EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PROCYTE CORPORATION
AND
HUMATECH CORP
DATED AS OF APRIL 27, 1998
CONTENTS
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1. DEFINITIONS..................................................................... 1
2. SALE............................................................................ 3
2.1 Sale of Transferred Assets................................................ 3
2.2 Liabilities Not Assumed................................................... 4
2.3 Consideration for Sale.................................................... 5
2.3.1 Purchase Price...................................................... 5
2.3.2 Assumption of Obligations........................................... 5
2.3.3 Allocation of Purchase Price........................................ 5
2.4 Holdback Amount........................................................... 5
2.4.1 Holdback Amount..................................................... 5
2.4.2 Administration...................................................... 6
2.4.3 Termination......................................................... 6
2.5 Closing............................................................... 6
3. SELLER'S REPRESENTATIONS AND WARRANTIES......................................... 6
3.1 Organization.............................................................. 6
3.2 Corporate Authority....................................................... 7
3.3 No Conflict............................................................... 7
3.4 Consents and Approval..................................................... 7
3.5 Financial Statements...................................................... 8
3.5.1 Financial Statements................................................ 8
3.5.2 Liabilities......................................................... 8
3.6 Absence of Certain Changes................................................ 8
3.7 Taxes..................................................................... 9
3.8 Real Properties........................................................... 10
3.9 Inventories; Accounts Receivable.......................................... 10
3.9.1 Inventories......................................................... 10
3.9.2 Accounts Receivable................................................. 10
3.10 Other Tangible Personal Property.......................................... 11
3.11 Customers and Suppliers................................................... 11
3.12 Contracts................................................................. 11
3.13 Laws and Regulations...................................................... 12
3.14 Litigation................................................................ 12
3.15 Employee Benefit Plans and Employment Contracts........................... 12
3.16 Other Liabilities and Obligations......................................... 13
3.17 Intellectual Property..................................................... 13
3.18 Business Operations....................................................... 14
3.19 Full Disclosure........................................................... 14
3.20 Brokers................................................................... 14
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3.21 Securities Representations................................................ 14
3.22 Residency................................................................. 15
3.23 Title to Transferred Assets............................................... 15
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES...................................... 16
4.1 Organization.............................................................. 16
4.2 Corporate Authority....................................................... 16
4.3 No Conflict............................................................... 16
4.4 Brokers................................................................... 16
4.5 Form 10-K................................................................. 17
4.6 Absence of Certain Changes................................................ 17
4.7 Taxes..................................................................... 17
4.8 Laws and Regulations...................................................... 17
4.9 Purchaser Stock........................................................... 17
5. PARTIES' OBLIGATIONS AT THE CLOSING............................................. 17
5.1 Obligations of Purchaser and Seller at Closing............................ 17
5.2 Obligations of Seller at Closing.......................................... 18
5.3 Purchaser's Obligations at the Closing.................................... 19
5.3.1 Deliveries to Seller................................................ 19
5.3.2 Deliveries to Escrow................................................ 19
6. OBLIGATIONS AFTER THE CLOSING.................................................... 19
6.1 Registration of Stock..................................................... 19
6.2 Board of Directors........................................................ 20
6.3 Preservation of Goodwill.................................................. 20
6.4 Distribution to Shareholders.............................................. 20
6.5 Change of Name and Dissolution............................................ 20
6.6 Access to Records......................................................... 20
6.7 Non-Solicitation of Employees............................................. 21
6.8 Brokers................................................................... 21
6.9 Cooperate in Publicity.................................................... 21
7. ESCROW.......................................................................... 21
7.1 Escrow Fund............................................................... 21
7.2 Escrow Period; Distribution upon Termination of Escrow Periods............ 21
7.3 Protection of Escrow Fund................................................. 22
7.4 Distributions; Voting..................................................... 22
7.5 Claims Upon Escrow Fund................................................... 22
7.6 Objections to Claims...................................................... 23
7.7 Resolution of Conflicts................................................... 23
7.8 Escrow Agent's Duties..................................................... 24
7.9 Representative............................................................ 25
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8. INDEMNIFICATION
8.1 Seller's Agreement to Indemnify........................................... 25
8.2 Purchaser's Agreement to Indemnify........................................ 25
8.3 Third Party Claims........................................................ 26
8.4 Right of Offset........................................................... 26
9. GENERAL PROVISIONS............................................................... 27
9.1 Survival.................................................................. 27
9.2 Notices................................................................... 27
9.3 No Assignment............................................................. 28
9.4 Governing Law; Venue...................................................... 29
9.5 Amendments; Waiver........................................................ 29
9.6 Entire Agreement.......................................................... 29
9.7 Reliance Upon Representations and Warranties.............................. 29
9.8 Reformation and Severability.............................................. 30
9.9 Further Assurances........................................................ 30
9.10 Expenses.................................................................. 31
9.11. Arbitration............................................................... 31
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LIST OF SCHEDULES
Schedule 2.1(b) Contracts, Agreements, Purchase Orders, Real Property, Real
Estate Leases and Personal Property
Schedule 2.1(e) Trademarks, Service Marks, Copyrights, Patents, Patent
Applications, Trade Names
Schedule 2.3.1 Seller's Payment Instructions
Schedule 2.3.3 Allocation of Purchase Price
Schedule 2.4.3 Shareholders of Seller
Schedule 3.1 Applicable Jurisdictions
Schedule 3.4 Consents and Approvals
Schedule 3.5.1 Unaudited Financial Statements
Schedule 3.5.2 Liabilities
Schedule 3.8 Real Property
Schedule 3.9.2 Accounts Receivable
Schedule 3.10 Equipment, Furniture, Fixtures and Other Personal Property
Schedule 3.11 Customer List with Sales Summary
Schedule 3.12 Contracts
Schedule 3.14 Litigation
Schedule 3.15 Existing Employment Agreements and Fringe Benefit Plans
Schedule 3.16 Other Liabilities and Obligations
Schedule 3.17 Intellectual Property
Schedule 3.23 Liens
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement"), is made and entered
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into as of this ___ day of __________________, 1998 by and between ProCyte
Corporation, a Washington corporation ("Purchaser"), and HumaTech Corp, a
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Florida corporation ("Seller").
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RECITALS
A. Seller is in the business of the distribution and sale of skincare
products to Doctors and other professionals both as branded and private label
items using its own training programs, courses and seminars to educate these
individuals on their products (the "Business").
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B. Seller desires to sell and Purchaser desires to purchase substantially
all of Seller's assets used in the Business on the terms and conditions set
forth in this Agreement.
AGREEMENT
In consideration of the mutual covenants and agreements hereinafter set
forth; in reliance on the representations, warranties, covenants, and conditions
contained in this Agreement; and for other good and valuable consideration, the
parties agree as follows:
1. DEFINITIONS
Capitalized terms used herein shall have the following meanings:
"AAA Rules" is defined in Section 9.11.
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"Accounts Receivable" are defined in Section 3.9.2.
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"Act" is defined in Section 3.21(b).
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"Agreement" is defined in the introductory paragraph of this Agreement.
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"Business" is defined in Recital A.
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"Closing" is defined in Section 2.5.
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"Closing Date" is defined in Section 2.5.
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"Contracts" is defined in Section 3.12.
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"Damages" is defined in Section 8.1.
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"Escrow Agent" is defined in Section 7.1.
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"Escrow Fund" is defined in Section 7.1.
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"Escrow Holdback" is defined in Section 7.1.
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"Escrow Period" is defined in Section 7.2.
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"Escrow Shares" is defined in Section 7.1.
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"Final Determination" is defined in Section 7.7.
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"Financial Statements" is defined in Section 3.5.1.
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"Holdback Amount" is defined in Section 2.4.1.
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"Indemnitee" is defined in Section 8.3.1.
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"Indemnitor" is defined in Section 8.3.1.
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"Intellectual Property" means all property listed in Section 2.1(e)(i) -
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(iv).
"Inventories" is defined in Section 2.1(a).
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"Laws" is defined in Section 3.13.
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"Lease" is defined in Section 2.3.2.
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"Litigation" is defined in Section 3.14.
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"New Shares" is defined in Section 7.4.
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"Obligations" is defined in Section 2.3.2.
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"Purchase Price" is defined in Section 2.3.1.
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"Purchaser" is defined in the introductory paragraph of this Agreement.
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"Purchaser Stock" is defined in Section 2.3.1.
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"Real Property Leases" is defined in Section 3.8.
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"Registration Statement" is defined in Section 6.1(a).
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"Representative" is defined in Section 7.9.
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"Seller" is defined in the introductory paragraph of this Agreement.
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"Seller's Balance Sheet" is defined in Section 2.1(a).
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"Shareholders" means the shareholders of Seller set forth on Schedule 2.4.3
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hereto.
"Suspension Period" is defined in Section 6.1(b).
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"Taxes" is defined in Section 3.7.
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"Transferred Assets" is defined in Section 2.1.
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2. SALE
2.1 SALE OF TRANSFERRED ASSETS
Seller agrees to sell, convey, transfer, assign, and deliver to Purchaser,
and Purchaser agrees to purchase from Seller, all of the following assets of
Seller (collectively, the "Transferred Assets"):
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(a) All inventories of finished goods and supplies reflected on Seller's
December 31, 1997, unaudited balance sheet ("Seller's Balance Sheet") (which is
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included among Seller's Financial Statements in Schedule 3.5.1), less all items
disposed of in the ordinary course of business during the period commencing
January 1, 1998, and ending on the date this transaction is consummated, plus
all items acquired by Seller during the same period ("Inventories").
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(b) All of Seller's rights and interests in and to the contracts,
agreements, purchase orders, real property leases, and personal property leases
set forth on Schedule 2.1(b), attached hereto.
(c) All Seller's furniture, fixtures, equipment, and other personal
property, all of which are described on Schedule 3.10, attached hereto, and all
sundry items of a like character that, although not described on Schedule 3.10,
are owned by Seller and are situated on or about the premises of Seller or are
in transit to Seller.
(d) Seller's accounts receivable as of December 31, 1997, all of which are
reflected on Seller's Balance Sheet, less all accounts collected in the ordinary
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course of business during the period commencing January 1, 1998, and ending on
the date this transaction is consummated, plus all accounts added during this
same period.
(e) All right, title, and interest in and to all of the following owned by
Seller, all of which are listed on Schedule 2.1(e), attached hereto and all
items of the same character whether or not so listed:
(i) All trademarks, service marks, copyrights, patents, patent
rights, patent applications, and trade names used in or necessary to the
Business.
(ii) All applications for registration or registrations of any Assets
listed in Section 2.1(e)(i), all promotional designs, designs, concepts,
literature, and rights against other persons with respect to such assets, and
all other promotional properties.
(iii) All formulae, know-how, pricing policies, letters, trade
secrets, inventions, models, processes, market information, market analyses,
marketing plans, operating or management policies, procedures, and forms,
computer software, computer operating procedures, and all other proprietary
rights used in or useful or developed for use in the Business of Seller.
(iv) All right, title, and interest of Seller in and to the name
"HumaTech Laboratories," or any variant of that name.
(v) All papers and records (whether in written or other form) of any
kind presently in or in the future coming into the care, custody, or control of
Seller relating to any of the Transferred Assets or the Business or the
acquisition or past, present, or future operation of Seller, including but not
limited to: customer lists, supplier lists, distributor lists, purchase and
sales records, blueprints, specifications, environmental control records,
accounting and financial records, maintenance records, operating and management
manuals, computer systems and software documentation, blank forms, other blank
instruments, and plans and designs of products.
(vi) All permits, licenses, franchises, consents, authorities,
special authorities, authorizations, and other similar acts of any government
body (federal, state, local, or foreign), subject to any action by such body
that may be required in connection with such assignment or transfer.
2.2 LIABILITIES NOT ASSUMED
Except to the extent expressly provided in this Agreement, Purchaser has
not agreed to pay, shall not be required to assume and shall not assume any
liability or obligation of Seller or of any affiliate of Seller or of any other
person. Without
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limitation of the foregoing, Purchaser shall have no liability for any federal,
state or local tax liabilities of Seller, excluding any sales tax or title
transfer fees attributable to the sale of Transferred Assets contemplated
herein, which Purchaser shall pay. Seller shall (a) pay and discharge and (b)
indemnify Purchaser and hold it harmless from and against any liability or
obligation of Seller not expressly assumed hereunder.
2.3 CONSIDERATION FOR SALE
2.3.1 PURCHASE PRICE
Subject to the holdback provisions contained herein, the purchase price for
the Transferred Assets shall be Three Million Dollars ($3,000,000) (the
"Purchase Price"). Subject to the holdback provisions, the Purchase Price shall
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be payable as follows: One Million Five Hundred Thousand Dollars ($1,500,000)
shall be paid by wire transfer on the date hereof, and One Million Five Hundred
Thousand Dollars ($1,500,000) shall be paid in the common stock of Purchaser
(the "Purchaser Stock") on the date hereof. The number of shares of Purchaser
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Stock payable to Seller shall be determined based on the ten-day average closing
price of Purchaser's common stock as listed on the NASDAQ for the ten business
days prior to the date hereof. The Purchase Price shall be paid according to
the instructions of Seller as set forth on Schedule 2.3.1.
2.3.2 ASSUMPTION OF OBLIGATIONS
Purchaser shall assume on the Closing Date all duties and obligations of
Seller pursuant to the contracts, agreements, purchase orders, and leases
described on Schedule 2.1(b) (the "Obligations").
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2.3.3 ALLOCATION OF PURCHASE PRICE
The parties agree that the Purchase Price shall be allocated as set forth
in Schedule 2.3.3 to this Agreement and that the allocation shall be used by the
parties in reporting the transaction contemplated by this Agreement for federal
and state tax purposes. Seller and Purchaser shall prepare and timely file all
such reports and returns as may be required by Section 1060 of the Internal
Revenue Code to report such allocation.
2.4 HOLDBACK AMOUNT
2.4.1 HOLDBACK AMOUNT
In order to secure Seller's obligations described in this Agreement,
Purchaser shall deliver from the Purchase Price payable to Seller under Section
2.3.1, a number
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of shares of Purchaser Stock equal to One Hundred Fifty Thousand Dollars
($150,000) in value (the value of each share being that determined under Section
2.3.1) on the date hereof (the "Holdback Amount") to Escrow Agent
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pursuant to Article 7 hereof. If after the Closing, Seller fails to pay or
perform any of its obligations set forth in this Agreement, while the Holdback
Amount remains in existence, Purchaser shall have the right to withdraw shares
of Purchaser Stock from the Holdback Amount sufficient to pay to Purchaser all
amounts due and owing from Seller in accordance with Article 7 hereof. For
purposes of payments from the Holdback Amount, the value of each share of
Purchaser Stock shall be the price determined under Section 2.3.1 hereof.
2.4.2 ADMINISTRATION
The Holdback Amount shall be administered in accordance with Article 7.
2.4.3 TERMINATION
The balance of the Holdback Amount, if any, shall be transferred to the
Shareholders, on a pro rata basis in accordance with Schedule 2.4.3, on the
first anniversary of the Closing Date.
2.5 CLOSING
The closing of the transfer of the Transferred Assets from Seller to
Purchaser (the "Closing") shall occur on the date hereof simultaneously with the
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execution and delivery of this Agreement. (The time and date on which the
Closing actually occurs is referred to herein as the "Closing Date") Closing
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shall occur at the offices of Xxxxxx & Xxxxxx, 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxx Xxxxx, Xxxxxxx 00000.
3. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Purchaser that the following facts
and circumstances are true and correct:
3.1 ORGANIZATION
Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. Seller is duly qualified to
transact business as a foreign corporation and is licensed and in good standing
in the jurisdictions listed in Schedule 3.1, which jurisdictions are the only
jurisdictions required due to (a) the ownership or lease of real or personal
property for use in the operation of Seller's business or (b) the nature of the
business conducted by Seller. Seller has all requisite
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corporate power and authority to own, lease and operate and use its assets, and
to carry on its business as now being conducted.
3.2 CORPORATE AUTHORITY
Seller has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by Seller of this Agreement, the performance by Seller of its obligations
hereunder and the consummation by Seller of the transactions contemplated hereby
including all actions contemplated in Article 8 have been duly authorized by all
necessary corporate action of Seller, including the approvals of the Board of
Directors of Seller and the Shareholders in accordance with applicable law.
This Agreement constitutes a valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
3.3 NO CONFLICT
The execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby will not (a) violate,
conflict with, or result in any breach of, any provision of Seller's certificate
of incorporation or bylaws; or (b) violate, conflict with, result in any breach
of, or constitute a default (or result in an event that, with notice or lapse of
time or both, would constitute a default) under any contract or judgment to
which Seller is a party or by which it is bound or which relates to the
Transferred Assets or Business; or (c) result in the creation of any encumbrance
on any of the Transferred Assets; or (d) violate any applicable law, statute,
rule, ordinance or regulation of any governmental body; or (e) give any party
with rights under any contract, judgment or other restriction to which Seller is
a party or by which it is bound or which relates to the Transferred Assets or
the Business, the right to terminate, modify or accelerate any rights,
obligations or performance under such contract, judgment or restriction.
3.4 CONSENTS AND APPROVALS
Except for those already obtained and set forth in Schedule 3.4, (a) no
consent, approval or authorization of, or declaration, notice, filing or
registration with, any governmental body is required for the execution, delivery
and performance by Seller of this Agreement and for the consummation by Seller
of the transactions contemplated hereby and (b) no consent, approval or
authorization of, or notice to, any third party is required for the execution,
delivery and performance by Seller of this Agreement and the consummation by
Seller of the transactions contemplated hereby. All reports and returns
required to be filed by Seller with any government and regulatory agency with
respect to this transaction have been properly filed.
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3.5 FINANCIAL STATEMENTS
3.5.1 FINANCIAL STATEMENTS
Schedule 3.5.1 contains the unaudited financial statements of Seller,
together with notes related to the financial statements. The financial
statements consist of balance sheets and statements of income and retained
earnings for the three (3) years ending December 31, 1997, and unaudited
statements for the three month period ending March 31, 1998 ("Financial
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Statements"). Except as disclosed on Schedule 3.5.1, the Financial Statements
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have been prepared in conformity with generally accepted accounting principles
consistently applied and present fairly and accurately the financial position,
results of operations, and changes in financial position of Seller at the dates
and for the periods covered.
3.5.2 LIABILITIES
Except as set forth on Schedule 3.5.2, there are no liabilities or
obligations of Seller, accrued, absolute, contingent, inchoate, or otherwise,
which are not shown or which are in excess of amounts shown or reserved for in
the Financial Statements, other than liabilities or obligations not in excess of
Ten Thousand Dollars ($10,000) incurred in the normal course of business and of
the same nature as those set forth in the Financial Statements.
3.6 ABSENCE OF CERTAIN CHANGES
Since December 31, 1997 there has not been:
(a) Any material adverse change in the Business, properties, assets,
financial condition, operations, sales, or net income of Seller.
(b) Any loss or destruction of, or damage to, properties or assets,
tangible or intangible (whether or not covered by insurance).
(c) Any change in policy regarding, or in amounts or terms of,
compensation payable to or to become payable to any of Seller's officers,
directors, employees, or agents, except for changes in policy or compensation
made pursuant to the 1998 budget and five-year projections approved by
Purchaser.
(d) Any labor dispute, disturbance, or attempt to organize a union.
(e) Any proposed law or regulation or any actual event or condition of
any character that is known to Seller that could materially adversely affect the
Business or future prospects of Seller.
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(f) Any claim, litigation, lawsuit, proceeding, or investigation,
pending or threatened against Seller, or any event or condition of any
character, that could have a materially adversely effect on the Business, assets
or future prospects of Seller.
(g) Any issuance, purchase of, or agreement to issue or purchase
shares of capital stock or other securities of Seller.
(h) Any mortgage, pledge, lien, or encumbrance made or agreed to be
made on any of Seller's assets or properties, tangible or intangible.
(i) Any sale, transfer, other disposition of, or agreement to sell,
transfer, or dispose of Seller's properties or assets, tangible or intangible,
except as contemplated in this Agreement and except in the normal course of
business and then only for full and fair value received.
(j) Any borrowing or agreements to borrow by or from Seller.
(k) Any loans, advances, or agreements with respect to any loans or
advances, other than to customers in the normal course of business and that have
been properly reflected as "accounts receivable" on Seller's books.
(l) Any act or transaction outside the ordinary course of business.
(m) Any dividends or distributions paid or declared, or any repayment
of loans or other obligations to the shareholders of Seller.
(n) Any capital expenditure made by Seller in excess of $10,000.
(o) Any agreement by Seller to do any of the items described in this
Section 3.6.
3.7 TAXES
All federal, state, local, and foreign income, ad valorem, excise, sales,
use, payroll, unemployment, and other taxes and assessments ("Taxes") that are
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due and payable by Seller on behalf of Seller have been properly computed, duly
reported, fully paid, and discharged. There are no unpaid Taxes that are or
could become a lien on the property of Seller or the Transferred Assets or
require payment by Seller, except for current Taxes not yet due and payable.
All current Taxes not yet due and payable by Seller have been properly accrued
on the balance sheets of Seller. Seller has not incurred any liability for
penalties, assessments, or interest under the Internal Revenue Code. No
unexpired waiver executed by or on behalf of Seller with respect
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to any Taxes is in effect. Seller has filed all tax returns that are required to
be filed, and such tax returns are complete and accurate in all material
respects. There are no liens for Taxes upon the Transferred Assets.
3.8 REAL PROPERTIES
Seller does not own any real property. Schedule 3.8 contains true,
correct, and complete copies of all real property leases to which Seller is a
party ("Real Property Leases"). All of the Real Property Leases are valid and
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in full force. There does not exist any default or event that with notice,
lapse of time, or both will constitute a default under any of these Real
Property Leases. All the buildings, fixtures, and leasehold improvements used
by Seller in the Business are located on such leased property.
3.9 INVENTORIES; ACCOUNTS RECEIVABLE
3.9.1 INVENTORIES.
All Inventories consist of items of a quality and quantity usable and
saleable in the ordinary course of business by Seller and were of the stated
value on December 31, 1997 as that value is set forth in the Financial
Statements of Seller for December 31, 1997 provided by Seller to Purchaser in
Schedule 3.5.1. All sales of Inventory since December 31, 1997 were made in the
ordinary course of business, and for each of such sales, either the purchaser of
the Inventories has made full payment for it or the purchaser's liability to
make such payment is reflected in the financial books of the Seller. No items
included in the Inventories have been pledged as collateral or are held by
Seller on consignment from others. All of the Inventories are substantially free
of defects and also comply with the specifications submitted by the purchasers
of the items of Inventories in all material respects.
3.9.2 ACCOUNTS RECEIVABLE
Set forth in Schedule 3.9.2 is a list of all of the accounts receivable of
Seller, and an aging schedule relating thereto, as of December 31, 1997, all of
which are reflected on Seller's Balance Sheet and a list of the accounts
receivable of Seller, and an aging schedule relating thereto, as of March 31,
1998 (the "Accounts Receivable"). The Accounts Receivable are, and any accounts
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receivable arising between March 31, 1998 and the date hereof are valid and
subsisting and all such accounts receivable arose in the ordinary course of the
Business of Seller. The accounts receivable are not subject to any material
counterclaim set-off, defense, security interest, claim, or other encumbrance,
except as set forth in Schedule 3.9.2.
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3.10 OTHER TANGIBLE PERSONAL PROPERTY
The equipment, furniture, fixtures, and other personal property described
in Schedule 3.10 constitute all the items of tangible personal property owned
by, in the possession of, or used by Seller in connection with Seller's Business
except Inventories. Except as stated in Schedule 3.10, no personal property
used by Seller in connection with its business is held under any lease, security
agreement, conditional sales contract, or other title retention or security
agreement or is located any place other than Seller's place of business.
3.11 CUSTOMERS AND SUPPLIERS
Set forth in Schedule 3.11 is a correct and current list of all customers
and suppliers of Seller together with summaries of the dollar volumes of sales
made to each customer during the most recent fiscal year. Except as indicated
in Schedule 3.11, Seller has no information and Seller is not aware of any facts
indicating that any of these customers or suppliers intend to cease doing
business with Seller or to materially alter the amount of the business that they
are presently doing with Seller.
3.12 CONTRACTS
Schedule 3.12 attached to this Agreement contains true and correct lists of
all oral and written contracts or arrangements obligating Seller, including
without limitation, union contracts, guarantees, bids, purchase orders,
commitments, joint venture or partnership agreements, contracts with
municipalities, pledges and other security agreements, and copies of standard
form customer contracts ("Contracts"). Seller has provided Purchaser with a copy
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of each such written Contract and a summary of each oral Contract. Schedule 3.12
also sets forth a list of all persons or entities whose consents are required to
be obtained under any Contract with respect to the consummation of this
transaction by Seller, which consents have been obtained. Except as set forth in
Schedule 3.12, Seller is not a party to, nor are Seller's assets and properties
bound by, any distributor's or manufacturer's representative, agency agreement,
output or requirements agreement, agreement not entered into in the ordinary
course of business, indenture, mortgage, deed of trust, lease, or any agreement
that is unusual in nature, duration, or amount. There is no default or event
that with notice, lapse of time, or both will constitute a default by any party
to any of the Contracts. Seller has not received any notice that any party to
any of the Contracts intends to cancel or terminate any of the Contracts or to
exercise or not exercise any options under any of the Contracts. Seller is not a
party to, nor are Seller's assets or properties bound by, any Contract that is
materially adverse to the business, property, or financial condition of Seller.
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3.13 LAWS AND REGULATIONS
Seller is not in default or violation of any law, statute, rule,
regulation, code, ordinance, treaty, ruling, directive, or court order, or order
of any federal, state, municipal, foreign, or other government department,
board, bureau, agency, or instrumentality, wherever located ("Laws"), and
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Seller's assets and its use thereof are and have been in compliance with such
Laws.
3.14 LITIGATION
Except as disclosed in Schedule 3.14, there are no pending, outstanding,
or threatened (i) claims; (ii) legal, administrative, or other proceedings; or
(iii) suits, investigations, inquiries, complaints, notices of violation,
judgments, injunctions, orders, directives, or restrictions against or involving
Seller or any of the assets, properties, or business of Seller or any of
Seller's officers, directors, employees, or stockholders that could materially
adversely affect Seller, its assets, properties, or business ("Litigation").
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There is no basis for any of the Litigation against any of Seller's assets,
properties, persons, or entities. Seller has furnished or made available to
Purchaser copies of all relevant court papers and other documents relating to
any matters set forth in Schedule 3.14. Except as set forth in Schedule 3.14,
Seller is not presently engaged in any legal action or arbitration to recover
moneys due Seller or for damages sustained by or claims of Seller.
3.15 EMPLOYEE BENEFIT PLANS AND EMPLOYMENT CONTRACTS
Schedule 3.15 attached to this Agreement contains (i) a complete
description and copies of all employment agreements in effect with Seller; and
(ii) a complete description of all benefit plans maintained for the benefit of
current or former employees, directors, or officers, including without
limitation employee pension benefit plans, employee welfare benefit plans, and
any deferred compensation, performance, bonus, profit sharing, incentive,
vacation pay, holiday pay, severance, life, medical or other insurance,
retirement, excess benefit, fringe benefit or other plan, trust or arrangement,
whether written or oral, together with the approximate annual cost of each
benefit and perquisite. Copies of the plans, agreements, or arrangements
regarding each benefit are also attached. The provisions and operations of all
such programs and plans are in compliance in all material respects with all
applicable material Laws and government rules and regulations. There are no
unfunded pension or similar liabilities regarding any employee of Seller. All
pension plans have been properly funded as to current and past service costs,
have at all times been administered in compliance in all material respects with
all applicable requirements of ERISA and any other applicable Laws, and Seller
does not maintain any "pension plan" as defined in ERISA that is unfunded,
except as disclosed in
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Schedule 3.15. Schedule 3.15 also sets forth all states in which Seller has
employees and the status of unemployment insurance accounts in each state.
Seller has used its best efforts to encourage all of its employees to accept any
employment offered by Purchaser.
3.16 OTHER LIABILITIES AND OBLIGATIONS
Schedule 3.16 contains a true and correct list of all liabilities and
obligations of Seller (not disclosed elsewhere in this Agreement) of any kind,
character, and description whether accrued, absolute, contingent, or otherwise,
and whether or not required to be disclosed or accrued in the Financial
Statements of Seller, that exceed $5,000 to any one creditor. In the case of
liabilities that are not fixed, an estimate of the maximum amount that may be
payable is also included.
3.17 INTELLECTUAL PROPERTY
(a) Seller is the sole and exclusive owner of the entire right, title and
interest in and to, and has the sole and exclusive right to use, the
Intellectual Property. Each item of Intellectual Property is free and clear of
liens, encumbrances, restrictions, or legal or equitable claims of others.
Seller has taken all necessary security measures to protect the secrecy,
confidentiality, and value of the Intellectual Property.
(b) No items of intellectual property (including without limitation
patents, trade names, trademarks, service marks, copyrights or applications for
any of the foregoing) other than those included in the Intellectual Property are
or have been used in or are necessary to the conduct of Seller's business.
Seller has the right and authority to use each item of Intellectual Property as
presently used in the conduct of its business.
(c) The use of the Intellectual Property does not and will not conflict
with, infringe upon, or violate any patent, copyright, or other proprietary
right of any person, firm, or corporation, nor is Seller now infringing on any
right belonging to any person, firm, or corporation with respect to the
Intellectual Property. Seller is not a party to any license, agreement, or
arrangement, whether as a licensee, licensor, or otherwise with respect to the
Intellectual Property.
(d) To the knowledge of Seller, none of the Intellectual Property or
Seller's rights thereto are being infringed upon or otherwise violated by any
person or entity.
(e) The consummation of the transactions contemplated by this Agreement
will not alter or impair any of the Intellectual Property, and the Intellectual
Property
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may be transferred to Purchaser hereunder without the consent or approval of any
other party or governmental entity.
3.18 BUSINESS OPERATIONS
The business operations of Seller are and have been for the past five
years in material compliance with all Laws of all government authorities having
jurisdiction over such business insofar as failure to comply could materially
adversely affect Seller's business.
3.19 FULL DISCLOSURE
No representation, warranty, or covenant made to Purchaser in this
Agreement nor any document, certificate, exhibit, or other information given or
delivered to Purchaser pursuant to this Agreement, by Seller or its shareholders
contains or will contain any untrue statement of a material fact, or omits or
will omit a material fact necessary to make the statements contained in this
Agreement or the matters disclosed in the related documents, certificates,
information, or exhibits not misleading. Each of the Schedules attached hereto
is a true, complete and accurate list or description, as appropriate, of the
items purported to be listed or described thereon. Seller has not withheld from
Purchaser knowledge of any events, conditions or fact which may affect the
Business of Seller, the Transferred Assets, this Agreement or the transactions
contemplated hereby.
3.20 BROKERS
Neither Seller nor any of Seller's officers, directors, employees, or
stockholders, has retained, consented to, or authorized any broker, investment
banker, or third party to act on Seller's behalf, directly or indirectly, as a
broker or finder in connection with the transactions contemplated by this
Agreement.
3.21 SECURITIES REPRESENTATIONS
(a) Seller has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of ownership of the
Purchaser Stock and is able to bear the economic risk of loss of its entire
investment;
(b) Seller is not acquiring the Purchaser Stock with a view to any resale,
distribution or other disposition of the Purchaser Stock in violation of the
Securities Act of 1933, as amended (the "Act");
---
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(c) Seller understands that the Purchaser Stock has not been registered
under the Act or the securities laws of any state and that the sale contemplated
hereby is being made in reliance on an exemption from such registration
requirements;
(d) Seller:
(i) is an accredited investor within the meaning of Rule 501(a) of
Regulation D under the Act; or
(ii) either alone or with Seller's "purchaser representative" (as
such term is defined by Rule 501(h) of Regulation D under the Act) has such
knowledge and experience in financial and business matters that Seller is
capable of evaluating the merits and risks of an investment in the Purchaser
Stock.
(e) Except as otherwise contemplated in this Agreement and without in any
way limiting the representations and warranties set forth above, Seller agrees
not to make any disposition of all or any portion of the Purchaser Stock unless
and until:
(i) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(ii) The Purchaser shall be satisfied that such proposed disposition
complies in all respects with SEC Rule 144 (or any successor rule providing a
safe harbor for such dispositions without registration), as well as any other
applicable federal or state securities laws; or
(iii) The Purchaser shall have received, upon its reasonable request,
an opinion of legal counsel for the holder of the Purchaser Stock satisfactory
to the Purchaser stating that such transaction is exempt from registration.
3.22 RESIDENCY
For purposes of the application of federal and state securities laws,
Seller represents and confirms that its principal executive offices are located
in the State of Florida.
3.23 TITLE TO TRANSFERRED ASSETS
Seller has good and marketable title to all the Transferred Assets, free
and clear of all security interests, except as set forth on Schedule 3.23. The
Transferred Assets are all the assets used in or necessary to the operation of
the Business.
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4. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Seller that:
4.1 ORGANIZATION
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Washington, with corporate power to own
property and carry on its business as it is now being conducted.
4.2 CORPORATE AUTHORITY
Purchaser has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery by Purchaser of this Agreement, the performance by Purchaser of its
obligations hereunder and the consummation by Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary corporate action.
This Agreement constitutes a valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
4.3 NO CONFLICT
The execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby will not (a) violate,
conflict with, or result in any breach of, any provision of Seller's certificate
of incorporation or bylaws; or (b) violate, conflict with, result in any breach
of, or constitute a default (or result in an event that, with notice or lapse of
time or both, would constitute a default) under any contract or judgment to
which Seller is a party or by which it is bound, or (c) violate any applicable
law, statute, rule, ordinance or regulation of any governmental body.
4.4 BROKERS
Other than CDS Inc., neither Purchaser, nor any of Purchaser's officers,
directors, or employees, has retained, consented to, or authorized any broker,
investment banker, or third party to act on its behalf, directly or indirectly,
as a broker or finder in connection with the transactions contemplated by this
Agreement. Seller shall have no liability for the obligation due to CDS Inc.
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4.5 FORM 10-K
Purchaser has provided Seller with a copy of its Annual Report for 1997 on
Form 10-K filed with the Securities and Exchange Commission, which contains its
audited financial statements for the year ending December 31, 1997.
4.6 ABSENCE OF CERTAIN CHANGES
Since December 31, 1997, there has not been any material adverse change in
the business, assets, or financial condition of Purchaser.
4.7 TAXES
All Taxes that are due and payable by Purchaser on behalf of Purchaser have
been properly computed, duly reported, fully paid, and discharged. Purchaser
has filed all tax returns that are required to be filed, and such tax returns
are complete and accurate in all material respects.
4.8 LAWS AND REGULATIONS
Purchaser is not in default or violation of any Laws and Purchaser's assets
and its use thereof are and have been in compliance with such Laws.
4.9 PURCHASER STOCK
When issued to the Seller in accordance with this Agreement, the Purchaser
Stock shall be duly authorized, fully paid, non-assessable, and transferable by
Seller to the Shareholders in accordance with Section 6.4 hereof.
5. PARTIES' OBLIGATIONS AT THE CLOSING
5.1 OBLIGATIONS OF PURCHASER AND SELLER AT CLOSING
At the Closing, Purchaser and Seller shall deliver to each other the
following fully executed documents in forms mutually satisfactory to the parties
thereto:
(a) An Employment Agreement between Xxxxx Xxxxxxx and Purchaser;
(b) An Employment Agreement between Xxx Xxxxxx and Purchaser; and
(c) Such other fully executed documents as may be reasonably required to
effect the transactions set forth in this Agreement.
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5.2 OBLIGATIONS OF SELLER AT CLOSING
At the Closing, Seller shall deliver or cause to be delivered to Purchaser
the following fully executed documents in forms mutually satisfactory to the
parties thereto:
(a) Confidentiality and Noncompetition Agreement between Purchaser and
Xxxxxxx Xxxxxxx;
(b) Investor Questionnaire and Representation Agreement executed for each
Shareholder;
(c) The legal opinion of Xxxxxx & Xxxxxx, P.A., counsel to Seller;
(d) An executed xxxx of sale sufficient to convey to Purchaser all rights,
title, and interest in and to all of the Transferred Assets;
(e) One or more fully executed instruments of assignment in a form
acceptable to Purchaser assigning to Purchaser the exclusive rights to: all the
Contracts, and any other contract rights and leases sold pursuant to this
Agreement; the Accounts Receivable; the Intellectual Property and any other item
of Transferred Assets for which Purchaser reasonably requests assignment;
(f) Clearance certificates from the appropriate agencies in all states
where Seller is qualified to do business and any related certificates that
Purchaser may reasonably request as evidence that all sales, use, and other tax
liabilities of Seller (other than income tax liabilities) accruing before the
Closing Date have been fully satisfied or provided for by Seller;
(g) A Uniform Commercial Code search report issued by the Secretary of
State in each state where Seller owns personal property or in which Seller is
located and dated as of a date not more than three days before the date hereof
indicating that there are no filings under the UCC on file with the Secretary of
State that name Seller as debtor or otherwise indicate any lien on the assets
and properties of Seller, except for the liens otherwise disclosed in this
Agreement;
(h) Resolutions approved by Seller's board of directors and Shareholders
relating to this Agreement, certified by Seller's corporate secretary; and
(i) All documentation in the possession of Seller necessary to operate and
to use all of the Transferred Assets.
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5.3 PURCHASER'S OBLIGATIONS AT THE CLOSING
5.3.1 DELIVERIES TO SELLER
At the Closing, Purchaser shall deliver or cause to be delivered to Seller
the following:
(a) The Purchase Price less the Holdback Amount described in Section 2.4
hereof;
(b) A fully executed instrument of assumption, in form acceptable to
Seller, sufficient to evidence the assumption of the Obligations; and
(c) The legal opinion of Xxxxxxx Coie LLP, counsel to Purchaser.
5.3.2 DELIVERIES TO ESCROW
At the Closing, Purchaser shall deliver or cause to be delivered to Escrow
Agent Purchaser Stock equal to the Holdback Amount.
6. OBLIGATIONS AFTER THE CLOSING
6.1 REGISTRATION OF STOCK
(a) The Purchaser shall (i) within seven (7) calendar days of the
Closing Date, prepare and file with the SEC a registration statement (the
"Registration Statement") covering the sale, on the NASDAQ National Market, of
-----------------------
one hundred percent (100%) of the shares of Purchaser Stock issued to the Seller
and subsequently distributed to the Shareholders, other than shares subject to
the Holdback (ii) use its commercially reasonable best efforts, subject to
receipt of necessary information from the Seller or the Shareholders, as the
case may be, to cause the Registration Statement to become effective on or
before the 60th calendar day from the Closing Date and to remain effective
(subject to the provisions of Section 6.1(b) hereof) for a period ending twelve
(12) months after the Closing Date.
(b) Upon written notice given to the Shareholders, Purchaser may elect
to suspend the use of the prospectus forming part of the Registration Statement
(i) upon the failure of any Shareholder to provide information necessary in
order to make the prospectus true, complete and correct in all material respects
as to sales by such Shareholder or (ii) for additional periods that do not in
the aggregate exceed sixty (60) days during the course of the calendar year
(each sixty (60) days is hereinafter referred to as a "Suspension Period") as a
-----------------
result of business developments or other transactions involving the Purchaser
the existence of which would make the
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Registration Statement inaccurate or misleading in any material respect. The
Purchaser agrees in good faith to seek to minimize any need to invoke the
provisions of this Section 6.1(b).
6.2 BOARD OF DIRECTORS
No later than the first Board of Directors meeting following the next
annual meeting of shareholders of Purchaser held following the Closing,
Purchaser shall cause either Xxxxx Xxxxxxx or Xxx Xxxxxx to be elected to
Purchaser's Board of Directors. Thereafter, for as long as either Xxxxxxx or
Tapman is a shareholder or employee of Purchaser, Purchaser shall cause either
Xxxxxxx or Xxxxxx to be among the nominees presented to the shareholders of
Purchaser for election to the Board of Directors for any period for which
neither Xxxxxxx nor Tapman would otherwise be a director.
6.3 PRESERVATION OF GOODWILL
Following the Closing Date, Seller will restrict its activities so that
Purchaser's reasonable expectations with respect to the goodwill, business
reputation, employee relations, and prospects connected with the Transferred
Assets purchased under this Agreement will not be materially impaired.
6.4 DISTRIBUTION TO SHAREHOLDERS
Immediately following the Closing, the Seller shall distribute the
Purchaser Stock to the Shareholders on a pro rata basis in accordance with
Schedule 2.4.3.
6.5 CHANGE OF NAME AND DISSOLUTION
Seller agrees that, after the Closing Date, it will not use or employ in
any manner, directly or indirectly, the name "HumaTech" or any variation of such
name. Seller also agrees that, in order to comply with this covenant, it will
take and cause to be taken all necessary action, including filing a withdrawal
notice for any assumed name certificate bearing Seller's name or any variant of
the name, that Seller has previously filed. As soon as practicable following
the Closing and stock distribution as set forth in Section 6.4, Seller shall
commence a corporate dissolution, which dissolution will be completed within one
year after the Closing.
6.6 Access to Records
From and after the Closing Date, Seller shall allow Purchaser and its
counsel, accountants, and other representatives access to records that are,
after the Closing Date, in the custody or control of the Seller.
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6.7 NON-SOLICITATION OF EMPLOYEES
Seller shall not solicit any employee of Purchaser or any employee of
Seller retained by Purchaser in the Business being acquired to leave employment
with Purchaser.
6.8 BROKERS
Seller shall assist and cooperate with Purchaser in resisting any claim of
any broker, investment banker, or third party (with the exception of CDS, Inc.)
for any brokerage fee, finder's fee, or commission against Purchaser or Seller
in connection with the transactions contemplated by this Agreement.
6.9 COOPERATE IN PUBLICITY
Neither party, without the prior written consent of the other party, shall
make any statement, public announcement, or any release to trade publications,
to the press, or make any statement to any competitor, customer, supplier or any
other third party, with respect to the discussions between Purchaser and Seller,
or this Agreement; provided, however, that Purchaser may make any disclosures,
-------- -------
which, in the opinion of its legal counsel, are required by applicable law or
any stock exchange so long as prior or contemporaneous notice thereof is given
to the Company.
7. ESCROW
7.1 ESCROW FUND
At the Closing, Purchaser will deposit the stock certificates evidencing
the Holdback Amount of Purchaser Stock ("the Escrow Shares") with Xxxxxx &
-------------
Xxxxxx, P.A., as Escrow Agent (the "Escrow Agent"), such deposit to constitute
------------
an escrow fund (the "Escrow Fund") to be governed by the terms set forth herein
-----------
(the "Escrow Holdback"). For purposes of this Agreement, each Shareholder shall
---------------
be deemed to have contributed his or her pro rata share of the Escrow Shares
based on Schedule 2.4.3 into the Escrow Fund. The Escrow Fund shall be
available to satisfy any Claims for indemnification made by Purchaser against
Seller pursuant to Article 8 of this Agreement.
7.2 ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF ESCROW PERIODS
Subject to the limitations contained in this Article 7, the Escrow Fund
shall remain in existence for a period of one (1) years following the Closing
Date (the
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"Escrow Period"). Upon the expiration of such Escrow Period, the Escrow Fund
-------------
shall terminate with respect to all Escrow Shares; provided, however, that the
number of Escrow Shares, which, in the reasonable judgment of Purchaser are
necessary to satisfy any unsatisfied Claims specified in any Claim delivered to
the Escrow Agent prior to the expiration of such Escrow Period shall remain in
the Escrow Fund (and the Escrow Fund shall remain in existence) until such
Claims have been resolved. As soon as all such Claims have been resolved to the
satisfaction of Escrow Agent, in its reasonable discretion, the Escrow Agent
shall deliver to the Shareholders all Escrow Shares and other property remaining
in the Escrow Fund not required to satisfy such Claims pro rata among them in
accordance with Schedule 2.4.3.
7.3 PROTECTION OF ESCROW FUND
The Escrow Agent shall hold and safeguard the Escrow Fund during the Escrow
Period, shall treat such fund as a trust fund in accordance with the terms of
this Agreement and not as the property of Seller or the Shareholders and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
7.4 DISTRIBUTIONS; VOTING
Any shares of Common Stock or other equity securities issued or distributed
by Purchaser (including shares issued upon a stock split) ("New Shares") in
----------
respect of Escrow Shares in the Escrow Fund which have not been released shall
be added to the Escrow Fund and become a part thereof. New Shares issued in
respect of shares which have been released from the Escrow Fund shall not be
added to the Escrow Fund, but shall be distributed to the holders thereof. When
and if cash dividends on Common Stock in the Escrow Fund shall be declared and
paid, they shall not be added to the Escrow Fund but shall be paid to those on
whose behalf such Common Stock is held in the Escrow Fund. Each Shareholder
shall have voting rights with respect to the Escrow Shares contributed to the
Escrow Fund on behalf of such Shareholder (and on any voting securities added to
the Escrow Fund in respect of such shares) so long as such shares of Common
Stock or other voting securities are held in escrow.
7.5 CLAIMS UPON ESCROW FUND
Upon receipt by the Escrow Agent at any time on or before the last day of
the Escrow Period of a claim pursuant to Article 8 signed by any officer of
Purchaser, the Escrow Agent shall, subject to the provisions of Sections 7.6 and
7.7, deliver to Purchaser out of the Escrow Fund, as promptly as practicable,
shares of Common Stock or other assets held in the Escrow Fund in an amount
equal to such Claim. For the purposes of determining the number of shares of
Common Stock to be delivered to
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Purchaser out of the Escrow Fund, the Common Stock shall be valued in accordance
with Section 2.4.1 hereof (adjusted for any changes in capitalization affecting
the Escrow Shares after the date hereof, such as stock splits or stock
dividends).
7.6 OBJECTIONS TO CLAIMS
Notwithstanding the provisions of Section 7.5 above, for a period of thirty
(30) days after delivery of any claim by Purchaser to Escrow Agent, the Escrow
Agent shall make no delivery to Purchaser of Escrow Shares or other assets
unless the Escrow Agent shall have first received written authorization from the
Representative to make such delivery. After the expiration of such thirty (30)
day period, the Escrow Agent shall make delivery of the shares of Common Stock
or other property in the Escrow Fund in accordance with Section 7.5 hereof,
provided that no such payment or delivery may be made if the Representative
shall object in writing to the claim and such objection shall have been
delivered to the Escrow Agent prior to the expiration of such thirty (30) day
period.
7.7 RESOLUTION OF CONFLICTS
In case the Representative shall so object in writing to any claim or
claims made, the Representative and Purchaser shall attempt in good faith to
agree upon the rights of the respective parties with respect to each of such
claims. If the Representative and Purchaser should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and distribute shares of Purchaser Stock or other
property from the Escrow Fund in accordance with the terms thereof. If no such
agreement can be reached after good faith negotiation, the Escrow Agent shall
continue to hold in escrow the Escrow Fund until a "Final Determination"
-------------------
(defined below) has occurred with respect to such claim, regardless of when such
Final Determination occurs and whether or not it occurs after the expiration of
the Escrow Period. In such event, upon receipt by Escrow Agent of evidence that
a Final Determination has occurred, the Escrow Agent shall distribute the Escrow
Shares or other property in the Escrow Fund in accordance with such Final
Determination. As used herein, a Final Determination shall mean either a mutual
agreement of the parties concerned (evidenced by appropriate instructions in
writing to the Escrow Agent, signed by all such parties) or a binding
arbitration, or a final order, decree, or judgment of a court of competent
jurisdiction in the United States of America (the time for appeal having expired
and no appeal having been taken), all costs and expenses of which are to be paid
by such parties. The Escrow Agent shall be under no duty whatsoever to
institute or defend any such proceeding.
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The Escrow Agent shall have no obligation for determining or ascertaining the
completeness or accuracy of any Claim.
7.8 ESCROW AGENT'S DUTIES
The Escrow Agent shall be obligated only for the performance of such duties
as are specifically set forth herein, and as set forth in any additional written
escrow instructions which the Escrow Agent may receive after the date of the
Agreement which are signed by an officer of Purchaser and the Representative,
and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be liable
for any act done or omitted hereunder as Escrow Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith. The
Parties hereby jointly and severally agree to indemnify and hold the Escrow
Agent harmless from any and all liability, loss, cost, damage or expense,
including reasonable attorneys' fees incurred or suffered as a result of the
performance of its duties under this Agreement.
The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto (other than notices pursuant to
Sections 7.6 and 7.7) or by any other person, excepting only orders or process
of courts of law, and is hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court. In case the Escrow Agent obeys or
complies with any such order, judgment or decree of any court, the Escrow Agent
shall not be liable to any of the parties hereto or to any other person by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.
The Escrow Agent shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
The Escrow Agent shall not be liable for the expiration of any rights under
any statute of limitations with respect to this Agreement or any documents
deposited with the Escrow Agent.
The Escrow Agent may resign at any time upon giving at least thirty (30)
days written notice to Purchaser and the Representative. Thereafter, the Escrow
Agent shall be discharged from any further duties and liabilities under the
Agreement. The Escrow Agent shall have no responsibility for the genuineness or
validity of any
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document or other item deposited with it and shall be fully protected in acting
in accordance with any written instructions or certificates given to it
hereunder and believed by it to be signed by the proper parties. It may consult
with counsel and shall be fully protected in any action taken in good faith in
accordance with such advice. It shall not be required to institute legal
proceedings of any kind. Escrow Agent may take any and all such actions as
Escrow Agent deems necessary or desirable, in its exclusive discretion, to
discharge and terminate its duties under this Agreement, including (but not
limited to) delivery of the Escrow Fund into any court and the bringing of an
action or interpleader or any other proceeding which Escrow Agent deems
appropriate. In the event of litigation between or among some or all of the
parties hereto, Escrow Agent may deposit the Escrow Fund with the clerk of the
court in which any such litigation is pending.
7.9 REPRESENTATIVE
Seller hereby irrevocably constitutes and appoints Xxxxx Xxxxxxx and her
successors, acting as hereinafter provided (the "Representative"), as its
--------------
attorney-in-fact and agent to act in its name, place and stead in connection
with all matters arising from or under this Agreement with respect to the Escrow
Shares and the Holdback, and acknowledges that such appointment is coupled with
an interest. By executing this Agreement, Xxxxx Xxxxxxx hereby (i) accepts her
appointment and authorization to act as the Representative and as attorney-in-
fact and agent on behalf of the Seller in accordance with the terms hereof and
(ii) agrees to perform her obligations hereunder.
8. INDEMNIFICATION
8.1 SELLER'S AGREEMENT TO INDEMNIFY
Subject to the terms and conditions of this Article 8, Seller agrees to
indemnify, defend and hold harmless Purchaser, at any time from and after the
Closing, from and against all losses, liabilities, deficiencies, penalties,
fines, costs, damages, or other expenses ("Damages") asserted against, resulting
-------
to, imposed upon or incurred by Purchaser, directly or indirectly, by reason of
or resulting from (a) liabilities, obligations or claims of or against Seller or
any affiliate or subsidiary of Seller (whether absolute, accrued, contingent or
otherwise) existing as of the Closing Date or arising out of facts, conditions
or circumstances occurring at or prior thereto (excluding the liabilities
assumed pursuant to Section 2.3.2), whether or not such liabilities, obligations
or claims were known at the time of the Closing; (b) a breach of any
representation, warranty, covenant or agreement of Seller contained in or made
pursuant to this Agreement or any facts or circumstances constituting such a
breach; (c) any Tax or related claim asserted against Purchaser relating to the
operations or
-25-
properties of the business being acquired herein or the Transferred Assets with
respect to any period ending on or before the Closing Date; (d) any Taxes which
may be due as a result of the sale contemplated by this Agreement; (e) any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated hereby; and (f) any claims or liability for brokerage commissions
or finder's fees received by reason of any action taken by Seller.
8.2 PURCHASER'S AGREEMENT TO INDEMNIFY
Subject to the terms and conditions of this Article 8, Purchaser agrees to
indemnify, defend and hold harmless Seller, at any time after the consummation
of the Closing, from and against all Damages asserted against, resulting to,
imposed upon or incurred by Seller, directly or indirectly, by reason of or
resulting from (a) liabilities, obligations or claims relating to the
Transferred Assets (whether absolute, accrued, contingent or otherwise)
resulting from Purchaser's conduct of the business being acquired herein after
the Closing Date; (b) a breach of any representation, warranty, covenant or
agreement of Purchaser contained in or made pursuant to this Agreement or any
facts or circumstances constituting such a breach and (c) any claim or liability
for brokerage commissions or finder's fees incurred by reason of any action
taken by Purchaser.
8.3 THIRD PARTY CLAIMS
8.3.1 Promptly after the assertion by any third party of any claim against
any person or any entity entitled to be indemnified under this Article 8 (the
"Indemnitee") that, in the judgment of such Indemnitee, may result in the
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incurrence by such Indemnitee of Damages for which such Indemnitee would be
entitled to indemnification pursuant to this Agreement, such Indemnitee shall
deliver to the party from whom it is entitled to be indemnified against such
Damages (the "Indemnitor") a written notice describing in reasonable detail such
----------
claim and such Indemnitor may, at its option, assume the defense of the
Indemnitee against such claim (including the employment of such counsel as shall
be satisfactory to such Indemnitee, and the payment of expenses). Failure to
receive notice from Indemnitee shall not relieve Indemnitor of any liability
which it might otherwise have to Indemnitee under Sections 8.1 and 8.2 hereof.
Any Indemnitee shall have the right to employ separate counsel in any such
action or claim and to participate in the defense thereto, but the fees and
expenses of such counsel shall not be at the expense of the Indemnitor unless
(i) the Indemnitor shall have failed, within a reasonable time after having been
notified by the Indemnitee of the existence of such claim as provided in the
preceding sentence, to assume the defense of such claim, (ii) the employment of
such counsel has been specifically authorized by the Indemnitor, of (iii) the
named parties to any
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such action (including any impleaded parties) include both such Indemnitee and
Indemnitor and such Indemnitee shall have been advised in writing by such
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to Indemnitor. If the
Indemnitor, within a reasonable time after notice of any such third party claim,
fails to defend the Indemnitee against which such claim has been asserted, the
Indemnitee shall (upon further notice to Indemnitor) have the right to undertake
the defense, compromise or settlement of such claim on behalf of and for the
account and risk of the Indemnitor subject to the right of the Indemnitor to
assume the defense of such claim at any time prior to settlement, compromise or
final determination thereof. Except as otherwise herein provided, no Indemnitor
shall be liable to indemnify any Indemnitee for any settlement of any such
action or claim effected without the consent of the Indemnitor, but if settled
with the written consent of the Indemnitor, or if there be a final judgment for
the plaintiff or claimant in any such action, the Indemnitor shall indemnify and
hold harmless each Indemnitee from and against any loss or liability by reason
or such settlement or judgment.
8.3.2 Anything in this Section 8.3 to the contrary notwithstanding, (i) if
there is a reasonable probability that a third party claim will or does
materially and adversely affect the Indemnitee other than as a result of money
damages or other money payments, the Indemnitee shall have the right, at its own
expense, to defend, compromise or settle such claim; and (ii) the Indemnitor
shall not, without the written consent of the Indemnitee, settle or compromise
any claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnitee a release from any liability in respect to such claim.
8.4 RIGHT OF OFFSET
Any or all of the amount of any claims owing to Purchaser by Seller under
this Article 8 may be recovered by an offset by Purchaser against the Holdback
Amount specified in Section 2.4 hereof; provided, however, nothing herein is
intended to limit Seller's liability with respect to such claims.
9. GENERAL PROVISIONS
9.1 SURVIVAL
The representations, warranties, covenants, and agreements of the parties
contained in this Agreement or contained in any writing delivered pursuant to
this Agreement shall survive the Closing Date.
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9.2 NOTICES
All notices that are required or that may be given pursuant to the terms of
this Agreement shall be in writing and shall be sufficient in all respects if
given in writing and delivered personally or by registered or certified mail,
return receipt requested, postage prepaid as follows:
If to Seller: HumaTech Laboratories
0000 X. Xxxxxxx Xxx, Xxxxx 000X
Xxxx Xxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx, President
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx
Xxxxxx & Xxxxxx, P.A.
0000 X Xxxxxxx Xxx. #000
Xxxx Xxxxx, XX 00000
Facsimile: (000)000-0000
If to Purchaser: ProCyte Corporation
Attn: Xxxx X. Xxxxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxx X. Xxxxxx
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to a Shareholder To the address for such Shareholder
set forth on Schedule 2.4.3 hereof.
9.3 NO ASSIGNMENT
This Agreement shall be binding on and inure to the benefit of the parties
to this Agreement and their respective successors and permitted assigns.
Neither Seller nor Purchaser may assign any of its rights or obligations
hereunder without the prior written consent of the other party. Notwithstanding
the foregoing, Purchaser may assign its rights and obligations under this
Agreement to any affiliate of Purchaser, and furthermore Purchaser may assign
its rights and obligations hereunder to any
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successor of Purchaser in the conduct of the Business after the Closing;
provided, however, that any such assignment by Purchaser shall not relieve
Purchaser from its obligations hereunder.
9.4 GOVERNING LAW; VENUE
THIS AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS UNDER THE LAWS OF THE
STATE OF WASHINGTON WITHOUT REGARD TO THE DICTATES OF CONFLICTS OF LAWS THEREOF
AND THE PARTIES AGREE TO SUBMIT TO EXCLUSIVE JURISDICTION AND VENUE IN THE
UNITED STATES FEDERAL DISTRICT COURTS FOR THE STATE OF WASHINGTON AND IN THE
STATE COURTS OF THE STATE OF WASHINGTON.
9.5 AMENDMENTS; WAIVER
This Agreement may be amended only in writing by the mutual consent of all
of the parties, evidenced by all necessary and proper corporate authority. No
waiver of any provision of this Agreement shall arise from any action or
inaction of any party, except an instrument in writing expressly waiving the
provision executed by the party entitled to the benefit of the provision.
9.6 ENTIRE AGREEMENT
This Agreement, together with any documents and exhibits given or delivered
pursuant to this Agreement, constitutes the entire agreement between the parties
to this Agreement. No party shall be bound by any communications between them
on the subject matter of this Agreement unless the communication is (a) in
writing, (b) bears a date contemporaneous with or subsequent to the date of this
Agreement, and (c) is agreed to by all parties to this Agreement. Except as
specifically referenced herein, on execution of this Agreement, all prior
agreements or understandings between the parties shall be null and void.
9.7 RELIANCE UPON REPRESENTATIONS AND WARRANTIES
The parties mutually agree that,
(a) notwithstanding any right of Purchaser to fully investigate the affairs
of Seller and notwithstanding any knowledge of facts determined or determinable
by Purchaser pursuant to the investigation or right to investigate, Purchaser
may fully rely upon the representations, warranties, and covenants made to
Purchaser in this Agreement and on the accuracy of any document, certificate, or
exhibit given or
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delivered to Purchaser pursuant to this Agreement. Knowledge by an agent of
Purchaser of any facts not otherwise disclosed in this Agreement or in a
document, certificate, or exhibit delivered to Purchaser pursuant to this
Agreement shall not constitute a defense by Seller for indemnification of
Purchaser under Article 8 or for any claim for misrepresentation or breach of
any warranty, agreement, or covenant under this Agreement or any exhibit,
certificate, or document delivered under this Agreement.
(b) notwithstanding any right of Seller to fully investigate the affairs of
Purchaser and notwithstanding any knowledge of facts determined or determinable
by Seller pursuant to the investigation or right to investigate, Seller may
fully rely upon the representations, warranties, and covenants made to Seller in
this Agreement and on the accuracy of any document, certificate, or exhibit
given or delivered to Seller pursuant to this Agreement. Knowledge by an agent
of Seller of any facts not otherwise disclosed in this Agreement or in a
document, certificate, or exhibit delivered to Seller pursuant to this Agreement
shall not constitute a defense by Purchaser for indemnification of Seller under
Article 8 or for any claim for misrepresentation or breach of any warranty,
agreement, or covenant under this Agreement or any exhibit, certificate, or
document delivered under this Agreement.
9.8 REFORMATION AND SEVERABILITY
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof;
(a) in lieu of illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforce able; and
(b) the legality, validity and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
9.9 FURTHER ASSURANCES
Each party shall, from time to time after the Closing, at the request of
any other party and without further consideration, execute and deliver such
other instruments of conveyance, assignments, transfer and assumption, and take
such other actions, as such other party may reasonably request to consummate
more effectively the transactions contemplated by this Agreement.
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9.10 EXPENSES
Except as otherwise provided herein, each of the parties shall pay all
fees and expenses incurred by it or any of its affiliates or subsidiaries in
connection with this Agreement.
9.11. ARBITRATION
Except to the extent that any party shall be entitled to seek equitable
relief, including specific performance under this Agreement, any controversies
or claims arising out of or relating to this Agreement shall be fully and
finally settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect (the "AAA Rules"),
---------
conducted by one arbitrator either mutually agreed upon by the Company and
Seller or chosen in accordance with the AAA Rules, except that the parties
thereto shall have any right to discovery as would be permitted by the Federal
Rules of Civil Procedure for a period of 90 days following the commencement of
such arbitration and the arbitrator thereof shall resolve any dispute which
arises in connection with such discovery. The prevailing party shall be entitled
to costs, expenses and reasonable attorneys' fees, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. If, for whatever reason, this clause cannot be enforced as drafted, the
obligation to arbitrate shall remain specifically enforceable in accordance with
RCW Chapter 7.04, and the King County Superior Court shall have jurisdiction to
appoint a single arbitrator to arbitrate any disputes or claims between the
parties. Any and all awards entered by an arbitrator may be entered as a
judgment on an ex parte basis in the King County Superior Court, or any other
court having jurisdiction over the party against whom the award is entered, and
enforced according to the terms of the award. THE VENUE OF ALL HEARINGS SHALL BE
IN KING COUNTY, WASHINGTON.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN.
HUMATECH CORP
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, President
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PROCYTE CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President & Chief Executive Officer
Accepting Appointment as the Representative
Pursuant to Section 7.9 hereof:
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Solely for the purposes of Article 7 hereof:
Xxxxxx & Xxxxxx, P.A.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx
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