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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made and entered into
as of this 15th day of December, 2000, by and among:
United Therapeutics Corporation (a Delaware corporation)
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxxxxx 00000 ("UTC"),
UP Subsidiary Corporation (a Delaware corporation)
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxxxxx 00000 ("UP SUB"), a subsidiary of UTC,
Xxxxx Pharma, Inc. (a California corporation)
0000 Xxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000 ("XXXXX"),
Unless the context provides otherwise, capitalized terms used herein are defined
in Section 10.1.
RECITALS
A. The Boards of Directors of Xxxxx, UTC and UP Sub have determined
that the acquisition of the Xxxxx Assets and assumption of the Xxxxx Liabilities
by UP Sub pursuant to the terms and conditions of this Agreement (the
"ACQUISITION") are to the long term benefit of the shareholders of each entity
and will provide strategic benefits to Xxxxx, UTC and UP Sub and, accordingly,
the respective Boards of Directors have approved the Acquisition, subject to
approval of the Xxxxx Stockholders;
X. Xxxxx desires to sell the Xxxxx Assets and assign the Xxxxx
Liabilities to UP Sub as provided in this Agreement;
C. UP Sub desires to purchase the Xxxxx Assets and assume the Xxxxx
Liabilities as provided in this Agreement; and
X. Xxxxx, UP Sub and UTC desire to make certain representations,
warranties and agreements in connection with and establish various conditions
precedent to the Acquisition.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
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ARTICLE I. PURCHASE AND SALE OF THE XXXXX ASSETS AND ASSUMPTION AND TRANSFER OF
THE XXXXX LIABILITIES
1.1 Xxxxx Assets and Xxxxx Liabilities.
(a) Subject to the terms of this Agreement, at the Closing (defined
in Section 1.2 below), Xxxxx shall sell, convey and deliver to UP Sub and UP Sub
shall purchase all right, title and interest in and to the Xxxxx Assets, free
and clear of any Liens, and Xxxxx shall transfer and assign to UP Sub and UP Sub
shall assume the Xxxxx Liabilities. The parties intend that the Acquisition
shall be treated as a fully taxable asset acquisition transaction for tax
purposes.
(b) The consideration for the transfer and sale to UP Sub of the
Xxxxx Assets shall be the assumption by UP Sub of the Xxxxx Liabilities, the
Shares issued pursuant to Section 1.3, the payment made pursuant to Section 1.3,
and the royalties contemplated by Article 2.
(c) If the assignment or transfer of any obligation or instrument
would cause a breach thereof and if no required consent to such assignment or
transfer has been obtained, then, at UP Sub's election and in its sole
discretion, such obligation or instrument shall not be assigned or transferred,
but UP Sub shall act as agent for Xxxxx in order to obtain for UP Sub the
benefits under such obligation or instrument.
(d) EXCEPT AS EXPRESSLY AND UNAMBIGUOUSLY PROVIDED IN THIS SECTION
1.1, NEITHER UTC, UP SUB NOR ANY OF THEIR AFFILIATES ASSUMES OR AGREES TO BECOME
LIABLE FOR OR SUCCESSOR TO ANY LIABILITIES OR OBLIGATIONS WHATSOEVER, LIQUIDATED
OR OTHERWISE, WHETHER OF XXXXX OR ANY OTHER PERSON OR OF THE BUSINESS. NO OTHER
STATEMENT IN OR PROVISION OF THIS AGREEMENT AND NO OTHER STATEMENT, WRITTEN OR
ORAL, ACTION OR FAILURE TO ACT INCLUDES OR CONSTITUTES ANY SUCH ASSUMPTION OR
AGREEMENT, AND ANY STATEMENT TO THE CONTRARY BY ANY PERSON IS UNAUTHORIZED AND
HEREBY DISCLAIMED.
1.2 Closing. The purchase and sale contemplated by this Agreement shall be
consummated at a Closing to be held at the Silver Spring, Maryland offices of
UTC starting at 2:00 p.m. local time on December 11, 2000, or at such other time
or place as may be agreed upon by the parties upon satisfaction (or where
appropriate waiver) of the conditions to Closing set forth in Article 6 below,
but not later than December 31, 2000. The consummation of such purchase and sale
is referred to in this Agreement as the "CLOSING" and the date of such Closing
is the "CLOSING DATE."
1.3 Consideration. UTC agrees, on behalf of UP Sub, to issue to Xxxxx
294,635 shares of UTC Common Stock (the "SHARES") and to pay to Xxxxx the amount
of $100 (One Hundred Dollars) as set forth below. Such shares shall be
registered by UTC for resale by Xxxxx in accordance with the terms of the
Registration Rights Agreement attached as Exhibit E hereto and shall be subject
to the Transfer Restrictions provided in Section 7.3 below. (a) A certificate
for 147,317 shares (representing 50% of the Shares) will be delivered to Xxxxx
at Closing;
(b) A certificate for 147,318 shares (representing 50% of the
Shares) will be delivered to the Escrow Agent, such shares to be allocated by
the Escrow Agent as follows:
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(i) 73,659 shares (representing 25% of the Shares) to be
held in escrow pursuant to the "hold back" terms of the Escrow Agreement; and
(ii) 73,659 shares (representing 25% of the Shares) will be
held in escrow pursuant to the "give back" terms of the Escrow Agreement; and
(c) A check for $100 shall be delivered to Xxxxx at Closing.
1.4 Issuance of Shares; Escrow; Restrictive Legend.
(a) UTC shall direct its Transfer Agent to issue certificates
evidencing the Shares in accordance with this Agreement.
(b) On the Closing Date, the parties shall deliver into Escrow
pursuant to the Escrow Agreement, share certificates representing the Shares as
set forth in Sections 1.3(b) and 1.3(c) above.
(c) Xxxxx acknowledges that the Shares have not been registered
under the Securities Act or the securities laws of any state and therefore shall
bear a restrictive legend substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE
BEEN ISSUED IN RELIANCE ON AN EXEMPTION FROM REGISTRATION AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
1.5 Post-Closing Adjustment to Shares. The amount of the Shares shall be
adjusted on the first anniversary of Closing (the "ANNIVERSARY DATE") as
follows:
(a) in the event that the per share average closing price of UTC
Common Stock as reported by the Nasdaq National Market over the 90 calendar days
prior to the Anniversary Date (the "AVERAGE ANNIVERSARY CLOSING PRICE") is less
than $90.00 per share (as adjusted for any intervening dividends or stock
splits) then, in such event, within twenty days of the Anniversary Date, UTC
will issue to Xxxxx that number of additional shares of UTC Common Stock valued
at the Average Anniversary Closing Price in order to achieve the equivalence of
Shares valued at $90.00 per share as of Closing; provided, however, that if the
average closing price of UTC Common Stock over the 90 calendar days prior to the
Anniversary Date is less than $51.65, then the additional UTC Common Stock to be
issued under this Section 1.5(a) shall not exceed a value equivalent to the
difference between $90.00 per share and $51.65. In the event that UTC issues
additional shares under this Section 1.5(a), such shares shall be deemed
"Shares" for all purposes of
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this Agreement and shall be registered by UTC for resale by Xxxxx in accordance
with the terms of the Registration Rights Agreement attached as Exhibit E
hereto; and
(b) in the event that the Average Anniversary Closing Price is more
than $99.00 per share (as adjusted for any intervening dividends or stock
splits) then, in such event, the number of shares of UTC Common Stock issued as
of Closing shall be adjusted as if it had a value of $99.00 at Closing (for a
total value of the Shares not to exceed $29,168,885) and within twenty days of
the Anniversary Date the Escrow Agent shall be instructed by the parties to
return to UTC that number of shares of UTC Common Stock as contemplated by and
in accordance with the "give back" terms of the Escrow Agreement. In the event
that the number of shares calculated as to be released from Escrow and returned
to UTC pursuant to the "give back" terms of the Escrow Agreement exceeds the
shares then held in Escrow, UTC may recover the cash equivalent of the excess
shares based on the Average Anniversary Closing Price from the royalty payments
to Xxxxx under Section 2 below.
ARTICLE 2. ROYALTY PAYMENTS TO XXXXX
2.1 Royalties.
(a) Rates.
(i) UP Sub shall pay to Xxxxx the following royalties with
respect to Net Sales made after Closing and in each calendar year and for so
long as a Valid Patent Claim is in existence and until the cumulative
consideration received by Xxxxx (i.e., $26,517,150 plus all cumulative royalty
payments to which Xxxxx would be entitled under this Article 2) has reached an
aggregate total value of $75,000,000:
Annual Net Sales Royalty
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$0 to $50,000,000 5.0%
$50,000,001 to $150,000,000 5.5%
$150,000,001 and above 6.0%
(ii) Once a Valid Patent Claim is no longer in existence, UP
Sub shall thereafter pay to Xxxxx a flat 1% royalty with respect to Net Sales
only until the cumulative consideration received by Xxxxx (i.e., $26,517,150
plus all cumulative royalty payments to which Xxxxx would be entitled under this
Article 2) has reached an aggregate total value of $75,000,000.
(b) Accrual of Royalties. No royalties shall be payable on a Product
distributed to Third Parties solely for marketing and advertising purposes,
which must be reasonable in amount, or as a sample for testing or evaluation
purposes. No royalties shall be payable on sales among UP Sub and its
Affiliates, but royalties shall be payable on subsequent sales by UP Sub and its
Affiliates to a Third Party.
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(c) Third Party Royalties. If UP Sub or its Affiliates determine, at
UP Sub or its Affiliates' discretion and after consulting with Xxxxx, that they
are required to pay royalties to any Third Party because the manufacture, use or
sale of Products infringe any patent or other intellectual property rights of
such Third Party in any country, UP Sub or its Affiliates may deduct from
royalties thereafter due with respect to Net Sales of such Product in such
country the royalties or such other fees paid to such Third Party.
(d) Compulsory Licenses. Should a compulsory license be granted to a
Third Party under the applicable laws of any country under the Patent Rights
hereunder, the royalty rate payable hereunder for the sale of Products in such
country shall be reduced by an amount equivalent to the lower royalty rate
granted to such Third Party for such country.
(e) Commercial Hardship. If in any country UP Sub can demonstrate
that for any reason beyond it or its Affiliates' control the royalty payable
hereunder by UP Sub causes or may cause UP Sub or its Affiliates a significant
reduction in its or their sales of Product in that country, or otherwise causes
or may cause hardship in the promotion or sale of Product in a country, the
parties shall meet and in good faith endeavor to agree on a reduction in the
royalty rate payable in that country. The negotiated royalty rate will be one
which will place UP Sub or its Affiliates in a position to market competitively
the Product in such country.
(f) Reduction in Royalty Due to Invalid Claim. In the event that all
applicable claims of a patent included in the Patent Rights under which UP Sub
is selling or actively developing a Product shall be held invalid or infringed
by a court of competent jurisdiction in a given country, whether or not there is
a conflicting decision by another court of competent jurisdiction in such
country, UP Sub may cease payment of royalties which would have otherwise been
due hereunder on Net Sales of Product covered by such claims in such country
until such judgment shall be finally reversed by an unappealed or unappealable
decree of a court of competent jurisdiction of higher dignity in such country;
provided, however, that if and to the extent such judgment is finally reversed
by an unappealed or unappealable decree of a court of competent jurisdiction,
the former royalty payments shall be resumed and the royalty payments not
therefore made shall become due and payable.
(g) Set-Offs. All royalty payments to Xxxxx under this Article 2 are
subject to set-off by UP Sub in accordance with (i) Section 8, and (ii) Section
1.5(b).
2.2 Royalty Reports; Accounting
(a) Reports, Exchange Rates. UP Sub shall furnish to Xxxxx a
quarterly written report showing in reasonably specific detail, on a country by
country basis: (i) the gross sales of each Product sold by UP Sub and its
Affiliates during the reporting period and the calculation of Net Sales from
such gross sales; (ii) the royalties payable in Dollars, if any, which shall
have accrued hereunder based upon Net Sales of each Product; (iii) the
withholding taxes, if any, required by law to be deducted in respect of such
sales; (iv) the exchange rates used in determining the amount due; and (v) the
amount and explanation for any reduction in royalties in accordance with
Sections 2.1
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(c), (d), (e), (f) and (g) above. With respect to sales of Products invoiced in
Dollars, the gross sales, Net Sales, and royalties payable shall be expressed in
Dollars. With respect to sales of Products invoiced in a currency other than
Dollars, the gross sales, Net Sales and royalties payable shall be expressed in
the domestic currency of the Person making the sale together with the Dollar
equivalent of the royalty payable. The Dollar equivalent shall be calculated
using the average exchange rate (local currency per US $1) published in The Wall
Street Journal, Western Edition, under the heading "Currency Trading," on the
last business day of each month during the applicable calendar quarter. Reports
shall be due on the sixtieth (60th) day following the close of each quarter. UP
Sub and its Affiliates shall keep complete and accurate records in sufficient
detail to properly reflect all gross sales and Net Sales and to enable the
royalties payable hereunder to be determined.
(b) Audits. Upon the written request of Xxxxx, and not more than
once in each calendar year, UP Sub shall permit an independent certified public
accounting firm of nationally recognized standing, selected by Xxxxx and
reasonably acceptable to UP Sub, at Xxxxx'x expense, to have access during
normal business hours to such of the records of UP Sub as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder for any year
ending not more than twenty-four (24) months prior to the date of such request.
The accounting firm shall disclose to Xxxxx only whether the royalty reports are
fairly stated or not and the specific details concerning any discrepancies. No
other information shall be shared. Xxxxx shall treat all financial information
subject to review under this Section 2.2 or under any sublicense agreement as
confidential and shall cause its accounting firm to retain all such financial
information in confidence.
2.3 Royalty Payments.
(a) Payment Terms. Royalties shown to have accrued by each royalty
report provided for under Section 2.2 above shall be due and payable on the date
such royalty report is due. Payment of royalties in whole or in part may be made
in advance of such due date.
(b) Payment Method. All royalty payments by UP Sub under this
Article 2 shall be paid in Dollars, and all such payments shall be originated
from a United States bank located in the United States and made by bank check to
such address as Xxxxx shall designate. Upon the election of UP Sub made in
writing not less than thirty (30) days prior to any payment date, UP Sub shall
pay all royalties owing to Xxxxx hereunder in the currency in which such
royalties accrued, without conversion into Dollars.
(c) Exchange Control. If at any time legal restrictions prevent the
prompt remittance of part or all royalties with respect to any country where the
Product is sold, payment shall be made through such lawful means or methods as
UP Sub reasonably shall determine.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx represents and warrants to UP Sub and UTC, as of the date of this
Agreement, as follows:
3.1 Subsidiaries.
(a) Xxxxx has no subsidiaries and there are no other entities owned
or controlled by Xxxxx).
(b) Xxxxx neither owns, directly or indirectly, nor has the right to
acquire, any share of capital stock, partnership interest, joint venture
interest or other security or equity interest in any corporation, limited
liability company, partnership, joint venture, or other entity.
3.2 Organization, Good Standing and Qualification.
Xxxxx is a corporation duly organized and validly existing under the
laws of the State of California. Xxxxx has all necessary power and authority to
own its Property and to carry on the Business as now owned and operated by it.
Xxxxx is duly qualified to do business or is otherwise approved or validly
registered and is in good standing in every jurisdiction where the character of
the Properties owned or leased by it or the nature of the Business conducted by
it makes such qualification, approval or registration necessary, except where
failure to be so qualified, approved or registered would not be Materially
Adverse to Xxxxx. Schedule 3.2 sets forth all of the jurisdictions in which
Xxxxx is qualified to do business or otherwise is approved or registered or has
branch offices or representative offices. The registers, account books, minute
books, and corporate documents of Xxxxx that have been delivered to UP Sub
present fairly and accurately Xxxxx'x activities. The only business engaged in
by Xxxxx is the Business.
3.3 Capitalization.
The authorized capital stock of Xxxxx consists of 375,000,000 shares of
Xxxxx common stock, of which 4,084,377 shares are issued and outstanding as of
the date hereof as set forth on Schedule 3.3, and 13,664,999 shares of Xxxxx
preferred stock, of which 11,213,084 shares are issued and outstanding as of the
date hereof as set forth with particularity (by Series) on Schedule 3.3. As of
the date hereof, there are 361,852,966 shares of Xxxxx common stock and 519,363
shares of Xxxxx preferred stock reserved for issuance pursuant to outstanding
warrants and options as set forth Schedule 3.3. All shares of capital stock of
Xxxxx currently issued and outstanding and all other securities of Xxxxx
currently issued and outstanding (all as set forth on Schedule 3.3) have been
duly authorized and validly issued and are fully paid and nonassessable.
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3.4 No Conflict.
The execution and delivery of this Agreement and the other Transaction
Agreements do not, and the performance of and compliance with this Agreement and
such other Transaction Agreements will not:
(a) give rise to, accelerate the maturity of or otherwise modify any
obligation of Xxxxx or result in a material breach of or constitute (with or
without the giving of notice or the passage of time or both) a material default
under any material obligation of Xxxxx or result in the creation of a Lien on
the Xxxxx Assets pursuant to (i) the terms of any applicable statute, law,
ordinance, rule or regulation, or (ii) the terms, conditions or provisions of
the constituent documents of Xxxxx, or any Contract, permit, concession, grant,
franchise, license, judgment, order, decree or other instrument or arrangement
to which Xxxxx is a party or by which Xxxxx or any of the Property of Xxxxx is
bound; or
(b) give rise to (i) any loss of subsidies, bonuses, exemptions,
rebates, discounted loans or other advantages, (ii) any early termination or
significant modification of any Contract to which Xxxxx is a party, (iii) any
obligation to pay a bonus, or indemnity or other payment to any director,
employee or contractor of Xxxxx, (iv) any calls for early repayment of any loans
or financing granted to Xxxxx, (v) any modification, suspension or withdrawal of
any permits or authorization granted to Xxxxx, or of any favorable fiscal or
corporate regime in place as a result of an agreement or otherwise, (vi) payment
of any taxes, fees or duties, (vii) any entitlement for any Person to be
released from its obligations under the terms of any guarantee, comfort letter
or other similar document issued as a security or in support of any undertakings
on the part of Xxxxx, and (viii) any registration or constitution of a pledge or
other security on the assets of Xxxxx.
3.5 Approvals and Consents.
No consent, permit or approval of, filing with or notice to any
Governmental Agency or any other Person (whether or not governmental in
character) has been or is required to be obtained, made or given by Xxxxx in
connection with the execution and delivery of this Agreement or the other
Transaction Agreements or the performance of and compliance by Xxxxx with this
Agreement and such other Transaction Agreements, other than those which have
been obtained and other than approval of the Xxxxx Stockholders as contemplated
by Section 6.1(a).
3.6 Authorization; Validity.
Subject to approval of the Xxxxx Stockholders, Xxxxx has full power,
legal capacity and authority to enter into, perform and comply with this
Agreement and each of the other Transaction Agreements to which it is or will be
a party. This Agreement and each of the other Transaction Agreements have been,
or will at Closing be, duly executed by Xxxxx and constitute, or will constitute
at Closing, the valid and binding obligations of Xxxxx, enforceable against
Xxxxx in accordance with their terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and by general equitable
principles (regardless of whether enforceability is considered in a
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proceeding in equity or at law).
3.7 Financial Statements.
Schedule 3.7(i) includes the balance sheets and related statements of
income (including notes, accounting estimates and principles) of Xxxxx set forth
in U.S. dollars and prepared in accordance with generally accepted accounting
principles consistently applied as of and for the years ending December 31,
1997, 1998, and 1999, which balance sheets and related statements of income for
1997, 1998 and 1999 are audited. Schedule 3.7(ii) to this Agreement sets forth
the unaudited balance sheet of Xxxxx (the "STUB BALANCE SHEET"), as of
December11, 2000 (the "STUB PERIOD DATE"). The financial statements in Schedules
3.7(i) and 3.7(ii) are referred to collectively as the "FINANCIAL STATEMENTS."
The Financial Statements except for the Stub Balance Sheet (a) have been
prepared in accordance with generally accepted accounting principles
consistently applied, (b) subject to any limiting conditions or statements set
forth therein, fairly present the financial position of Xxxxx as of the
respective dates indicated and the results of Xxxxx'x operations for the
respective periods indicated, and (c) were prepared from existing books,
records, descriptions and representations of Xxxxx, which books, records,
descriptions and representations of Xxxxx, when taken in conjunction with the
audit statement and work papers, are substantially complete and correct in all
material respects and do not contain or reflect any material inaccuracies or
discrepancies.
3.8 Absence of Specified Changes.
Except as set forth in Schedule 3.8, as specifically disclosed in the
Financial Statements and as otherwise expressly contemplated by this Agreement,
since December 31, 1999, there has not been any:
(a) Materially Adverse change in the financial condition,
liabilities, assets, Business or prospects of Xxxxx;
(b) Labor trouble or other event or condition in respect of the
officers or employees of Xxxxx that is Materially Adverse to Xxxxx;
(c) Entering into or assumption of any material Contract or
obligation by Xxxxx, other than in the Ordinary Course of Business or as
contemplated hereby;
(d) Change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rates) by
Xxxxx;
(e) Revaluation by Xxxxx of any of its assets for book or tax
purposes, other than for adjustments made as part of or arising out of the
preparation of the Financial Statements;
(f) Except as disclosed on Schedule 3.20(a)(i), increase in the
salary or other compensation payable or to become payable by Xxxxx to any of its
officers, directors, employees, consultants, or contractors, or the declaration,
payment or commitment or obligation of any kind for
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the payment of a bonus or other additional salary or compensation to any such
individual, except as dictated by applicable law;
(g) Sale, lease or other disposition or transfer of any Property of
Xxxxx other than in the Ordinary Course of Business;
(h) Amendment or termination of any Contract or license to which
either Xxxxx is a party or by which Xxxxx or any of the Property of Xxxxx is or
may be bound, the effect of which is Materially Adverse to Xxxxx;
(i) Guarantee by Xxxxx of any obligation of any Person;
(j) Material increase in the level of Xxxxx Indebtedness or any new
borrowings or loans by Xxxxx;
(k) Waiver or release of any right or claim of Xxxxx, the effect of
which is Materially Adverse to Xxxxx;
(l) Dividends, distributions or other payments by Xxxxx to any Xxxxx
Stockholder in any form, or any loans, advances or capital contributions to, or
investments in, any other Person;
(m) Imposition of any Lien (other than a Permitted Lien) on any
Property of Xxxxx;
(n) Failure to pay the trade payables and other obligations of Xxxxx
in excess of $5,000 individually within 60 days of the date of receipt of
invoices therefor or pursuant to their agreed payment terms, which are currently
unpaid, or any material change in the practices or procedures of Xxxxx with
respect to the payment of trade payables or other obligations of Xxxxx or the
collection of accounts receivable and revenues (whether by way of acceleration
of collections or otherwise);
(o) Payment, discharge or satisfaction of any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), in accounts which in the aggregate exceed the sum of $25,000, other
than the payment, discharge or satisfaction in the Ordinary Course of Business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Financial Statements
(or the notes thereto);
(p) Exclusive license or other license or arrangement granted to any
Person with respect to the Xxxxx Proprietary Rights; or
(q) Loss or threatened loss of employees, consultants, vendors,
suppliers, or customers that is or would be Materially Adverse to Xxxxx.
3.9 Liabilities.
Except for the Xxxxx Liabilities, Xxxxx does not have any liabilities,
debts or obligations (and is subject to no claims), known or unknown, fixed or
contingent, liquidated or unliquidated,
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secured or unsecured, direct or indirect, or of any other kind, other than (a)
liabilities specifically disclosed and identified as to nature and amount on the
Stub Balance Sheet or in the Schedules attached hereto (but only to the extent
of such amounts specifically disclosed in such Schedules or to the extent the
Contracts giving rise to any such liabilities have been specifically identified
in such Schedules), and (b) liabilities, debts, obligations or responsibilities
arising since the Stub Period Date which have been incurred by Xxxxx in the
Ordinary Course of Business.
3.10 Tax Returns and Payments.
(a) All Tax declarations, returns and other filings required to be
filed or made by Xxxxx have been timely filed and are true, correct and
complete, and all Taxes, assessments, fees, interest, penalties and other
governmental charges shown to be due and payable on such declarations, returns
or filings have been paid or will be paid on a timely basis. Xxxxx has delivered
to UP Sub complete copies of all such Tax declarations, returns and other
filings made within the past three years prior to the execution of this
Agreement. Xxxxx has not received any written notice of a proposed deficiency or
additional assessment for any Taxes, assessments, fees, interest, penalties or
governmental charges against Xxxxx, and no claim for assessment or collection of
Taxes has been made for which adequate provision has not been made or which has
not been resolved as of the date hereof. Except as set forth at Schedule
3.10(a), there is no completed, pending, or to the Knowledge of Xxxxx,
threatened Tax audit or investigation with respect to Xxxxx, and Xxxxx neither
is the subject of any inspection or inquiry, nor received any request or notice
from any Governmental Authority with respect to, the Tax declarations, returns
or filings of Xxxxx or Taxes that may be due by Xxxxx. All Taxes resulting from
or relating to the operations of Xxxxx which were or will be required to have
been paid, withheld or collected and remitted to the proper taxing authority by
Xxxxx at any time prior to the Closing Date, have been, or will prior to the
Closing Date be, paid, withheld or collected and remitted in full.
(b) Other than net operating loss carry-forwards, Xxxxx has not
benefited from any fiscal advantage or favorable tax regime by reason of its
status or activities. Xxxxx has not benefited from any fiscal advantage or
favorable tax regime in exchange for existing undertakings or obligations by
which it is still bound. Xxxxx is not bound by any obligation nor shall it incur
any additional tax burden as a result of its enjoyment of any fiscal advantages
or postponement of taxation, or of any favorable tax regime, other than with
respect to accelerated depreciation.
(c) Except for Permitted Liens, there are no Liens or grounds for
assertion or assessment of any Liens for Taxes upon the Xxxxx Assets. Except as
set forth on Schedule 3.10(c), Xxxxx is not nor has it been a party to any Tax
or loss sharing or Tax allocation agreement. No item of income or gain reported
by Xxxxx for financial accounting purposes in any pre-Closing Date period since
December 31, 1999 is required to be included in Taxable income in any
post-Closing period, except for contracts in progress. Xxxxx is not required to
include in income any adjustment in its current or in any future Taxable period,
by reason of a change in accounting method; nor to the Knowledge of Xxxxx has a
Tax authority proposed, or is a Tax authority considering, any such change in
accounting method except as may be otherwise disclosed on Schedule 3.10(a).
There are no outstanding rulings or any requests for rulings from any Tax
authority with respect to Xxxxx.
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(d) None of the assets of Xxxxx is property that is required to be
treated by Tax authorities as owned by any other Person and none of the Xxxxx
Assets is Tax exempt use property.
3.11 Real Property Leases.
Schedule 3.11 contains a list of the Real Property Leases which list
identifies the date of each such Real Property Lease and the address of the real
property which is the subject thereof. True and complete copies of each of the
leases identified on Schedule 3.l1 and any and all amendments thereto have been
made available to UP Sub. As of the Closing Date, Xxxxx will have secured the
written agreements of all lessors to assign the Real Property Leases to UP Sub.
Upon the Closing, UP Sub will have all right, title and interest of the lessee
under the terms of the Real Property Leases, free and clear of all Liens. There
has been no default or basis for termination of, nor has any event occurred
which could constitute a default or basis for termination of, any Real Property
Lease. Xxxxx does not own any real property.
3.12 Condition of Property.
All buildings, improvements and Equipment owned or otherwise used by
Xxxxx and material to the operation of the Business are in good operating
condition and repair, with no material defects. To the Knowledge of Xxxxx, all
buildings, improvements and Equipment leased by Xxxxx and material to the
operation of the Business are in good operating condition and repair, with no
material defects. The buildings, improvements and Equipment owned, leased or
otherwise used by Xxxxx are suitable for the operation of the Business as
currently conducted. None of the real property used by Xxxxx is the subject, and
to the Knowledge of Xxxxx is not likely to become the subject, of any actions
for hidden defects, failure to conform with laws, regulations, rules, codes or
other applicable legal requirements, or actions invoking the builders'
liability, subject to periodic building code, fire and life safety inspections
in the normal course of business which could result in building, tenant space,
tenant equipment or other modifications or compliance adjustments from time to
time. The activities carried out on the real property covered by Real Property
Leases are duly authorized thereby and are not in material violation of any
applicable law, regulation, ordinance, zoning code, or similar enactments.
3.13 Equipment/Title to Properties/Transfer of Xxxxx Assets.
(a) Schedule 3.13(a) sets forth a complete and accurate list of each
item of Equipment owned by Xxxxx as of the date hereof and the address at which
each item of Equipment is located. Schedule 3.13(a) sets forth a complete and
accurate list of each lease pursuant to which Xxxxx leases any item of Equipment
and under which the monthly rental payment exceeds $500 individually. True and
complete copies of each of the leases identified on Schedule 3.13(a) and any and
all amendments thereto have been made available to UP Sub. Xxxxx is not in
default under any of the leases set forth on Schedule 3.13(a). As of the Closing
Date, Xxxxx will have secured the written agreements of all lessors of Equipment
under which the monthly rental payment exceeds $500 individually to assign such
leases to UP Sub.
(b) Xxxxx has good and marketable title or valid leasehold to all
its Properties, in each
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case free and clear of any Lien except: (i) those listed in Schedule 3.13(b);
(ii) Permitted Liens; (iii) Liens imposed by law or incurred in the Ordinary
Course of Business for obligations not yet due to materialmen, warehousemen and
the like; and (iv) Liens on the lessor's interest in any real property or
Equipment leased by Xxxxx.
(c) The Xxxxx Assets and Xxxxx Liabilities constitute all of Xxxxx'x
property and property rights now used, useful or necessary for the conduct of
the Business. Except as set forth on Schedule 3.13(c), no consent is necessary
to, and there exists no restriction on, the transfer of any of the Xxxxx Assets
or the assignment of the Xxxxx Liabilities to UP Sub. There exists no
restriction or condition affecting the title to or utility of the Xxxxx Assets
or Xxxxx Liabilities which would prevent UP Sub from occupying or utilizing the
Xxxxx Assets or enforcing the rights under the Xxxxx Liabilities to the same
extent as Xxxxx might continue to do if the Acquisition were not to take place.
Upon the Closing, good and marketable title to the Xxxxx Assets and the rights
under the Xxxxx Liabilities shall be vested in UP Sub free and clear of all
Liens.
3.14 Compliance with Law.
(a) No Violations. Xxxxx is not in material violation of nor has
Xxxxx materially violated any applicable United States or other country's
central, provincial, regional, federal, state, local, municipal or other
governmental or quasi-governmental statute, law, order, judgment, decree,
requirement or regulation ("LAW") applicable to the Business, operations or
Property of Xxxxx. Xxxxx has not received (i) any notice, claim or assertion,
formal or informal, oral or written (oral notices shall so qualify only if given
to a Designated Individual), of any such violation by Xxxxx from any Person, or
(ii) any request from any Governmental Agency that Xxxxx modify or terminate any
of its operations or modify or dispose of any of its Property in each case in
any manner.
(b) Permits. Set forth on Schedule 3.14(b) hereto is a description
of each permit, license or approval required for the conduct of the Business.
Such permits, licenses and approvals are in full force and effect. Except as
noted on Schedule 3.14(b), such permits, licenses and approvals are freely
transferable by Xxxxx and, upon Closing, UP Sub will have all right, title and
interest of the holder thereof.
3.15 Environmental Matters.
(a) Hazardous Materials. Neither Xxxxx nor, to the Knowledge of
Xxxxx, any previous owner, tenant, occupant or user of the real property subject
to the Real Property Leases, has used, handled, generated, produced,
manufactured, installed, treated, stored, transported or been involved in the
Release of any Hazardous Materials in material violation of any applicable
Environmental Requirements or in any manner which could result in liability
Materially Adverse to Xxxxx or the imposition of obligations, fines or penalties
Materially Adverse to Xxxxx.
(b) Compliance. Neither Xxxxx nor, to the Knowledge of Xxxxx, any
previous owner, tenant, occupant or user of the real property or any current
operator of or tenant on the real property subject to the Real Property Leases,
has received any oral or written notice or other communication
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(oral notices shall so qualify only if given to a Designated Individual)
concerning (i) any alleged violation of or under any applicable Environmental
Requirement or the suspected presence of any Hazardous Material in violation of
any applicable Environmental Requirement on, under, or in the vicinity of such
real property, or (ii) alleged liability for any environmental related damages
or claims in connection with such real property or otherwise, including without
limitation any potential liability as a potentially responsible or liable party
with respect to any environmental investigation or remediation, or the
incurrence of response costs regarding such real property or otherwise. In
addition, Xxxxx has not received any oral or written notice or other
communication (oral notices shall so qualify only if given to a Designated
Individual) concerning any violation, alleged violation, liability or alleged
liability including without limitation as a potential responsible or liable
party, of or under any Environmental Requirement, or in regard to the presence
or suspected presence of Hazardous Materials on or in the vicinity of property
owned or controlled by any third Person which Hazardous Material was generated,
transported, treated, stored, released or disposed by or on behalf of Xxxxx.
There are no Liens on any of the Property of Xxxxx arising under any
Environmental Requirements. Xxxxx is not in violation of nor has Xxxxx violated
at any time any applicable United States or other country's central, provincial,
regional, federal, state, local, municipal or other governmental or
quasi-governmental statute, law, order, judgment, decree, requirement or
regulation relating to the environment, Hazardous Materials, or Environmental
Requirements.
3.16 Accounts Receivable.
Except as set forth on Schedule 3.16, the accounts receivable and notes
receivable reflected on the Stub Balance Sheet and the accounts receivable and
notes receivable arising since the date thereof are valid and binding
obligations of the debtors arising from a bona fide transaction in the Ordinary
Course of Business and are not subject to any defenses, counterclaims or rights
of setoff.
3.17 Proprietary Rights.
(a) Schedule 3.17(a) contains a true, complete and correct list of
each Proprietary Right which is (i) owned by Xxxxx (the "OWNED PROPRIETARY
RIGHTS") or (ii) licensed to Xxxxx (excluding any prepackaged software that may
be acquired commercially for less than $15,000) (the "LICENSED PROPRIETARY
RIGHTS" and together with the Owned Proprietary Rights, the "XXXXX PROPRIETARY
RIGHTS"). Schedule 3.17(a) identifies which of the Proprietary Rights are Owned
Proprietary Rights and which are Licensed Proprietary Rights.
(b) In each case where any Owned Proprietary Right that consists of
a patent or other registration or application is held by assignment, the
assignment has been duly recorded with the Governmental Agency from which the
patent or other registration issued or before which the application for
registration is pending. The rights of Xxxxx in or to any Owned Proprietary
Rights, and the Exploitation of any Owned Proprietary Rights for the continued
operation of the Business do not and will not conflict with, misappropriate, or
infringe upon any proprietary right of any third party, subject, as to future
Exploitation, to the possibility of termination or expiration of the rights of
Xxxxx to the Owned Proprietary Rights.
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(c) Except as set forth on Schedule 3.17(a), each Owned Proprietary
Right is exclusively owned by Xxxxx. Each Owned Proprietary Right and all of the
rights of Xxxxx in or to each of the Licensed Proprietary Rights are held free
and clear of any Liens, other than Permitted Liens. Except as set forth on
Schedule 3.17(c), Xxxxx has not granted any license, sublicense or other right
to any Person with respect to the Owned Proprietary Rights or the Licensed
Proprietary Rights.
(d) Except as set forth on Schedule 3.17(d), no claims have been
made, asserted or threatened, and no claims are presently pending or threatened,
against Xxxxx either (i) based upon or challenging or seeking to deny or
restrict the Exploitation by Xxxxx of any of the Proprietary Rights in the
Business, or (ii) alleging that (A) the Exploitation of the Proprietary Rights,
or (B) any services provided by, processes used by, or products manufactured or
sold by Xxxxx, does or may conflict with, misappropriate or infringe upon the
proprietary rights of any third party.
(e) Except as set forth on Schedule 3.17(e), to the Knowledge of
Xxxxx, no Person is engaging in any activity or using any proprietary right that
infringes upon the Xxxxx Proprietary Rights or upon the rights of Xxxxx therein.
The consummation of the transactions contemplated by this Agreement and the
other Transaction Agreements will not result in the termination or impairment of
any of the Owned Proprietary Rights.
(f) Schedule 3.17(f) sets forth a complete and accurate list of the
titles and dates of all licenses and sublicenses for the Licensed Proprietary
Rights (including all amendments of such licenses and sublicenses). Xxxxx has
made available to UP Sub true, complete and correct copies of such licenses and
sublicenses. With respect to each such license and sublicense (together with all
amendments, consents and evidence of commencement dates and expiration dates
pertaining thereto):
(i) such license or sublicense is legal, valid, binding and
enforceable and in full force and effect, subject to the effect of bankruptcy or
similar insolvency laws affecting the rights of creditors generally and the
potential unavailability of specific enforcement, injunctive relief and other
equitable remedies;
(ii) the consummation of the transactions contemplated by
this Agreement and the other Transaction Agreements will not cause such license
or sublicense to cease to be in full force and effect or to be legal, valid,
binding and enforceable against the other party thereto, subject to the effect
of bankruptcy or similar insolvency laws affecting the rights of creditors
generally and the potential unavailability of specific enforcement, injunctive
relief and other equitable remedies, on terms substantially identical to those
currently in effect, nor will the consummation of the transactions contemplated
by this Agreement or the other Transaction Agreements constitute a breach or
default under such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate or materially modify such license or
sublicense;
(iii) with respect to each such license or sublicense: (A)
Xxxxx has not received any written notice of termination or cancellation under
such license or sublicense and no licensor or sublicensor will have any right of
termination or cancellation under such license or sublicense as a result of the
consummation of the transactions contemplated by this Agreement and the other
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Transaction Agreements, and (B) Xxxxx has not received any notice of a breach or
default under such license or sublicense, which breach or default has not been
cured; and
(iv) Xxxxx is not in breach or default in any material
respect under such license or sublicense.
(g) The rights of Xxxxx to the Owned Proprietary Rights and, to the
Knowledge of Xxxxx, the rights of the source(s) of each of the Licensed
Proprietary Rights in or to the Proprietary Rights underlying such Licensed
Proprietary Rights, have not been adjudged invalid or unenforceable as a whole
or in part and all Xxxxx Proprietary Rights are valid and enforceable to the
extent set forth in this Section 3.17.
(h) To the Knowledge of Xxxxx, unless otherwise disclosed in
Schedule 3.17(h), no study has been performed or research or experiments
conducted that would suggest that development and commercialization of therapies
based on the Xxxxx Proprietary Rights would not be feasible, safe or effective.
(i) All prepackaged software presently or in the past used by Xxxxx
was and is being used pursuant to valid license or other use arrangements.
3.18 Customers and Distributors.
Schedule 3.18 sets forth the customers and distributors of Xxxxx for the
period from January 1, 2000 through October 31, 2000, together with revenues
attributable to sales to such customers and distributors during each such
period. As of the Closing Date, Xxxxx will have secured the written agreement of
all customers and distributors, with whom Xxxxx has written agreements,
providing for Xxxxx'x assignment of all customer agreements to UP Sub.
3.19 Suppliers.
Schedule 3.19 sets forth the top ten suppliers of materials to Xxxxx for
the years 1999 and 2000, together with payments attributable to such supplier
during each such period. To the Knowledge of Xxxxx, none of the suppliers who
have provided materials to Xxxxx since January 1, 1999 intends to cease
providing materials, or materially reduce the amount of materials it provides,
to Xxxxx, which loss of or reduction in the provision of such materials
individually or in the aggregate would be Materially Adverse to Xxxxx. As of the
Closing Date, Xxxxx will have secured the written agreement of all suppliers
providing for Xxxxx'x assignment of all supply agreements to UP Sub.
3.20 Employment and Labor Matters.
(a) Employment.
(i) Schedule 3.20(a)(i) sets forth a complete and accurate
list of all written employment and independent contractor Contracts to which
Xxxxx is a party or by which Xxxxx is
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bound which are not terminable by Xxxxx at will. Xxxxx is not a party to, nor is
it bound by, any oral employment contracts. All other employees of Xxxxx are
employees terminable at will under California law. Schedule 3.20(a)(i) sets
forth a list of the current annualized salaries for all employees of Xxxxx and
the amount and payment terms for payments to consultants of Xxxxx.
(ii) Schedule 3.20(a)(ii) sets forth severance and other
obligations of Xxxxx to former employees or corporate officers of Xxxxx and
which are still currently outstanding. Xxxxx has not undertaken to grant any
benefits to any employees or corporate officers of Xxxxx as a result of the
completion of the transactions provided for herein, other than as provided for
herein, nor has Xxxxx changed its hiring or termination policies or practices in
any material respect.
(iii) Except for Xxxxxxx Xxxxxxx, no officers or employees of
Xxxxx have resigned, or made known his or her intention to resign, within the
three months preceding the Closing Date.
(iv) Except as set forth on Schedule 3.20(a)(iv), as of the
date hereof, Xxxxx has paid when due to all of Xxxxx'x employees, officers and
directors, any wages, salaries, commissions, bonuses, benefits, paid holidays,
reimbursements or any other material compensation. Except as set forth on
Schedule 3.20(a)(iv), Xxxxx is in material compliance with all applicable laws,
rules, regulations, ordinances, and other requirements of governmental and
quasi-governmental entities, and all employment and other Contracts that govern
labor, employment and employment practices, terms and conditions of employment,
wages, hours and benefits, including, without limitation, all laws, rules,
regulations, ordinances, and other requirements relating to employee health and
safety, wage and hour, civil or human rights, and employment discrimination, the
non-compliance with which would be Materially Adverse to Xxxxx or the Business.
(v) The removal of any director, officer or employee of
Xxxxx will not result in the creation or acceleration of any rights of third
parties against Xxxxx, including any right to acquire Xxxxx Proprietary Rights
or Xxxxx Common Stock.
(vi) Xxxxx is in full compliance with and has not violated
the terms and provisions of any applicable United States or other country's
central, provincial, regional, federal, state, local, municipal or other
governmental or quasi-governmental statute, law, order, judgment, decree,
requirement or regulation pertaining to immigration and the hiring of
non-citizens (collectively, "IMMIGRATION LAWS"). Xxxxx has not been the subject
of any inspection or investigation relating to its compliance with or violation
of Immigration Laws, nor has it been warned, fined or otherwise penalized by
reason of any failure to comply with Immigration Laws, nor is any such
proceeding pending or, to the Knowledge of Xxxxx, threatened. Xxxxx has provided
to UP Sub all records, documents or other papers which are retained pursuant to
applicable Immigration Laws.
(b) Labor Disputes. There is no pending or, to the Knowledge of
Xxxxx, threatened dispute, controversy (including any representation question),
strike, work stoppage or claimed violation of the terms of a collective
bargaining agreement or employment contract affecting or relating to any
employee or group of employees (in each case, whether union or nonunion) of
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Xxxxx that is reasonably likely to be Materially Adverse to the Business. There
is no pending or, to the Knowledge of Xxxxx, threatened, labor-related
litigation involving Xxxxx.
(c) Payments to Agents and Employees. All payments to agents,
consultants and others made by Xxxxx have been in payment of bona fide fees and
commissions and not as bribes or illegal or improper payments. Xxxxx has
properly and accurately reflected on its books and records all compensation paid
to and perquisites provided to or on behalf of its consultants, agents and
employees. Such compensation and perquisites have been properly and accurately
disclosed in the Financial Statements.
3.21 Insurance.
Schedule 3.21 lists all policies of liability, theft, fire, title,
workers' compensation and other forms of insurance and surety bonds insuring
Xxxxx and its directors, officers, employees, Properties, assets and Business.
The policies listed on Schedule 3.21 evidence insurance in such amounts and
against such risks and losses as are generally maintained with respect to
comparable properties and businesses. All policies listed in Schedule 3.21 are
in full force and effect and all premiums have been paid by Xxxxx. Xxxxx has not
failed to give any notice or to present any claim under any such policy or
binder in a due or timely fashion. Except as set forth on Schedule 3.21, there
have not been any claims in excess of $10,000 under any of the policies listed
in Schedule 3.21 or against any insurers in relation to the operation of Xxxxx.
As of the Closing Date, Xxxxx will have secured the written agreement of all
insurers providing for Xxxxx'x assignment of all insurance policies to UP Sub.
3.22 Contracts.
(a) Schedule 3.22 sets forth a complete and accurate list of each
Contract to which Xxxxx is a party other than (i) Contracts under which no party
thereto has any remaining liability, absolute or contingent, (ii) Contracts for
or related to employment, and (iii) the following Contracts which Xxxxx has
entered into with its shareholders (i) Xxxxx Pharma Amended and Restated
Registration Rights Agreement dated April 6, 2000; (ii) Xxxxx Pharma Amended and
Restated Investor Rights Agreement dated April 6, 2000; and (iii) Board Observer
Rights Agreement dated April 6, 2000.
(b) The Designated Contracts are and shall be as of the Closing Date
in full force and effect and are valid and enforceable in accordance with their
respective terms with respect to Xxxxx and the other party(ies) thereto, except
as the same may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally and
by general equitable principles. Xxxxx shall have, as of the Closing Date,
secured the written agreement of all parties for Xxxxx'x assignment of all
Designated Contracts to UP Sub, except to the extent that such Designated
Contracts do not require consent for an assignment due to a sale of assets.
(c) No event has occurred and no condition exists which constitutes,
or with notice or lapse of time or both would constitute, a material default by
Xxxxx or any other party under any of
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the Designated Contracts. Neither the execution of this Agreement or the other
Transaction Agreements nor the Closing will constitute or result in a breach or
violation of or default under any Designated Contract or would create a Lien on
any Xxxxx Asset.
(d) Xxxxx has not received any oral or written notice (oral notices
shall so qualify only if given to a Designated Individual) that any party to any
of the Designated Contracts intends to cancel or terminate any of them or to
exercise or not exercise any options under any of them.
(e) Xxxxx is not a party to, nor is the Property of Xxxxx bound by,
any non-written contract material to the Business or Xxxxx not disclosed in this
Agreement or the Schedules hereto.
(f) None of the Designated Contracts is contrary to any applicable
legal or regulatory provisions, or to any judicial or administrative decision.
3.23 Legal Proceedings.
Schedule 3.23 sets forth a complete and accurate list of all claims,
suits, actions, arbitrations, legal, administrative or other proceedings or
governmental investigations: (i) to which Xxxxx is a party or which are, to the
Knowledge of Xxxxx, threatened against Xxxxx, (ii) to which any employee or
representative of Xxxxx is a party and in respect of which Xxxxx is obligated to
provide indemnification or reimbursement, or (iii) to which Xxxxx or any
employee or representative of Xxxxx was a party (with respect to the latter,
only to the extent Xxxxx was obligated to provide indemnification or
reimbursement in respect thereof). Schedule 3.23 sets forth, for each of the
matters identified therein, a brief summary of such matter and the parties
involved therein, the total maximum amount claimed by the plaintiff against
Xxxxx and, to the extent settled or resolved, the amount paid by Xxxxx in
judgment or settlement and any other remedies imposed upon Xxxxx as a result
thereof. There are no claims, suits, actions, arbitrations, legal,
administrative or other proceedings or governmental investigations pending or,
to the Knowledge of Xxxxx, threatened against Xxxxx which seek to question,
delay, or prevent the consummation of the transactions contemplated by this
Agreement or any of the other Transaction Agreements. Xxxxx is not in default
with respect to any judgment, order, writ, injunction, decree or award of any
Governmental Agency or of any arbitrator or arbitration panel. Other than as set
forth in Schedule 3.23, there is presently outstanding, to the Knowledge of
Xxxxx, no reasonable basis for any other material claim, suit, action,
arbitration or other proceeding to be brought against Xxxxx which, if asserted,
would have at least a reasonable probability of an outcome that would be
Materially Adverse to Xxxxx.
3.24 Certain Relationships and Interests.
Except as set forth in Schedule 3.24 and Schedule 3.20(a)(1), and as may
be disclosed by the Financial Statements, Xxxxx does not have and has not had,
any Contract with, any outstanding loans to or from, any outstanding liabilities
to, or any sharing arrangements (whether for compensation or otherwise) with any
officer, director, employee, stockholder or Affiliate of Xxxxx, or any relative
of any such Person or any Person in which any such individual is an officer,
director or partner or has a material financial interest, direct or indirect.
Except as set forth in Schedule
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3.24, no officer, director, employee, stockholder, member or Affiliate of Xxxxx,
nor any relative of any of such individual, owns or has any direct or indirect
interest in any Property owned by or leased to Xxxxx or any Proprietary Right
licensed to or by Xxxxx. Except as set forth in Schedule 3.24, neither Xxxxx nor
any officer, director, stockholder or Affiliate of Xxxxx, nor any relative of
any such individual, owns or has any direct or indirect interest in any business
which is a competitor, supplier or customer of Xxxxx or in any Person with whom
Xxxxx is doing business in any way.
3.25 Business Records.
All records of Xxxxx, including without limitation all customer,
supplier, accounting, personnel and computer records, are complete and accurate
and are maintained in accordance with good business practices.
3.26 Powers of Attorney; Guarantees and Other Liabilities.
Xxxxx does not have any powers of attorney outstanding. Except as set
forth in Schedule 3.26, Xxxxx does not have any obligations or liabilities
(absolute or contingent) as guarantor, surety, cosigner, endorser, co-maker,
indemnitor, or otherwise respecting the obligations or liabilities of any
Person.
3.27 Full Disclosure.
The representations and warranties contained in this Article 3 taken
together with the matters described in the Schedules as a whole, do not contain
any untrue statement of a material fact and do not omit any material fact the
omission of which would make the statements made herein or therein misleading.
Xxxxx does not have Knowledge of any fact that Xxxxx reasonably believes is or
would be Materially Adverse to Xxxxx or the Business which has not been set
forth herein.
3.28 Brokers.
Except as set forth on Schedule 3.28, no broker, agent, finder,
consultant or other Person has been retained by, or has acted on behalf of Xxxxx
(other than legal and accounting advisors) or is entitled to be paid based upon
any agreements or understandings made by Xxxxx in connection with any of the
transactions contemplated by this Agreement.
3.29 Investment Representations.
(a) This Agreement is made in reliance upon the
representation of Xxxxx to UTC that the Shares will be acquired by Xxxxx for
investment, for Xxxxx'x own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that Xxxxx has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Xxxxx understands that the Shares are "restricted" under
the federal securities laws inasmuch as they are being acquired from UTC in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the
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Securities Act only in certain limited circumstances. By executing this
Agreement, Xxxxx further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Shares.
(b) Xxxxx believes it has received all the information from
UTC that it considers necessary or appropriate for entering into this Agreement
and acquiring the Shares. Xxxxx further represents that it has had an
opportunity to ask questions and receive answers from UTC regarding the
business, properties, prospects and financial condition of UTC.
3.30 Survival of Representations and Warranties; Nature of Representations
and Warranties. Except as otherwise provided in Section 9.4, the representations
and warranties of Xxxxx shall survive the Closing Date.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF UTC AND UP SUB
UP Sub and UTC represent and warrant to Xxxxx as follows:
4.1 Organization, Good Standing and Qualification.
UP Sub and UTC are corporations duly organized and validly existing
under the laws of the State of Delaware and have all necessary corporate power
and authority to own, lease and operate the properties and assets they now own,
lease and operate and to carry on their business as now being conducted.
4.2 Issuance of the Shares.
Upon issuance to Xxxxx pursuant to the terms and conditions of this
Agreement, the Shares will be validly issued, fully paid and non-assessable,
free and clear of any and all taxes, liens, claims and encumbrances, except as
contemplated by the Transfer Agreements.
4.3 Principle Exchange/Market.
The UTC Common Stock is currently listed on the Nasdaq National Market.
4.4 No Violations.
Neither the execution and delivery of this Agreement or any of the other
Transaction Agreements by UP Sub or UTC nor the consummation of the transactions
contemplated hereby or thereby, will (i) violate any law, statute, ordinance,
rule or regulation to which UP Sub or UTC is subject, or any provision of UP
Sub's or UTC's organizational documents, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate modify, or cancel, or require any
notice under, or the consent of any other party to, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture,
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agreement for borrowed money, instrument of indebtedness lien, or other
arrangement to which UP Sub or UTC is a party or by which it is bound or to
which any of its assets is subject, excluding from clauses (i) and (ii) above
such violations, conflicts, breaches and defaults that, in the aggregate, would
not have a Materially Adverse effect on the ability of UP Sub or UTC to
consummate the transactions provided for by this Agreement and the other
Transaction Agreements.
4.5 Approvals.
No consent, permit or approval of, filing with or notice to any
Governmental Agency or any other Person (whether or not governmental in
character) has been or is required to be obtained, made or given by UP Sub or
UTC in connection with the execution and delivery of this Agreement or the other
Transaction Agreements or the performance of and compliance with this Agreement
and such Transaction Agreements, except such consents, permits, approvals,
filings or notices that have been so obtained, made or given or notices that
will be filed pursuant to the Securities Act and pursuant to the requirements of
the Nasdaq Stock Market.
4.6 Authorization, Validity.
UP Sub and UTC each has all requisite right, corporate power and
authority and full legal capacity to enter into, perform and comply with this
Agreement and each of the other Transaction Agreements to which it is or will be
a party. All proceedings required to be taken by UP Sub and UTC to authorize the
execution, delivery and performance of and compliance with this Agreement and
such Transaction Agreements have been properly taken and no other proceedings
(corporate or otherwise) on the part of UP Sub or UTC (or their shareholders) or
any other Person are necessary to authorize this Agreement and the other
Transaction Agreements or to consummate the transactions contemplated hereby or
thereby. This Agreement and each of such Transaction Agreements has been, or
will at Closing be, duly executed by UP Sub and UTC and constitute, or will
constitute at Closing, the valid and binding obligation of UP Sub and UTC,
enforceable against UP Sub and UTC in accordance with their terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law).
4.7 SEC Documents.
The UTC Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and UTC is in full compliance with and has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d) (all of the foregoing including all filings, exhibits, financial
statements, schedules and documents incorporated by reference therein being
referred to herein as the "SEC DOCUMENTS"). As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder.
The financial statements of UTC included in the SEC Documents have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent
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basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of UTC as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
4.8 Brokers.
No broker, agent, finder, consultant or other Person has been retained
by, or has acted on behalf of UP Sub or UTC (other than legal and accounting
advisors) or is entitled to be paid based upon any agreements or understandings
made by UP Sub or UTC in connection with any of the transactions contemplated by
this Agreement.
ARTICLE 5. COVENANTS OF XXXXX
Xxxxx covenants and agrees that, from and after the date of this
Agreement to the Closing Date, Xxxxx will conduct the Business subject to the
following:
5.1 Operation of the Business. Without the prior written consent of UP Sub,
except to effect the arrangements described in Section 7.4(b) hereof, Xxxxx will
not:
(a) grant any increase in the rate of pay of any of its employees,
grant any increase in the salaries of any officer, employee or agent, enter into
or increase the benefits provided under any bonus, profit-sharing, incentive
compensation, pension, retirement, medical, hospitalization, life insurance or
other insurance plan or plans, or other contracts or commitments, or in any
other way increase in any amount the benefits or compensation of any such
officer, employee or agent;
(b) enter into any employment contract or collective bargaining
agreement;
(c) enter into any Contract or commitment or engage in any
transaction which is not in the Ordinary Course of the Business or which is
inconsistent with past practices;
(d) sell or dispose of or encumber any of the Xxxxx Assets, other
than the disposition of Xxxxx Assets to pay expenses and liabilities (i) arising
in the Ordinary Course of Business or (ii) arising under Section 9.1, as
contemplated by Schedule 1.1(a) paragraph (a);
(e) make, or enter into any Contract for, any material capital
expenditure or enter into any material lease of capital equipment or real
estate;
(f) declare or pay any dividend or make any sale of, or distribution
in respect of, its capital stock or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or issue any of its capital stock or
other securities other than the issuance of Series B preferred stock or common
stock of Xxxxx upon the exercise of currently outstanding warrants;
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(g) make or institute any unusual or novel method of transacting
business or change any accounting procedures or practices or its financial
structure;
(h) make any statements to or changes in its articles or certificate
of incorporation or association or bylaws;
(i) perform any act, or attempt to do any act, or permit any act or
omission to act, which will cause a breach of any material contract, commitment
or obligation to which Xxxxx is a party; or
(j) take any action or incur any liability or obligation which, if
taken or incurred prior to the date of this Agreement, would be required to be
disclosed on any Schedule hereto.
5.2 Preservation of Business. Xxxxx shall carry on the Business
diligently and substantially in the same manner as heretofore conducted and
shall keep its business organizations intact, including its present employees
and present relationships with suppliers and customers and others having
business relations with Xxxxx.
5.3 Insurance and Maintenance of Property. Xxxxx will cause all the
Xxxxx Assets and all property owned or leased pursuant to the Xxxxx Liabilities
to be insured against all ordinary and insurable risks (except in respect of any
leased property where the terms of the lease do not impose on lessee the
obligation to maintain insurance and where the loss of such property would not
materially adversely affect the conduct of the Business) and will operate,
maintain and repair all of such property in a careful, prudent and efficient
manner.
5.4 Full Access. Representatives of UP Sub shall have full access at
all reasonable times to all premises, properties, books, records, contracts, tax
records and documents relating to the Business, and Xxxxx will furnish to UP Sub
any information in respect of the Business as UP Sub may from time to time
request. Such examination and investigation by UP Sub , and any discovery of
facts resulting therefrom, shall not affect the warranties and representations
of Xxxxx contained in this Agreement.
5.5 WARN Act. Xxxxx shall be responsible for compliance with and for
any and all liabilities and penalties under the WARN Act.
5.6 Other Government Filings. Xxxxx will cooperate with UP Sub in
making, as soon as practicable following the execution hereof, all filings,
required by any Government Agency (including without limitation premerger
notifications required to be filed with the Federal Trade Commission and the
United States Department of Justice) in connection with the Acquisition. All
information provided by Xxxxx in connection with such filings will be true,
accurate and complete and will comply with all applicable laws.
ARTICLE 6. CONDITIONS TO THE CLOSING
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6.1 Conditions to Each Party's Obligations. The respective obligations of
each party to effect the transactions to be effected by it at the Closing shall
be subject to the satisfaction, or waiver by such party (except with respect to
the Xxxxx Stockholder approval, which may not be waived by either party hereto),
at or prior to the Closing Date of the following conditions:
(a) Consents, Approvals. The Xxxxx Stockholders shall have approved
the Acquisition, this Agreement and the other Transaction Agreements as required
by law, and Xxxxx shall have received all consents, approvals, authorizations,
or other actions by, or filings with or notification to, any Person or
Governmental Agency set forth in Article 3 and made all such filings and
declarations, as may be required to consummate the transactions contemplated by
this Agreement, and the execution and delivery of the other Transaction
Agreements.
(b) No Injunctions. There shall not be in effect any statute,
regulation, order, decree or judgment of any governmental authority which makes
it illegal or enjoins or prevents the consummation of the transactions
contemplated by this Agreement or the Transaction Agreements.
(c) Deadline. The Closing shall take place not later than December
31, 2000.
6.2 Conditions to Obligations of UP Sub and UTC. The obligations of each of
UP Sub and UTC to effect the transactions to be effected by it at the Closing
shall be subject to the satisfaction of, or waiver by UP Sub and UTC, at or
prior to the Closing Date, of the following conditions:
(a) Xxxxx'x Obligations Performed. Xxxxx shall have performed,
satisfied and complied in all material respects with all covenants, agreements,
conditions and obligations under this Agreement required to be performed by it
on or prior to the Closing Date. The deliveries described in Section 6.5 hereof
shall have been made.
(b) Accuracy of Representations and Warranties. The representations
and warranties of Xxxxx contained in this Agreement or any written schedule or
certificate that shall be delivered by Xxxxx pursuant to this Agreement shall be
true and correct in all material respects in each case as of the Closing Date
(except for representations and warranties expressly stated herein to be
applicable solely as to a specified date which were true and correct as of such
date).
(c) Due Diligence. The completion of UP Sub's and UTC's due
diligence review of the Business and operations of Xxxxx to the reasonable
satisfaction of UP Sub and UTC.
(d) Transaction Agreements. Xxxxx shall have executed and delivered
each of the Transaction Agreements.
(e) No Materially Adverse Effect. Since the date of this Agreement,
no event or series of events shall have occurred which has had or would
reasonably be expected to have a Materially Adverse effect on Xxxxx.
(f) Certification by Xxxxx. UP Sub shall have received a
certificate, dated the date of the Closing, signed by an officer of Xxxxx
representing and warranting, in such detail as UP Sub
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may reasonably request, that the conditions specified in Section 6.1(a) and
Sections 6.2(a), (b), (d) and (e) have been fulfilled.
(g) Consents: Approvals.
All consents, approvals and actions of, filings with and notices
to any Governmental Agency necessary to permit UP Sub and UTC to perform their
obligations under this Agreement and the other Transaction Agreements and all
other consents (or in lieu thereof waivers) to the performance by Xxxxx of its
obligations under this Agreement and the other Transaction Agreements or to the
consummation of the transactions contemplated hereby and thereby as are required
under any Contract to which Xxxxx is a party or by which any of its Property is
bound shall have been obtained, shall be in form and substance reasonably
satisfactory to UP Sub , shall not be subject to the satisfaction of any
condition that has not been satisfied or waived, shall not be conditioned upon
the giving of any additional consideration by UP Sub, and shall be in full force
and effect.
(h) Litigation. There shall be no investigation, notice, litigation,
arbitration or proceeding pending or threatened by any Governmental Agency or
Person for the purpose of enjoining or preventing the consummation of this
Agreement or the other Transaction Agreements or otherwise claiming that the
consummation of this Agreement or such Transaction Agreements is illegal or
improper or which, if decided adversely, would Materially Adversely affect (i)
the Business, (ii) UP Sub's rights in respect thereof, (iii) the Xxxxx Assets,
or (iv) Xxxxx'x ability to perform its obligations under this Agreement and the
Transaction Agreements, if and when the transactions contemplated hereby are
consummated, or that would cause any of the transactions contemplated by this
Agreement or the Transaction Agreements to be rescinded following consummation
(and no such judgment, order, decree, stipulation, injunction or change shall be
in effect).
(i) Opinion of Xxxxx'x Counsel. UP Sub and UTC shall have received
from Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel for Xxxxx, an opinion dated the
date of the Closing in the form of Exhibit B.
(j) Management Agreements.
(i) UP Sub shall have entered into a three-year employment
agreement with Xxxxxxx Xxxxxx as its Chief Executive Officer in the form of
Exhibit C, including her acceptance of and agreement to be bound by (i) UTC's
Employee Manual, and (ii) UTC's Securities Trades by UTC Personnel Policy, both
of which shall be attachments to her employment agreement.
(ii) UP Sub shall have entered into a four-year employment
agreement with Xxxx Xxxxx as its Chief Scientific Officer in the form of Exhibit
C, including his acceptance of and agreement to be bound by (i) UTC's Employee
Manual, and (ii) UTC's Securities Trades by UTC Personnel Policy, both of which
shall be attachments to his employment agreement.
(iii) UP Sub shall have entered into a part-time employment
agreement with
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Xxxxxx Xxxxxxx as a consultant in the form of Exhibit D.
(k) Approval and Delivery of Documentation. Xxxxx shall have
delivered such other certificates, instruments, opinions and other documents as
UP Sub may reasonably request, and the form and substance of all certificates,
instruments, opinions and other documents delivered to UP Sub under this
Agreement shall be satisfactory in all reasonable respects to UP Sub and its
counsel including, without limitation, the agreement described in Section 7.4(b)
below. No legal impediment to the consummation of transactions contemplated by
this Agreement and the Transaction Agreements shall have arisen in the
reasonable judgment of UP Sub and UTC. The deliveries described in Section 6.5
hereof shall have been made.
6.3 Conditions to Obligations of Xxxxx. The obligations of Xxxxx to effect
the transactions to be effected by it at the Closing shall be subject to the
satisfaction, or waiver by Xxxxx, at or prior to the Closing Date of the
following conditions:
(a) UP Sub's and UTC's Obligations Performed. UP Sub and UTC shall
have performed, satisfied and complied in all material respects with all
covenants, agreements, conditions and obligations under this Agreement required
to be performed by them on or prior to the Closing Date.
(b) Accuracy of Representations and Warranties. Each of the
representations and warranties of UP Sub and UTC contained in this Agreement or
any written schedule or certificate that shall be delivered by UP Sub or UTC
pursuant to this Agreement shall be true and correct in all material respects in
each case as of the Closing Date (except for representations and warranties
expressly stated herein to be applicable solely as to a specified date which
were true and correct as of such date).
(c) Opinion of UP Sub and UTC's Counsel. Xxxxx shall have received
from Mahon, Patusky, Xxxxxxxxx & Xxxxxx, Chartered, counsel for UP Sub and UTC,
an opinion dated the date of the Closing in the form of Exhibit F.
(d) Deliveries upon Closing. UP Sub and UTC shall have delivered
such other certificates, instruments, opinions and other documents as Xxxxx may
reasonably request, and the form and substance of all certificates, instruments,
opinions and other documents delivered to Xxxxx under this Agreement shall be
satisfactory in all reasonable respects to Xxxxx and its counsel. No legal
impediment to the consummation of transaction contemplated by this Agreement and
the other Transaction Agreements shall have arisen in the reasonable judgment of
Xxxxx. The deliveries described in Section 6.4 hereof shall have been made.
(e) Litigation. There shall be no investigation, notice, litigation,
arbitration or proceeding pending or threatened by any Governmental Agency or
Person for the purpose of enjoining or preventing the consummation of this
Agreement or the other Transaction Agreements or otherwise claiming that the
consummation of this Agreement or such Transaction Agreements is illegal or
improper or that would cause any of the transactions contemplated by this
Agreement or such Transaction Agreements to be rescinded following consummation
(and no such judgment,
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order, decree, stipulation, injunction or change shall be in effect).
6.4 UP Sub's Deliveries at Closing.
At Closing, UP Sub shall deliver to Xxxxx the following:
(a) a duly executed certificate, dated as of the Closing Date, from
UP Sub and UTC to the effect that the conditions set forth in Sections 6.3(a)
and (b) which have not otherwise been waived by Xxxxx have been satisfied;
(b) duly executed Employment Agreements with Xxxx Xxxxx and Xxxxxxx
Xxxxxx, and a consulting agreement with Xxxxxx Xxxxxxx in the form of Exhibit C
and Exhibit D, respectively, hereto;
(c) a duly executed Registration Rights Agreement in the form of
Exhibit E hereto;
(d) opinion of Xxxxx Patusky Xxxxxxxxx & Xxxxxx, Chartered, counsel
for UP Sub and UTC, addressing the matters relating to UP Sub and UTC as set
forth at Exhibit F;
(e) a duly executed certificate for 147,317 shares (representing 50%
of the shares);
(f) a check for $100 (One Hundred Dollars) made payable to Xxxxx
Pharma, Inc.; and
(g) a duly executed Escrow Agreement.
6.5 Xxxxx'x Deliveries at Closing.
At Closing, Xxxxx shall deliver to UP Sub and UTC the following:
(a) a duly executed certificate, dated as of the Closing Date, from
Xxxxx to the effect that the conditions set forth in Sections 6.1(a), 6.2(a),
(b), (d), (e) which have not otherwise been waived by UP Sub and UTC have been
satisfied;
(b) opinion of Wilson, Sonsini, counsel for Xxxxx, addressing the
matters relating to Xxxxx set forth at Exhibit B;
(c) duly executed Employment Agreements with Xxxxxxx Xxxxxx and Xxxx
Xxxxx, and a consulting agreement with Xxxxxx Xxxxxxx in the form of Exhibit C
and Exhibit D, respectively, hereto;
(e) a duly executed Registration Rights Agreement in the form of
Exhibit E hereto;
(f) certificates of the Secretary of Xxxxx certifying the
authenticity and completeness and accompanying the charter, By-laws, minutes
relating to the Transaction and stock record book of Xxxxx including a certified
copy of the Xxxxx Stockholders' resolutions approving this
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Agreement, the other Transaction Agreements and the transactions contemplated
hereby and thereby; and
(g) such other instruments or documents necessary to complete the
transaction contemplated herein, all reasonably satisfactory in form and
substance to UP Sub.
ARTICLE 7. POST-CLOSING OBLIGATIONS AND AGREEMENTS
7.1 Certain Taxes.
All transfer, documentary, sales, use, value added, stamp, duty,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement or the Acquisition shall be
paid by Xxxxx when due, and Xxxxx will, at its own expense, file all necessary
Tax returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees. Xxxxx
shall indemnify, defend and hold UP Sub and UTC, together with their respective
Affiliates, officers, directors, shareholders, employees and agents, harmless
from and against any such Taxes.
7.2 Post-Closing Operations.
(a) UP Sub will fund the Business as it will be conducted by UP Sub
after the Closing as follows: (i) until pivotal trial results of a landmark
(>250 patients) multi-center HeartBar Angina Study which is to commence in the
first half of 2001 with results showing statistically significant improvements
in primary and secondary endpoints in a randomized, placebo-controlled,
double-blind study of not less than 250 patients and of a quality reasonably
likely to be accepted for publication in a prominent journal such as the New
England Journal of Medicine or The Lancet are first presented in a podium
presentation at a major scientific meeting (e.g., American Heart Association or
American College of Cardiology) that is relevant to the physicians that Xxxxx is
trying to reach, UP Sub's funding obligation of the Business shall not exceed $5
million annually, not less than 25% of which shall be for research and
development expenses; and (ii) following a podium presentation at a major
scientific meeting of such landmark statistically significant study results of
the HeartBar Angina Study, UP Sub shall commit to spending such amounts as UP
Sub determines, in its sole reasonable judgement based upon discussions with
Xxxxx management, is appropriate to achieve product profitability in the soonest
practicable timeframe.
(b) All expenditures in excess of $50,000 shall be approved by UP
Sub's Chief Executive Officer and any out-of-budget expenditure must be approved
in advance of obligation by UP Sub's Chief Executive Officer or his designee.
(c) UTC shall cause the number of members of the Board of Directors
to be increased by one and shall cause Xxxx Xxxxx to be appointed to fill such
newly created directorship.
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(d) The Scientific Advisory Boards of Xxxxx and UTC shall be merged
into a single UTC Scientific Advisory Board.
(e) Within 30 days of Closing, UTC shall grant to each of Xxxxx
Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx and Xxx Xxxxxxxx an option to purchase
4,000 shares of the common stock of United Therapeutics Corporation priced at
the NASDAQ closing price on the date of the grant and vesting in one-quarter
increments on each anniversary of this Agreement. Each of the foregoing grantees
shall enter into a separate stock option agreement with UTC setting forth the
terms of this option grant.
7.3 Transfer Restrictions.
(a) Xxxxx hereby agrees that it will not, directly or indirectly,
without the prior written consent of UTC, sell, offer, contract to sell, pledge,
grant any option to purchase or otherwise dispose of (collectively, a
"DISPOSITION") any of the Shares delivered to Xxxxx in accordance with Section
1.3(a) for a period commencing on the date hereof and ending (i) with respect to
103,122 of the Shares delivered to Xxxxx on Closing, on the 90th day following
the Closing Date, and (ii) with respect to the remaining 44,195 of the Shares
delivered to Xxxxx at Closing, on the 180th day following the Closing Date
(each, a "LOCK-UP PERIOD"). The foregoing restriction is expressly agreed to
preclude Xxxxx from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Shares during the Lock-Up Period. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option). Xxxxx also agrees and consents to the entry of stop
transfer instructions consistent with the restrictions set forth in this Section
7.3 with the Transfer Agent against the transfer of any Shares.
(b) The Shares and any other shares of UTC Common Stock issued to
Xxxxx pursuant to this Agreement may only be disposed of pursuant to an
effective registration statement under the Securities Act, or pursuant to an
available exemption from or in a transaction not subject to the registration
requirements of the Securities Act, and in compliance with any applicable
federal and state securities laws.
(c) UTC will register the Shares for resale by Xxxxx in accordance
with the terms of the Registration Rights Agreement attached as Exhibit E
hereto.
7.4 Certain Xxxxx Activities. Xxxxx hereby agrees and covenants to UTC and
UP Sub as follows:
(a) Xxxxx will take no action, by board resolution or otherwise, in
furtherance of the dissolution of Xxxxx or the pro rata or similar distribution
of the Shares to the shareholders of Xxxxx prior to the Anniversary Date.
(b) Prior to the Closing, subject to the approval of Dr. Xxxx Xxxxx,
all holders of the Series D preferred stock will enter into an irrevocable
written agreement with Xxxxx to
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reapportion future distributions to shareholders of royalty payments paid by UP
Sub to Xxxxx under Article 2 hereof, for the benefit of holders of Xxxxx'x
common stock and preferred stock (other than the Series D preferred holders) and
certain optionholders of Xxxxx. Xxxxx shall take no action which directly or
indirectly interferes with, encumbers, pledges, or in any way compromises such
an arrangement.
(c) Within twenty days following the Closing Date, Xxxxx will take
all necessary actions to change its corporate name to a new name that does not
contain the trademark "Xxxxx Pharma", which trademark is included among the
Xxxxx Assets purchased by UP Sub hereunder.
(d) Xxxxx agrees to cooperate fully with UTC in connection with the
preparation and filing with the SEC of any required reports on Form 8-K relating
to the Acquisition and the other transactions contemplated by this Agreement at
its own expense.
7.5 Additional Agreements.
In case at any time after the date of this Agreement any further action
is necessary or desirable to carry out the purposes of this Agreement or the
other Transaction Agreements, the parties to this Agreement shall take all such
actions.
ARTICLE 8. INDEMNIFICATION
8.1 Indemnification as to Representations, Warranties, Covenants and Other
Matters.
(a) Xxxxx agrees to indemnify, defend and hold UP Sub, UTC and their
respective Affiliates, officers, directors, shareholders, employees and agents
harmless from and against any and all losses, liabilities, damages, claims,
demands, costs, obligations, deficiencies and expenses (including without
limitation interest, penalties and reasonable attorneys' fees and expenses and,
in the case of environmental matters, reasonably necessary facility and
equipment repairs, modifications and additions) (collectively and including
without limitation Tax Losses, "LOSSES") which arise, or result, directly or
indirectly, from:
(i) Representations, Warranties and Covenants -- any
material breach of or failure to perform, any representation, warranty, covenant
or obligation of Xxxxx in this Agreement or in any Schedule or certificate
delivered pursuant hereto;
(ii) Identified Claims and Litigation Matters (Designated
Claims) -- defense costs and all other Losses arising out of or in connection
with the claims and litigation matters against Xxxxx which are identified on
Schedule 8.1(a)(ii) (such claims and matters, the "DESIGNATED CLAIM"; Losses
from the Designated Claims, the "DESIGNATED CLAIM LOSSES");
(iii) Enforcement Actions Against Infringers of Xxxxx
Proprietary Rights - all costs, including reasonable attorneys' fees, expert
witness fees, investigators, court costs and all other expenses of any kind or
nature arising out of or in connection with enforcing the Xxxxx
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Proprietary Rights against Third Parties reasonably believed by UP Sub to be
infringing the Xxxxx Proprietary Rights as of the Closing Date. UP Sub and the
counsel it selects to pursue enforcement of the Xxxxx Proprietary Rights will
consult with counsel selected by Xxxxx with respect to the strategy of each
enforcement action initiated by UP Sub.
(iv) Liabilities -- any and all liabilities, debts, or
obligations, known or unknown, fixed or contingent, liquidated or unliquidated,
secured or unsecured, direct or indirect, or of any other kind, of Xxxxx, which
arose or accrued prior to Closing, other than liabilities specifically disclosed
and identified as to amount on the Stub Balance Sheet or in the Schedules
attached hereto (but only to the extent of such amounts specifically disclosed
in such Schedules or to the extent the Contracts giving rise to any such
liabilities have been specifically identified in such Schedules). The foregoing
liabilities shall include, without limitation, any and all losses that UP Sub
might incur by reason of any claim, suit, demand or action alleging that the
operation of the Business of Xxxxx prior to Closing conflicted with, infringed
upon or misappropriated the proprietary rights of any third party, only to the
extent covered by Xxxxx'x warranties and representations under this Agreement;
and
(v) Taxes -- in addition to Losses resulting from any breach
of the representations and warranties in Section 3.10, but notwithstanding
disclosure in Schedule 3.10(a), any and all Losses arising from or related or
attributable to Taxes of UP Sub relating to or arising or accruing on or before
Closing, or obligations of UP Sub to report, pay, or withhold in respect of such
Taxes, to the extent related to or arising or accruing on or before Closing (all
such Losses in this clause (v) with respect to Tax matters are referred to
herein as "TAX LOSSES").
(b) "Losses" shall include any amounts paid by Xxxxx under Section
9.1 to the extent such amounts in the aggregate exceed $130,000;
(c) UP Sub and UTC agree, jointly and severally, to indemnify,
defend and hold Xxxxx harmless from and against any and all Losses which arise
or result, directly or indirectly, from any breach of or failure to perform, any
representation, warranty, covenant or obligation of UP Sub or UTC in this
Agreement.
8.2 Notice of Claims.
(a) If an indemnified party reasonably believes that it may incur
any Losses hereunder, or receives notice of a third-party claim for which it
intends to seek indemnification hereunder, it shall give the indemnifying party
prompt written notice of such claim (which in the case of a third party claim,
shall be within 20 days of receipt of such claim), specifying the facts and
circumstances of the indemnification claim and the estimated amount of the
Losses.
(b) The indemnifying party under this Section 8.2 shall have the
right to conduct and control, through counsel of its own choosing but reasonably
acceptable to the indemnified party, any third-party claim, action or suit or
compromise or settlement thereof but only so long as prior to assuming the
conduct or control of such claims, action or suit, the indemnifying party
confirms in writing to the indemnified party that such claim, action or suit is
one in respect of which the
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indemnifying party is obligated to provide indemnification under this Agreement.
The indemnified party may, at its election, participate in the defense of any
such claim, action or suit through counsel of its own choosing, but the fees and
expenses of such counsel shall be at the expense of the indemnified party,
unless the indemnified party shall have been advised by such counsel that there
are one or more legal defenses available to it that are inconsistent and
conflicting with those available to the indemnifying party (in which case, if
the indemnified party notifies the indemnifying party in writing that it elects
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party with respect to such defenses). If the indemnifying party
shall fail to defend promptly and diligently any such third-party claim, action
or suit, then, upon the written notice to the indemnifying party stating the
reasons therefore, the indemnified party may defend, through counsel of its own
choosing, such claim, action or suit and may settle such claim, action or suit
and recover from the indemnifying party the amount of such settlement or of any
judgment and the costs and expenses of such defense. The obligations of the
indemnifying party hereunder shall not be reduced as a result of any action by
the party furnishing the notice of third-party claim responding to such claim if
such action is reasonably required to minimize damages or to avoid a forfeiture
or penalty or to comply with a requirement imposed by law. The indemnifying
party shall not compromise or settle any third-party claim, action or suit that
includes any term which shall require any act or forbearance by the indemnified
party and which does not unconditionally release the indemnified party from all
liability in respect of such claim, action or suit without the prior written
consent of the indemnified party. UP Sub and Xxxxx shall cooperate in all
reasonable respects with each other in connection with the defense, negotiation
or settlement of any legal proceeding, claim or demand referred to in this
Section 8.2.
8.3 Offset.
(a) UP Sub shall have the right to offset from the "hold-back"
described in Section 4(a) of the Escrow Agreement and from the royalties to be
paid to Xxxxx in accordance with Article 2, any amounts representing Losses to
UP Sub or UTC arising under Sections 8.1(a)(i),(ii),(iv) and (v), and Section
8.1(b) of this Agreement, all as are more fully described in and subject to the
terms of the Escrow Agreement.
(b) UP Sub shall have the right to offset from the "hold-back"
described in Sections 4(b) and (c) of the Escrow Agreement and from the
royalties to be paid to Xxxxx in accordance with Article 2, any amounts
representing Losses to UP Sub or UTC arising under Section 8.1(a)(iii) of this
Agreement, all as are more fully described in and subject to the terms of the
Escrow Agreement.
(c) In the event that on the respective dates of release of the
"hold-backs" described in Section 4 of the Escrow Agreement there are then
pending third-party claims which give rise to rights to indemnification in favor
of UP Sub or UTC and their respective Affiliates, officers, directors,
shareholders, employees and agents under this Article 8 which have not been
fully resolved or settled, UP Sub shall be entitled to exercise the set-off
rights provided above with respect to such claims by withholding from the
respective "hold-back" shares an amount equal to the reasonable assessment of
the amount of Losses that are likely to be incurred by UP Sub in
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respect of such claims. In connection with such exercise of set-off rights, UP
Sub shall give written notice to Xxxxx of the amount of its assessment of the
Losses in question. If Xxxxx disagrees with assessment of the Losses by UP Sub,
it shall give written notice to UP Sub of its objection no later than 30 days
after receipt of the first notice from UP Sub. If the parties are unable to
resolve their differences within 30 days of Xxxxx'x notice to UP Sub, the matter
shall be submitted to a CPA firm selected by UP Sub, and a CPA firm selected by
Xxxxx, to arrive at a proposed resolution on Losses assessment. In the event
that the two selected firms arrive at a mutual recommendation, it shall be
adopted by the parties. In the event that two selected firms are unable to
arrive at a mutual recommendation, then the two selected firms shall agree upon
a third CPA firm to act as an arbitrator (the "ACCOUNTING ARBITRATOR") for a
final determination of the reasonable assessment of the amount of Losses that
are likely to be incurred in respect of such claim. If the Accounting Arbitrator
determines that the amount withheld by UP Sub is in excess of the amount of
Losses that are likely to be incurred by UP Sub, then UP Sub shall release the
excess amount, to Xxxxx. The fees and expenses of the Accounting Arbitrator
shall be borne equally by UP Sub, on the one hand, and by Xxxxx, on the other.
Each of the parties shall bear its own attorneys' and accountants' fees and
expenses incurred in connection with resolution of the matter by the Accounting
Arbitrator.
(d) Exercise of the offset rights under this Section 8.3(a), (b) and
(c) by UP Sub shall not limit the rights of UP Sub to recover any amounts owed
to any of them that exceed the amount obtained by exercise of those rights and
such exercise shall not be in substitution of or in any way limit the exercise
by UP Sub of its other rights and remedies.
ARTICLE 9. MISCELLANEOUS
9.1 Transactional Expenses.
Xxxxx and UP Sub shall each pay its own legal and accounting fees and
expenses incident to the negotiation, preparation, execution, delivery and
performance hereof, including, without limitation, the fees and expenses of its
counsel, accountants and other experts. To the extent any of such fees and
expenses have been charged to or are payable by Xxxxx, Xxxxx shall cause such
amounts to be discharged and paid for prior to Closing.
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9.2 Bulk Sales.
Xxxxx and UP Sub each waive compliance by the other with all bulk sales
Laws applicable to the transactions contemplated hereby. Any Losses suffered by
Xxxxx or UP Sub as a result of the failure of Xxxxx or UP Sub to comply with the
provisions of any bulk sales Laws applicable to the transactions contemplated
hereby shall be borne by Xxxxx and Xxxxx shall defend UP Sub and hold UP Sub
harmless for any Losses incurred by UP Sub arising out of or resulting from a
failure to comply with any such bulk sales Laws.
9.3 Other Agreements Superseded; Waiver and Modification.
This Agreement and the other Transaction Agreements supersede all prior
agreements, representations or understandings, written or oral, of UTC, UP Sub
and Xxxxx relating to any form of acquisition of Xxxxx, and incorporates the
entire understanding of the parties with respect thereto. This Agreement may be
amended or supplemented only by a written instrument signed by the party against
whom the amendment or supplement is sought to be enforced. Except as otherwise
provided in Article 6, the party benefited by any condition or obligation may
waive the same, but such waiver shall not be enforceable by another party unless
made by written instrument signed by the waiving party.
9.4 Survival.
Except as otherwise specified in this Agreement, the indemnifications,
covenants, representations and warranties made in this Agreement or made in
writing pursuant hereto shall survive the Closing, any investigation of the
matters covered thereby by or on behalf of any party to whom they are made or
any discovery or knowledge prior to Closing or execution of this Agreement of
misstatement or misrepresentation by the party to whom they are made. Each of
the parties acknowledges that the others are entering into this Agreement and
will consummate the transactions contemplated hereby, in reliance upon the
express representations and warranties of the other parties made in this
Agreement or made in a writing delivered pursuant hereto.
9.5 Recovery of Litigation Costs.
If any legal action or any arbitration or other proceeding is brought
for the enforcement of this Agreement or because of an alleged dispute, breach,
default or misrepresentation in connection with any provision of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
9.6 Notices.
Any notice under or relating to this Agreement shall be given in writing
and shall be deemed sufficiently given and served for all purposes when
personally delivered or given by telex or machine-confirmed facsimile or seven
(7) Business Days after a writing is deposited in the mails, airmail postage and
other charges prepaid and registered, return receipt requested, in each case
sent
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or addressed as follows:
(a) If to UP Sub :
UP Sub Acquisition, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, CEO
with a copy to:
Xxxxx Patusky Xxxxxxxxx & Xxxxxx, Chartered
0000 Xxxxxxxxxxx Xxxxxx. X.X.
Xxxxxxxxxx, X.X. 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(b) If to UTC:
United Therapeutics Corporation
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, CEO
with a copy to:
Xxxxx Patusky Xxxxxxxxx & Xxxxxx, Chartered
0000 Xxxxxxxxxxx Xxxxxx. X.X.
Xxxxxxxxxx, X.X. 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(c) If to Xxxxx:
Xxxxx PH, Inc.
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c/o Sherbrooke Capital
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxxxx
With a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxx
9.7 Law Governing: Arbitration.
(a) This Agreement shall be construed in accordance with the laws of
the State of Delaware, without regard to its internal conflicts of law
principles.
(b) Any controversy or claim arising out of or relating to this
Agreement, or to any breach thereof, shall be finally resolved by arbitration
pursuant to this Section 9.7. To institute the provisions of this paragraph, the
party desiring to institute the procedure shall first notify the other party and
then both parties shall attempt to resolve the claim within fifteen (15)
Business Days. In the event the parties cannot resolve the claim within such
time period, the matter shall be submitted to the American Arbitration
Association ("AAA") in accordance with the Commercial Arbitration Rules of the
American Arbitration Association as they exist on the date of this Agreement.
The parties agree that the exclusive proper place of venue for any arbitration
hearing shall be Silver Spring, Maryland for a claim brought by Xxxxx and San
Francisco, California for a claim brought by UTC or UP Sub. The parties agree
that the arbitrator(s) may grant any relief that could have been granted if the
case were determined by the civil courts of general jurisdiction. If, however,
the arbitrator(s) determine(s) that he or she is or they are not empowered to
exercise the equitable powers of the courts, the party being denied the
equitable relief may have the matter tried by the civil courts. Xxxxx consents
to the jurisdiction of the courts sitting in Silver Spring, MD, USA (and of the
appropriate appellate courts) and UTC and UP Sub consent to the jurisdiction of
the courts sitting in San Francisco, CA, USA (and of the appropriate appellate
courts), in any such action or proceeding and waives any objection to venue laid
therein. In addition, nothing contained herein shall prevent UP Sub or their
Affiliates from pursuing any remedies, including but not limited to any of the
remedies afforded hereunder, in any courts or other tribunals in which any labor
dispute or action involving any employment contract may be pending with Xxxxx.
Process in respect of litigation or arbitration may be served on any party by
certified mail, return receipt requested, in addition to every other method
permitted by law. The parties agree that the fact of any arbitration
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or litigation and all matters with respect to or arising out of any such
arbitration or litigation shall be confidential information in accordance with
Section 9.12, unless otherwise required by applicable law.
9.8 Assignability; Successors.
Xxxxx may not assign any of its rights or obligations hereunder without
the consent of UP Sub or UTC. UP Sub may assign its rights and obligations
hereunder without consent of Xxxxx to any Affiliate of UP Sub or UTC or to any
successor or assign of UP Sub or UTC, provided that notice thereof is given to
Xxxxx and provided that such assignment shall not release UP Sub or UTC from its
obligations hereunder. Any assignment made or purported to be made contrary to
the provisions of this Section 9.8 shall be void and of no force or effect.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of each of the parties and their respective successors and assigns.
9.9 Time of Essence.
Time is of the essence of this Agreement and all of the terms,
conditions and provisions hereof.
9.10 Counterparts.
This Agreement may be executed in any number of counterparts and each
such executed counterpart shall be deemed to be an original instrument, but all
such executed counterparts together shall constitute one and the same
instrument. One party may execute one or more counterparts other than that or
those executed by another party, without thereby affecting the effectiveness of
any such signatures.
9.11 Parties in Interest.
Nothing in this Agreement, express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any Person other than
the parties to it and their respective permitted successors and assigns, nor is
anything in this Agreement intended to relieve or discharge any obligation of
any third Person to any party hereto or give any third Person any right of
subrogation or action over against any party hereto.
9.12 Severability.
If any provision of this Agreement is held to be unenforceable for any
reason, it shall be modified rather than voided, if possible, in order to
achieve the intent of the parties to this Agreement to the extent possible. In
any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
9.13 Confidentiality.
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(a) The terms and conditions of this Agreement shall be treated as
confidential and shall not be disclosed by any party hereto other than to (i)
its or his officers, directors, employees, accountants, lawyers, and other
advisors, on a need to know basis, (ii) successors and assigns of such party and
Persons considering investing in or acquiring such party or any Affiliate
thereof or providing financing for the same, and (iii) as may be reasonably
necessary to permit consummation of the transactions contemplated by this
Agreement or for subsequent operation of UP Sub or the Business. The foregoing
shall not prevent disclosure as required by applicable law, including federal
securities laws, or by UTC as it may deem necessary or appropriate as a public
company. In connection with any disclosure permitted by this Section 9.13, the
disclosee shall be instructed to comply with the obligations of this paragraph.
(b) In the event that the Closing does not occur, each of UP Sub, on
the one hand, and Xxxxx, on the other hand, shall treat as confidential and
shall not disclose other than to its or his officers, directors, employees,
accountants, lawyers, and other advisors, on a need to know basis, any
confidential information (as defined in Section 9.13(d) below) of any of the
other parties hereto. In connection with any disclosure permitted by this
Section 9.13, the disclosee shall be instructed to comply with the obligations
of this Section 9.13.
(c) At all times after Closing, Xxxxx will hold in strictest
confidence, and will not use or disclose to any third party other than its or
his officers, directors, employees, accountants, lawyers, and other advisors, on
a need to know basis, any confidential information (as defined in Section
9.13(d) below) of Xxxxx or other Affiliates or of UP Sub or any of their
Affiliates obtained by Xxxxx at any time prior to Closing. In connection with
any disclosure permitted by this Section 9.13, the disclosee shall be instructed
to comply with the obligations of this Section 9.13.
(d) The term "confidential information" as used in this Section 9.13
shall mean all non-public information relating to a party and its Affiliates.
"Confidential information" of a party includes, without limitation, information
relating to services and products of such party and its Affiliates, marketing or
promotion of such services and products, business policies or practices,
customers, suppliers, or such other information received from others that the
party or its Affiliates is obligated to treat as confidential. "Confidential
information" shall not include, however, information that: (i) is or becomes
generally known or available to the public through no fault of any of the
parties to whom disclosure is made, (ii) was given to third parties by the
disclosing party without restriction on use or disclosure, (iii) was known by
the parties to whom disclosure is made prior to receiving such information from
the disclosing party, or (iv) is required to be disclosed pursuant to any court
order, law or regulation, after providing notice to the disclosing party;
provided, however, that in the event of a dispute disclosure, the party to whom
disclosure was made shall bear the burden of proof of demonstrating that the
confidential information falls within one of the above exceptions.
9.14 Disclosure Schedules.
Disclosure of any fact or item in any Disclosure Schedule shall, should
the existence of the fact or item or its contents be relevant to any other
Disclosure Schedule and such relevance shall be clear on its face, be deemed to
be disclosed with respect to that other Disclosure Schedule
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whether or not any explicit cross-reference appears therein. Disclosure of any
matter in the Disclosure Schedules shall not be deemed to imply that such matter
is or is not material. Disclosure of any matter in the Disclosure Schedules
shall not constitute an admission or raise any inference that such matter
constitutes a violation of law or an admission of liability or facts supporting
liability.
ARTICLE 10. INTERPRETATION OF THIS AGREEMENT
10.1 Terms Defined.
As used in this Agreement, the following terms have the respective
meanings set forth below or in the location indicated:
Accounting Arbitrator - see Section 8.3(c).
Acquisition - see Recitals.
Affiliate - a Person (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, another Person, or (ii) which beneficially owns or holds 20% or more of
any class of the voting stock of another Person, or (iii) 20% or more of the
voting stock (or in the case of a Person which is not a corporation, 20% or more
of the equity interest) of which is beneficially owned or held by another
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by Contract or
otherwise.
Agreement - this Asset Purchase Agreement, including the Exhibits and
Schedules hereto.
Anniversary Date - see Section 1.5.
Average Anniversary Closing Price - see Section 1.5(a).
Business - a medical foods company engaged in the business of
development and marketing of medical foods and other products enriched with the
amino acid L-arginine.
Business Day - any day which is not a Saturday, Sunday or a bank holiday
in either California or Maryland, USA.
Closing - see Section 1.2.
Closing Date - see Section 1.2.
Consideration - any cash or non-cash consideration of any kind
whatsoever, whether tangible or intangible, direct or indirect.
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Xxxxx - see introductory paragraphs.
Xxxxx Assets - all assets listed on Schedule 1.1(a) hereto.
Xxxxx Common Stock - common stock, no par value per share, of Xxxxx.
Xxxxx Indebtedness - all current liabilities and long-term debt of
Xxxxx, including without limitation, (i) all accounts payable, long-term debt
due within one-year, short-term borrowings, accrued expenses including officer's
compensation, salaries and payroll taxes, and other liabilities, (ii) all debt
for borrowed money or for the deferred purchase price of property or services,
and other interest-bearing obligations, of Xxxxx, (iii) all obligations under
leases that are or should be, under generally accepted accounting principles
related to the preparation of consolidated financial statements, as consistently
applied by Xxxxx in past years, treated as capital leases of Xxxxx, (iv) all
debt for borrowed money or for the deferred purchase price of property or
services, or capital leases, in respect of which Xxxxx has provided its
Guarantee (other than the Guarantee of the Real Property Lease by Xxxxx), (iv)
all principal, interest and other amounts outstanding (and any penalties or
other amounts attributable to the repayment thereof at the Closing) by Xxxxx to
any lender, bank or financial institution, whether by loan, line of credit, or
bank overdraft, (v) all overdue or deferred social security contributions or
pension fund payments or other payments in respect of Taxes (including interest
and penalties thereon accrued Closing), (vi) any deferred payment in respect of
any court orders or judgments or settlements arising prior to the Closing Date,
and (vii) any deferred severance payments in connection with dismissal of any
employees prior to the Closing Date to the extent treated as indebtedness under
generally accepted accounting principles of the United States.
Xxxxx Liabilities - all liabilities listed on Schedule 1.1(b) hereto and
on the Stub Balance Sheet.
Xxxxx Preferred Stock - the preferred stock of Xxxxx as authorized by
the Xxxxx Articles of Incorporation and described in detail on Schedule 3.3.
Xxxxx Proprietary Rights - see Section 3.17(a).
Xxxxx Stockholders - all holders of outstanding securities of Xxxxx
entitled to vote with respect to the Acquisition.
Contract - except as specifically provided in this Agreement, any
written agreement, contract, lease, license, promissory note, conditional sales
contract, indenture, mortgage, deed of trust, commitment, undertaking,
instrument or arrangement of any kind. Without limiting the generality of the
foregoing, any agreement, commitment, undertaking or arrangement of any kind
with a Governmental Agency shall constitute a "Contract" whether it was entered
into voluntarily or pursuant to applicable law or in settlement of a claim or
possible claim by such Governmental Agency, or otherwise.
Designated Claim - see Section 8.l(a)(ii).
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Designated Claim Loss - see Section 8.1(a)(ii).
Designated Contracts - see the Contracts included or listed on Schedule
3.22.
Designated Exchange Rate - with respect to a given currency to be
converted into Dollars, the rate for purchase of Dollars with such currency
published in The Wall Street Journal as being in effect on the Business Day
prior to the date on which the conversion is to be calculated.
Disposition - see Section 7.3(a).
Dollar or $ - means United States dollars.
Environmental Requirements - any currently existing United States or
other country's central, provincial, regional, federal, state or local laws,
statutes and common law, ordinances, regulations, permits, orders, licenses,
approvals, authorizations or similar requirements of any Government Authority
and all judicial and administrative agency decrees, judgments and orders, in
each case relating to safety, health or the environment, including without
limitation, those pertaining to soils, subsurface, air, surface water and ground
water, land use, Hazardous Materials, waste, disposal, noise, odor and other
human health or environmental matters.
Equipment - any machinery, tools, appliances, vehicles, furniture,
fixtures, equipment, computers (and related software systems), parts or similar
tangible personal Property.
Escrow - the escrow established by the parties hereto pursuant to the
Escrow Agreement.
Escrow Agent - Xxxxx, Patusky Xxxxxxxxx & Xxxxxx, Chartered, Chicago
Title, or their successor, who shall serve as escrow agent of the Escrow
pursuant to the Escrow Agreement.
Escrow Agreement - the Escrow Agreement entered into by and among the
parties hereto in the form attached hereto as Exhibit A.
Exchange Act - the Securities Exchange Act of 1934, as amended.
Exploitation - the use, display, reproduction, manufacturing,
distribution, licensing, sublicensing, sale, representation or any other
exercise of any Proprietary Rights, or any rights relating thereto, in any
product, work, technology, process or other form or manner, including without
limitation to any online use or transmission via Internet or other electronic
medium, whether now known or hereafter devised. "Exploit" means to so use,
display, reproduce, manufacture, distribute, license, sublicense, sell,
represent or otherwise exercise any Proprietary Rights, or any rights relating
thereto.
Financial Statements - see Section 3.7.
Governmental Agency - any United States or other country's central,
provincial, regional,
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federal, state or local government or any political subdivision thereof or any
department, commission, board, bureau, agency, court, panel or other
instrumentality of any kind of any of the foregoing or any quasi-governmental
entity of any kind or type.
Hazardous Materials - any substance:
(i) which is (upon the Closing) defined as a hazardous substance,
hazardous material, hazardous waste, extremely hazardous substance, extremely
hazardous material, extremely hazardous waste, pollutant, contaminant, toxic
substance, toxic material, toxic waste or any similar term in any Environmental
Requirement;
(ii) which is hazardous, toxic, corrosive, flammable, explosive,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous,
(iii) which is regulated under any Environmental Requirement;
(iv) the presence of which on the Real Property causes or threatens
to cause a nuisance upon the Real Property or to adjacent properties or poses or
threatens to pose a hazard to the Real Property or to the health or safety of
Persons on or about the Real Property;
(v) which is petroleum or a petroleum substance or a petroleum
product, including without limitation gasoline, diesel fuel or other petroleum
hydrocarbons;
(vi) which is asbestos or an asbestos compound or which contains
asbestos; or
(vii) which is a PCB (polychlorinated biphenyl) or a PCB compound or
contains PCBs.
Immigration Laws - see Section 3.20(a)(vi).
Knowledge - means the actual knowledge of the Person to whom the
reference is made.
Licensed Proprietary Rights - see Section 3.17(a).
Law - see Section 3.14(a).
Lien - any mortgage, deed of trust, security interest, retention of
title or lease for security purposes, pledge, charge, encumbrance, equity,
claim, easement, right of way, covenant, limitation, condition or restriction,
leasehold interest or any right of any kind of any other Person in or with
respect to any Property.
Lock-Up Period - see Section 7.3(a).
Losses - see Section 8.1(a).
Materially Adverse - with respect to a Party, shall mean materially
adverse to such Party or
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its business, financial condition, results of operations, liabilities, assets,
properties, sales, operations, or prospects, taken as a whole.
Net Sales - (i) with respect to any Product, the invoiced sales price of
such Product billed by UP Sub and its Affiliates to Third Parties less the
following: (a) credits, allowances, discounts and rebates to, and chargebacks
from the account of, such Third Parties for spoiled, damaged, obsolete,
outdated, rejected or returned Product and for retroactive price reductions in
lieu of returned Product; (b) actual shipping and handling, freight and
insurance costs incurred in transporting such Product in final form to such
Third Parties; (c) cash, quantity, and trade discounts; (d) sales, use, excise,
value-added and other taxes or governmental charges incurred in connection with
the sale, exportation or importation, transportation, or delivery of such
Product in final form; and (e) bad debts or uncollectible accounts; and (ii) and
all amounts received by UP Sub and its Affiliates from licenses granted to Third
Parties under the Patent Rights. "Net Sales," with respect to any Product
containing one or more active ingredients and/or delivery technologies in
addition to the Patent Rights, means the invoiced sales price of such Product
billed to Third Parties, less all the allowances, adjustments, reductions,
discounts, taxes, duties and other charges referred to in the foregoing
sentence, multiplied by a fraction, the numerator of which shall be the
manufacturing cost or acquisition cost, as applicable, of the Patent Rights
included in such Product and the denominator of which shall be the manufacturing
cost or acquisition cost, as applicable, of all active ingredients and/or
delivery technologies in such Product, including the Patent Rights. In no event,
however, shall the foregoing fraction be less than one-half (1/2).
Ordinary Course of Business - the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
Owned Proprietary Rights - see Section 3.17(a).
Patent Rights - (i) all domestic and international issued patents and
patent applications set forth in Schedule 3.17(a) attached hereto which are
owned by or licensed to Xxxxx which claim (a) a Product, (b) the process of
manufacture or use of a Product, or (c) a congener described within the patents
or patent applications set forth Schedule 3.17(a), and (ii) any and all
reissues, extensions, substitutions, confirmations, registrations,
revalidations, renewals, supplementary protection certificates, additions,
continuations, continuations-in-part, divisions, or foreign equivalents to any
such patents and patent applications set forth in Schedule 3.17(a).
Permitted Lien - (a) Liens for taxes or other governmental charges not
yet due and payable or the amount or validity of which is being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been reserved on the Stub Balance Sheet, (b) Liens existing on the Closing Date
and judgments and other similar Liens fully reflected on the Stub Balance Sheet,
and (c) easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use,
and enjoyment of the property or assets encumbered thereby in the normal course
of business or materially impair the value of the property subject thereto.
Person - an individual, partnership, corporation, limited liability
company, trust or
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unincorporated organization, or a Governmental Agency.
Plan - see Section 3.21.
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Product - shall mean any product that is dependant upon the Patent
Rights.
Property - any interest of Xxxxx in any kind of property or asset,
whether real, personal or mixed, tangible or intangible, and wherever located,
including without limitation money and the other Xxxxx Assets, and including,
without limitation, the Business and the goodwill and value of Xxxxx as a going
concern.
Proprietary Rights - all trademarks, service marks, trade dress,
copyrights and trade names, and all applications for or registrations of any of
the foregoing, marketing or promotional designs, rights against other Persons in
respect of the any of the foregoing and any other promotional Properties used or
useful or developed or acquired for use in the Business. All privacy, publicity,
property, moral or other such similar rights ("droit moral"). All patents,
patent rights, patent applications, letters patent, trade secrets, inventions,
models, processes, designs, licenses, business rights, rights to exclude others,
information as to the identities or requirements of customers or potential
customers, market information, market analyses, marketing plans, operating or
management policies, procedures and forms, and all other proprietary rights used
or useful or developed or acquired for use in the Business.
Real Property Leases - the leases of real property under which Xxxxx is
a lessee, all as set forth on Schedule 3.11.
Release - any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching or disposing into the environment of
any Hazardous Material.
SEC - Securities and Exchange Commission.
SEC Documents - see Section 4.10.
Securities Act - the Securities Exchange Act of 1933, as amended.
Shares - see Section 1.3.
Stub Balance Sheet - see Section 3.7.
Stub Period Date - see Section 3.7.
Tax or Taxes - any United States or other country's central, provincial,
regional, federal, state, local or other jurisdictional tax, import or export
fees, duties or tariffs, assessments, fees (including without limitation,
documentation, license, filing and registration fees), customs' fees, social
security payments or contributions, social contribution payments, or other
charges of any other nature or kind whatsoever, levied by a Governmental
Authority, including without limitation (a) taxes imposed or based on or with
respect to or measured by any net or gross income or receipts, (b) value added,
transfer, excise, sales, use, gross receipts or other similar taxes, (c) any
franchise taxes, taxes on doing business, license taxes, occupational taxes,
gross receipts taxes or capital stock taxes (including any minimum taxes and
taxes measured by any item of tax preference), (d) taxes based upon or imposed
with reference to real or personal property ownership, (e) compulsory social
welfare and social security funds, (f) employment taxes that are required to be
paid or collected, or
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any other employment related tax imposed by any other federal, state or other
jurisdiction, (g) any withholding for Taxes, and (h) any taxes similar to or in
the nature of those taxes described in (a), (b), (c), (d), (e), (f) or (g)
above, together with any penalties, fines, interest, or other additions to any
such taxes or other charges however imposed, withheld, levied or assessed.
Taxable - see Section 3.10(e).
Tax Losses - see Section 8.l(a)(v).
Third Party - any individual or entity other than Xxxxx, UP Sub , UTC
and their respective Affiliates.
Transaction Agreements - this Agreement, the Escrow Agreement and the
Registration Rights Agreement.
Transfer Agent - the transfer agent for UTC, which at the date hereof is
The Bank of New York.
UP Sub - see introductory paragraphs.
UTC - see introductory paragraphs.
UTC Common Stock - the common stock of UTC, par value $.01 per share.
UTC Preferred Stock - see Section 4.2.
UTC Shares - see Section 1.3(c).
Valid Patent Claim - a claim of an issued and unexpired patent included
within the Patent Rights which has not been held unenforceable, unpatentable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, and
which has not been admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise.
10.2 References.
All terms such as "herein," "hereby" or "hereunder" refer to this
Agreement as a whole. The use of the terms "including", "include" and "includes"
followed by one or more examples is intended to be illustrative and shall not be
deemed or construed to limit the scope of the classification or category to the
examples listed.
10.3 Headings, Schedules.
The headings used in this Agreement are provided for convenience only
and this Agreement shall be interpreted as though they did not appear herein.
The Schedules and Attachments to this Agreement form an integral part of this
Agreement.
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10.4 Fair Construction.
This Agreement shall be given a fair and reasonable construction in
accordance with the intention of the parties and without regard to the drafter
thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
UP ACQUISTION CORPORATION
By:
-----------------------------------
Its:
UNITED THERAPEUTICS CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxxxx, CEO
XXXXX PHARMA, INC.
By: /s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, Ph.D., Chairman
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