1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
CN BIOSCIENCES, INC.,
as Buyer,
XXXXX X. XXXXXXX, XXXXXX XXXXXX, XXXXXXX XXXXXXXXXX,
XXXX XXXXXXX, XXXXXX XXXXXXXXXX, XXXXXX XXXXXXX,
XXXXXXX XXXXXX, XXXXXX XXXX and XXX VAN OOSBREE
as Sellers,
and
PEL-FREEZ, INC.
Dated as of
November 25, 1997
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS
ARTICLE II. SALE AND PURCHASE
SECTION 2.1. Agreement to Sell and to Purchase...................................................................11
SECTION 2.2. Closing.............................................................................................11
SECTION 2.3. Purchase Price; [**************]; Earn-Out Amount...................................................11
SECTION 2.4. Preparation of Effective Date Financial Statements; Purchase Price Adjustment.......................13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.1. Ownership; Title to the Shares......................................................................15
SECTION 3.2. Authority...........................................................................................15
SECTION 3.3. Corporate Organization..............................................................................15
SECTION 3.4. Capitalization......................................................................................16
SECTION 3.5. Subsidiaries........................................................................................16
SECTION 3.6. No Conflict or Violation............................................................................16
SECTION 3.7. Consents and Approvals..............................................................................17
SECTION 3.8. Financial Statements................................................................................17
SECTION 3.9. Liabilities for Borrowed Money; Absence of Undisclosed Liabilities; Guarantees......................18
SECTION 3.10. Interests in Real Property.........................................................................18
SECTION 3.11. Personal Property..................................................................................19
SECTION 3.12. Intellectual Property; Intangible Assets...........................................................20
SECTION 3.13. Compliance with Law................................................................................21
SECTION 3.14. Licenses, Permits and Governmental Approvals.......................................................21
SECTION 3.15. Environmental Matters..............................................................................22
SECTION 3.16. Litigation.........................................................................................23
SECTION 3.17. Contracts..........................................................................................24
SECTION 3.18. Accounts Receivable................................................................................24
SECTION 3.19. Inventories........................................................................................25
SECTION 3.20. Catalogs, Brochures and Advertisements.............................................................25
SECTION 3.21. Warranties.........................................................................................25
SECTION 3.22. Customers and Suppliers............................................................................25
SECTION 3.23. Products Liability.................................................................................26
SECTION 3.24. Insurance..........................................................................................26
SECTION 3.25. Transactions with Directors, Officers and Affiliates...............................................27
SECTION 3.26. Propriety of Past Payments.........................................................................28
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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SECTION 3.27. Employee Plans.....................................................................................28
SECTION 3.28. Labor Matters......................................................................................28
SECTION 3.29. Absence of Certain Changes or Events...............................................................29
SECTION 3.30. Tax Matters........................................................................................32
SECTION 3.31. Accuracy of Information............................................................................33
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF DUBBELL
SECTION 4.1. Corporate Organization..............................................................................33
SECTION 4.2. Capitalization......................................................................................33
SECTION 4.3. Subsidiaries........................................................................................34
SECTION 4.4. Validity of Agreement...............................................................................34
SECTION 4.5. No Conflict or Violation............................................................................34
SECTION 4.6. Consents and Approvals..............................................................................34
SECTION 4.7. Financial Statements................................................................................34
SECTION 4.8. Tax Matters.........................................................................................35
SECTION 4.9. Holding Company.....................................................................................36
SECTION 4.10. Licenses, Permits and Governmental Approvals.......................................................37
SECTION 4.11. Compliance with Law................................................................................37
SECTION 4.12. Environmental Matters..............................................................................38
SECTION 4.13. Litigation.........................................................................................39
SECTION 4.14. Contracts..........................................................................................40
SECTION 4.15. Intercompany Accounts..............................................................................40
SECTION 4.16. Propriety of Past Payments.........................................................................40
SECTION 4.17. Employee Plans.....................................................................................41
SECTION 4.18. Absence of Certain Changes or Events...............................................................44
SECTION 4.19. Parent's Liabilities...............................................................................46
SECTION 4.20. Other Properties...................................................................................46
SECTION 4.21. Accuracy of Information............................................................................46
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
SECTION 5.1. Corporate Organization..............................................................................47
SECTION 5.2. Validity of Agreement...............................................................................47
SECTION 5.3. No Conflict or Violation; No Defaults...............................................................47
SECTION 5.4. Consents and Approvals..............................................................................47
SECTION 5.5. Investment Representation...........................................................................47
SECTION 5.6. Financial Capability................................................................................48
ARTICLE VI. COVENANTS
SECTION 6.1. Redemption Transaction..............................................................................48
SECTION 6.2. Continued Development of Novagen Brand Products.....................................................48
SECTION 6.3. Non-Solicitation of Employees.......................................................................48
SECTION 6.4. Access to Properties and Records....................................................................48
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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SECTION 6.5. Negotiations........................................................................................49
SECTION 6.6. Consents and Approvals..............................................................................49
SECTION 6.7. Commercially Reasonable Efforts.....................................................................49
SECTION 6.8. Notice of Breach....................................................................................49
SECTION 6.9. Confidential Information............................................................................50
SECTION 6.10. Tax Covenants......................................................................................50
SECTION 6.11. Release of Resigning Directors and Officers; Assumption of Obligations.............................51
SECTION 6.12. Actions of Sellers.................................................................................52
SECTION 6.13. Change of Name of the Parent.......................................................................52
SECTION 6.14. Transfer of Corporate Books and Records............................................................52
SECTION 6.15. Employee Relations and Benefits....................................................................53
SECTION 6.16. Further Assurances.................................................................................55
SECTION 6.17. Post-Closing Management of Promega Dispute.........................................................55
SECTION 6.18. Intercompany Accounts..............................................................................56
SECTION 6.19. Continuation of Company's Business.................................................................56
SECTION 6.20 Releases from Liability.............................................................................56
SECTION 6.21 Ancillary Agreements................................................................................57
SECTION 6.22 Closing Documentation................................................................................57
SECTION 6.23. Actions of Buyer....................................................................................57
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF THE BUYER
SECTION 7.1. Representations and Warranties of the Sellers.......................................................57
SECTION 7.2. Performance of the Sellers' Obligations.............................................................57
SECTION 7.3. Redemption Transaction..............................................................................58
SECTION 7.4. Receipt of Documents................................................................................58
SECTION 7.5. Consents and Approvals..............................................................................58
SECTION 7.6. No Violation of Orders..............................................................................59
SECTION 7.7. No Material Adverse Change..........................................................................59
SECTION 7.8. Discharge of Indebtedness; Release of Liens.........................................................59
SECTION 7.9. Opinion of Counsel..................................................................................59
SECTION 7.10. Legal Matters......................................................................................59
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF THE SELLERS
SECTION 8.1. Representations and Warranties of the Buyer.........................................................60
SECTION 8.2. Performance of the Buyer's Obligations..............................................................60
SECTION 8.3. Consents and Approvals..............................................................................60
SECTION 8.4. No Violation of Orders..............................................................................60
SECTION 8.5. Opinion of Counsel..................................................................................60
SECTION 8.6. Legal Matters.......................................................................................60
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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ARTICLE IX. INDEMNIFICATION
SECTION 9.1. Indemnification by the Sellers and the Buyer........................................................61
SECTION 9.2. Procedures..........................................................................................63
SECTION 9.3. Procedures Relating to Tax Claims...................................................................65
SECTION 9.4. Limitations on Indemnity............................................................................65
SECTION 9.5. Set Off Against Earn-Out Payments...................................................................66
SECTION 9.6. Purchase Price Adjustment...........................................................................66
SECTION 9.7. Insurance...........................................................................................66
SECTION 9.8. Exclusive Remedies..................................................................................66
SECTION 9.9. Disclaimer..........................................................................................66
ARTICLE X. TERMINATION AND ABANDONMENT
SECTION 10.1. Methods of Termination; Upset Date.................................................................67
SECTION 10.2. Procedure Upon Termination.........................................................................68
ARTICLE XI. MISCELLANEOUS PROVISIONS
SECTION 11.1. Representation of Sellers by Sellers' Agents.......................................................68
SECTION 11.2. Nature and Survival of Representations, Etc........................................................69
SECTION 11.3. Publicity..........................................................................................69
SECTION 11.4. Successors and Assigns; No Third-Party Beneficiaries...............................................69
SECTION 11.5. Brokers, Finders and Financial Advisors............................................................70
SECTION 11.6. Fees and Expenses..................................................................................70
SECTION 11.7. Notices............................................................................................70
SECTION 11.8 Release under Seller's Escrow Agreement.............................................................72
SECTION 11.9. Entire Agreement...................................................................................73
SECTION 11.10. Waivers and Amendments............................................................................73
SECTION 11.11. Severability......................................................................................73
SECTION 11.12. Titles and Headings...............................................................................73
SECTION 11.13. Signatures and Counterparts.......................................................................73
SECTION 11.14. Enforcement of the Agreement......................................................................74
SECTION 11.15. Governing Law.....................................................................................74
SECTION 11.16. Knowledge.........................................................................................74
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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Exhibits
Exhibit A-1 Shareholders of Novagen, Inc.
Exhibit A-2 Shareholders of Novagen, Inc. as of the Closing Date
Exhibit B Form of Opinions of Counsel to the Parent, Dubbell and the Company Minority Shareholders
Exhibit C Form of Opinion of Buyer's Counsel
Exhibit D Form of Certificate of Non-Foreign Status
Exhibit E Sellers' Escrow Agreement
Exhibit F [************************]
Exhibit G Xxxxxxxxxx Employment Agreement
Exhibit H rRTF Assignment and License Agreement
Exhibit I BEVSCO Agreement
Exhibit J CIMPRO Agreement
Exhibit K Terms of Agreements
Disclosure Schedule
Company
Section 3.3 Corporate Organization
Section 3.6 Conflicts or Violations
Section 3.7 Consents and Approvals
Section 3.8 Financial Statements
Section 3.9 Liabilities for Borrowed Money
Section 3.10 Real Property Interests
Section 3.11 Personal Property
Section 3.12 Intellectual Property; Intangible Assets
Section 3.13 Compliance with Laws
Section 3.14 Licenses, Permits and Governmental Approval
Section 3.15 Environmental Matters
Section 3.16 Litigation
Section 3.17 Contracts
Section 3.18 Accounts Receivable
Section 3.20 Catalogs, Brochures and Advertisements
Section 3.21 Warranties
Section 3.22 Customers and Suppliers
Section 3.24 Insurance
Section 3.25 Transactions with Directors, Officers and Affiliates
Section 3.26 Past Payments
Section 3.28 Labor Matters
Section 3.29 Certain Changes or Events
Section 3.30 Tax Matters
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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Parent
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Section 4.1 Corporate Organization
Section 4.2 Options
Section 4.3 Subsidiaries
Section 4.5 Conflicts or Violations
Section 4.6 Consents and Approvals
Section 4.8 Taxes
Section 4.9 Parent Lease
Section 4.10 Licenses
Section 4.11 Compliance with Laws
Section 4.12 Environmental Matters
Section 4.13 Litigation
Section 4.14 Contracts
Section 4.16 Past Payments
Section 4.17 Employee Plans
Section 4.18 Certain Changes or Events
Other
Section 6.15 Employee Relations and Benefits
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
8
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November 25,
1997, by and among
CN BIOSCIENCES, INC., a Delaware corporation (the "BUYER");
XXXXX X. XXXXXXX ("DUBBELL");
XXXXXX XXXXXX, XXXXXXX XXXXXXXXXX, XXXX XXXXXXX, XXXXXX XXXXXXXXXX,
XXXXXX XXXXXXX, XXXXXXX XXXXXX, XXXXXX XXXX and XXX VAN OOSBREE (collectively,
the "COMPANY MINORITY SHAREHOLDERS" and, together with Dubbell, the "SELLERS");
and
PEL-FREEZ, INC., an Arkansas corporation (the "PARENT").
W I T N E S S E T H:
WHEREAS, Dubbell is the owner of all of the issued and outstanding
capital stock of the Parent;
WHEREAS, immediately prior to the Closing (as defined herein), the
Parent shall (a) contribute the outstanding capital stock of Pel-Freez Rabbit
Meat, Inc., an Arkansas corporation ("PFRM"), to Tri-State Industrials, Inc., an
Arkansas corporation ("TRI-STATE") and (b) purchase from Dubbell 52,800 shares
of Common Stock, par value $.01 per share, of the Parent (the "PARENT COMMON
STOCK") in consideration for the transfer to him of all of the outstanding
capital stock of Tri-State (all of such redeemed shares of Parent Common Stock
are hereinafter referred to as the "REDEEMED SHARES" and such transfers of
capital stock and redemptions of the Redeemed Shares are hereinafter
collectively referred to as the "REDEMPTION TRANSACTION");
WHEREAS, the Parent and the Company Minority Shareholders are the
respective owners of the shares of issued and outstanding capital stock of
Novagen, Inc., an Arkansas corporation (the "COMPANY"), listed after their names
on EXHIBIT A-1 hereto (such shares owned by the Company Minority Shareholders,
the "COMPANY MINORITY SHARES"), which shares constitute all of the issued and
outstanding capital stock of the Company;
WHEREAS, the Buyer desires to purchase the Parent Common Stock other
than the Redeemed Shares (the "REMAINING PARENT SHARES") from Dubbell, and
Dubbell desires to sell the Remaining Parent Shares to the Buyer, in each case
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Buyer desires to purchase the Company Minority Shares from
the Company Minority Shareholders, and the Company Minority Shareholders desire
to sell the
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
9
Company Minority Shares to the Buyer, in each case upon the terms and subject to
the conditions set forth in this Agreement; and
WHEREAS, as a result of the purchase by the Buyer of the Remaining
Parent Shares and the Company Minority Shares, each of the Parent and the
Company shall become wholly owned subsidiaries of the Buyer.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"ADJUSTMENT AMOUNT" shall have the meaning set forth in Section 2.3.
"AFFILIATE" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with such Person. As used in this definition, "control" (including the
terms "controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, together with the Exhibits and
Disclosure Schedules referred to herein.
"AGGRIEVED PARTY" shall have the meaning set forth in Section 9.2.
"ANCILLARY DOCUMENT" shall have the meaning given thereto in Section
9.1.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other
day on which banks in the State of New York are required or authorized to close.
"BUYER" shall have the meaning set forth in the recitals to this
Agreement.
"BUYER INDEMNIFIED PARTIES" shall mean the Buyer, any Affiliate of the
Buyer, and their respective officers, directors and employees.
"BUYER'S PROPOSED PURCHASE PRICE ADJUSTMENT" shall have the meaning set
forth in Section 2.4(c).
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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"C&L" shall have the meaning set forth in Section 2.4(b).
"CELL LINES" shall mean all cell lines, sibling cell lines, strains,
cultures and other biological or biochemical source stocks used by the Company
in its business.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended.
"CERTIFICATION OF NOVAGEN BRAND NET SALES" shall mean, for each of the
years ending December 31, 1998, 1999 and 2000, a certificate, signed by an
officer of the Buyer, setting forth the dollar amount of Novagen Brand Net Sales
for the respective fiscal year and the dollar amount of any Earn-Out Amount
payable for such fiscal year.
"CLAIM" shall have the meaning set forth in Section 9.2.
"CLOSING" shall have the meaning set forth in Section 2.2.
"CLOSING DATE" shall have the meaning set forth in Section 2.2.
"COBRA" shall mean Section 4908B of the Code and Section 601 et seq. of
ERISA, and the proposed or final regulations thereunder.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the recitals to this
Agreement.
"COMPANY AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 3.8.
"COMPANY COMMON STOCK" shall have the meaning set forth in Section 3.1.
"COMPANY EFFECTIVE DATE STOCKHOLDERS EQUITY" shall have the meaning set
forth in Section 2.4(b).
"COMPANY FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.8.
"COMPANY MINORITY SHARES" shall have the meaning set forth in the
recitals to this Agreement.
"COMPANY MINORITY SHAREHOLDERS" shall have the meaning set forth in the
recitals to this Agreement.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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"COMPANY SEPTEMBER 27 STOCKHOLDERS EQUITY" shall have the meaning set
forth in Section 2.4(a).
"COMPANY UNAUDITED INTERIM FINANCIAL STATEMENTS" shall have the meaning
set forth in Section 3.8.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
6.9.
"CORPORATE RECORDS" shall have the meaning set forth in Section 6.14.
"DB PLAN" shall have the meaning set forth in Section 6.15(g).
"DISCLOSING PARTY" shall have the meaning set forth in Section 6.9.
"DISCLOSURE SCHEDULE" means, collectively, the respective schedules
provided by the Sellers in accordance with the terms of this Agreement.
"DISPUTE NOTICE" shall have the meaning set forth in Section 2.4(c).
"DUBBELL" shall have the meaning set forth in the recitals to this
Agreement.
"DUBBELL'S AGENT" shall have the meaning set forth in Section 11.1.
"E&Y" shall have the meaning set forth in Section 2.4(b).
"EARN-OUT AMOUNT" shall mean, with respect to each of the fiscal years
ending December 31, 1998, 1999 and 2000, the dollar amount, if any, equal to the
product of (x) 0.20 and (y) the amount by which Novagen Brand Net Sales for such
year exceeds the Threshold Amount applicable to such year.
"EARN-OUT PERIOD" shall mean the period commencing on January 1, 1998
and ending on December 31, 2000.
"EFFECTIVE DATE" shall mean December 27, 1997.
"EFFECTIVE DATE FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 2.4(b).
"EMPLOYMENT AND LABOR AGREEMENTS" shall have the meaning set forth in
Section 3.28.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 3.15.
"ENVIRONMENTAL PERMITS" shall have the meaning set forth in Section
3.15.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which is or has ever been treated as a single employer with the
Parent, the Company or any Subsidiary of the Parent, under Section 414(b), (c),
(m), or (o) of the Code, but only during the period in which such trade or
business was so treated.
[*********************************************************************
**]
"FINAL PURCHASE PRICE ADJUSTMENT" shall have the meaning set forth in
Section 2.4(c).
"FURNITURE, FIXTURES AND EQUIPMENT" shall have the meaning set forth in
Section 3.11.
"FURNITURE, FIXTURES AND EQUIPMENT LEASES" shall have the meaning set
forth in Section 3.11.
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 3.15.
"INDEMNIFYING PARTIES" shall have the meaning set forth in Section 9.2.
"INITIAL PAYMENT" shall mean $10,500,000, which, in the aggregate,
shall be paid to the Sellers' Agents on the Closing Date on the terms and
subject to the conditions of this Agreement to be held and distributed by the
Sellers' Agents in accordance with the terms of the Sellers' Escrow Agreement.
"INTANGIBLE ASSETS" shall mean all intangible personal property rights
(including Intellectual Property) owned or held by the Company and relating to
the operation of its business, including, without limitation, all goodwill of
the Company relating to its business, all know-how relating to the manufacture
or development of Novagen Brand Products by the Company at any time up to and
including the Closing Date, trade secrets, all software, software systems,
databases and all other information systems used in its business, the current
toll free "800" and "888" telephone numbers utilized by the Company in
connection with its business, DNA and RNA sequences, expression strains and
vectors, production formulations, manufacturing methods, laboratory methods, and
all rights on the part of the Company to proceeds of any insurance policies and
all claims on the part of the Company for recoupment, reimbursement and coverage
under any insurance policies, in each case arising in connection with the
operation of its business.
"INTELLECTUAL PROPERTY" shall mean (i) trademarks and service marks
(registered or unregistered), trade dress, trade names and other names and
slogans embodying business or product goodwill or indications of origin, all
applications or registrations in any jurisdiction
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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pertaining to the foregoing and all goodwill associated therewith, including,
without limitation, the copyrights to all Product catalogs of the Company,
product guides, user instructions, technical notes and other supplements
published in connection with the Company's business, advertising copy used in
connection with the Company's business and art work related to the business;
(ii) patents, patentable inventions, discoveries, improvements, ideas, formula
methodology, processes, technology and computer programs, software and databases
(including source code, object code, development documentation, programming
tools, drawings, specifications and data) and all applications or registrations
in any jurisdiction pertaining to the foregoing, including all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof;
(iii) trade secrets, know-how, including confidential and other non-public
information, and the right in any jurisdiction to limit the use or disclosure
thereof; and (iv) Internet Web sites, domain names and registrations or
applications for registrations thereof and those other items listed in Section
3.12 of the Disclosure Schedule.
"IRCA" shall mean the Immigration Reform and Control Act of 1986 and
all rules and regulations adopted pursuant thereto or in connection therewith.
"XXXX AND XXXXXXX NOTES" shall mean, together, the Promissory Note
dated August 28, 1997 issued by the Parent in the name of Xxxxx Xxxx in the
principal amount of $59,072.00 and the Promissory Note dated October 28, 1997
issued by the Parent in the name of Xxxxxx Xxxxxxx in the principal amount of
$3,584.22.
"LICENSE" shall have the meaning set forth in Section 3.14.
"LOSS" shall have the meaning set forth in Section 9.1.
"MATERIAL CONTRACT" shall have the meaning set forth in Section 3.17.
"XXXXXXXXXX" shall have the meaning set forth in Section 6.17.
"MINORITY SHAREHOLDERS' AGENTS" shall have the meaning set forth in
Section 11.1.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"1998 SHORT PERIOD FEDERAL TAX RETURN" shall have the meaning set forth
in Section 6.10.
"1997 FEDERAL TAX RETURNS" shall have the meaning set forth in Section
6.10.
"NLRB" shall mean the National Labor Relations Board.
"NOVAGEN BRAND NET SALES" shall mean, as to any given fiscal year, the
gross amount received by the Buyer and its Subsidiaries on a consolidated basis
from sales to any Person of
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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Novagen Brand Products, including but not limited to sales to third party
manufacturers for use in products with another label or brand and intercompany
sales to Buyer or its Affiliates, after deducting, where applicable, the
following:
(a) normal and customary trade discounts actually allowed
and taken;
(b) returns and credits;
(c) taxes (the legal incidence of which is on a purchase
and separately shown on a shipping invoice); and
(d) transportation, insurance and postage charges (if
prepaid and invoiced as a separate item).
Sales to related parties shall be priced as if made on an arm's length basis to
an outside third party at the Company's or the Buyer's published sales price.
"NOVAGEN BRAND PRODUCT" shall mean any Products having a Novagen Part
Number or Novagen Label, whether or not sold under the Novagen Label by the
Company, the Buyer or its Subsidiaries, including any Product currently sold by
the Company, together with any new Product which the Company may develop or
cause to be developed. Products sold by the Buyer and its Subsidiaries shall be
classified as "Novagen Brand Products" by reference to their having a Novagen
Part Number or Novagen Label without regard to the catalog or other type of
sales media in which they are listed.
"NOVAGEN LABEL" shall mean the label attached to a Product which
identifies the Company.
"NOVAGEN PART NUMBER" shall mean the number attributed by the Company
to a Product.
"OCCURRENCE" shall have the meaning set forth in Section 3.23.
"PARENT" shall have the meaning set forth in the recitals to this
Agreement.
"PARENT AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 4.7.
"PARENT COMMON STOCK" shall have the meaning set forth in the recitals
to this Agreement.
"PARENT CONTRACT" shall have the meaning set forth in Section 4.14.
"PARENT EMPLOYEE BENEFIT PLANS" has the meaning set forth in Section
4.17(a).
"PARENT FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.7.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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"PARENT LEASE" shall mean the Lease Agreement dated June 3, 1983,
between the Parent and Teachers Insurance and Annuity Association of America, as
last amended by the Sixth Amendment to Lease, dated January 31, 1997 (as the
same may be amended, supplemented and modified from time to time).
"PARENT LIABILITIES" shall mean all of the debts, obligations, or
liabilities, if any, of the Parent as of the Closing Date, of whatsoever kind,
whether contingent or otherwise, whether known or unknown.
"PARENT PENSION PLAN" has the meaning set forth in Section 4.17(a).
"PARENT SHARES" shall mean, as of the date of this Agreement, the
issued and outstanding shares of Parent Common Stock.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereof.
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, joint-stock company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
"PFRM" shall have the meaning set forth in the recitals to this
Agreement.
"POLICIES" shall have the meaning set forth in Section 3.24.
"PRE-CLOSING TAX PERIOD" shall mean any taxable period ending on or
before the Effective Date and the portion ending on and including the Effective
Date of any Straddle Period.
"PRODUCT" shall mean any component, substance or material manufactured
by Novagen or any third party manufacturer under contract to Novagen, whether
sold separately or combined to form a kit with other articles.
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"PROMEGA DISPUTE" shall mean the dispute involving patent infringement
and other matters in the case of Promega Corporation v. Novagen, Incorporated,
No 96-C-0164-C, in the United States District Court for the Western District of
Wisconsin, including all appeals therefrom and other actions relating to the
causes of action and underlying facts and patents involved in such case.
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"PROMEGA EUROPEAN APPLICATION MATTER" shall mean the actions by the
Company in opposition to patent EPO 566714B1 of Promega Corporation.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
16
"PROPERTY TAXES" shall have the meaning set forth in Section 6.10.
"PURCHASE PRICE" shall mean the sum of (a) the Initial Payment and, (b)
any Earn-Out Amounts, including Adjustment Amounts, if any, (x) plus the Final
Purchase Price Adjustment if such amount is payable to the Sellers or (y) minus
the Final Purchase Price Adjustment if such amount is payable to the Buyer.
"REAL PROPERTY LEASES" shall have the meaning set forth in Section
3.10.
"RECEIVING PARTY" shall have the meaning set forth in Section 6.9.
"REDEEMED SHARES" shall have the meaning set forth in the recitals to
this Agreement.
"REDEMPTION TRANSACTION" shall have the meaning set forth in the
recitals to this Agreement.
"REMAINING PARENT SHARES" shall have the meaning set forth in the
recitals to this Agreement.
"RESET THRESHOLD TARGET FOR 1999" shall have the meaning set forth in
the definition of Threshold Amount.
"RETENTION BONUS POOL" shall have the meaning set forth in Section
6.15(i).
"SELLERS" shall have the meaning set forth in the recitals to this
Agreement.
"SELLERS' AGENTS" shall have the meaning set forth in Section 11.1.
"SELLERS' ESCROW AGREEMENT" shall mean the Sellers' Escrow Agreement in
the form attached hereto as Exhibit E.
"SELLERS' PROPOSED PURCHASE PRICE ADJUSTMENT" shall have the meaning
set forth in Section 2.4(b).
"SEVERANCE AGREEMENTS" shall mean the Employment Termination Agreement
dated June 23, 1997 between the Parent and Xxxxx Xxxx, including all exhibits
thereto, and the Employment Termination Agreement dated July 31, 1997 between
the Parent and Xxxxxx Xxxxxxx, including all exhibits thereto.
"SHARES" shall mean the Remaining Parent Shares and the Company
Minority Shares.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
17
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"STRADDLE PERIOD" shall mean any taxable period of the Parent or the
Company that includes (but does not end on) the Effective Date.
"STRADDLE TAX RETURN" shall mean any Tax Return required to be filed by
the Parent or the Company covering a taxable period commencing prior to the
Effective Date and ending after the Effective Date.
"SUBSIDIARY" of any Person means any corporation, association,
partnership or other business entity of which a majority of the combined voting
power of all voting stock or other interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly,
through one or more intermediaries, or both, by such Person.
"TAX" or "TAXES" shall mean any and all federal, state, local, foreign
and other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on the Parent or the
Company, including, without limitation, taxes imposed on, or measured by,
income, franchise, profits or gross receipts, and also ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and customs duties.
"TAX CLAIM" shall have the meaning set forth in Section 9.3.
"TAX RETURNS" shall mean returns, reports, information statements and
other documentation (including any additional or supporting material) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax and shall
include any amended returns required as a result of examination adjustments made
by the Internal Revenue Service or other Tax authority.
"THRESHOLD AMOUNT" shall mean (a) $5,400,000 for the year ending
December 31, 1998, (b) $7,200,000 for the year ending December 31, 1999, and (c)
$9,700,000 for the year ending December 31, 2000; provided, however, that if
Novagen Brand Net Sales are less than $5,400,000 for the year ending December
31, 1998, then the amount set forth in (b) above shall be the product of Novagen
Brand Net Sales for the year ending December 31, 1998 multiplied by 1.34 (the
"RESET THRESHOLD TARGET FOR 1999") and the amount set forth in (c) above shall
be the product of the Reset Threshold Target for 1999 multiplied by 1.35.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
18
"TRI-STATE" shall have the meaning set forth in the recitals to this
Agreement.
"VECTOR AGREEMENTS" shall mean the letter agreements, dated August 1,
1997, between the Parent and Vector Securities International, Inc.
"WARN" means the Worker Adjustment and Retraining Notification Act and
any similar state or local "plant closing" law.
ARTICLE II.
SALE AND PURCHASE
SECTION 2.1. AGREEMENT TO SELL AND TO PURCHASE. On the Closing Date and
upon the terms and subject to the conditions set forth in this Agreement, (i)
Dubbell shall sell, assign, transfer, convey and deliver the Remaining Parent
Shares, free and clear of any liens, claims, charges, security interests or
other legal or equitable encumbrances, limitations or restrictions, to the
Buyer, and the Buyer shall purchase and accept the Remaining Parent Shares from
Dubbell, and (ii) the Company Minority Shareholders shall sell, assign,
transfer, convey and deliver the Company Minority Shares, free and clear of any
liens, claims, charges, security interests or other legal or equitable
encumbrances, limitations or restrictions, to the Buyer, and the Buyer shall
purchase and accept the Company Minority Shares from the Company Minority
Shareholders.
SECTION 2.2. CLOSING. The closing of such purchases and sales (the
"CLOSING") shall take place at 10:00 A.M., on January 2, 1998 or such later date
that is the next Business Day after the Business Day on which each condition
described in Articles VII and VIII are satisfied or waived (the "CLOSING DATE"),
other than those conditions that can be satisfied only on the Closing Date, at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the Buyer and the
Sellers' Agents shall agree in writing. The Closing Date may be postponed to
such other time and date as the Buyer and the Sellers' Agents shall agree in
writing. At the Closing, (i) Dubbell shall deliver to the Buyer or its designees
stock certificates representing the Remaining Parent Shares, duly endorsed in
blank for transfer or accompanied by appropriate stock powers duly executed in
blank, with all taxes, direct or indirect, attributable to the transfer of the
Remaining Parent Shares paid or provided for and (ii) the Company Minority
Shareholders shall deliver to the Buyer or its designees stock certificates
representing the Company Minority Shares, duly endorsed in blank for transfer or
accompanied by appropriate stock powers duly executed in blank, with all taxes,
direct or indirect, attributable to the transfer of the Company Minority Shares
paid or provided for. In full consideration and exchange for the Remaining
Parent Shares and the Company Minority Shares, the Buyer shall thereupon pay to
the Sellers the Purchase Price in accordance with the provisions of Section 2.3
hereof.
SECTION 2.3. PURCHASE PRICE; [**************]; EARN-OUT AMOUNT. The
Purchase Price for the Shares shall be paid as follows:
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
19
(a) On the Closing Date, the Buyer shall pay to the Sellers'
Agents an amount equal to the Initial Payment,
[************************************************] which payment shall
be made by wire transfer in immediately available funds to the bank
account specified by the Sellers' Agents in written instructions to the
Buyer at least five (5) Business Days prior to the Closing Date and
shall be held and distributed by the Sellers' Agents pursuant to the
terms of the Sellers' Escrow Agreement.
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(b) (i) On or prior to the March 31 following each of the
years ending December 31, 1998, 1999 and 2000, the Buyer shall deliver
to the Sellers' Agents a Certification of Novagen Brand Net Sales for
the most recently completed fiscal year. If a Certification of Novagen
Brand Net Sales indicates that an Earn-Out Amount is due to the
Sellers, then simultaneously with the delivery of such Certification,
the Buyer shall deliver to the Sellers' Agents a certified check in an
amount equal to the aggregate Earn-Out Amount due to the Sellers, such
amount to be held and distributed by the Sellers' Agents pursuant to
the terms of the Sellers' Escrow Agreement.
(ii) During the Earn-Out Period, the Buyer shall keep
complete and accurate records of Novagen Brand Net Sales in sufficient
detail to enable the Sellers' Agents to verify payments owed to the
Sellers under this Agreement in respect of any Earn-Out Amount. The
Buyers shall permit Sellers' Agents to have reasonable access to such
records annually, including the Buyer's detailed sales reports
identifying sales by individual product, at the offices of the Buyer.
If Dubbell's Agent notifies the Buyer that he has reasonable grounds to
believe that the amount due in respect of an Earn-Out Amount is greater
than the amount specified in the Certification of Novagen Brand Net
Sales (which notice shall be delivered to the Buyer within sixty (60)
days after the delivery of the applicable Certification of Novagen
Brand Net Sales), the Buyer shall permit a certified public accountant
appointed by the Sellers' Agents at Sellers' expense, to examine the
Buyer's books, ledgers and records covering Novagen Brand Net Sales
during regular business hours for the purpose of verifying, and only to
the extent necessary to verify, whether any additional amount is due to
each Seller (the "ADJUSTMENT AMOUNT"), but in no event shall such
procedure be conducted more than once for each calendar year period.
The accountant shall maintain all information received during such
examination in strict confidence, and shall report to the Sellers'
Agents only with respect to the accuracy of any Earn-Out Amount. In the
event the records examined reveal that the Buyer has paid less than the
amount due the Sellers in respect of the Earn-Out Amount in question,
the Buyer shall pay the appropriate Adjustment Amount due to the
Sellers based on such audit plus accrued interest on such additional
amount at the base, prime, or similar interest rate in effect for the
period covered by the audit as set by Citibank, N.A. and if the records
examined reveal that the Buyer has paid less than ninety-five percent
(95%) of the amount due the Sellers in respect of the Earn-Out Amount
in question, the Buyer shall also pay the
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
20
reasonable costs of the audit. In the event the records examined reveal
that the Buyer has paid more than the amount due in respect of the
Earn-Out Amount in question, the Sellers shall not be obligated to
return any amounts to the Buyer. Payment of the amount due to the
Sellers in respect of any Adjustment Amount shall be made by delivering
a certified check payable to the order of the Sellers' Agents to be
held and distributed by the Sellers' Agents pursuant to the terms of
the Sellers' Escrow Agreement.
SECTION 2.4. PREPARATION OF EFFECTIVE DATE FINANCIAL STATEMENTS;
PURCHASE PRICE ADJUSTMENT.
(a) (i) Prior to the execution of this Agreement, the Sellers
have caused to be prepared and have delivered to the Buyer: the
unaudited interim consolidated balance sheet of the Parent and its
Subsidiaries as of September 27, 1997, and the unaudited interim
balance sheet of the Company as of September 27, 1997, together with
the related unaudited consolidated statements of income for the Parent
and the Company for the period then ended and (ii) at the time of
execution of this Agreement, the Sellers shall cause to be prepared and
delivered to the Buyer a certificate signed by the Sellers' Agents
certifying the amount of the stockholders' equity of the Company as of
September 27, 1997 as reflected in such financial statements (the
"COMPANY SEPTEMBER 27 STOCKHOLDERS EQUITY"). Such financial statements
and the data reflected in such certificate shall have been derived from
the Company Unaudited Interim Financial Statements, which financial
statements are subject to any year-end adjustments which appropriately
apply to such unaudited interim financial statements.
(b) Promptly after the Closing Date, the Sellers shall cause
to be prepared the consolidated balance sheet of the Parent, together
with a supplemental consolidating balance sheet of Parent and the
Company, as of December 27, 1997, together with the respective related
consolidated and supplemental consolidating statements of income,
shareholders' equity and cash flows for the year then ended, which
financial statements shall reflect the consummation of the Redemption
Transaction (the "EFFECTIVE DATE FINANCIAL STATEMENTS"). The Effective
Date Financial Statements shall be prepared in accordance with GAAP
applied on a basis consistent with that used in, and in accordance with
the same accounting principles applied in, the preparation of the
Parent Audited Financial Statements and shall include all such
information and schedules as are required by Regulation S-X of the
Securities and Exchange Commission to permit their inclusion in the
securities law filings of the Buyer. The Sellers shall cause Coopers &
Xxxxxxx L.L.P. ("C&L") to audit the Effective Date Financial Statements
and shall cause C&L to issue, on or prior to February 28, 1998, an
opinion containing no qualifications or exceptions with respect to the
scope of its audit or otherwise, on the Effective Date Financial
Statements that such accountants have audited the Effective Date
Financial Statements in accordance with generally accepted auditing
standards and that the Effective Date Financial Statements were
prepared in accordance with GAAP. The Sellers shall cause the Effective
Date Financial Statements together with the opinion of C&L referenced
above to be
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
21
delivered to the Buyer on or prior to February 28, 1998. Ernst & Young,
LLP ("E&Y") shall have access to C&L's work papers and personnel,
subject to an officer of the Buyer and a partner of E&Y signing an
appropriate hold harmless letter. Simultaneously with the delivery of
the Effective Date Financial Statements, Sellers shall deliver to Buyer
a certificate signed by the Sellers' Agents setting forth a schedule
sufficient to permit an analysis of the stockholders' equity of the
Company as of the Effective Date and certifying (i) such schedule has
been properly derived from the Effective Date Financial Statements,
(ii) the amount of the stockholders equity of the Company as of the
Effective Date as reflected on such schedule (the "COMPANY EFFECTIVE
DATE STOCKHOLDERS EQUITY") and (iii) a calculation of the difference
between the Company September 27 Stockholders Equity and the Company
Effective Date Stockholders Equity (the "SELLERS' PROPOSED PURCHASE
PRICE ADJUSTMENT"). After the Closing, Buyer shall give Sellers and C&L
such access to personnel and books and records as may be required for
Sellers to fulfill their obligation under this Section 2.4(b).
(c) The Buyer shall have the right to dispute Sellers'
Proposed Purchase Price Adjustment during a fifteen (15) day period
following the delivery of the certificate described in Section 2.4(b)
by delivering a dispute notice to the Sellers' Agents (a "DISPUTE
NOTICE") setting forth in reasonable detail its disputes with the
Sellers regarding the amount of the Company Effective Date Stockholders
Equity or the calculation of the purchase price adjustment, and setting
forth Buyer's proposed purchase price adjustment (the "BUYER'S PROPOSED
PURCHASE PRICE ADJUSTMENT"). In the absence of the delivery of a
Dispute Notice, or if the Buyer affirmatively notifies the Sellers'
Agents that it agrees with Seller's Proposed Purchase Price Adjustment,
the Sellers' Proposed Purchase Price Adjustment shall be deemed to be
final and shall become the "FINAL PURCHASE PRICE ADJUSTMENT." If a
Dispute Notice is delivered, the parties shall have a period of thirty
(30) days after delivery of the Dispute Notice in which they shall
seek, in good faith, together with their respective accountants to
resolve the matters in dispute. If such matters are resolved by the
parties, the Company Effective Date Stockholders Equity and the Final
Payment Price Adjustment shall be as so agreed. If at the conclusion of
such thirty (30) day period, the parties have been unable to resolve
such dispute, the dispute shall be referred to a third firm of
independent public accountants of recognized national standing that is
not then engaged by either the Sellers or the Buyer to resolve such
dispute. Such firm shall be instructed that it shall have authority to
resolve the dispute only by selecting either the Sellers' Proposed
Purchase Price Adjustment or the Buyer's Proposed Purchase Price
Adjustment, whichever such firm considers as most closely reflecting
the correct determination consistent with this Agreement. The purchase
price adjustment selected by such third firm of accountants shall
become the Final Purchase Price Adjustment, the amount of the Company
Effective Date Stockholders Equity shall be adjusted accordingly and
each shall be binding on all parties hereto. The parties shall
cooperate fully with such third party accountants and provide such firm
with access to personnel and work papers, with a view to permitting
such firm to make its determination within
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
22
thirty (30) days after submission to it of the dispute. The fees of
such firm shall be paid by the party whose proposed purchase price
adjustment is not selected by such firm.
(d) Within five (5) days after the determination of the Final
Purchase Price Adjustment as called for in the foregoing paragraphs:
(i) if the Company Effective Date Stockholders Equity
exceeds the Company September 27 Stockholders Equity, the Buyer shall
deliver a certified check in an amount equal to the Final Purchase
Price Adjustment payable to the order of the Sellers' Agents to be held
and distributed by the Sellers' Agents pursuant to the terms of the
Sellers' Escrow Agreement; and
(ii) if the Company September 27 Stockholders Equity
exceeds the Company Effective Date Stockholders Equity, the Sellers
shall cause the Sellers' Agents to deliver a certified check to the
Buyer, payable to the order of the Buyer, in an amount equal to the
Final Purchase Price Adjustment.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby jointly and severally represents, warrants
and agrees (except with respect to Sections 3.1 and 3.2 to which each severally
represents, warrants and agrees) as follows:
SECTION 3.1. OWNERSHIP; TITLE TO THE SHARES. Dubbell owns the Parent
Shares and will own at and as of the Closing the Remaining Parent Shares, in
each case free and clear of any lien, charge or encumbrance, and at and as of
the Closing there shall be no issued and outstanding shares of capital stock of
the Parent other than the Remaining Parent Shares. Each of the Company Minority
Shareholders and the Parent owns, free and clear of any lien, charge or
encumbrance, all of the shares of common stock, no par value, of the Company
(the "COMPANY COMMON STOCK") set forth after the name of such Minority
Shareholder and the Parent on EXHIBIT A-1 hereto and will own at and as of the
Closing Date, free and clear of any lien, charge or encumbrance, all of the
shares of Company Common Stock set forth after the name of such Minority
Shareholder and the Parent on EXHIBIT A-2 hereto.
SECTION 3.2. AUTHORITY. This Agreement constitutes a valid and binding
obligation of each Seller (subject to normal equitable principles and subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the
rights of creditors) and this Agreement and all transactions contemplated hereby
will not result in a violation of any of the terms and provisions of any
agreement to which such Seller is a party or by which such Seller is otherwise
bound.
SECTION 3.3. CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
23
has all requisite corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals to own its properties and assets
and to conduct its businesses as now conducted. The Company is duly qualified to
do business as a foreign corporation 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 necessary,
except in any jurisdiction where the failure to be so qualified would not have a
material adverse effect on the business, results of operations or the condition
(financial or otherwise) of the Company. Section 3.3 of the Disclosure Schedule
sets forth all of the jurisdictions in which the Company is qualified to do
business. The copies of the articles of incorporation and by-laws of the Company
included as part of Section 3.3 of the Disclosure Schedule constitute accurate
and complete copies of such organizational instruments and accurately reflect
all amendments thereto through the date hereof.
SECTION 3.4. CAPITALIZATION. The authorized capital stock of the
Company consists of 5,000 shares of Company Common Stock, all of which are
issued and outstanding. As of the date hereof, such shares of Company Common
Stock are owned of record and beneficially by the Persons in the amounts set
forth opposite their names on EXHIBIT A-1 hereto, and at and as of to the
Closing Date, such shares of Company Common Stock will be owned of record and
beneficially by the Persons in the amounts set forth on EXHIBIT A-2 hereto. Such
shares of Company Common Stock represent all of the issued and outstanding
shares of capital stock of the Company. All shares of Company Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no outstanding options, warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any shares of Company Common Stock, and there are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire
outstanding shares of Company Common Stock.
SECTION 3.5. SUBSIDIARIES. The Company does not own any shares of, or
control, directly or indirectly, or have any equity interest in, any Person.
SECTION 3.6. NO CONFLICT OR VIOLATION.
(a) Except as set forth in Section 3.6 of the Disclosure
Schedule, the execution, delivery and performance by the Sellers of
this Agreement and the transactions contemplated hereby do not and will
not: (i) violate or conflict with any provision of the articles of
incorporation or by-laws of the Company; (ii) violate any provision of
law, statute, judgment, order, writ, injunction, decree, award, rule,
or regulation of any court, arbitrator, or other governmental or
regulatory authority applicable to the Company; (iii) violate, result
in a breach of, constitute (with due notice or lapse of time or both) a
default or cause any obligation, penalty, premium, right of termination
or acceleration to arise, accrue or occur under any material contract,
lease, loan agreement, mortgage, security agreement, trust indenture or
other agreement or instrument to which the Company is a party or by
which the Company is bound or to which its properties or assets are
subject; (iv) result in the creation or
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
24
imposition of any lien, charge or encumbrance of any kind whatsoever
upon any of the properties or assets of the Company; or (v) result in
the cancellation, modification, revocation or suspension of any
License.
(b) Except as set forth in Section 3.6 of the Disclosure
Schedule, to the best of each Seller's knowledge, neither the purchase
of the Remaining Parent Shares and the Company Minority Shares by the
Buyer nor the consummation of the transactions contemplated by this
Agreement will result in any material adverse change in the business
operations of the Company or in the loss of the benefits of any
relationship with any customer or supplier.
SECTION 3.7. CONSENTS AND APPROVALS. Section 3.7 of the Disclosure
Schedule sets forth a true and complete list of each consent, waiver,
authorization or approval of any governmental or regulatory authority, domestic
or foreign, or any other Person, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required of or to be made by the Company in connection with the execution,
delivery and performance of this Agreement.
SECTION 3.8. FINANCIAL STATEMENTS.
(a) Section 3.8 of the Disclosure Schedule includes copies of
(x) the audited balance sheet of the Company as of December 28, 1996,
together with the related statements of income, shareholders' equity
and cash flows for the year then ended and the notes thereto (the
"COMPANY AUDITED FINANCIAL STATEMENTS") and (y) the unaudited interim
balance sheet of the Company as of September 27, 1997, together with
the related unaudited statement of income for the nine-month period
then ended (the "COMPANY UNAUDITED INTERIM FINANCIAL STATEMENTS" and,
together with the Company Audited Financial Statements, the "COMPANY
FINANCIAL STATEMENTS"). The Company Financial Statements, including the
notes thereto: (i) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby; (ii) present
fairly the financial position, results of operations and cash flows of
the Company as of such dates and for the periods then ended (subject,
in the case of the Company Unaudited Interim Financial Statements, to
normal year-end audit adjustments consistent with prior periods and to
possible damages related to the Promega Dispute); and (iii) are
complete in all material respects, correct and in accordance with the
books of account and records of the Company.
(b) Except as set forth in Section 3.8 of the Disclosure
Schedule, the Company has no commitments to make any capital
expenditures or to invest, advance or loan any monies to any Persons in
excess of $10,000.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
25
SECTION 3.9. LIABILITIES FOR BORROWED MONEY; ABSENCE OF UNDISCLOSED
LIABILITIES; GUARANTEES.
(a) Section 3.9 of the Disclosure Schedule sets forth as of
the date hereof a true and complete list of all indebtedness for
borrowed money due from the Company to any Person.
(b) The Company has no indebtedness or liability, direct or
indirect, absolute or, to the knowledge of any Seller, contingent,
which is required by GAAP to be shown or provided for on the balance
sheet of the Company included in the Company Unaudited Interim
Financial Statements other than as shown on such balance sheet and
other than liabilities incurred or accrued in the ordinary course of
business (including liens for current Taxes and assessments not in
default) since September 27, 1997 and there is no existing condition,
situation or set of circumstances which could reasonably be expected to
result in such a liability except for the Promega Dispute. Except as
disclosed in Section 3.9 of the Disclosure Schedule or as shown in such
balance sheet or in the notes to the Company Unaudited Interim
Financial Statements, the Company is not, directly or indirectly,
liable upon or with respect to (by discount, repurchase agreements or
otherwise), or obligated in any other way to provide funds in respect
of, or to guarantee or assume, any debt, obligation or dividend of any
person, except endorsements in the ordinary course of business in
connection with the deposit of items for collection.
SECTION 3.10. INTERESTS IN REAL PROPERTY.
(a) The Company does not own and has never owned any real
property. Section 3.10 of the Disclosure Schedule sets forth a true and
complete list of all real properties leased by the Company. Except as
disclosed in Section 3.10 of the Disclosure Schedule, the Company has
good and transferable leaseholds in all real property shown in Section
3.10 of the Disclosure Schedule as leased by it (all such leases being
referred to herein as "REAL PROPERTY LEASES"). To any Seller's
knowledge each of the Real Property Leases is valid and enforceable. To
any Seller's knowledge there does not exist under any Real Property
Lease any default by the Company or any landlord or any event which
with notice or lapse of time or both would constitute a default by
either the Company or the landlord. Except as disclosed in Section 3.10
of the Disclosure Schedule, none of the Company's interests in real
property leased by the Company is subject to any liens (other than a
lien of current property Taxes and assessments not in default, if any),
mortgages or encumbrances; and none of such real properties is subject
to any easement, right of way, license, grant, building or use
restriction, exception, reservation, limitation or other impediment
which materially and adversely affects the value thereof to the Company
or which interferes with or impairs the present and continued use
thereof in the usual and normal conduct of the business of the Company.
Sellers have no reason to believe, nor have they attempted to determine
whether improvements on all real property leased or
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
26
used by the Company and the operations therein conducted fail to
conform in all material respects to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and
administrative regulations, except for nonconforming uses or violations
which do not and will not expose any person or property to injury or
damage, adversely affect any insurance coverage, give rise to strict
liability, penalties or fines, jeopardize any Licenses or Environmental
Permits, or interfere materially in any respect with the present use,
operation or maintenance thereof by the Company as now used, operated
or maintained, or which do not and will not materially and adversely
affect the value thereof. All buildings, structures, improvements and
fixtures owned, leased or used by the Company in the conduct of its
business are in good operating condition and repair.
(b) There are no outstanding requirements or recommendations
by any insurance company which has issued a policy covering any real
property leased or used by the Company, or by any board of fire
underwriters or other body exercising similar functions, requiring or
recommending any repairs or work to be done on any such property.
(c) None of the Company's leased real properties is subject to
any sublease, license or other agreement granting to any person any
right to the use, occupancy or enjoyment of such property or any
portion thereof.
SECTION 3.11. PERSONAL PROPERTY. Section 3.11 of the Disclosure
Schedule sets forth a complete and correct list and brief description of each
item of equipment, furniture, fixtures and other tangible personal property (the
"FURNITURE, FIXTURES AND EQUIPMENT") individually having an original purchase
cost or aggregate lease cost exceeding $5,000 owned or leased by the Company,
including vehicles, if any. Except as set forth in Section 3.11 of the
Disclosure Schedule, the Company owns outright and has good title, free and
clear of all title defects and objections, security interests, liens, charges
and encumbrances of any nature whatsoever (other than the lien of current
property Taxes and assessments not in default, if any) to the Furniture,
Fixtures and Equipment owned by it and to all the machinery, equipment,
furniture and fixtures reflected on the balance sheet included in the Company
Unaudited Interim Financial Statements and all such property acquired since the
date thereof, except for any of such property which has been sold or disposed of
in the ordinary course of business. None of the title defects, objections,
security interests, liens, charges or encumbrances (if any) listed in Section
3.11 of the Disclosure Schedule materially and adversely affects the value of
any of the items of personal property to which it relates or interferes with its
use in the conduct of business of the Company. Except as set forth in Section
3.11 of the Disclosure Schedule, the Company holds good and transferable
leaseholds under valid and enforceable leases in all of the Furniture, Fixtures
and Equipment leased by it, and none of such Furniture, Fixtures and Equipment
leased by the Company is subject to any sublease, license or other agreement
granting to any person any right to use such property (all such leases,
subleases, licenses and other agreements are collectively referred to herein as
"FURNITURE, FIXTURES AND EQUIPMENT LEASES"). To the knowledge of any Seller, all
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
27
Furniture, Fixtures and Equipment Leases are valid and enforceable. The Company
is not in breach of or default (and no event has occurred which, with due notice
or lapse of time or both, may constitute such a lapse or default) of any
provision of any of the Furniture, Fixtures and Equipment Leases. The Furniture,
Fixtures and Equipment and other personal property now owned, leased or used by
the Company is sufficient and adequate to carry on its business as presently
conducted and all items thereof are in good operating condition and repair. The
Company does not hold any personal property of any other person, firm or
corporation pursuant to any consignment or similar arrangement.
SECTION 3.12. INTELLECTUAL PROPERTY; INTANGIBLE ASSETS.
(a) Section 3.12 of the Disclosure Schedule sets forth a
complete and correct listing of the Intellectual Property. Except as
described in Section 3.12 of the Disclosure Schedule, all Intellectual
Property listed therein is owned by the Company, free and clear of all
liens, security interests and encumbrances of any nature whatsoever and
is not known to be the subject of any challenge. The Intellectual
Property is valid, subsisting, unexpired, in proper form and, to the
knowledge of any Seller, enforceable and all renewal fees and other
maintenance fees which have fallen due on or prior to the date of this
Agreement have been paid. The grants, registrations and applications
for the Intellectual Property have not lapsed, expired or been
abandoned and no application or registration thereof is the subject of
any legal or governmental proceeding before any governmental,
registration or other authority in any jurisdiction. As of the date
hereof, except as described in Section 3.12 of the Disclosure Schedule,
there are no unresolved claims, suits or actions made and to the
knowledge of any Seller, there has not been communicated to the Company
the threat of any claim that the Company is in violation or
infringement of any Intellectual Property of any other Person. Except
as disclosed in Section 3.12 of the Disclosure Schedule, the Company is
the owner of, or has a valid license to use, the Intellectual Property
necessary for the conduct of its business as now conducted, without any
known conflict with the rights of others, and the Company has not
knowingly forfeited or otherwise relinquished any Intellectual Property
necessary for the conduct of its business as now conducted. The Company
has not entered into any material consent, indemnification, forbearance
to xxx, settlement agreement or cross-licensing arrangement with any
person relating to the Intellectual Property of any third party other
than as may be contained in the license agreements listed in Schedule
3.12 of the Disclosure Schedule. Except as disclosed in Section 3.12 of
the Disclosure Schedule, the Company is not under any obligation to pay
any royalties or similar payments in connection with any license to any
of its Affiliates. Except as set forth on Schedule 3.12 of the
Disclosure Schedule, the Company is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance by the
Sellers of their obligations under this Agreement, in breach of any
license, sublicense or other agreement relating to the Intellectual
Property. The validity and enforceability of the Intellectual Property
and the registration thereof has not been impugned or otherwise
affected adversely as a result of the consummation of the transactions
contemplated by
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
28
this Agreement. No present, and to the knowledge of any Seller, no
former, employees, officers or directors of the Company hold any right,
title or interest directly or indirectly, in whole or in part, in or to
any Intellectual Property.
(b) Except as shown in Section 3.12 of the Disclosure
Schedule, there is no restriction affecting the use of any of the
Intangible Assets (other than with respect to Intangible Assets that
the Company holds by virtue of license arrangements), and no license
has been granted by the Company with respect thereto. None of the
Intangible Assets is currently being challenged, is involved in any
pending or threatened administrative or judicial proceeding, or, to the
knowledge of Company, conflicts with any rights of any other person,
firm or corporation. The Company owns or has the right to use all
computer software, software systems and databases and all other
information systems necessary for the conduct of its business. The
Company's rights in and to the Intangible Assets are sufficient and
adequate to permit the continued conduct of its business in the manner
now conducted, and, to the knowledge of each Seller, none of the
Products or operations of the Company's business involves any
infringement of any proprietary right of any other Person, except as
may be determined in the Promega Dispute.
SECTION 3.13. COMPLIANCE WITH LAW. Except as set forth in Section 3.13
of the Disclosure Schedule, the operations of the Company have been conducted,
in all material aspects, in accordance with all applicable laws, regulations,
orders and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Company and its assets, properties and
operations. None of the Sellers or the Company has received notice of any
violation of any such law, regulation, order or other legal requirement, or is
in default with respect to any order, writ, judgment, award, injunction or
decree of any federal, state or local court or governmental or regulatory
authority or arbitrator, domestic or foreign, applicable to the Company or any
of its assets, properties or operations. No Seller has knowledge of any proposed
change in any such laws, rules or regulations that would adversely affect the
transactions contemplated by this Agreement or all or a substantial part of the
assets or the businesses or prospects of the Company.
SECTION 3.14. LICENSES, PERMITS AND GOVERNMENTAL APPROVALS.
(a) Section 3.14 of the Disclosure Schedule sets forth a true
and complete list of all material licenses of the Company (including,
but not limited to, any environmental licenses, permits, registrations
or authorizations), health or other permits, franchises, authorizations
and approvals issued or granted to the Company by the United States,
any state or local government, any foreign national or local
government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (each a "LICENSE" and,
collectively, the "LICENSES"), and all pending applications therefor.
Each License has been issued to, and duly obtained and fully paid for
by, the Company and is valid, in full force and effect, and not subject
to
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
29
any pending or known threatened administrative or judicial proceeding
to suspend, revoke, cancel or declare such License invalid in any
respect.
(b) The Company has all Licenses required, and such Licenses
are sufficient and adequate in all material respects, to permit the
continued lawful conduct of the Company's business in the manner now
conducted and the ownership, occupancy and operation of its real and
personal property for their present uses. The Company is not in
violation of any of the Licenses in any material respect. The Licenses
have never been suspended, revoked or otherwise terminated, subject to
any fine or penalty, or subject to judicial or administrative review,
for any reason other than the renewal or expiration thereof nor has any
application of the Company for any License ever been denied. The
Company's operations are not being conducted in a manner that violates
any of the material terms or conditions under which any License was
granted. Except as disclosed in Section 3.14 of the Disclosure
Schedule, to the best of Sellers' knowledge, no License will in any way
be materially or adversely affected by, or terminate or lapse by reason
of, the transactions contemplated by this Agreement. The Sellers have
delivered to the Buyer or its representatives true and complete copies
of all Licenses together with all amendments and modifications thereto.
SECTION 3.15. ENVIRONMENTAL MATTERS. Notwithstanding anything to the
contrary contained in this Agreement and in addition to the other
representations and warranties contained herein:
(a) To the knowledge of any of the Sellers, the Company and
its operations are, and in the past have been, in compliance in all
material respects with all applicable laws, regulations and other
requirements of governmental or regulatory authorities or duties under
the common law relating to toxic or hazardous substances, wastes,
pollution or to the protection of human health, safety, or the
environment (collectively, "ENVIRONMENTAL LAWS") and have obtained and
maintained in effect all Licenses, permits and other authorizations or
registrations (collectively "ENVIRONMENTAL PERMITS") required under all
Environmental Laws and are, and in the past have been, in compliance
with all such Environmental Permits.
(b) To the knowledge of any of the Sellers, the Company has
not performed or suffered any act which could give rise to, or has
otherwise incurred, liability to any person (governmental or other)
under CERCLA, or any other Environmental Laws, as amended, nor has the
Company received notice of any such liability or any claim therefor or
submitted notice pursuant to Section 103 of CERCLA to any governmental
agency with respect to any of its assets.
(c) To the knowledge of any of the Sellers, no hazardous
substance, hazardous waste, contaminant, pollutant or toxic substance
(as such terms are defined in any applicable Environmental Law and
collectively referred to herein as "HAZARDOUS MATERIALS") has been
released, placed or dumped by the Company or by
-22-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
30
action of the Company otherwise come to be located on, at, beneath or
near any of the assets or properties leased by the Company or any
surface waters or groundwaters thereon or thereunder.
(d) Except as disclosed in Section 3.15 of the Disclosure
Schedule, the Company does not own or operate, and has never owned or
operated, aboveground or underground storage tanks containing a
regulated substance, as such term is defined in Subchapter IX of the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6991 et seq.,
as amended, or a surface impoundment, lagoon, landfill, PCB containing
electrical equipment or asbestos containing materials.
(e) To the knowledge of any of the Sellers, with respect to
any or all of the real properties leased by the Company: (i) there are
no, nor have there been in the past, asbestos-containing materials,
urea formaldehyde insulation, polychlorinated biphenyls or, to the
knowledge of any Seller, lead-based paints present at any such
properties; and (ii) there are no wetlands (as defined under any
Environmental Law) located on any such properties, nor have any been
drained, filled or otherwise altered.
(f) To the knowledge of any of the Sellers, except as
disclosed in Section 3.15 of the Disclosure Schedule, none of the real
properties leased by the Company (i) has been used or is now used for
the generation, transportation, storage, handling, treatment or
disposal of any Hazardous Materials or (ii) is identified on a federal,
state or local listing of sites which require or might require
environmental cleanup.
(g) To the knowledge of any of the Sellers, there are no
ongoing investigations or negotiations, pending or threatened
administrative, judicial or regulatory proceedings, or consent decrees
or other agreements in effect that relate to environmental conditions
in, on, under, about or related to the Company, its operations or the
real properties leased by the Company.
(h) No Seller has been advised that, nor has any Seller sought
advice as to whether the Company or its operations is subject to
reporting requirements under the federal Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq., or
analogous state statutes and related regulations, all as amended.
SECTION 3.16. LITIGATION. Except as set forth in Section 3.16 of the
Disclosure Schedule and except for the Promega Dispute, there are no claims,
actions, suits, proceedings, labor disputes or investigations pending or, to the
knowledge of any of the Sellers, threatened before any federal, state or local
court or governmental, administrative or regulatory authority, domestic or
foreign, or before any arbitrator of any nature, brought by or against the
Company or its officers, directors, employees, agents or any of their respective
Affiliates involving, affecting or relating to any assets, properties or
operations of the Company or the transactions contemplated by this Agreement.
Section 3.16 of the Disclosure Schedule sets forth a list and a summary
description of all such pending or known threatened actions, suits, proceedings,
disputes or investigations. None of the Sellers or the Company nor any of their
-23-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
31
or the Company's assets or properties is subject to, nor to any Seller's
knowledge, does any basis exist for, any order, writ, judgment, award,
injunction or decree of any federal, state or local court or governmental or
regulatory authority or arbitrator, that materially affects the Company's
assets, properties, operations, prospects, net income or financial condition or
which would interfere with the transactions contemplated by this Agreement.
SECTION 3.17. CONTRACTS.
(a) Section 3.17 of the Disclosure Schedule sets forth a
true and complete list and a summary description showing the expiration
dates (exclusive of renewal terms) of all contracts, agreements,
instruments, commitments and other arrangements to which the Company is
a party or otherwise relating to or affecting any of its assets,
properties or operations including, without limitation, all written or
oral, express or implied contracts, which involve an obligation or
commitment on the part of the Company in excess of $10,000 (each, a
"MATERIAL CONTRACT"). To the knowledge of any of the Sellers, each
Material Contract is valid, binding and enforceable against the parties
thereto in accordance with its terms, and in full force and effect on
the date hereof. The Company has, in all material respects, performed
all obligations, including, but not limited to, the timely making of
any rental or other payments, required to be performed by it under, and
is not in default or breach of any material provision in respect of,
any Material Contract, and no event has occurred which, with due notice
or lapse of time or both, would constitute such a default. The Sellers
have delivered to the Buyer or its representatives true and complete
originals or copies of all the Material Contracts and a copy of every
default notice received by the Sellers or the Company during the past
three years with respect to any of the Material Contracts.
(b) Except as may be disclosed in Schedule 3.17 of the
Disclosure Schedule, to the knowledge of any of the Sellers, the
Company is not a party to any agreement or instrument, or subject to
any charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule or regulation which, insofar as it
relates to the business of the Company, materially adversely affects,
or would in the future be reasonably expected to materially adversely
affect, its business, prospects, operations, properties, assets or
financial condition.
SECTION 3.18. ACCOUNTS RECEIVABLE. All notes and accounts receivable of
the Company reflected in the Company Unaudited Interim Financial Statements, or
arising since September 27, 1997, constitute bona fide receivables of the
Company and have arisen through the ordinary course operation of the Company's
business. All notes and accounts receivable payable to or for the benefit of the
Company on the date hereof are current and collectible in amounts not less than
the aggregate amount thereof (net of reserves established in accordance with
GAAP applied consistently with prior practice) carried on the books of the
Company, and to the best of each Seller's knowledge, are not subject to any
counterclaims or set-offs. Except as set forth in Schedule 3.18, none of such
notes or accounts receivable is more than 90 days past due.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
32
SECTION 3.19. INVENTORIES.
(a) The inventories of the Company reflected in the Company
Unaudited Interim Financial Statements, or acquired by the Company
since September 27, 1997, are carried at the lower of cost or net
realizable value determined in accordance with GAAP, and are of a type,
quantity and quality useable and salable in the ordinary conduct of the
Company's business. Except as disclosed in Schedule 3.19 of the
Disclosure Schedule, all inventory is owned by the Company free and
clear of all liens and encumbrances.
(b) Where necessary in connection with the manufacture of the
Company's products, the Cell Lines, or other biological products, taken
as a whole, are biologically active and provide the source material
necessary to generate the biological materials included in the
Company's products. Such Cell Lines have been properly maintained by
the Company so as to retain their viability, minimize deterioration and
avoid contamination, and the Company has established and maintained
duplicate back-up stocks of the most significant of such Cell Lines
(from the point of view of volume of sales of the Company's products
they generate) to enable their continued production in the event of the
expiration or contamination of the primary stocks of such Cell Lines.
The Company has (i) manufactured or prepared the other biological
materials included in the Company's inventory in accordance with what,
to the knowledge of the Company constitutes good standards generally
utilized by its competitors in the industry, (ii) maintained accurate
quality control records by production lot of all such biological
materials and (iii) has maintained such materials in a manner
reasonably designed to preserve their viability and to avoid
contamination and deterioration.
SECTION 3.20. CATALOGS, BROCHURES AND ADVERTISEMENTS. Section 3.20 of
the Disclosure Schedule sets forth a true and complete list of catalogs, catalog
supplements, advertisements, sales brochures and marketing brochures (whether
print or other media) designed, produced and/or distributed by or for the
Company since January 1, 1996. The Sellers have delivered to the Buyer or its
representatives true and complete originals or copies of all such catalogs,
catalog supplements, advertisements, sales brochures and marketing brochures.
SECTION 3.21. WARRANTIES. Section 3.21 of the Disclosure Schedule sets
forth the written warranties given by the Company in connection with the sale of
its Products. To the best of each Seller's knowledge the Company has given no
unwritten warranties in such connection.
SECTION 3.22. CUSTOMERS AND SUPPLIERS. Section 3.22 of the Disclosure
Schedule sets forth a complete and correct list of (a) the ten largest suppliers
by dollar volume of the Company and the aggregate dollar volume of purchases by
the Company from such suppliers for the last fiscal year of the Company and (b)
all customers or suppliers that within the last
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
33
24 months have terminated any agreement, contract or other arrangement with the
Company or with whom the Company has terminated any agreement, contract or other
arrangement, in each case with or without cause, prior to the stated expiration
thereof. Except as set forth in Section 3.22 of the Disclosure Schedule, since
January 1, 1997, the Company has not at any time delivered to, or received from,
any customer or supplier any formal notice or written allegation of a default or
breach with respect to any agreement, contract or other arrangement and, to each
Seller's knowledge, none of such customers or suppliers has, or intends to
terminate or not exercise any option to renew or otherwise change significantly
its relationship with the Company. The Company has not granted any credit,
rebate, trade-in, free return or other sales terms to customers or others which
substantially differ from terms granted in the ordinary course of its business
consistent with past practice.
SECTION 3.23. PRODUCTS LIABILITY.
(a) There is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature before any court or governmental or
other regulatory or administrative agency, commission or authority
against or involving any Product, or class of claims or lawsuits
involving the same or similar Product produced, distributed or sold by
or on behalf of the Company which is pending or, to the knowledge of
Sellers, threatened, resulting from an alleged defect in design,
manufacture, materials or workmanship of any Product produced,
distributed or sold by or on behalf of the Company, or any alleged
failure to warn, or from any breach of implied warranties or
representations, and there has not been any Occurrence (as defined
below) that is material to the business of the Company.
(b) For purposes of this Section 3.23, the term "OCCURRENCE"
shall mean any accident, happening or event which was caused or
allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship including, without
limitation, any alleged failure to warn or any breach of express or
implied warranties or representations with respect to, or any such
accident, happening or event otherwise involving, a Product (including
any parts or components) manufactured, produced, distributed or sold by
or on behalf of the Company which is likely to result in a claim or
loss.
SECTION 3.24. INSURANCE.
(a) Section 3.24 of the Disclosure Schedule sets forth a true
and complete list of all policies of title insurance, liability and
casualty insurance, property insurance, auto insurance, business
interruption insurance, tenant's insurance, workers' compensation, life
insurance, disability insurance, excess or umbrella insurance and any
other type of insurance insuring the properties, assets, employees
and/or operations of the Company and indicates whether such policies
are in the name of the Company, the Parent or an Affiliate
(collectively, the "POLICIES"). The Sellers have furnished
-26-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
34
true, complete and accurate copies of all the Policies to the Buyer.
All premiums payable under all such Policies have been timely paid and
the Company has complied fully with the terms and conditions of all
such Policies.
(b) Except as set forth in Section 3.24 of the Disclosure
Schedule, all such Policies are in full force and effect and will not
in any way be affected by or terminated or lapsed by reason of the
consummation of the transactions contemplated by this Agreement. The
Sellers shall use their respective best efforts to cause the Company or
the Parent, as applicable, to maintain the coverage under all Policies
in full force and effect through the Closing Date. Neither the Company
nor the Parent is in default under any provisions of the Policies, and
there is no claim by the Company or any other Person pending under any
of the Policies as to which coverage has been questioned, denied or
disputed by the underwriters or issuers of such Policies. Except as set
forth in Section 3.24 of the Disclosure Schedule, none of the Sellers,
the Company or the Parent has received any written notice from or on
behalf of any insurance carrier or other issuer issuing such Policies
that insurance rates or other annual premium or fee in effect as of the
date hereof will hereafter be substantially increased (except to the
extent that insurance rates or other fees may be increased for all
similarly situated risks), that there will be a non-renewal,
cancellation or increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) of any of the Policies in
effect as of the date hereof, or that alteration of any equipment or
any improvements to real estate occupied by or leased to or by the
Company, purchase of additional equipment, or modification of any of
the methods of doing business of the Company, will be required or
suggested after the date hereof. The Policies maintained by the Company
(and the Parent and its Affiliates on behalf of the Company) are
adequate in accordance with the requirements of any applicable leases
and are in at least the minimum amounts required by, and are otherwise
sufficient for purposes of, any currently applicable law, rule, or
regulation of any federal, state, local or foreign government, agency
or authority, including, without limitation, environmental regulations.
SECTION 3.25. TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES.
Except as disclosed in Section 3.25 of the Disclosure Schedule, since January 1,
1996, there have been no transactions between the Company and any director,
officer, employee, stockholder or other Affiliate of the Company or loans,
guarantees or pledges to, by or for the Company from, to, by or for any of such
persons in excess of $50,000. Since January 1, 1996, to the Sellers' knowledge,
none of the officers, directors or employees of the Company, or any spouse or
relative of any of such persons, has been a director or officer of, or has had
any direct or indirect interest in, any firm, corporation, association or
business enterprise which during such period has been a supplier, customer or
sales agent of the Company or has competed with or been engaged in any business
of the kind being conducted by the Company, except for an investment in less
than 5 percent of the outstanding equity of any such firm, corporation,
association or business enterprise, the equity of which is publicly traded.
Except with respect to their ownership interests in the Company or the Parent,
none of the Sellers or
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
35
any of their Affiliates (other than the Company) owns or has any rights in or to
any of the assets, properties or rights used by the Company in the ordinary
course of its business except as disclosed in Section 3.12 of the Disclosure
Schedule.
SECTION 3.26. PROPRIETY OF PAST PAYMENTS. Except as set forth in
Section 3.26 of the Disclosure Schedule, no finder's fee or other payment has
been, or will be, made by or on behalf of the Company in respect of, or in
connection with, any Material Contract to any person, firm, corporation or other
entity which is not a party to such Material Contract. No funds or assets of the
Company have been used for illegal purposes; no unrecorded funds or assets of
the Company have been established for any purpose; no accumulation or use of the
Company's corporate funds or assets has been made without being properly
accounted for in the respective books and records of the Company; all payments
by or on behalf of the Company have been duly and properly recorded and
accounted for in its books and records; no false or artificial entry has been
made in the books and records of the Company for any reason; no payment has been
made by or on behalf of the Company with the understanding that any part of such
payment is to be used for any purpose other than that described in the documents
supporting such payment; and the Company has not made, directly or indirectly,
any illegal contributions to any political party or candidate, either domestic
or foreign.
SECTION 3.27. EMPLOYEE PLANS. There are no Parent Employee Benefit
Plans or Parent Pension Plans applicable to employees of the Company other than
those listed in Section 4.17 of the Disclosure Schedule.
SECTION 3.28. LABOR MATTERS.
(a) Except as set forth in Section 3.28 of the Disclosure
Schedule: (i) the Company is not a party to any outstanding employment,
consulting or management agreements or contracts with officers or
employees that are not terminable at will, or that provide for the
payment of any bonus or commission; (ii) the Company is not a party to
any agreement, policy or practice that requires it to pay termination
or severance pay to salaried, non-exempt or hourly employees (other
than as required by law); (iii) the Company is not a party to any
collective bargaining agreement or other labor union contract
applicable to persons employed by the Company nor does any Seller know
of any activities or proceedings of any labor union to organize any
such employees. The Sellers have furnished to the Buyer complete and
correct copies of all such agreements (the "EMPLOYMENT AND LABOR
AGREEMENTS"). The Company has not breached or otherwise failed to
comply with any provisions of any Employment and Labor Agreement, and
is in full compliance with all terms of any collective bargaining
agreement and there are no grievances outstanding thereunder.
(b) Except as set forth in Section 3.28 of the Disclosure
Schedule (i) the Company is in compliance with all applicable laws
relating to employment and employment practices, wages, hours, and
terms and conditions of employment and is not engaged in any unfair
labor practice; (ii) there is no unfair labor practice charge or
-28-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
36
complaint pending before the NLRB against the Company; (iii) there is
no labor strike, material slowdown or material work stoppage or lockout
actually pending or, to the Sellers' knowledge, threatened against or
affecting the Company, and the Company has not at any time experienced
any strike, material slowdown or material work stoppage, lockout or
other collective labor action by or with respect to employees of the
Company; (iv) there is no representation claim or petition pending
before the NLRB or any similar foreign agency and, to the Sellers'
knowledge, no question concerning representation exists relating to the
employees of the Company; (v) there are no charges with respect to or
relating to the Company pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices; and (vi) the Company has
received no formal notice from any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of the Company and, to the
Sellers' knowledge, no such investigation is in progress.
(c) The Company at all times has been in compliance with all
terms and provisions of IRCA. All employees of the Company assigned to
work at sites pursuant to assignment by the Company have had and will
have had their identity and eligibility for work within the U.S.
properly verified by the Company. At or prior to Closing, when and if
requested by the Buyer, the Sellers shall cause the Company to provide
copies of the I-9 Forms together with such other documentation as may
be requested by the Buyer from time to time in order to satisfy Buyer
that the Company has performed its obligations hereunder as required by
the IRCA.
SECTION 3.29. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 3.29 of the Disclosure Schedule, since September 27, 1997, the
business of the Company has been conducted in the ordinary course consistent
with past practices and there has not been any:
(a) amendment to the Company's articles of incorporation or
by-laws;
(b) change made in the Company's authorized capital or
outstanding securities;
(c) issuance, sale, delivery of, or agreement to issue, sell,
or deliver, any capital stock, bonds, or other corporate securities of
the Company (whether authorized and unissued or held in treasury), or
grant of, or agreement to grant, any options, warrants, or other rights
of the Company calling for the issue, sale, or delivery thereof;
(d) borrowing of, or agreement to borrow, any funds by the
Company, and the Company has not incurred or become subject to any
obligation or liability (absolute or contingent), except obligations
and liabilities incurred in the ordinary course of business, none of
which, individually or in the aggregate, are materially adverse to the
-29-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
37
business, assets, properties, operations, prospects, or condition,
financial or otherwise, of the Company;
(e) payment of any obligation or liability (absolute or
contingent), by the Company other than current liabilities reflected in
or shown on the Company Unaudited Interim Financial Statements and
current liabilities incurred in the ordinary course of business since
September 27, 1997;
(f) increase in the salary or other compensation payable or to
become payable by the Company to any of its officers, directors, or
employees, or the declaration, payment, commitment, or obligation of
any kind for the payment of additional salary or compensation to any
such person exceeding $5,000;
(g) accrual or arrangement, whether direct or indirect, for,
or payment of, bonuses or special compensation of any kind, or any
severance or termination pay, to any present or former officer,
director, or employee of the Company;
(h) adoption of any new, or amendment of any existing,
employee benefit plan, program or arrangement;
(i) material adverse change in the business, assets,
properties, operations, or condition, financial or otherwise of the
Company;
(j) destruction of, damage to, or loss of, any material asset
of the Company (whether or not covered by insurance);
(k) failure to keep in force and effect insurance comparable
in amount and scope to coverage maintained by the Company (or on its
behalf) on September 27, 1997;
(l) labor dispute or activity or proceeding by a labor union
or threat thereof;
(m) change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization methods,
policies, or rate) by the Company;
(n) failure by the Company to keep its books of account,
records and files in the ordinary course and consistent with past
practice;
(o) amendment, modification, or termination of any contract,
lease, License, promissory note, commitment, or any other agreement,
instrument, indebtedness, or obligation to which the Company is a
party, or by which it or any of its assets or properties are bound,
except those agreements, amendments, or terminations effected in the
ordinary course of business consistent with past practices;
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
38
(p) waiver or release of any right or claim of the Company or
cancellation of any debts or claims, except in the ordinary course of
business;
(q) declaration or making of, or agreement to declare or make,
any payment of dividends or distribution of any asset of any kind
whatsoever in respect to the Company's capital stock, nor any purchase,
redemption, or other acquisition or agreement to purchase, redeem, or
otherwise acquire, any of such outstanding capital stock;
(r) citation received by the Company for any violations of any
act, law, rule, regulation, or code of any governmental entity or
agency;
(s) claim incurred by the Company for damages or alleged
damages for any actual or alleged negligence or other tort or breach of
contract (whether or not fully covered by insurance);
(t) sale, transfer, or disposal of any of the assets,
properties, or rights (tangible or intangible) of the Company, except
in the ordinary course of business;
(u) mortgage, pledge, or subjection to lien, charge, or other
encumbrance, of any of the assets, properties, or rights (tangible or
intangible) of the Company;
(v) agreement entered into granting any preferential rights to
purchase any of the assets, properties, or rights (tangible or
intangible) of the Company (including management and control thereof),
or requiring the consent of any party to the transfer and assignment of
any such assets, properties, or rights (including management and
control thereof);
(w) capital expenditure by the Company exceeding $10,000;
(x) revaluation by the Company of any of its assets;
(y) failure by the Company to file, when due or required, any
federal, state, local, foreign or other Tax return or report required
to be filed or failure to pay when due any taxes, assessments, fees or
other charges lawfully levied against the Company unless the validity
thereof was contested in good faith and by appropriate proceedings
diligently conducted;
(z) loan by the Company to any Person, guaranty by the Company
of any loan, or incurrence by the Company of any indebtedness; or
(aa) agreement by the Company or the Sellers to do any of the
things described in the preceding clauses (a) through (z).
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
39
SECTION 3.30. TAX MATTERS.
(a) From the Company's inception through the date hereof, the
Company has been included with the Parent in its consolidated federal
income Tax Return as a member of an "affiliated group" (as defined in
Section 1504(a) of the Code) of which the Parent is the common parent.
(b) Except as otherwise disclosed in Section 3.30 of the
Company Disclosure Schedule, (i) the Company has filed (or joined in
the filing of) when due all Tax Returns required by applicable law to
be filed with respect to the Company and all Taxes shown to be due on
such Tax Returns have been paid; (ii) all such Tax Returns were true,
correct and complete as of the time of such filing; (iii) all Taxes
relating to periods ending on or before the Closing Date owed by the
Company (whether or not shown on any Tax Return) or to which the
Company may be liable under Treasury Regulations Section 1.1502-6 (or
analogous state or foreign provisions) by virtue of having been a
member of any "affiliated group" (or other group filing on a combined
or unitary basis) at any time on or prior to the Closing Date, if
required to have been paid, have been paid (except for Taxes which are
being contested in good faith); (iv) any liability of the Company for
Taxes not yet due and payable, or which are being contested in good
faith, has been provided for on the Company Financial Statements in
accordance with GAAP; (v) there is no action, suit, proceeding,
investigation, audit or claim now pending against, or with respect to,
the Company in respect of any Tax or assessment, nor is any claim for
additional Tax or assessment asserted by any Tax authority; (vi) since
January 1, 1993, no claim has been made by any Tax authority in a
jurisdiction where the Company does not currently file a Tax Return
that it is or may be subject to Tax by such jurisdiction, nor to the
knowledge of the Company is any such assertion threatened; (vii) there
is no outstanding request for any extension of time within which to pay
any Taxes or file any Tax Returns; (viii) there has been no waiver or
extension of any applicable statute of limitations for the assessment
or collection of any Taxes of the Company; (ix) no property of the
Company is "tax-exempt use property" within the meaning of Section
168(h) of the Code; (x) the Company is not a party to any lease made
pursuant to former Section 168(f)(8) of the Internal Revenue Code of
1954; (xi) no excess loss account (within the meaning of Treasury
Regulations Section 1.1502-19) exists with respect to the Company;
(xii) the Company has no deferred gain or loss arising from any
intercompany transactions, within the meaning of Treasury Regulations
Section 1.1502-13; (xiii) the Company has not filed any agreement or
consent under Section 341(f) of the Code; (xiv) the Company is not a
party to any agreement, whether written or unwritten, providing for the
payment of Taxes, payment for Tax losses, entitlements to refunds or
similar Tax matters; (xv) no ruling with respect to Taxes (other than a
request for determination of the status of a qualified pension plan)
has been requested by or on behalf of the Company; and (xvi) the
Company has withheld and paid all material Taxes required to be
withheld in connection with any amounts paid or owing to any employee,
creditor, independent contractor or other third party.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
40
SECTION 3.31. ACCURACY OF INFORMATION. To the knowledge of each Seller,
none of the representations, warranties or statements of the Sellers contained
in this Agreement, or in the Disclosure Schedule or exhibits hereto, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make any of such representations, warranties or statements
not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DUBBELL
Dubbell hereby represents, warrants and agrees as follows:
SECTION 4.1. CORPORATE ORGANIZATION. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority and all
governmental licenses, authorizations, permits, consents and approvals to own
its properties and assets and to conduct its businesses as now conducted. The
Parent is duly qualified to do business as a foreign corporation 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 necessary, except in any jurisdiction where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or the condition (financial or otherwise) of the Parent. Section 4.1
of the Disclosure Schedule sets forth all of the jurisdictions in which the
Parent is qualified to do business. The copies of the articles of incorporation
and by-laws of the Parent included as part of Section 4.1 of the Disclosure
Schedule constitute accurate and complete copies of such organizational
instruments and accurately reflect all amendments thereto through the date
hereof.
SECTION 4.2. CAPITALIZATION. The authorized capital stock of the Parent
consists of 1,000,000 shares of Parent Common Stock of which 480,000 shares are
issued and outstanding on the date of this Agreement and of which 427,200 shares
shall be outstanding at the Closing Date as a result of the redemptions of
Parent Common Stock in connection with the Redemption Transaction. The Parent
Shares represent, and at the Closing, the Remaining Parent Shares will
represent, all of the issued and outstanding shares of the capital stock of the
Parent and are owned of record and beneficially by Dubbell, free and clear of
any lien, charge or encumbrance. All the outstanding shares of Parent Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 4.2 of the Disclosure Schedule, on
the date of this Agreement there are no outstanding options, warrants,
agreements, conversion rights, preemptive rights or other rights to subscribe
for, purchase or otherwise acquire any shares of Parent Common Stock, and except
as contemplated by the Redemption Transaction, there are no outstanding
obligations or plans of the Parent to repurchase, redeem or otherwise acquire
outstanding shares of Parent Common Stock. On the Closing Date, there shall be
no outstanding options, warrants, agreements, conversion rights, preemptive
rights or other rights to subscribe for, purchase or otherwise acquire any
shares of Parent Common Stock.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
41
SECTION 4.3. SUBSIDIARIES. Except as set forth in Section 4.3 of the
Disclosure Schedule, the Parent does not own any shares of, or control, directly
or indirectly, or have any equity interest in, any Person.
SECTION 4.4. VALIDITY OF AGREEMENT. The Parent has the corporate power
to enter into this Agreement and to carry out its obligations hereunder,
including in connection with the Redemption Transaction. The execution and
delivery of this Agreement and the performance by the Parent of its obligations
hereunder, including in connection with the Redemption Transaction have been
duly authorized by the Board of Directors of the Parent, and no other corporate
proceedings on the part of the Parent are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by the Parent
and constitutes the valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms (subject to normal equitable
principles and subject to bankruptcy, insolvency, fraudulent conveyances and
similar laws affecting the rights of creditors).
SECTION 4.5. NO CONFLICT OR VIOLATION. Except as set forth in Section
4.5 of the Disclosure Schedule, the execution, delivery and performance by
Dubbell and the Parent of this Agreement and the transactions contemplated
hereby, including the Redemption Transaction, do not and will not: (i) violate
or conflict with any provision of the articles of incorporation or by-laws of
the Parent; (ii) violate any provision of law, statute, judgment, order, writ,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
other governmental or regulatory authority applicable to the Parent; (iii)
violate, result in a breach of, constitute (with due notice or lapse of time or
both) a default or cause any obligation, penalty, premium, right of termination
or acceleration to arise, accrue or occur under any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which either Dubbell or the Parent is a party or by which
either of them is bound or to which any of their respective properties or assets
is subject; (iv) result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of the
Parent; (v) result in the cancellation, modification, revocation or suspension
of any License; or (vi) to the knowledge of Dubbell, otherwise result in the
loss of any right important or valuable to the Parent.
SECTION 4.6. CONSENTS AND APPROVALS. Section 4.6 of the Disclosure
Schedule sets forth a true and complete list of each consent, waiver,
authorization or approval of any governmental or regulatory authority, domestic
or foreign, or any other Person, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required of or to be made by the Parent or Dubbell in connection with the
execution, delivery and performance of this Agreement.
SECTION 4.7. FINANCIAL STATEMENTS.
(a) Dubbell has heretofore furnished to the Buyer copies of
(i) the audited consolidated balance sheet of the Parent and its
Subsidiaries as of December 28, 1996, together with the related
statements of income, stockholders' equity and cash flows for
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
42
the year then ended and the notes thereto (the "PARENT AUDITED
FINANCIAL STATEMENTS") and (ii) the Parent Unaudited Interim Financial
Statements (together with the Parent Audited Financial Statements, the
"PARENT FINANCIAL STATEMENTS"). The Parent Financial Statements,
including the notes thereto: (i) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby;
(ii) present fairly the consolidated financial position, results of
operations and cash flows of the Parent and its Subsidiaries as of such
dates and for the periods then ended (subject, in the case of the
Parent Unaudited Interim Financial Statements, to normal year-end audit
adjustments consistent with prior periods) and (iii) are in all
material respects, complete, correct and in accordance with the books
of account and records of the Parent and its Subsidiaries.
(b) The Parent has no assets, properties or liabilities
required by GAAP to be set forth in the Parent Unaudited Interim
Financial Statements other than those reflected on the balance sheet
included in the Parent Unaudited Interim Financial Statements.
(c) The Parent has no commitments to make any capital
expenditures or to invest, advance or loan any monies to any Persons.
SECTION 4.8. TAX MATTERS.
(a) From the date of their inception through the date hereof,
the Parent has included the Company in its consolidated federal income
Tax Return as a member of an "affiliated group" (as defined in Section
1504(a) of the Code) of which the Parent is the common parent.
(b) Except as otherwise disclosed in Section 4.8 of the
Disclosure Schedule, (i) beginning with the fiscal ended April 29,
1978, the Parent, the Company and each other Subsidiary of the Parent
have filed (or joined in the filing of) when due all Tax Returns
required by applicable law to be filed with respect to the Parent, the
Company and each other Subsidiary of the Parent and all Taxes shown to
be due on such Tax Returns have been paid; (ii) all such Tax Returns
were true, correct and complete as of the time of such filing; (iii)
all Taxes relating to periods ending on or before the Closing Date owed
by the Parent, the Company or any other Subsidiary of the Parent
(whether or not shown on any Tax Return) or to which the Company or any
Subsidiary of the Parent may be liable under Treasury Regulations
Section 1.1502-6 (or analogous state or foreign provisions) by virtue
of having been a member of any "affiliated group" (or other group
filing on a combined or unitary basis) at any time on or prior to the
Closing Date, if required to have been paid, have been paid (except for
Taxes which are being contested in good faith); (iv) any liability of
the Parent, the Company or any other Subsidiary of the Parent for Taxes
not yet due and payable, or which are being contested in good faith,
has been provided for on the Parent Financial Statements in accordance
with GAAP; (v) there is no action, suit, proceeding, investigation,
audit or
-35-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
43
claim now pending against, or with respect to, the Parent, the Company
or any other Subsidiary of the Parent in respect of any Tax or
assessment, nor is any claim for additional Tax or assessment asserted
by any Tax authority; (vi) since January 1, 1993, no claim has been
made by any Tax authority in a jurisdiction where the Parent, the
Company or any other Subsidiary of the Parent does not currently file a
Tax Return that it is or may be subject to Tax by such jurisdiction,
nor to the knowledge of Dubbell, the Parent or the Company is any such
assertion threatened; (vii) there is no outstanding request for any
extension of time within which to pay any Taxes or file any Tax
Returns; (viii) there has been no waiver or extension of any applicable
statute of limitations for the assessment or collection of any Taxes of
the Parent, the Company or any other Subsidiary of the Parent; (ix) no
property of the Parent or the Company is "tax-exempt use property"
within the meaning of Section 168(h) of the Code; (x) neither the
Parent nor the Company is a party to any lease made pursuant to former
Section 168(f)(8) of the Internal Revenue Code of 1954; (xi) except
with respect to Tri-State, no excess loss account (within the meaning
of Treasury Regulations Section 1.1502-19) exists with respect to the
Company or any other Subsidiary of the Parent; (xii) neither the
Company nor any other Subsidiary of the Parent has any deferred gain or
loss arising from any intercompany transactions, within the meaning of
Treasury Regulations Section 1.1502-13; (xiii) neither the Parent, the
Company nor any other Subsidiary of the Parent has filed any agreement
or consent under Section 341(f) of the Code; (xiv) Dubbell is not a
"foreign person" within the meaning of Section 1445 of the Code; (xv)
neither the Parent, the Company nor any other Subsidiary of the Parent
is a party to any agreement, whether written or unwritten, providing
for the payment of Taxes, payment for Tax losses, entitlements to
refunds or similar Tax matters; (xvi) no ruling with respect to Taxes
(other than a request for determination of the status of a qualified
pension plan) has been requested by or on behalf of the Parent, the
Company or any other Subsidiary of the Parent; (xvii) the Parent has
not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (xviii) Since 1991,
no member of the consolidated group of which the Parent is the common
parent has had "personal holding company income" within the meaning of
Section 542 of the Code; and (xix) the Parent, the Company and each
other Subsidiary of the Parent has withheld and paid all material Taxes
required to be withheld in connection with any amounts paid or owing to
any employee, creditor, independent contractor or other third party.
SECTION 4.9. HOLDING COMPANY. The Parent is, and has always been,
primarily a holding company. Although the Parent has not engaged in any separate
business activity of its own, it has, from time to time, engaged in business as
an agent or representative of the Subsidiaries for various purposes, including,
but not limited to, provision of credit, obtaining licenses and permits and
entering into contracts. Except as set forth in Section 4.9 of the Disclosure
Schedule, the Parent does not lease any real property. The Parent does not own,
and has never owned, any real property. The Parent does not have, and has never
had, any employees.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
44
SECTION 4.10. LICENSES, PERMITS AND GOVERNMENTAL APPROVALS.
(a) Section 4.10 of the Disclosure Schedule sets forth a true
and complete list of all material licenses of the Parent (including,
but not limited to, any environmental licenses, permits, registrations
or authorizations), health or other permits, franchises, authorizations
and approvals issued or granted to the Parent by the United States, any
state or local government, any foreign national or local government, or
any department, agency, board, commission, bureau or instrumentality of
any of the foregoing (each a "PARENT LICENSE" and, collectively, the
"PARENT LICENSES"), and all pending applications therefor. Each Parent
License has been issued to, and duly obtained and fully paid for by,
the Parent and is valid, in full force and effect, and not subject to
any pending or known threatened administrative or judicial proceeding
to suspend, revoke, cancel or declare such Parent License invalid in
any respect.
(b) The Parent has all Parent Licenses required, and such
Parent Licenses are sufficient and adequate in all respects, to permit
the continued lawful conduct of the Parent's business in the manner now
conducted and the ownership, occupancy and operation of its real and
personal property for their present uses. The Parent is not in
violation of any of the Parent Licenses in any material respect. The
Parent Licenses have never been suspended, revoked or otherwise
terminated, subject to any fine or penalty, or subject to judicial or
administrative review, for any reason other than the renewal or
expiration thereof nor has any application of the Parent for any Parent
License ever been denied. The Parent's operations are not being
conducted in a manner that violate any of the terms or conditions under
which any Parent License was granted. Except as disclosed in Section
4.10 of the Disclosure Schedule, no Parent License will in any way be
materially and adversely affected by, or terminate or lapse by reason
of, the transactions contemplated by this Agreement. Dubbell has
delivered to the Buyer or its representatives true and complete copies
of all Parent Licenses together with all amendments and modifications
thereto.
SECTION 4.11. COMPLIANCE WITH LAW. Except as set forth in Section 4.11
of the Disclosure Schedule, the operations of the Parent have been conducted in
all material respects in accordance with all applicable laws, regulations,
orders and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Parent and its assets, properties and
operations. Neither Dubbell nor the Parent has received notice of any violation
of any such law, regulation, order or other legal requirement, or is in default
with respect to any order, writ, judgment, award, injunction or decree of any
federal, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to the Parent or any of its assets,
properties or operations. Neither Dubbell nor the Parent has knowledge of any
proposed changes in any such laws, rules or regulations that would adversely
affect the transactions contemplated by this Agreement or all or a substantial
part of the assets or the businesses of the Parent.
-37-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
45
SECTION 4.12. ENVIRONMENTAL MATTERS. Except as set forth in Section
4.12 of the Disclosure Schedule:
(a) The operations of the Parent and its Subsidiaries (other
than the Company) are, and in the past have been, in compliance in all
material respects with all Environmental Laws and they have obtained
and maintained in effect all Environmental Permits and are, and in the
past have been, in compliance with all such Environmental Permits.
(b) Neither the Parent nor any Subsidiary (other than the
Company) has performed or suffered any act which could give rise to, or
has otherwise incurred, liability to any person (governmental or other)
under CERCLA, or any other Environmental Laws, nor has the Company nor
any Subsidiary (other than the Company) received notice of any such
liability or any claim therefor or submitted notice pursuant to Section
103 of CERCLA to any governmental agency with respect to any of its
assets.
(c) No Hazardous Material has been released, placed, dumped or
otherwise come to be located on, at, beneath or near any of the assets
or properties owned or leased by the Parent or any of its Subsidiaries
(other than the Company) or any surface waters or groundwaters thereon
or thereunder.
(d) Neither the Parent nor any Subsidiary (other than the
Company) owns or operates, and has never owned or operated, aboveground
or underground storage tanks.
(e) With respect to any or all of the real properties owned or
leased by the Parent or any of its Subsidiaries (other than the
Company) (i) there are no, nor have there been in the past,
asbestos-containing materials, urea formaldehyde insulation,
polychlorinated biphenyls or, to the knowledge of Dubbell, lead-based
paints present at any such properties; and (ii) there are no wetlands
(as defined under any Environmental Law) located on any such
properties, nor have any been drained, filled or otherwise altered.
(f) None of the real properties owned or leased by the Parent
or any of its Subsidiaries (other than the Company) (i) has been used
or is now used for the generation, transportation, storage, handling,
treatment or disposal of any Hazardous Materials or (ii) is identified
on a federal, state or local listing of sites which require or might
require environmental cleanup.
(g) No condition exists on any of the real properties owned or
leased by the Parent or any of its Subsidiaries (other than the
Company) that upon the failure to act, the passage of time or the
giving of notice would give rise to liability under any Environmental
Law.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
46
(h) There are no ongoing investigations or negotiations,
pending or threatened administrative, judicial or regulatory
proceedings, or consent decrees or other agreements in effect that
relate to environmental conditions in, on, under, about or related to
the Parent or any of its Subsidiaries (other than the Company), any of
their operations or the real properties owned or leased by any of them.
(i) Neither the Parent nor any of its Subsidiaries (other than
the Company) nor any of their operations is subject to reporting
requirements under the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq., or analogous state
statutes and related regulations, all as amended.
SECTION 4.13. LITIGATION. Except as set forth in Section 4.13 of the
Disclosure Schedule, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to the knowledge of Dubbell, threatened
before any federal, state or local court or governmental, administrative or
regulatory authority, domestic or foreign, or before any arbitrator of any
nature, brought by or against Dubbell, the Parent or its officers, directors,
employees or agents or any of their respective Affiliates involving, affecting
or relating to any assets, properties or operations of the Parent or the
transactions contemplated by this Agreement. Section 4.13 of the Disclosure
Schedule sets forth a list and a summary description of all such pending or
known threatened actions, suits, proceedings, disputes or investigations. None
of Dubbell nor the Parent nor any of their assets or properties is subject to,
nor to Dubbell's knowledge, does any basis exist for any order, writ, judgment,
award, injunction or decree of any federal, state or local court or governmental
or regulatory authority or arbitrator, that materially and adversely affects the
Parent's assets, properties, operations, net income or financial condition or
which would interfere with the transactions contemplated by this Agreement.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
47
SECTION 4.14. CONTRACTS.
(a) Section 4.14 of the Disclosure Schedule sets forth a true
and complete list and a summary description showing the expiration
dates (exclusive of renewal terms) of all material contracts,
agreements, instruments, commitments and other arrangements to which
the Parent is a party or otherwise relating to or affecting any of its
assets or properties including, without limitation, all written or
oral, express or implied (each, a "PARENT CONTRACT"). To the knowledge
of Dubbell, each Parent Contract is valid, binding and enforceable
against the parties thereto in accordance with its terms, and in full
force and effect on the date hereof. The Parent has performed in all
material respects, all obligations, including, but not limited to, the
timely making of any rental or other payments, required to be performed
by it under, and is not in default or breach of any material provision
in respect of, any Parent Contract, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a
default. Dubbell has delivered to the Buyer or its representatives true
and complete originals or copies of all Parent Contracts and a copy of
every default notice received by Dubbell or the Parent during the past
three years with respect to any of the Parent Contracts.
(b) To the knowledge of Dubbell, except as disclosed in
Section 4.14 of the Disclosure Schedule and the Parent is not a party
to any agreement or instrument, or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree,
rule or regulation which, insofar as it relates to the businesses of
the Parent, materially adversely affects or would in the future
materially adversely affect the Parent's business, operations,
properties, assets or financial condition.
SECTION 4.15. INTERCOMPANY ACCOUNTS. The Company has no obligations and
no amounts are due to the Parent or any of its Affiliates other than for goods
and services purchased or provided in the ordinary course of business.
SECTION 4.16. PROPRIETY OF PAST PAYMENTS. Except as set forth in
Section 4.16 of the Disclosure Schedule, no finder's fee or other payment has
been, or will be, made by or on behalf of the Parent in respect of, or in
connection with, any Parent Contract to any person, firm, corporation or other
entity which is not a party to such Parent Contract. To the knowledge of
Dubbell, no funds or assets of the Parent have been used for illegal purposes;
no unrecorded funds or assets of the Parent have been established for any
purpose; no accumulation or use of the Parent's corporate funds or assets has
been made without being properly accounted for in the respective books and
records of the Parent; all payments by or on behalf of the Parent have been duly
and properly recorded and accounted for in its books and records; no false or
artificial entry has been made in the books and records of the Parent for any
reason; no payment has been made by or on behalf of the Parent with the
understanding that any part of such payment is to be used for any purpose other
than that described in the documents supporting such payment; and the Parent has
not made, directly or
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
48
indirectly, any illegal contributions to any political party or candidate,
either domestic or foreign.
SECTION 4.17. EMPLOYEE PLANS.
(a) Section 4.17 of the Disclosure Schedule sets forth (i) any
"employee benefit plan", as defined in Section 3(3) of ERISA, and all
other employee benefit arrangements, policies or payroll practices,
including, without limitation, severance pay, sick leave, vacation pay,
salary continuation, disability, retirement, deferred compensation,
bonus, stock purchase, stock option or other equity-based compensation,
hospitalization, medical insurance, life insurance or scholarship
programs, maintained by the Parent, the Company or any Subsidiary of
the Parent or to which the Parent, the Company or any Subsidiary of the
Parent contributed or is obligated to contribute for or with respect to
current or former employees of the Parent, the Company or any
Subsidiary of the Parent, but excluding any such plan, arrangement,
policy, practice or program maintained or contributed to solely by a
Subsidiary of the Parent other than the Company, solely for the benefit
of employees of such Parent Subsidiary (the "PARENT EMPLOYEE BENEFIT
PLANS"), and (ii) all "employee pension benefit plans", as defined in
Section 3(2) of ERISA, which are subject to Title IV of ERISA or
Section 412 of the Code and at any time during the six-year period
ending on the date hereof were maintained or contributed to by the
Parent, the Company, any Subsidiary of the Parent or any ERISA
Affiliate (the "PARENT PENSION PLANS").
(b) None of the Parent, the Company, any Subsidiary of the
Parent or any ERISA Affiliate has within the six-year period ending on
the date hereof contributed to, or been obligated to contribute to, any
Multiemployer Plan.
(c) The Parent Employee Benefit Plans intended to qualify and
be tax-exempt under Sections 401 and 501 of the Code, respectively,
have been determined by the Internal Revenue Service to be so qualified
and tax-exempt, and nothing has occurred with respect to the operation
of such Parent Employee Benefit Plans which could cause the loss of
such qualification or tax exemption or the imposition of any liability,
penalty or tax under ERISA or the Code. Any trust maintained or
contributed to by the Parent, the Company or any Subsidiary of the
Parent which is intended to be tax-exempt pursuant to Section 501(c)(9)
of the Code has been determined by the Internal Revenue Service to be
so tax-exempt, and nothing has occurred since such determination which
could cause the loss of such tax exemption or the imposition of any
liability, penalty or tax under ERISA or the Code.
(d) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made
under any of the Parent Employee Benefit Plans or by law (without
regard to any waivers granted under Section 412 of the Code) to any
funds or trusts established thereunder or in connection therewith have
been made by the due date thereof (including any valid extension), and
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with the Commission pursuant to a request for confidential treatment.
49
all contributions for any period ending on or before the Closing Date
which are not yet due will have been paid or accrued on or prior to the
Closing Date. No accumulated funding deficiencies exist in any of the
Parent Pension Plans.
(e) There is no "amount of unfunded benefit liabilities," as
defined in Section 4001(a)(18) of ERISA, in any of the Parent Pension
Plans. The "benefit liabilities", as defined in Section 4001(a)(16) of
ERISA, of each of the Parent Pension Plans do not exceed the fair
market value of the assets of such Parent Pension Plan.
(f) There has been no "reportable event," as that term is
defined in Section 4043 of ERISA and the regulations thereunder, with
respect to any Parent Pension Plan which would require the giving of
notice or any event requiring disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA.
(g) There is no violation of ERISA with respect to the filing
of applicable reports, documents and notices regarding the Parent
Employee Benefit Plans with the Secretary of Labor or the Secretary of
the Treasury or the furnishing of such documents to the participants or
beneficiaries of the Parent Employee Benefit Plans.
(h) True, correct and complete copies of the following
documents, with respect to each of the Parent Employee Benefit Plans,
have been delivered to the Buyer: (i) all plans and related trust
documents, and amendments thereto; (ii) the most recent Forms 5500;
(iii) the most recent actuarial report and audited financial statement;
(iv) the last IRS determination or opinion letter; (v) summary plan
descriptions; (vi) written communications to employees; and (vii)
written descriptions of all non-written agreements relating to the
Parent Employee Benefit Plans.
(i) There are no pending actions, claims or lawsuits which
have been asserted or instituted against the Parent Employee Benefit
Plans, the assets of any of the trusts under such plans or the plan
sponsor or, to the knowledge of Dubbell, the plan administrator or any
fiduciary of the Parent Employee Benefit Plans with respect to the
operation of such plans (other than routine benefit claims), nor does
the Parent or the Company, or any Subsidiary of the Parent, or Dubbell,
have knowledge of facts which could form the basis for any such claim
or lawsuit.
(j) All amendments and actions required to bring the Parent
Employee Benefit Plans into conformity in all respects with all of the
applicable provisions of ERISA and other applicable laws have been made
or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing
Date.
(k) Any bonding required with respect to the Parent Employee
Benefit Plans in accordance with applicable provisions of ERISA has
been obtained and is in full force and effect.
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with the Commission pursuant to a request for confidential treatment.
50
(l) The Parent Employee Benefit Plans have been maintained in
accordance with their terms and with all provisions of ERISA (including
rules and regulations thereunder) and other applicable federal and
state laws and regulations. Neither the Parent, the Company, any
Subsidiary of the Parent or, to the knowledge of Dubbell, the Parent,
the Company and each Subsidiary of the Parent, any "party in interest"
(within the meaning of Section 3(14) of ERISA) or "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to any of
the Parent Employee Benefit Plans has engaged in a "prohibited
transaction," within the meaning of Section 4975 of the Code or Section
406 of ERISA, with respect to which there is no statutory or
administrative exemption. To the knowledge of Dubbell, no fiduciary has
any liability for breach of fiduciary duty or any other failure to act
or comply in connection with the administration or investment of the
assets of any Parent Employee Benefit Plan.
(m) None of the Parent, the Company, any Subsidiary of the
Parent or any ERISA Affiliate has terminated any Parent Pension Plan
within the six-year period ending on the date hereof, or incurred any
outstanding liability under Section 4062 of ERISA to the PBGC or to a
trustee appointed under Section 4042 of ERISA. All premiums due the
PBGC with respect to the Parent Pension Plans have been paid.
(n) None of the Parent, the Company or any Subsidiary of the
Parent maintains retiree life or retiree health insurance plans which
provide for continuing benefits or coverage for any participant or any
beneficiary of a participant, except as may be required under COBRA.
Each of the Parent, the Company, any Subsidiary of the Parent and any
ERISA Affiliate which maintains a "group health plan," within the
meaning of COBRA, has complied with the notice and health care
continuation requirements of COBRA.
(o) None of the Parent, the Company or any ERISA Affiliate, or
any organization with respect to which the Parent or the Company is a
successor or parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction described in Section 4069 of
ERISA.
(p) No liability under any Parent Employee Benefit Plan has
been funded or satisfied with the purchase of a contract from an
insurance company that is not rated AA by Standard & Poor's Corporation
or the equivalent by each other nationally recognized rating agency.
(q) Except as set forth in Section 4.17 of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (including the
Redemption Transaction) will (i) result in any payment becoming due to
any employee (current, former or retired) of the Parent, the Company or
any Subsidiary of the Parent, (ii) increase any benefits otherwise
payable under any Parent Employee Benefit Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
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with the Commission pursuant to a request for confidential treatment.
51
(r) None of the Parent, the Company or any Subsidiary of the
Parent has any contract, plan or commitment, whether legally binding or
not, to create any additional Parent Employee Benefit Plan or to modify
any existing Parent Employee Benefit Plan, other than contemplated
amendments thereto concerning withdrawal of the Parent and the Company
as participating employers thereunder and vesting of participants,
distributions to participants and related matters with respect to
participants affected by the transactions contemplated herein.
(s) No stock or other security issued by the Parent, the
Company or any Subsidiary of the Parent forms or has formed a material
part of the assets of any Parent Employee Benefit Plan.
(t) There has been no "mass layoff" or "plant closing," as
each such term is defined by WARN, with respect to the employees of the
Parent, the Company or any Subsidiary of the Parent, with respect to
which there could be any future liability to or in respect of such
employees under WARN.
SECTION 4.18. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 4.18 of the Disclosure Schedule, since September 27, 1997, there has
not been any:
(a) amendment to the Parent's articles of incorporation or
by-laws;
(b) change made in the Parent's authorized capital or
outstanding securities;
(c) issuance, sale, delivery of, or agreement to issue, sell,
or deliver, any capital stock, bonds, or other corporate securities of
the Parent (whether authorized and unissued or held in treasury), or
grant of, or agreement to grant, any options, warrants, or other rights
of the Parent calling for the issue, sale, or delivery thereof;
(d) borrowing of, or agreement to borrow, any funds by the
Parent, and the Parent has not incurred or become subject to any
obligation or liability (absolute or contingent);
(e) payment of any obligation or liability (absolute or
contingent), by the Parent;
(f) increase in the salary or other compensation payable or to
become payable by the Parent to any of its officers or directors, or
the declaration, payment, commitment, or obligation of any kind for the
payment of compensation to any such person;
(g) accrual or arrangement, whether direct or indirect, for,
or payment of, bonuses or special compensation of any kind, or any
severance or termination pay, to any present or former officer or
director of the Parent, except for settlements of outstanding stock
options of the Parent;
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with the Commission pursuant to a request for confidential treatment.
52
(h) adoption of any new, or amendment of any existing,
employee benefit plan, program or arrangement except as referred to in
Section 4.17(r);
(i) material adverse change in the business, assets,
properties, operations, or condition, financial or otherwise of the
Parent;
(j) destruction of, damage to, or loss of, any material asset
of the Parent (whether or not covered by insurance);
(k) failure to keep in force and effect insurance comparable
in amount and scope to coverage maintained by the Parent (or on its
behalf) on September 27, 1997;
(l) change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization methods,
policies, or rate) by the Parent;
(m) failure by the Parent to keep its books of account,
records and files in the ordinary course and consistent with past
practice;
(n) amendment, modification, or termination of any contract,
lease, License, promissory note, commitment, indenture, mortgage, deed
of trust, employee benefit plan, or any other agreement, instrument,
indebtedness, or obligation to which the Parent is a party, or by which
it or any of its assets or properties are bound, except those
agreements, amendments, or terminations effected in the ordinary course
of business consistent with past practices;
(o) waiver or release of any right or claim of the Parent or
cancellation of any debts or claims, except in the ordinary course of
business;
(p) declaration or making of, or agreement to declare or make,
other than pursuant to the Redemption Transaction, any payment of
dividends or distribution of any asset of any kind whatsoever in
respect to the Parent's capital stock, nor, other than the Redemption
Transaction, any purchase, redemption, or other acquisition or
agreement to purchase, redeem, or otherwise acquire, any of such
outstanding capital stock;
(q) citation received by the Parent for any violations of any
act, law, rule, regulation, or code of any governmental entity or
agency;
(r) claim incurred by the Parent for damages or alleged
damages for any actual or alleged negligence or other tort or breach of
contract (whether or not fully covered by insurance);
(s) sale, transfer, or disposal of any of the assets,
properties, or rights (tangible or intangible) of the Parent;
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with the Commission pursuant to a request for confidential treatment.
53
(t) mortgage, pledge, or subjection to lien, charge, or other
encumbrance, of any of the assets, properties, or rights (tangible or
intangible) of the Parent;
(u) agreement entered into granting any preferential rights to
purchase any of the assets, properties, or rights (tangible or
intangible) of the Parent (including management and control thereof),
or requiring the consent of any party to the transfer and assignment of
any such assets, properties, or rights (including management and
control thereof);
(v) capital expenditure by the Parent;
(w) revaluation by the Parent of any of its assets;
(x) failure by the Parent to file, when due or required, any
federal, state, local, foreign or other tax return or report required
to be filed or failure to pay when due any taxes, assessments, fees or
other charges lawfully levied against the Parent unless the validity
thereof was contested in good faith and by appropriate proceedings
diligently conducted;
(y) loan by the Parent to any Person, guaranty by the Parent
of any loan, or incurrence by the Parent of any indebtedness; or
(z) agreement by the Parent or Dubbell to do any of the things
described in the preceding clauses (a) through (y).
SECTION 4.19. PARENT'S LIABILITIES. Immediately prior to the Closing,
Parent shall have no debts, obligations or liabilities of whatsoever kind,
whether contingent or otherwise, whether known or unknown except for any
liabilities under the Severance Agreements, the Parent Lease or the Xxxx and
Xxxxxxx Notes to the extent that the Parent is not released thereunder.
SECTION 4.20. OTHER PROPERTIES. Schedule 4.20 sets forth a true and
complete list of all real properties owned or leased by PFRM and Tri-State.
SECTION 4.21. ACCURACY OF INFORMATION. To the knowledge of Dubbell,
none of the representations, warranties or statements of Dubbell contained in
this Agreement, or in the Disclosure Schedule or exhibits hereto, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make any of such representations, warranties or statements
not misleading.
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
54
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents, warrants and agrees as follows:
SECTION 5.1. CORPORATE ORGANIZATION. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted.
SECTION 5.2. VALIDITY OF AGREEMENT. The Buyer has the corporate power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance by the Buyer of its
obligations hereunder have been duly authorized by the Board of Directors of the
Buyer, and no other corporate proceedings on the part of the Buyer are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly executed by the Buyer and constitutes the valid and binding obligation of
the Buyer enforceable against the Buyer in accordance with its terms.
SECTION 5.3. NO CONFLICT OR VIOLATION; NO DEFAULTS. The execution,
delivery and performance by the Buyer of this Agreement and the transactions
contemplated hereby do not and will not violate or conflict with any provision
of its Amended and Restated Certificate of Incorporation or Amended and Restated
By-Laws and do not and will not violate any provision of law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator or other governmental or regulatory authority, nor violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Buyer is a party
or by which it is bound or to which any of its properties or assets is subject,
nor result in the creation or imposition of any lien, charge or encumbrance of
any kind whatsoever upon any of its properties or assets where such violations,
breaches or defaults in the aggregate would have a material adverse effect on
the transactions contemplated hereby or on the assets, properties, business,
operations, net income or financial condition of the Buyer.
SECTION 5.4. CONSENTS AND APPROVALS. Other than those which have been
made or obtained, no consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority on the part of
the Buyer or any vote, consent or approval in any manner of the holders of any
Security (as defined in Section 2(1) of the Securities Act of 1933, as amended)
of the Buyer is required as a condition to the execution and delivery of this
Agreement.
SECTION 5.5. INVESTMENT REPRESENTATION. The Buyer is acquiring the
Remaining Parent Shares and the Company Minority Shares solely for its own
account for investment, and not with a view toward the resale, transfer or other
distribution thereof.
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with the Commission pursuant to a request for confidential treatment.
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SECTION 5.6. FINANCIAL CAPABILITY. The Buyer has available sufficient
funds to pay the aggregate Purchase Price, including the Earn-Out Amount,
payable to the Sellers on the terms and subject to the conditions contemplated
by this Agreement.
ARTICLE VI.
COVENANTS
SECTION 6.1. REDEMPTION TRANSACTION. Dubbell shall, and shall cause the
Parent to, take all actions necessary to effect the Redemption Transaction on or
immediately prior to the Closing Date.
SECTION 6.2. CONTINUED DEVELOPMENT OF NOVAGEN BRAND PRODUCTS. During
the Earn-Out Period, the Buyer intends to continue to offer the Company's
product portfolio of Novagen Brand Products and to further develop new Novagen
Brand Products (whether internally developed or externally sourced). During the
Earn-Out Period, the Buyer will not change the brand of any Product which the
Company has offered as a Novagen Brand Product prior to the Closing Date, and
the Buyer further agrees that all future Products developed or manufactured by
the Company will carry a Novagen Part Number or Novagen Label and that all
Products sold by the Company under the name of another manufacturer will carry a
Novagen Part Number or Label. During the Earn-Out Period, new products added to
the Buyer's product portfolio will be assigned a brand based upon the Buyer's
assessment of various factors, including the Buyer's historical branding
practices, the brand of the Buyer most recognized for reaching various markets,
the fit of new products into the Buyer's existing brand product portfolio and
other strategic factors designed to maximize overall sales of the Buyer's entire
product portfolio. During the Earn-Out Period, the Buyer intends to provide
financial, management and other corporate resources for development,
manufacturing and marketing of the Products in the same manner as it would
provide for similar products developed by the Buyer. As a general matter,
modification of resource allocations may be made as a result of such business,
economic, political and other factors which a reasonable business person would
take into consideration. However, the Buyer shall retain the right to
discontinue offering any Novagen Brand Product and to make final determinations
in connection with branding new products as Novagen Brand Products or as any of
the Buyer's other brands.
SECTION 6.3. NON-SOLICITATION OF EMPLOYEES. For the two-year period
commencing on the Closing Date, no Seller shall make, offer, solicit or induce
to enter into, any written or oral arrangement, agreement or understanding
regarding employment or retention as a consultant with any employee of the
Company, in each case without the written consent of the Buyer.
SECTION 6.4. ACCESS TO PROPERTIES AND RECORDS. The Sellers shall
afford, and shall cause the Parent and the Company to afford, to the Buyer and
the Buyer's accountants, counsel and representatives full access during normal
business hours, without disruption to the normal operation of the Parent or the
Company, throughout the period prior to the Closing
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with the Commission pursuant to a request for confidential treatment.
56
Date (or the earlier termination of this Agreement pursuant to Article X hereof)
to all of the Parent's and the Company's properties, books, contracts and
records (including, but not limited to, all environmental studies, reports and
other environmental records, all auditors' work papers relating to the Parent or
the Company, supporting information for Tax returns of the Parent and the
Company and litigation files of the Parent and the Company) and, during such
period, shall furnish promptly to the Buyer all information concerning the
Parent's and the Company's business, properties, liabilities and personnel as
the Buyer may reasonably request; provided, however that such access shall not
be afforded to the properties, books, contracts and records of PFRM, except when
reasonable justification for access is shown based on possible liability to the
Parent, the Company or the Buyer. The Buyer shall be permitted, subject to any
required landlord consent, which the Sellers will use commercially reasonable
efforts to obtain, to conduct testing and analysis of soil, groundwater,
building components, tanks, containers and equipment to confirm the condition of
the real property owned or leased by the Parent or its Subsidiaries and
improvements thereon.
SECTION 6.5. NEGOTIATIONS. From and after the date hereof, none of the
Sellers, the Parent, the Company or any officers or directors of the Parent or
the Company or anyone acting on behalf of the Sellers or such Persons shall,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any person, firm, or other
entity or group (other than the Buyer or its representatives) concerning any
merger, sale of assets, purchase or sale of shares of capital stock or similar
transaction involving the Parent or the Company. The Sellers shall promptly
reject any such offers concerning any such transaction which they may receive or
of which they may become aware.
SECTION 6.6. CONSENTS AND APPROVALS. The Buyer and the Sellers shall
use commercially reasonable efforts to obtain, and the Sellers shall cause the
Parent and the Company to obtain, all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other Persons required in connection with the
execution, delivery and performance by them of this Agreement and the
transactions contemplated hereby.
SECTION 6.7. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto will use
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby, including, without
limitation, the transfer or reissuance of any permit, license, or approval
required pursuant to Environmental Laws.
SECTION 6.8. NOTICE OF BREACH. Through the Closing Date, each of the
parties hereto shall promptly give to the other parties written notice with
particularity upon having knowledge of any matter that may constitute a breach
of any representation, warranty, agreement or covenant contained in this
Agreement.
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with the Commission pursuant to a request for confidential treatment.
57
SECTION 6.9. CONFIDENTIAL INFORMATION. No party hereto shall use for
its own benefit or disclose to any Person Confidential Information that is the
exclusive property of another party hereto without the prior written consent of
that party. "Confidential Information" shall include protocols, processes,
information regarding customers, vendors, suppliers, trade secrets, training
programs, manuals or materials, technical information, contracts, systems,
procedures, mailing lists, know-how, trade names, improvements, price lists,
financial or other data (including the revenues, costs or profits associated
with any of the Parent's or the Company's products or services), business plans,
code books, invoices and other financial statements, computer programs, software
systems, databases, discs and printouts, plans (business, technical or
otherwise), customer and industry lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers, names,
addresses or any other compilation of information, written or unwritten, which
is or was used in the business of the Parent, the Company, the Buyer or any of
their respective Subsidiaries or Affiliates. Confidential Information shall not
include any information that can be shown by clear and convincing documentary
evidence to have been (1) public knowledge at the time of disclosure by a party
to this Agreement, its employees or agents ("DISCLOSING PARTY") or thereafter
made public knowledge through no act or failure to act on the part of another
party to this Agreement its employees or agents ("RECEIVING PARTY") or (2) known
independently by the Receiving Party prior to disclosure by the Disclosing
Party. Notwithstanding the foregoing, each party acknowledges that technology
which is public knowledge may have specific applications to products or
processes that are not public knowledge. The possible utilization of such
technology to these specific applications developed by or for a party will be
deemed confidential and proprietary and are to be maintained as such.
SECTION 6.10. TAX COVENANTS.
(a) Dubbell shall prepare and the Parent shall file within
five (5) days of receipt from Dubbell all Tax Returns with the
appropriate federal, state, local and foreign governmental agencies
relating to the Parent or the Company for periods ending on or prior to
the Closing Date, including the consolidated federal income Tax Return
for the year ending December 27, 1997 (the "1997 FEDERAL TAX RETURN")
and the consolidated federal income Tax Return for the period ending on
the Closing Date (the "1998 SHORT PERIOD FEDERAL TAX RETURN"). The
Parent shall prepare and file, or cause to be prepared and filed, all
Straddle Tax Returns required to be filed by the Parent or the Company
and shall pay the Taxes shown to be due thereon, provided, however,
that Dubbell shall promptly reimburse the Parent for the portion of
such Taxes that constitutes a Pre-Closing Tax. Buyer shall allow
Dubbell and his accountants to review, comment upon and reasonably
approve without undue delay any Straddle Tax Return and Dubbell shall
allow Buyer to review, comment upon and reasonably approve without
undue delay the 1997 Federal Tax Return and the 1998 Short Period
Federal Tax Return, at any time during the forty-five (45) day period
immediately preceding the filing of such Tax Returns. Buyer and Dubbell
agree to cause the Parent and the Company to file all Tax Returns for
any Straddle Period on
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with the Commission pursuant to a request for confidential treatment.
58
the basis that the relevant taxable period ended as of the close of
business on the Effective Date, unless the relevant Tax authority will
not accept a Tax Return filed on that basis.
(b) In the case of any Straddle Period, (i) real, personal and
intangible property Taxes ("PROPERTY TAXES") of the Parent or the
Company for the Pre-Closing Tax Period shall be equal to the amount of
such property Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days during the
Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the number of days in the Straddle Period; and
(ii) the Taxes of the Parent or the Company (other than property Taxes)
for the portion of the Straddle Period that constitutes a Pre-Closing
Tax Period shall be computed as if such taxable period ended as of the
close of business on the Effective Date.
(c) The Parent will cause any tax sharing agreement or similar
arrangement with respect to Taxes involving the Parent, the Company or
any other Subsidiary of the Parent to be terminated effective as of the
Effective Date, to the extent any such agreement or arrangement relates
to the Parent, the Company or any other Subsidiary of the Parent, and
after the Effective Date the Parent and the Company shall have no
obligation under any such agreement or arrangement for any past,
present or future period.
(d) The Buyer shall pay to Dubbell within ten (10) days of
receipt any Tax refunds received by the Buyer, the Parent or the
Company that relate solely to any Pre-Closing Tax Period, including any
Tax refunds related to the carryback of any losses incurred during the
taxable year of the Parent that includes the Closing Date.
(e) From and after the date hereof, neither the Parent, the
Company nor any other Subsidiary of the Parent shall, without the
consent of Buyer, (i) make, change or revoke, or permit to be made,
changed or revoked, any election or method of accounting with respect
to Taxes; or (ii) enter into, or permit to be entered into, any closing
or other agreement or settlement with respect to Taxes.
SECTION 6.11. RELEASE OF RESIGNING DIRECTORS AND OFFICERS; ASSUMPTION
OF OBLIGATIONS.
(a) On or prior to the Effective Date, each of the officers
and directors of the Parent and the Company designated by the Buyer
shall execute a resignation and cross release under which (i) he shall
resign effective on the Closing Date from any office held as an officer
or director of the Parent and/or the Company; (ii) he shall release the
Parent and/or the Company from any and all claims, costs, liabilities
and actions that he may have against them; (iii) the Parent and/or the
Company shall release such individual from any and all claims, costs,
liabilities and actions that it may have against such individual except
(x) as to any then unpaid loans made by the Parent or the Company to
such individual, and (y) any claims, costs, liabilities and actions
that
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
59
the Parent or the Company may have against such individual by reason of
his willful malfeasance or criminal conduct; and (iv) the Parent and/or
the Company shall indemnify and hold harmless such individual from and
against any and all liabilities, losses, damages, claims, costs and
expenses that such individual may incur arising out of or related to
his having served as an officer or director of the Parent and/or the
Company (except those arising from his willful malfeasance or criminal
conduct).
(b) On or prior to the Effective Date, Dubbell shall cause
PFRM to assume all liabilities and the performance of all obligations
under the Severance Agreements, the Parent Lease, the Xxxx and Xxxxxxx
Notes and any and all instruments, agreements or documents to which the
Parent is bound.
SECTION 6.12. ACTIONS OF SELLERS. Between the date of this Agreement
and the Closing Date, the Sellers will not take or knowingly permit to be taken
any action or do or knowingly permit to be done anything in the conduct of the
business of the Parent or the Company, as applicable, or otherwise, which would
be contrary to or in breach of any of the terms, conditions or provisions of
this Agreement, or which would cause any of the representations herein to be
untrue, except as may be provided for in this Article VI. Except as otherwise
requested by the Buyer, but without making any commitment on behalf of the
Buyer, the Sellers will use commercially reasonable efforts to preserve the
businesses of the Parent and the Company, to keep the services of their present
officers and employees available and to preserve the good will of the suppliers
and customers and others having business relationships with the Parent, the
Company or the Buyer.
SECTION 6.13. CHANGE OF NAME OF THE PARENT. Prior to the Effective
Date, Dubbell shall cause the Parent to take all actions necessary to cause the
name of the Parent to be changed to Novagen Holdings, Inc. or such other name as
the Buyer and Dubbell shall mutually agree. Additionally, the Buyer shall
execute any license or assignment required in order to enable Dubbell to
continue to use the name "Pel-Freez" in connection with the operation of
businesses not purchased by the Buyer.
SECTION 6.14. TRANSFER OF CORPORATE BOOKS AND RECORDS. On the Closing
Date, Dubbell shall cause the Parent and the Sellers shall cause the Company to
transfer all minute books, stock registers, Tax Returns and other corporate and
business books and records (including employee personnel files) of the Parent
and the Company applicable to all periods prior to and ending on the Closing
Date (the "CORPORATE RECORDS") to the Buyer. From and after the Closing Date
until the sixth year anniversary of the Closing Date, upon reasonable notice to
the Buyer and during regular business hours, the Sellers shall have access to
the Corporate Records. The Buyer shall give each of Dubbell's Agent and the
Minority Shareholders' Agent notice 30 days prior to the disposal of any
Corporate Records. Upon such notice, the Sellers' Agents, at their election, may
request the Buyer to deliver all such documents to the Sellers' Agents, or
either of them, and may retain the same with no obligation of any kind or nature
in respect thereof to the Buyer. The Buyer shall deliver such
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
60
Corporate Records to the Sellers' Agents at the place where they are regularly
stored by the Buyer.
SECTION 6.15. EMPLOYEE RELATIONS AND BENEFITS.
(a) The Parent and Dubbell shall take, or cause to be taken,
such corporate action as is necessary to cause (i) the Parent Employee
Benefit Plans to be assumed by PFRM as of or prior to the Closing Date,
(ii) the Parent and the Company to cease as of the Closing Date to be
participating employers in any of the Parent Employee Benefit Plans and
(iii) the Parent and the Company to have no liability as of and after
the Closing Date to PFRM or any other Person in respect of any Parent
Employee Benefit Plan.
(b) Dubbell shall cause PFRM and its Affiliates following the
Closing Date, and the Parent Employee Benefit Plans, to be responsible
for all claims of participants in the Parent Employee Benefit Plans
(including those persons who remain employed with the Company
immediately following the Closing Date (the "POST-CLOSING COMPANY
EMPLOYEES")) for payments or benefits thereunder. The Parent Employee
Benefit Plans shall be responsible for all claims of Post-Closing
Company Employees for worker's compensation, unemployment compensation
and other government-mandated benefits, and for weekly indemnity, life,
hospital/medical/surgical, disability, major medical and dental
benefits, for expenses which were incurred prior to the Closing Date
and are payable under the terms and conditions of any of the Parent
Employee Benefit Plans. Those employee benefit plans maintained by the
Buyer and in which Post-Closing Company Employees participate on the
Closing Date, and which are analogous to a plan or program described in
the preceding sentence (the "BUYER WELFARE PLANS"), shall be
responsible for all claims for expenses incurred on or following the
Closing Date and which are payable under the terms and conditions of
any of the Buyer Welfare Plans.
(c) Service by Post-Closing Company Employees with the Company
shall be recognized under the Buyer Welfare Plans, and any other
employee benefit plans maintained by the Buyer for the benefit of
Post-Closing Company Employees, for all purposes, including but not
limited to participation, coverage, vesting and level of benefits, as
applicable. The Buyer shall waive or cause its insurance carriers to
waive all limitations as to preexisting conditions, if any, with
respect to participation and coverage requirements applicable to
Post-Closing Company Employees under the Buyer Welfare Plans except to
the extent that such limitations (i) prevented any person from
participating in any Parent Employee Benefit Plan immediately prior to
the Closing Date and (ii) remain allowable following the passage of the
Health Insurance Portability and Accountability Act.
(d) If the Closing Date is prior to December 31, Post-Closing
Company Employees shall be allowed to continue to participate for the
remainder of the calendar
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with the Commission pursuant to a request for confidential treatment.
61
year in which the Closing Date occurs, on an after-tax basis, in the
Parent Employee Benefit Plan which provides a health care flexible
spending account and a dependent care spending account.
(e) The Buyer shall cause Post-Closing Company Employees to be
provided with severance benefits in accordance with the arrangement
described in Section 6.15 of the Disclosure Schedule for terminations
of employment occurring within one year of the Closing Date.
(f) Dubbell shall cause PFRM or such other entity as may
maintain the Pel-Freez, Inc. 401(k) Plan (the "PEL-FREEZ 401(K) PLAN")
following the Closing Date to cause all accounts of Post-Closing
Company Employees in the Pel-Freez 401(k) Plan to become fully vested
and nonforfeitable as of the Closing Date. Provided a favorable Private
Letter Ruling is issued by the Internal Revenue Service, Dubbell shall
cause PFRM, or such other entity as may maintain the Pel-Freez 401(k)
Plan following the Closing Date, to allow Post-Closing Company
Employees having account balances therein to elect to receive lump sum
distributions of such account balances in accordance with Section
401(k)(10) of the Code until the end of the second calendar year
following the calendar year in which the Closing Date occurs. The Buyer
shall cause the Code Section 401(k) Plan maintained by it to accept
rollover contributions of such distributions in accordance with the
requirements of the Code. The account balances in the Pel-Freez 401(k)
Plan which are not distributed in accordance with Section 401(k)(10) of
the Code shall be treated in accordance with the terms of the Pel-Freez
401(k) Plan. Dubbell shall cause PFRM or such other entity as may
maintain the Pel-Freez 401(k) Plan to apply to the Internal Revenue
Service for the Private Letter Ruling referred to above as soon as
practicable following the date hereof, and use its best efforts to
obtain such Private Letter Ruling.
(g) Dubbell shall cause PFRM or such other entity as may
maintain the Pel-Freez, Inc. Retirement Plan (the "DB PLAN") to cause
all accrued benefits of Post-Closing Company Employees in the DB Plan
to become fully vested and nonforfeitable as of the Closing Date. Such
accrued benefits shall be payable in accordance with the terms of the
DB Plan. Dubbell shall take, or cause to be taken, by the Parent (prior
to the Closing Date) or PFRM or such other entity, as applicable,
(following the Closing Date) any action required by the Pension Benefit
Guaranty Corporation (the "PBGC") to prevent a termination of the DB
Plan by the PBGC in a manner or under circumstances which could cause
the Buyer, Parent, the Company or any ERISA Affiliate of any of them to
have any liability to or in respect of the DB Plan following the
Closing Date. Dubbell shall cause a "reportable event" filing to be
timely made with the PBGC in connection with the transactions
contemplated hereunder, if required pursuant to Section 4043 of ERISA
or the regulations thereunder. Dubbell shall cause to be promptly
forwarded to the Buyer any comments received from the PBGC by the
Sellers, the Parent, the Company or any ERISA
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
62
Affiliate of any of them (whether written or oral) following the date
hereof regarding the DB Plan.
(h) Prior to or as of the Closing Date, the Sellers and the
Parent shall take whatever action is necessary to cause any outstanding
options, warrants and other rights to purchase stock of the Parent or
the Company to cease to exist. The Sellers and the Parent shall obtain
releases from each of the holders of such options, warrants or other
rights, addressed to the Parent, confirming that such options ceased to
exist no later than the Closing Date, and that such holder maintains no
rights against the Parent, the Company or the Buyer, or any Affiliate
of any of them, in respect thereof on and following the Closing Date.
(i) Prior to the Closing Date, the Company shall set aside
$25,000 into a bookkeeping account denominated the "RETENTION BONUS
POOL." This set-aside shall be recorded in the financial operations of
the Company as a charge to earnings prior to the Closing Date.
Immediately following the Closing Date, the Buyer shall cause the
Retention Bonus Pool to be increased by an additional $25,000. The
resulting $50,000 Retention Bonus Pool shall be distributed at the
discretion of the person who is the General Manager of the Company
ninety (90) days following the Closing Date, to those Post-Closing
Company Employees who continue to be employed with the Company at such
time.
SECTION 6.16. FURTHER ASSURANCES. Upon the request of a party or
parties hereto at any time after the Closing Date, the other party or parties
will forthwith execute and deliver such further instruments of assignment,
transfer, conveyance, endorsement, direction or authorization and other
documents as the requesting party or parties or its or their counsel may
reasonably request in order to perfect title of the Buyer and its successors and
assigns to the Remaining Parent Shares and the Company Minority Shares or
otherwise to effectuate the purposes of this Agreement.
SECTION 6.17. POST-CLOSING MANAGEMENT OF PROMEGA DISPUTE.
(a)
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(b) The Buyer and the Company shall make Xxxxxx X. Xxxxxxxxxx
("XXXXXXXXXX") and other employees of the Company available for
consultations, court
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
63
appearances, settlement conferences and other meetings with Dubbell and
legal counsel regarding the Promega Dispute as may be reasonably
requested by Dubbell and shall make available to Dubbell upon his
reasonable request such books and records of the Company that have
relevance to the Promega Dispute.
(c)
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SECTION 6.18. INTERCOMPANY ACCOUNTS. The Buyer shall, within 90 days of
the Closing Date, pay or cause to be paid the Intercompany/Affiliate Account of
the Company outstanding as of the Closing Date, which amount shall not exceed
$200,000, and which shall bear interest from the Closing Date at a rate of 8%
per annum on the unpaid balance thereof. The Buyer shall be entitled to credit
against such outstanding Intercompany/Affiliate Account balance the amount of
any payments made prior to the Closing Date by the Parent or the Company to
Vector Securities International, Inc. or any other obligations of the Parent or
the Company to Vector Securities, Inc. in connection with the transactions
contemplated by this Agreement and to the extent such amounts exceed the amount
of the Intercompany/Affiliate Account, the Sellers shall reimburse the Buyer for
such amounts.
SECTION 6.19. CONTINUATION OF COMPANY'S BUSINESS. From and after the
date of this Agreement through the Effective Date, the Company shall operate the
business in the ordinary course consistent with past practice and prior to the
Closing in accordance with the business plans and budgets established by the
Company, including, without limitation, reducing the amounts due under the
Company's Intercompany/Affiliate account. From and after the Effective Date,
Dubbell shall not permit the Parent, and the Sellers and the Parent shall not
permit the Company, to take any actions with respect to their respective
operations, howsoever insignificant, without the prior consent of the Buyer,
except for the Redemption Transaction. From and after the Effective Date, the
operations of the Parent and the Company shall be conducted for the account and
benefit, and at the expense, of the Buyer as if the transactions contemplated
hereby had been consummated on the Effective Date.
SECTION 6.20. RELEASES FROM LIABILITY. Dubbell shall use commercially
reasonable efforts to obtain, on behalf of the Parent, unconditional releases of
all liabilities or obligations
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
64
of the Parent under the Severance Agreements, the Parent Lease, the Xxxx and
Xxxxxxx Notes and any and all other instruments, agreements or documents to
which the Parent is bound.
SECTION 6.21. ANCILLARY AGREEMENTS. On or prior to the Closing Date,
the Parent, the Company and PFRM, as applicable, shall enter into agreements
substantially in the forms of Exhibits H, I and J, and reasonably acceptable to
the Buyer. The Buyer and Dubbell shall negotiate in good faith agreements based
on the principal terms set forth on Exhibit K.
SECTION 6.22. CLOSING DOCUMENTATION. (a) On or before December 30,
1997, the Buyer shall cause to be prepared and submitted for review by the
Sellers' attorneys, fully executed copies of each of the certificates,
agreements, opinions and other documents required under Article VIII, dated as
of the Closing Date, to be held by such attorneys pending receipt of
instructions from the Buyer that they be delivered at the Closing.
(b) On or before December 30, 1997, the Sellers shall cause to be
prepared and submitted for review by the Buyer's attorneys, fully executed
copies of each of the certificates, agreements, opinions and other documents
required under Article VII, dated as of the Closing Date, to be held by such
attorneys pending receipt of instructions from the Sellers' Agents that they be
delivered at the Closing.
SECTION 6.23. ACTIONS OF BUYER. Between the date of the Agreement and
the Effective Date, the Buyer will not take, or knowingly permit to be taken,
any action which might reasonably be expected to adversely impact the day-to-day
operations of the business of the Company.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Buyer in its sole discretion:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. All
representations and warranties made by the Sellers in this Agreement or in any
Ancillary Document delivered pursuant to the provisions of this Agreement in
connection with the transactions contemplated hereby that are qualified as to
materiality or as to a specified dollar amount shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of the Closing Date as if again made by the Sellers on and
as of such date, except for changes contemplated in Article VI hereof, and the
Buyer shall have received a certificate dated the Closing Date and signed by
each of the Sellers to that effect.
SECTION 7.2. PERFORMANCE OF THE SELLERS' OBLIGATIONS. The Sellers shall
have performed all obligations required under this Agreement to be performed by
them on or
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
65
before the Closing Date, and the Buyer shall have received a certificate dated
the Closing Date and signed by each of the Sellers to that effect.
SECTION 7.3. REDEMPTION TRANSACTION. The Redemption Transaction shall
have been effected by Dubbell and the Parent.
SECTION 7.4. RECEIPT OF DOCUMENTS. The Sellers shall have delivered to
the Buyer all of the following, each duly executed by the parties thereto (other
than the Buyer) and dated the Closing Date (or an earlier date satisfactory to
the Buyer), in form and substance satisfactory to the Buyer:
(a) EMPLOYMENT AGREEMENT. The Employment Agreement between
Xxxxxxxxxx and the Company, substantially in the form of Exhibit G
hereto;
(b) RESIGNATIONS. The resignations and releases of those
officers and directors of the Parent and the Company designated by the
Buyer, effective the Closing Date;
(c) CERTIFICATE OF NON-FOREIGN STATUS. The Buyer shall have
received a certificate from Dubbell substantially in the form of
Exhibit D hereto;
(d) STOCK OPTION RELEASES. The releases of persons formerly
holding options, warrants or other rights to purchase stock of the
Parent or the Company, as described in Section 6.15(h);
(e) EVIDENCE OF RELEASE OF LIENS. Documents evidencing the
release of all liens on assets of the Parent and the Company, including
Form UCC-3 Termination Statements, and payoff letters from all
appropriate lenders;
(f) RELEASE UNDER VECTOR AGREEMENTS. The release of the Parent
from any and all liabilities and obligations under the Vector
Agreements, including, without limitation, any indemnification
obligations.
(g) RELEASE UNDER ANNUITY. The release of the Parent and the
Company by Xxxxx Xxxxxxxx from any and all liabilities or obligations
and the termination of any and all security interests and other liens
on the property of the Parent or the Company under any annuity for his
benefit; and
(h) OTHER. All documents the Buyer may reasonably require
relating to the existence of the Parent and the Company and the
authority of the Sellers to enter into this Agreement, all in form and
substance reasonably satisfactory to the Buyer.
SECTION 7.5. CONSENTS AND APPROVALS. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other Person, including but not limited to,
those required by Environmental Laws, required in
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*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
66
connection with the Parent's and the Sellers' execution, delivery and
performance of this Agreement shall have been duly obtained and shall be in full
force and effect on the Closing Date.
SECTION 7.6. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of the Company shall be in effect.
SECTION 7.7. NO MATERIAL ADVERSE CHANGE. During the period from the
date of this Agreement to the Closing Date, there shall not have been any
material adverse change in the assets, properties, business, operations, net
income or financial condition of the Parent or the Company. For purposes of this
Section 7.7, any claim or lawsuit brought by Promega Corporation or its
principal stockholder or any of their respective Affiliates prior to the Closing
Date against the Company, the Parent, the Buyer or any party hereto shall not,
in and of itself, be considered a material adverse change unless it is related
to a material omission by the Company or any Seller.
SECTION 7.8. DISCHARGE OF INDEBTEDNESS; RELEASE OF LIENS. The Parent
shall have paid, and shall have caused its Subsidiaries and Affiliates to have
paid, all amounts due and owing to the Company by the Parent and such
Subsidiaries and Affiliates. All amounts due and owing to the Parent by any of
its Subsidiaries (including the Company) immediately prior to the Redemption
Transaction shall be cancelled at such time and treated as a contribution to the
capital of the respective Subsidiaries owing such amounts. The Sellers shall
have performed, or caused the Parent and the Company to perform, all acts
necessary to terminate and release all liens, security interests, charges,
interests or other encumbrances on the Remaining Parent Shares and the Company
Minority Shares and the assets of the Parent and the Company.
SECTION 7.9. OPINION OF COUNSEL. The Buyer shall have received an
opinion, dated as of the Closing Date, from Xxxxxx & Xxxxxxx, a Professional
Corporation, counsel to the Parent and Dubbell and Xxxxxxx & Xxxxx, counsel to
the Minority Shareholders, in form and substance reasonably satisfactory to the
Buyer and its counsel, substantially in the forms attached as EXHIBIT B hereto.
SECTION 7.10. LEGAL MATTERS. All certificates, instruments, opinions
and other documents required to be executed or delivered by or on behalf of the
Sellers under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Sellers in furtherance
of the transactions contemplated hereby, shall be reasonably satisfactory in
form and substance to counsel for the Buyer.
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with the Commission pursuant to a request for confidential treatment.
67
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Sellers' Agents.
SECTION 8.1. REPRESENTATIONS AND WARRANTIES OF THE BUYER. All
representations and warranties made by the Buyer in this Agreement or in any
Ancillary Document delivered pursuant to the provisions of this Agreement in
connection with the transactions contemplated hereby that are qualified as to
materiality or as to a specified dollar amount shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of the Closing Date as if again made by the Buyer on and as
of such date and the Sellers shall have received a certificate dated the Closing
Date and signed by an authorized officer of the Buyer to that effect.
SECTION 8.2. PERFORMANCE OF THE BUYER'S OBLIGATIONS. The Buyer shall
have performed all obligations required under this Agreement to be performed by
it on or before the Closing Date, and the Sellers shall have received a
certificate dated the Closing Date and signed by an authorized officer of the
Buyer to that effect.
SECTION 8.3. CONSENTS AND APPROVALS. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other Person required in connection with the
Buyer's execution, delivery and performance of this Agreement shall have been
duly obtained and shall be in full force and effect on the Closing Date.
SECTION 8.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, domestic or foreign, that declares this Agreement invalid
or unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby shall be in effect.
SECTION 8.5. OPINION OF COUNSEL. The Sellers shall have received a
favorable opinion, dated as of the Closing Date, from Xxxxxxx Xxxx & Xxxxxxxxx,
counsel for the Buyer, in form and substance reasonably satisfactory to the
Sellers and their counsel. substantially in the form of EXHIBIT C.
SECTION 8.6. LEGAL MATTERS. All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the
Buyer under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Buyer in furtherance of
the transactions contemplated hereby, shall be reasonably satisfactory in form
and substance to counsel for the Sellers.
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with the Commission pursuant to a request for confidential treatment.
68
ARTICLE IX.
INDEMNIFICATION
SECTION 9.1. INDEMNIFICATION BY THE SELLERS AND THE BUYER.
(a) The Sellers shall severally indemnify and hold the Buyer
Indemnified Parties harmless from and against and in respect of any and
all liabilities, losses, damages, judgments, settlements, claims, costs
and expenses, including but not limited to reasonable attorneys' fees
(each, a "LOSS"), arising out of or due to (i) a breach of any
covenant, condition or agreement of the Sellers contained in this
Agreement or any representation or warranty contained in Article III of
this Agreement and any related certificate, schedule, exhibit or other
document furnished by such parties pursuant to this Agreement or in
connection with the Closing (each, an "ANCILLARY DOCUMENT"), or (ii)
any claim or cause of action by or in respect of any person who is or
was employed by the Company, the circumstances giving rise to which
arose prior to the Closing Date. Notwithstanding the foregoing
provisions of this Section 9.1(a), for purposes of this Section 9.1(a),
the term "Loss" shall not include any amounts attributable to any
Pre-Closing Taxes of the Company.
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(a) shall not exceed $3,000,000 in the aggregate.
(b) The Sellers shall severally indemnify and hold the Buyer
Indemnified Parties harmless from and against and in respect of any and
all Losses, arising out of or due to any claim or cause of action (1)
arising pursuant to Environmental Laws as a result of any act,
omission, or condition in existence or first occurring prior to the
Closing Date at any real property owned or leased by the Company, (2)
arising out of the presence prior to the Closing Date at any real
property owned or leased by the Company prior to the Closing Date of
any Hazardous Material on, at, beneath, or near any real property owned
or leased by the Company prior to the Closing Date, (3) any violation
prior to the Closing Date of Environmental Law by the Company, at any
real property owned or leased by the Company prior to the Closing Date,
or (4) the disposal, arrangement for disposal, or transportation of any
Hazardous Materials, prior to the Closing Date by the Company or from
any real property owned or leased by the Company prior to the Closing
Date.
(c)
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(ii)
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(d) In addition to his obligations as a Seller, Dubbell shall
indemnify and hold the Buyer Indemnified Parties harmless from and
against and in respect of any and all Losses arising out or due to (i)
a breach of any representation or warranty contained in Article IV of
this Agreement and any related Ancillary Document, (ii) any failure of
Dubbell to pay and discharge when due any Parent Liabilities, (iii) any
claim for payments or benefits from or in respect of any of the Parent
Employee Benefit Plans, (iv) any claim or cause of action by or in
respect of any person who is or was employed by the Parent or any of
its Subsidiaries, the circumstances giving rise to which arose prior to
the Closing Date or (v) any claim or cause of action by any present or
former shareholder of the Parent or its Affiliates (other than Dubbell)
in such present or former shareholder's capacity as a shareholder of
the Parent or its Affiliates against a Buyer Indemnified Party, the
Parent or the Company arising out of any transactions in capital stock
of the Parent or its Affiliates; provided, however, that for purposes
of this Section 9.1(d), the term "Loss" shall not include any amounts
attributable to Taxes of any Subsidiary of the Parent other than the
Company, whether accrued before or after the Closing Date, and any
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(e) In addition to his obligations as a Seller, Dubbell shall
indemnify and hold the Buyer Indemnified Parties harmless from and
against and in respect of any and all Losses arising out or due to any
claim or cause of action by any party against a Buyer Indemnified
Party, the Parent or the Company with respect to liability from any
claim or cause of action (1) arising pursuant to Environmental Laws as
a result of any act, omission, or condition in existence or first
occurring prior to the Closing Date at any real property owned or
leased by the Parent and any of its Subsidiaries, (2) arising out of
the presence prior to the Closing Date of any Hazardous Material on,
at,
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beneath, or near any real property owned or leased by the Parent or its
Subsidiaries prior to the Closing Date, (3) any violation of
Environmental Law prior to the Closing Date by the Parent or its
Subsidiaries or at any real property owned or leased by the Parent or
its Subsidiaries prior to the Closing Date, or (4) the disposal,
arrangement for disposal, or transportation prior to the Closing Date
of any Hazardous Materials by the Parent or its Subsidiaries or from
any real property owned or leased by the Parent or its Subsidiaries
prior to the Closing Date.
(f) In addition to his other indemnification obligations,
Dubbell shall indemnify the Buyer Indemnified Parties and hold them
harmless from all Losses attributable to Taxes of any Subsidiary of the
Parent other than the Company, whether accrued before or after the
Closing Date, and any Pre-Closing Taxes of the Parent or the Company.
For purposes of this Agreement, "Pre-Closing Taxes" shall mean, to the
extent such liability does not give rise to a reduction in the Purchase
Price pursuant to Section 2.4 of this Agreement, (i) all liability for
Taxes of the Parent or the Company for Pre-Closing Tax Periods; (ii)
all liability resulting by reason of the several liability of the
Parent or the Company pursuant to Treasury Regulations 1.1502-6 or any
analogous state, local or foreign law or regulation or by reason of the
Parent or the Company having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date; (iii) all
liability for Taxes resulting by reason of the Redemption Transaction;
(iv) all liability for real estate transfer Taxes or real estate gains
Taxes arising as a result of the sale of the Parent Shares, the sale of
the Company Minority Shares or the deemed transfer of the stock of any
of the Subsidiaries of the Parent under this Agreement; (v) all
liability attributable to any misrepresentation or breach of warranty
made by Dubbell in Section 4.8 of this Agreement; (vi) all liability
for Taxes attributable to any failure to comply with any of the
covenants or agreements of Dubbell or the Company under this Agreement;
(vii) all liability for Taxes resulting by reason of any item of income
or gain of a partnership reported by the Company as a partner, to the
extent such items are properly attributable to a Pre-Closing Tax Period
of the partnership; and (viii) all liability for Taxes of any other
person pursuant to any contractual agreement entered into on or before
the Closing Date.
(g) The Buyer shall indemnify and hold harmless the Sellers
from and against and in respect of any and all Losses arising out of or
due to a breach of any representation, warranty, covenant, condition or
agreement of the Buyer contained in this Agreement or any related
Ancillary Document.
SECTION 9.2. PROCEDURES.
(a) If an event giving rise to indemnification under this
Agreement occurs or is alleged and the party or parties entitled to
receive the benefits of the indemnification provisions hereunder (the
"AGGRIEVED PARTY") asserts that a party or parties has become obligated
to the Aggrieved Party pursuant to Section 9.1 hereof (the
"INDEMNIFYING PARTY"), or if any suit, action, investigation, claim or
proceeding (each
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a "CLAIM") is begun, made or instituted as a result of which the
Indemnifying Party may become obligated to the Aggrieved Party
hereunder, the Aggrieved Party shall give written notice to the
Indemnifying Party, promptly after such Aggrieved Party has actual
knowledge of any Claim as to which indemnity may be sought; provided,
however, that the failure of any Aggrieved Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 9.2 except to the extent the
Indemnifying Party is materially prejudiced thereby. The Indemnifying
Party will have the right, at its option and at its sole cost and
expense, upon timely notice to the Aggrieved Party, to assume control
of the defense (or otherwise contest or protect the Aggrieved Party
against any such Claim) of any Claim by counsel of the Indemnifying
Party's choice, provided, however, such counsel is reasonably
satisfactory to the Buyer. Failure by the Indemnifying Party to notify
the Aggrieved Party of its election to defend any such action within a
reasonable time, but in no event more than fifteen days after notice
thereof shall have been given to the Indemnifying Party, shall be
deemed a waiver by the Indemnifying Party of its right to defend such
Claim. If the Indemnifying Party assumes the defense of any such Claim,
the obligations of the Indemnifying Party as to such Claim shall be
limited to taking all steps necessary in the defense or settlement of
such Claim resulting therefrom and to holding the Aggrieved Party
harmless to the extent required under Section 9.1 hereof, from and
against any and all Losses caused by or arising out of any settlement
approved by the Indemnifying Party or any judgment in connection with
such Claim resulting therefrom. The Aggrieved Party may participate, at
its expense, in the defense of such Claim, provided that the
Indemnifying Party shall direct and control the defense of such Claim.
The Indemnifying Party shall not, in the defense of such Claim
resulting therefrom, consent to entry of any judgment, except with the
written consent of the Aggrieved Party, or enter into any settlement,
except with the written consent of the Aggrieved Party, which does not
include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Aggrieved Party of a release from all liability in
respect of such Claim. All awards and costs payable by a third party to
the Aggrieved Party or the Indemnifying Party shall belong to the
Indemnifying Party.
(b) If the Indemnifying Party shall not assume the defense of
any such Claim resulting therefrom, the Aggrieved Party may defend
against such Claim in such manner as it may deem appropriate and,
unless the Indemnifying Party shall deposit with the Aggrieved Party a
sum equivalent to the total amount demanded in such Claim, but not in
excess of the amounts required pursuant to Section 9.1, or shall
deliver to the Aggrieved Party a surety bond in form and substance
reasonably satisfactory to the Aggrieved Party, but not for more than
the amounts required pursuant to Section 9.1, the Aggrieved Party may
settle such Claim on such terms as it may deem appropriate, and the
Indemnifying Party shall promptly reimburse the Aggrieved Party for the
amount of all expenses, legal or otherwise, incurred by the Aggrieved
Party in connection with the defense against or settlement of such
Claim to the extent provided in Section 9.1 hereof. If no settlement of
such Claim is made, the
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Indemnifying Party shall promptly reimburse the Aggrieved Party for the
amount of any judgment rendered with respect to such Claim and of all
expenses, legal or otherwise, incurred by the Aggrieved Party in the
defense against such Claim, to the extent so required pursuant to
Section 9.1 hereof.
SECTION 9.3. PROCEDURES RELATING TO TAX CLAIMS. If any Tax authority
raises any issue with Buyer, including any Tax matters which could be subject to
Dubbell's indemnification under Section 9.1(d), related to the Company or other
Subsidiary of the Parent, the Company or the Parent, then Buyer shall promptly
notify Dubbell and offer him the right to confer with such Tax authority before
any claim for Tax deficiency is raised. In addition, notwithstanding the
provisions of Section 9.2, if a Claim is made by any Tax authority which, if
successful, is likely to result in an indemnity payment to Buyer or any of its
Affiliates pursuant to this Article IX, the Buyer shall notify Dubbell of such
claim (a "TAX CLAIM"), stating the nature and basis of such claim and the amount
thereof, to the extent known. Failure to give notice under the preceding two
sentences shall not relieve Dubbell from any liability which he may have on
account of this indemnification or otherwise, except to the extent that Dubbell
is materially prejudiced thereby. Dubbell will have the right, at his option and
at his sole cost and expense, upon timely notice to the Buyer, to assume control
of any defense of any Tax Claim (other than a Tax Claim relating solely to Taxes
of the Parent or the Company for a Straddle Period) with his own counsel,
provided, however, such counsel is reasonably satisfactory to the Buyer.
Dubbell's right to control a Tax Claim will be limited to amounts in dispute
which would be paid by Dubbell or for which Dubbell would be liable pursuant to
this Article IX. Costs of such Tax Claims are to be borne by Dubbell unless the
Tax Claim relates to taxable periods of the Parent or the Company beginning
after the Effective Date or to any Straddle Period, in which event such costs
will be born by the Buyer or, in the case of the Straddle Period, will be fairly
apportioned between Dubbell and the Buyer based upon their proportionate
interests. The Buyer Indemnified Parties shall cooperate with Dubbell in
contesting any Tax Claim, which cooperation shall include the retention and,
upon Dubbell's request, the provision of records and information which are
reasonably relevant to such Tax Claim and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder. Notwithstanding the foregoing, Dubbell shall
neither consent nor agree to the settlement of any Tax Claim with respect to any
liability for Taxes that may affect the liability for any state or federal
income tax of the Parent or the Company or any "affiliated group" (as defined in
Section 1504(a) of the Code) of which the Parent or the Company is a member for
any taxable period ending subsequent to the Effective Date without the prior
written consent of the Buyer, and neither Dubbell, nor any entity controlled by
Dubbell, shall file an amended Tax Return that may affect the liability for
Taxes of the Parent or the Company without the prior written consent of the
Buyer. The Buyer and Dubbell shall jointly control all proceedings taken in
connection with any Tax Claims relating solely to a Straddle Period.
SECTION 9.4. LIMITATIONS ON INDEMNITY. Notwithstanding anything in this
Article IX to the contrary:
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(a) No Indemnifying Party shall have any obligation to make
any payment under Section 9.1(a) hereof with respect to any Loss
arising out of any breach of a representation or warranty unless the
Aggrieved Party shall have suffered or incurred aggregate Losses
indemnifiable under this Agreement of $50,000, and then only to the
extent such amount exceeds $50,000.
(b) The total liability of each Seller under Section 9.1(a),
(b) and (c) for all claims and obligations under this Article IX shall
not exceed the respective Seller's percentage of the Purchase Price
received or to be received by such Seller under this Agreement as set
forth on EXHIBIT A-2.
SECTION 9.5. SET OFF AGAINST EARN-OUT PAYMENTS. If, pursuant to this
Agreement, an individual Seller becomes obligated to pay any sum of money to the
Buyer, then such sum may, at the election of the Buyer, be set off against and
shall apply to the Earn-Out Payments any other sums owed by the Buyer to such
Seller under Section 2.3 until such sums are completely set off. The rights of
set off and payment set forth herein shall not apply to any Tax refund due to
Dubbell hereunder, [********************************] The rights of set off and
payment set forth herein shall be in addition to, and not in limitation or a
waiver of, any rights or remedies of the Buyer under any provisions of this
Agreement, whether now or hereafter existing, at law or in equity or by Statute.
SECTION 9.6. PURCHASE PRICE ADJUSTMENT. The parties agree to treat any
payments received under this Article IX as an adjustment to the Purchase Price
for all federal, state and local income Tax purposes.
SECTION 9.7. INSURANCE. In calculating any Loss, there shall be
deducted any insurance recovery in respect thereof (and no right of subrogation
shall accrue hereunder to any insurer). To the extent that an Aggrieved Party
has insurance coverage with respect to any Loss, such Aggrieved Party shall, and
agrees that it will, seek to collect its damages first against such Insurance
and only secondarily from an Indemnifying Party, and in the event that any
Indemnifying Party is required to indemnify any Aggrieved Party for any such
Loss, the Indemnifying Party shall have a right of subrogation with respect to
such insurer.
SECTION 9.8. EXCLUSIVE REMEDIES. Except as otherwise explicitly
provided in this Agreement, the sole and exclusive remedy of the Sellers and the
Buyer for breach of any of the respective representations, warranties or
covenants of the Buyer or the Sellers, respectively, in this Agreement are as
set forth in this Article IX, provided, however, that this Section 9.8 shall not
limit remedies for fraud. The Buyer acknowledges and agrees that no Seller would
have entered into this Agreement but for the inclusion herein of this Section
9.8. The Sellers each acknowledge and agree that the Buyer would not have
entered into this Agreement but for the inclusion of this Section 9.8.
SECTION 9.9. DISCLAIMER. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT AND ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED BY SELLERS IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY,
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THE SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATION OR WARRANTY
INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY AT COMMON LAW, BY
STATUTE, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO THOSE RELATING TO (i) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AND (iii) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
ARTICLE X.
TERMINATION AND ABANDONMENT
SECTION 10.1. METHODS OF TERMINATION; UPSET DATE. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
before the Closing:
(a) by the mutual written consent of the Sellers through
Dubbell or Dubbell's Agent and the Buyer;
(b) by the Buyer, if any Seller has materially breached any
representation, warranty, covenant or agreement and such breach is
either not capable of being cured prior to the Closing or, if such
breach is capable of being cured is not so cured within a reasonable
amount of time of such breach;
(c) by the Sellers through Dubbell or Dubbell's Agent, if the
Buyer has materially breached any representation, warranty, covenant or
agreement and such breach is either not capable of being cured prior to
the Closing or, if such breach is capable of being cured is not so
cured within a reasonable amount of time of such breach;
(d) by the Buyer, if any material adverse change in the
assets, properties, business, operations, net income or financial
condition of the Parent or the Company shall have occurred;
(e) by the Sellers through Dubbell or Dubbell's Agent or the
Buyer if a court of competent jurisdiction or governmental, regulatory
or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action (which order, decree or
ruling the parties hereto shall use their best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement; or
(f) by the Sellers through Dubbell or Dubbell's Agent or the
Buyer at any time after February 28, 1998.
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For purposes of this Section 10.1, any claim or lawsuit brought by
Promega Corporation or its principal stockholder or any of their respective
Affiliates prior to the Closing Date against the Company, the Parent, the Buyer
or any other party hereto shall not, in and of itself, be sufficient reason to
terminate this Agreement, provided, however, that the foregoing shall not
preclude the Buyer from terminating this Agreement as a result of a material
breach of any representation or warranty (other than Section 3.16 as it relates
to the Promega Dispute).
SECTION 10.2. PROCEDURE UPON TERMINATION. In the event of termination
and abandonment of this Agreement pursuant to Section 10.1, written notice
thereof shall forthwith be given to the other party or parties and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by the Sellers or the Buyer.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
SECTION 11.1. REPRESENTATION OF SELLERS BY SELLERS' AGENTS.
(a) Each of the Sellers hereby irrevocably appoints Xxxxx X.
Xxxxxxx (and his successors herein called "DUBBELL'S AGENT") and Xxxxxx
X. Xxxxxxxxxx (and his successors herein called the "MINORITY
SHAREHOLDERS' AGENT") (herein called the "SELLERS' AGENTS") as his or
her agents and attorneys-in-fact to take any action required to be
taken by the Sellers under the terms of this Agreement, including,
without limiting the generality of the foregoing, the giving and
receipt of any notices to be delivered or received by or on behalf of
any or all of the Sellers and the right to waive, modify or amend any
of the terms of this Agreement, and agrees to be bound by any and all
actions taken by such agents on their behalf. The Buyer shall be
entitled to rely exclusively upon any communications given jointly by
the Sellers' Agents, except where this Agreement specifically refers to
Dubbell's Agent or the Minority Shareholder's Agent in which case the
Buyer may rely on communications given by the specified agent and the
Buyer shall not be liable in any manner whatsoever for any action taken
or not taken in reliance upon the actions taken or not taken or
communications made by the Sellers' Agents or either of them, as the
case may be. The Buyer shall be entitled to disregard any notices or
communications given or made by the Sellers unless given or made
through the Sellers' Agents, or either of them, as the case may be.
(b) In the event of the death or incapacity of either of the
Sellers' Agents or his inability to perform his functions hereunder,
the Buyer shall be entitled to rely upon any notices or communications
given or made solely by or to the remaining Shareholders' Agent until
the receipt of notice of the appointment of a new agent and
attorney-in-fact. If at any time the offices of one or both of the
Sellers' Agents are vacant, then Dubbell or his successors in interest
shall appoint another person to serve as Dubbell's Agent, and the
Sellers other than Dubbell (herein called the "MINORITY
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SHAREHOLDERS") shall appoint another person to serve as the Minority
Shareholders' Agent. Such appointment or appointments shall be deemed
to have been made when the identities of the new Agent or Agents have
been communicated to the Buyer in writing.
(c) The manner and form by which the Sellers shall decide upon
any new agent and attorney-in-fact and the manner in which such
decisions are to be communicated to the remaining Sellers' Agents shall
be decided solely by the Sellers. The Sellers recognize, and hereby
acknowledge, that the Sellers' Agents have an interest in the subject
matter of this Agreement and that the appointment of such Agents as the
Sellers' Agents constitutes an irrevocable power-of-attorney coupled
with an interest.
(d) The Sellers jointly and severally shall indemnify and hold
harmless each of the Sellers' Agents from and against any loss or cost
which they or either of them may sustain or incur while acting as
Sellers' Agents except that each Sellers' Agent shall bear his own
liability and expense arising out of activities that are fraudulent or
grossly negligent.
SECTION 11.2. NATURE AND SURVIVAL OF REPRESENTATIONS, ETC. All
statements contained in any Ancillary Document delivered by or on behalf of the
Sellers or the Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed representations and warranties
by the Sellers or the Buyer hereunder. All representations and warranties and
agreements made by the parties hereto in this Agreement or pursuant hereto shall
survive the Closing hereunder and any investigation at any time made by or on
behalf of the Sellers or the Buyer. No suit or action may be commenced for
Claims under Section 9.1 at any time more than fifteen (15) months after the
Closing Date except for a suit or action brought thereunder for a breach of the
representations and warranties set forth in Sections 3.1, 3.15, 3.16 and 3.30 or
a suit or action brought to enforce the obligations of Dubbell or the other
Sellers, as applicable, under Sections 9.1(a) (with respect to a breach of any
covenant, condition or agreement under Sections 6.2, 6.3, 6.6, 6.7, 6.9, 6.10,
6.15, 6.16, 6.17, 6.20, 11.2, 11.5, 11.6, or 11.8 or Article IX), 9.1(b),
9.1(c), 9.1(d), 9.1(e) or 9.1(f) (with respect to which the applicable statute
of limitations shall apply).
SECTION 11.3. PUBLICITY. Prior to the Closing Date, the Sellers shall
not, nor shall they permit their respective Affiliates to, issue or cause the
publication of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby without the consent of the
Buyer. The Buyer shall consult with the Sellers before issuing any press release
or otherwise making any public statement with respect to the this Agreement and
the transactions contemplated hereby and shall not publicly disclose the names
of Pel-Freez, Inc. or Xxxxx X. Xxxxxxx, except in each case as required by law.
SECTION 11.4. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
This Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their
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respective successors and assigns; provided, however, that no party shall assign
or delegate any of the obligations created under this Agreement without the
prior written consent of the other parties. Notwithstanding the foregoing, the
Buyer shall have the unrestricted right to assign this Agreement and/or to
delegate all or any part of its obligations hereunder to any Affiliate of the
Buyer or to any lender in connection with any financing, but in such event the
Buyer shall remain fully liable for the performance of all of such obligations
in the manner prescribed in this Agreement. Nothing in this Agreement shall
confer upon any Person not a party to this Agreement, or the legal
representatives of such Person, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.
SECTION 11.5. BROKERS, FINDERS AND FINANCIAL ADVISORS. The Buyer, on
the one hand, and the Sellers, on the other, represent and warrant to each other
that all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Buyer and the Sellers directly with
each other and that no person is entitled to any broker's, finder's or financial
advisor's fee in connection with or on account of this Agreement or any
transaction herein contemplated, except that Sellers have engaged Vector
Securities, Inc. as a financial advisor and shall be obligated for its fees
and costs.
SECTION 11.6. FEES AND EXPENSES. All legal, accounting and other fees,
costs and expenses of the Parent, the Company and the Sellers incurred in
connection with, or arising out of their obligations contained in, this
Agreement and the transactions contemplated hereby shall be paid by the Sellers.
All legal, accounting and other fees, costs and expenses of the Buyer incurred
in connection with, or arising out of its obligations contained in, this
Agreement and the transactions contemplated hereby shall be paid by the Buyer.
SECTION 11.7. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if delivered personally or sent by registered or certified mail
(postage prepaid, return receipt requested) by facsimile or by air courier
guaranteeing second day delivery directed to the parties at the following
addresses:
(a) If to the Buyer, to:
CN Biosciences, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(b) If to the Sellers' Agents, to:
Xxxxx X. Xxxxxxx
Pel-Freez, Inc.
000 Xxxxx Xxxxxxxx
X.X. Xxx 00
Xxxxxx, XX 00000
Fax: (000) 000-0000
and:
Xxxxxx X. Xxxxxxxxxx
Novagen, Inc.
000 Xxxxxxx Xx.
Xxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, a Professional Corporation
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxx X. Will, Esq.
Fax: (000) 000-0000
and:
Xxxxxxx & Xxxxx
000 Xxxxxx Xxxxxx
Xxxxx 000
P.O. Box 1507
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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(c) If to the Parent, to:
Pel-Freez, Inc.
000 Xxxxx Xxxxxxxx
X.X. Xxx 00
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, a Professional Corporation
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxx X. Will, Esq.
Fax: (000) 000-0000
(d) If to Dubbell or Dubbell's Agent, to:
Xxxxx X. Xxxxxxx
Pel-Freez, Inc.
000 Xxxxx Xxxxxxxx
X.X. Xxx 00
Xxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, a Professional Corporation
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxx X. Will, Esq.
Fax: (000) 000-0000
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed.
SECTION 11.8. RELEASE UNDER SELLERS' ESCROW AGREEMENT. Each Seller
hereby jointly and severally indemnifies, releases and holds harmless the Buyer
from and against any Losses arising from any and all actions taken under or in
connection with the Sellers' Escrow Agreement.
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SECTION 11.9. ENTIRE AGREEMENT. This Agreement, together with the
Disclosure Schedule and the exhibits hereto, represent the entire agreement and
understanding of the parties with reference to the transactions set forth herein
and no representations or warranties have been made in connection with this
Agreement other than those expressly set forth herein or in the Disclosure
Schedule, exhibits, certificates and other documents delivered in accordance
herewith. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement and all prior drafts of
this Agreement, all of which are merged into this Agreement. No prior drafts of
this Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action or suit involving this Agreement.
SECTION 11.10. WAIVERS AND AMENDMENTS. The Sellers through the Sellers'
Agents or the Buyer may by written notice to the other: (a) extend the time for
the performance of any of the obligations or other actions of the other; (b)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement; (c) waive compliance with any of the covenants of
the other contained in this Agreement; (d) waive performance of any of the
obligations of the other created under this Agreement; or (e) waive fulfillment
of any of the conditions to its own obligations under this Agreement. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provision at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party hereto to take
any action against any breach of this Agreement or default by another party
hereto shall constitute a waiver of the former party's right to enforce any
provision of this Agreement or to take action against such breach or default or
any subsequent breach or default by such other party. This Agreement may be
amended, modified or supplemented only by a written instrument executed by the
Buyer and the Sellers' Agents.
SECTION 11.11. SEVERABILITY. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 11.12. TITLES AND HEADINGS. The Article and Section headings
and any table of contents contained in this Agreement are solely for convenience
of reference and shall not affect the meaning or interpretation of this
Agreement or of any term or provision hereof.
SECTION 11.13. SIGNATURES AND COUNTERPARTS. Facsimile transmission of
any signed original document and/or retransmission of any signed facsimile
transmission shall be the same as delivery of an original. At the request of any
party, the parties will confirm facsimile transmission by signing a duplicate
original document. This Agreement may be
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executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall be considered one and the same agreement.
SECTION 11.14. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur if any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto. Such remedies and all other
remedies provided for in this Agreement shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
SECTION 11.15. GOVERNING LAW. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of New York
without giving effect to the choice-of-law provisions thereof.
SECTION 11.16. KNOWLEDGE. As used in this Agreement, the terms
"knowledge" or "best knowledge" or words to that effect shall, as to any person,
refer to all facts of which such person shall have written notice or actual
knowledge.
-74-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
82
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLERS:
/s/ Xxxxx X. Xxxxxxx
----------------------------
XXXXX X. XXXXXXX
/s/ Xxxxxx Xxxxxx
----------------------------
XXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxxxxx
----------------------------
XXXXXXX XXXXXXXXXX
/s/ Xxxx Xxxxxxx
----------------------------
XXXX XXXXXXX
/s/ Xxxxxx Xxxxxxxxxx
----------------------------
XXXXXX XXXXXXXXXX
/s/ Xxxxxx Xxxxxxx
----------------------------
XXXXXX XXXXXXX
/s/ Xxxxxxx Xxxxxx
----------------------------
XXXXXXX XXXXXX
/s/ Xxxxxx Xxxx
----------------------------
XXXXXX XXXX
/s/ Xxx Van Oosbree
----------------------------
XXX VAN OOSBREE
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
83
PEL-FREEZ, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
CN BIOSCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Chief Executive Officer
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
84
EXHIBIT A-1
SHAREHOLDERS OF NOVAGEN, INC.
Number of Shares of
Name Company Common Stock
-------------------------------------------------------------------------
Xxxxxx Xxxxxx 00
Xxxxxxx Xxxxxxxxxx 25
Xxxx Xxxxxxx 25
Xxxxxx Xxxxxxx 50
Xxxxxx Xxxxxxxxxx 250
Xxxxxx Xxxx 25
Xxxxxxx Xxxxxx 25
Pel-Freez, Inc. 4,500
Xxx Van Oosbree 50
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
85
EXHIBIT A-2
SHAREHOLDERS OF NOVAGEN, INC. AS OF THE CLOSING DATE
Number of Shares of Percentage of
Name Company Common Stock Purchase Price
-------------------- -------------------- --------------
Xxxxxx Xxxxxx 50 1.0%
Xxxxxxx Xxxxxxxxxx 40 0.8%
Xxxx Xxxxxxx 40 0.8%
Xxxxxx Xxxxxxx 50 1.0%
Xxxxxx Xxxxxxxxxx 200 4.0%
Xxxxxx Xxxx 40 0.8%
Xxxxxxx Xxxxxx 40 0.8%
Pel-Freez, Inc. 4,500 90.0%
Xxx Van Oosbree 40 0.8%
----- ------
5,000 100.0%
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
86
EXHIBIT B
FORM OF OPINION OF COUNSEL TO THE PARENT, THE COMPANY AND DUBBELL
1. Dubbell owns the Remaining Parent Shares on the date hereof, free and
clear of any lien, charge or encumbrance, and there are no issued and
outstanding shares of capital stock of the Parent other than the
Remaining Parent Shares.
2. The Stock Purchase Agreement constitutes a valid and binding obligation
of Dubbell and, to our knowledge, the Stock Purchase Agreement and all
transactions contemplated thereby will not result in a violation of any
of the terms and provisions of any agreement to which Dubbell may be a
party or by which Dubbell may otherwise be bound.
3. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas and has all
requisite corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals to own its properties
and assets and to conduct its businesses as now conducted and as
proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in the jurisdictions
listed in Section 3.3 of the Disclosure Schedule, which includes 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 necessary.
4. The authorized capital stock of the Company consists of 5,000 shares of
Company Common Stock, all of which are issued and outstanding. Such
shares of Company Common Stock represent all of the issued and
outstanding shares of capital stock of the Company. All shares of
Company Common Stock have been duly authorized and validly issued and
are fully paid and nonassessable. There are no outstanding options,
warrants, agreements, conversion rights, preemptive rights or other
rights to subscribe for, purchase or otherwise acquire any shares of
Company Common Stock, and there are no outstanding obligations of the
Company to repurchase, redeem or otherwise acquire outstanding shares
of Company Common Stock.
5. The Company does not own any shares of, or control, directly or
indirectly, or have any equity interest in, any Person.
6. The execution, delivery and performance by the Dubbell of the Stock
Purchase Agreement and the transactions contemplated thereby do not and
will not: (i) violate or conflict with any provision of the articles of
incorporation or by-laws of the Company; (ii) violate any provision of
law, statute, judgment, order, writ, injunction, decree, or
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
87
award, or, to our knowledge, rule, or regulation, of any court,
arbitrator, or other governmental or regulatory authority applicable to
the Company; (iii) to our knowledge, violate, result in a breach of,
constitute (with due notice or lapse of time or both) a default or
cause any obligation, penalty, premium, right of termination or
acceleration to arise, accrue or occur under any material contract,
lease, loan agreement, mortgage, security agreement, trust indenture or
other agreement or instrument to which the Company is a party or by
which the Company is bound or to which its properties or assets is
subject; (iv) to our knowledge, result in the creation or imposition of
any lien, charge or encumbrance of any kind whatsoever upon any of the
properties or assets of the Company; or (v) to our knowledge, result in
the cancellation, modification, revocation or suspension of any
License.
7. Except as have been made or obtained, no consent, waiver, authorization
or approval of any governmental or regulatory authority, domestic or
foreign, or any other Person, or declaration to or filing or
registration with any such governmental or regulatory authority, is
required of or to be made by the Company in connection with the
execution, delivery and performance of the Stock Purchase Agreement.
8. Except as set forth in Section 3.16 of the Disclosure Schedule, to our
knowledge, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to our knowledge, threatened
before any federal, state or local court or governmental,
administrative or regulatory authority, domestic or foreign, or before
any arbitrator of any nature, brought by or against the Company or its
officers, directors, employees, agents or any of their respective
Affiliates involving, affecting or relating to any assets, properties
or operations of the Company or the transactions contemplated by the
Stock Purchase Agreement. Neither Dubbell nor the Company nor any of
his or the Company's assets or properties is subject to, nor does any
basis exist for, any order, writ, judgment, award, injunction or decree
of any federal, state or local court or governmental or regulatory
authority or arbitrator, that affects the Company's assets, properties,
operations, prospects, net income or financial condition or which would
interfere with the transactions contemplated by the Stock Purchase
Agreement.
9. The Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas and has all
requisite corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals to own its properties
and assets and to conduct its businesses as now conducted and as
proposed to be conducted. The Parent is duly qualified to do business
as a
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
88
foreign corporation and is in good standing in every jurisdiction
listed in Section 4.1 of the Disclosure Schedule, which includes 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 necessary.
10. The authorized capital stock of the Parent consists of 1,000,000 shares
of Parent Common Stock of which 427,200 shares are outstanding on the
date hereof. The Remaining Parent Shares represent all of the issued
and outstanding shares of the capital stock of the Parent and are owned
of record and beneficially by Dubbell, free and clear of any lien,
charge or encumbrance. All the outstanding shares of Parent Common
Stock have been duly authorized and validly issued and are fully paid
and nonassessable. There are no outstanding options, warrants,
agreements, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any shares of Parent
Common Stock, and there are no outstanding obligations or plans of the
Parent to repurchase, redeem or otherwise acquire outstanding shares of
Parent Common Stock.
11. Except as set forth in Section 4.3 of the Disclosure Schedule, the
Parent does not own any shares of, or control, directly or indirectly,
or have any equity interest in, any Person.
12. The Parent has the corporate power to enter into the Stock Purchase
Agreement and to carry out its obligations thereunder, including in
connection with the Redemption Transaction. The execution and delivery
of the Stock Purchase Agreement and the performance by the Parent of
its obligations thereunder, including in connection with the Redemption
Transaction, have been duly authorized by the Board of Directors of the
Parent, and no other corporate proceedings on the part of the Parent
are necessary to authorize such execution, delivery and performance.
The Stock Purchase Agreement has been duly executed by the Parent and
constitutes the valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms.
13. The execution, delivery and performance by Dubbell and the Parent of
the Stock Purchase Agreement and the transactions contemplated hereby,
including the Redemption Transaction, do not and will not: (i) violate
or conflict with any provision of the articles of incorporation or
by-laws of the Parent; (ii) violate any provision of law, statute,
judgment, order, writ, injunction, decree, or award, or, to our
knowledge, rule, or regulations of any court, arbitrator, or other
governmental or regulatory authority applicable to the Parent; (iii) to
our knowledge, violate,
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
89
result in a breach of, constitute (with due notice or lapse of time or
both) a default or cause any obligation, penalty, premium, right of
termination or acceleration to arise, accrue or occur under any
contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which either Dubbell or
the Parent is a party or by which either of them is bound or to which
any of their respective properties or assets is subject; (iv) result in
the creation or imposition of any lien, charge or encumbrance of any
kind whatsoever upon any of the properties or assets of the Parent; or
(v) to our knowledge, result in the cancellation, modification,
revocation or suspension of any License.
14. Except as have been made or obtained, no consent, waiver, authorization
or approval of any governmental or regulatory authority, domestic or
foreign, or any other Person, and no declaration to or filing or
registration with any such governmental or regulatory authority, is
required of or to be made by the Parent or Dubbell in connection with
the execution, delivery and performance of the Stock Purchase
Agreement.
15. Except as set forth in Section 4.13 of the Disclosure Schedule, to our
knowledge, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to our knowledge, threatened
before any federal, state or local court or governmental,
administrative or regulatory authority, domestic or foreign, or before
any arbitrator of any nature, brought by or against Dubbell, the Parent
or the Parent's officers, directors, employees or agents or any of
their respective Affiliates involving, affecting or relating to any
assets, properties or operations of the Parent or the transactions
contemplated by the Stock Purchase Agreement. None of Dubbell nor the
Parent nor any of their assets or properties is subject to, nor, to our
knowledge, does any basis exist for, any order, writ, judgment, award,
injunction or decree of any federal, state or local court or
governmental or regulatory authority or arbitrator, that affects the
Parent's assets, properties, operations, prospects, net income or
financial condition or which would interfere with the transactions
contemplated by the Stock Purchase Agreement.
16. Opinions in similar form to the above with respect to the ancillary
agreements by Parent and the Company where rights are being transferred
to Parent or the Company as to due authorization, execution and
delivery, validity and enforceability and no conflicts or consents.
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
90
FORM OF OPINION OF COUNSEL TO THE COMPANY MINORITY SHAREHOLDERS
1. Each of the Company Minority Shareholders owns, free and clear of any
lien, charge or encumbrance, all of the shares of Company Common Stock
set forth after the name of such Minority Shareholder and the Parent on
Exhibit A-2 to the Stock Purchase Agreement.
2. The Stock Purchase Agreement constitutes a valid and binding obligation
of each Company Minority Shareholder and, to our knowledge, the Stock
Purchase Agreement and all transactions contemplated thereby will not
result in a violation of any of the terms and provisions of any
agreement to which any Company Minority Shareholder may be a party or
by which any Company Minority Shareholder may otherwise be bound.
3. To our knowledge, none of the Company Minority Shareholders nor any of
their assets or properties is subject to, nor does any basis exist for,
any order, writ, judgment, award, injunction or decree of any federal,
state or local court or governmental or regulatory authority or
arbitrator, that which would interfere with the transactions
contemplated by the Stock Purchase Agreement.
4. Opinions in similar form to the above with respect to the Sellers'
Escrow Agreement and the [************************] as to due
authorization, execution and delivery, validity and enforceability and
no conflicts or consents.
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
91
EXHIBIT C
FORM OF OPINION OF BUYER'S COUNSEL
(a) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and the Buyer has all
requisite corporate power and authority to own its properties and assets and to
conduct its business as now conducted;
(b) The Buyer has the corporate power to enter into the Purchase
Agreement and to carry out its obligations thereunder. The execution and
delivery of the Purchase Agreement by the Buyer and the performance of the
obligations thereunder have been duly authorized by the Board of Directors of
the Buyer and no other corporate proceedings on the part of the Buyer are
necessary to authorize such execution, delivery and performance. The Purchase
Agreement has been duly executed by the Buyer and constitute the legal, valid
and binding obligations of the Buyer enforceable against it in accordance with
their terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforceability of
creditors' rights generally and except that the remedy of specific performance
or similar equitable relief may be subject to equitable defenses and to the
discretion of the court before which enforcement is sought; and
(c) The execution, delivery and performance of the Purchase Agreement
by the Buyer do not and will not violate or conflict with any provision of the
Amended and Restated Certificate of Incorporation or Amended and Restated
By-Laws of the Buyer and do not and will not violate any provision of law, or
any order, judgment or decree of any court or other governmental or regulatory
authority, nor violate nor will result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument known to us (after inquiry of appropriate officers of the Buyer)
to which the Buyer is a party or by which it is bound or to which its properties
or assets is subject.
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
92
Exhibit D
FORM OF CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. As required by Section
7.4(c) of the Stock Purchase Agreement, dated as of November __, 1997, by and
among CN Biosciences, Inc. as Buyer, Xxxxx X. Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx,
Xxxxxx Xxxx and Xxx Van Oosbree, as Sellers and Pel-Freez, Inc. and in order to
inform Buyer that withholding of tax is not required upon the disposition of a
U.S. real property interest by the undersigned Seller, the undersigned hereby
certifies the following:
1. Such Seller is not a foreign person, as defined in the Code and the
Treasury regulations promulgated thereunder;
2. Such Seller's U.S. taxpayer identification number is _____________;
and
3. Such Seller's address is ______________________________________.
Seller understands that this certification may be disclosed to the
Internal Revenue Service by Buyer and that any false statement contained herein
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
_________________________
Name of Seller
Date: __________ __, 1998
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
93
EXHIBIT E
SELLERS' ESCROW AGREEMENT
THIS SELLERS' ESCROW AGREEMENT (this "Agreement") is entered into as of
November 25, 1997, by and among XXXXX X. XXXXXXX ("Xxxxxxx"), XXXXXX XXXXXX,
XXXXXXX XXXXXXXXXX, XXXX XXXXXXX, XXXXXX XXXXXXXXXX ("Xxxxxxxxxx"), XXXXXX
XXXXXXX, XXXXXXX XXXXXX, XXXXXX XXXX and XXX VAN OOSBREE (collectively, together
with Dubbell and Xxxxxxxxxx, the "Sellers").
WHEREAS, Sellers, Pel-Freez, Inc., an Arkansas corporation (the
"Parent") and CN Biosciences, Inc., a Delaware corporation (the "Buyer") have
entered into a Stock Purchase Agreement dated as of November 25, 1997 (the
"Purchase Agreement"), pursuant to which, as a result of the transactions
contemplated thereby, the Parent and Novagen, Inc. will become wholly owned
subsidiaries of the Buyer; and
WHEREAS, Section 2.3 of the Purchase Agreement contemplates the
execution and delivery of this Agreement providing for the escrow of certain
portions of the Purchase Price (as such term is defined in the Purchase
Agreement); and
WHEREAS, simultaneously with the closing of the transactions under the
Purchase Agreement (the "Closing") certain of the Sellers have indebtedness that
must be repaid from their respective interests in the Purchase Price in order to
permit the transactions contemplated by the Purchase Agreement to be consummated
(as to any Seller, a "Seller's Obligation");
WHEREAS, the Sellers, collectively, are responsible for certain closing
costs, including fees of investment bankers, attorneys and accountants involved
in representing the Sellers in connection with the Purchase Agreement (the
"Closing Costs"); and
WHEREAS, the Sellers wish to make provision for the payment of the
various Seller's Obligations and Closing Costs and for the appropriate
allocation among them of the net amount of the Purchase Price, including the net
amount of the Initial Payment and the Earn Out Amount, if any (as such terms are
defined in the Purchase Agreement); and
WHEREAS, pursuant to the terms of the Purchase Agreement, Dubbell and
Xxxxxxxxxx were appointed to act as Sellers' Agents (as such term is defined in
the Purchase Agreement) and the parties now desire that Sellers' Agents also act
jointly as escrow agent pursuant to this Agreement and the Sellers' Agents are
willing to do so upon the terms and conditions hereinafter set forth;
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
94
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1. Establishment of Escrow. At the Closing, the Buyer shall deposit with
the Sellers' Agents an amount equal to the difference between the Initial
Payment of $10,500,000, less [************************************************
************************************************] ("Net Initial Payment") and
the aggregate amount of all discharged Seller's Obligations as contemplated in
the following paragraph (the "First Escrow Payment"). Seller's Agents shall
acknowledge receipt thereof, as well as receipt of amounts utilized to
discharge Sellers' Obligations, to Buyer. Sellers' Agents shall hold the First
Escrow Payment and any funds received by them relating to the Earn Out Amount
(in the aggregate the "Escrow Fund") in accordance with the terms of this
Agreement. The Escrow Fund shall be deposited in an interest bearing account
with a commercial bank having aggregate capital, surplus and undivided profits
in excess of $100,000,000.
2. Instructions on Payment of Seller's Obligations. On or prior to the Closing
Date, any Seller having Seller's Obligation shall so notify the Sellers' Agents,
specifying the amount of such Obligation, calculated through the Closing Date,
and the name of the creditor to whom such obligation is due and account number
of such creditor to which funds should be delivered to discharge such
obligation, and such Seller shall instruct the Sellers' Agents, in turn, to
instruct the Buyer to deduct from the amount of the Initial Payment and pay
directly to the creditor such Seller's Obligation. No Seller shall so instruct,
nor shall the Sellers' Agents instruct, the Buyer to pay directly any amount in
excess of the Net Initial Payment multiplied by the individual Seller's
percentage in Schedule B.
3. Initial Disbursements of Escrow Funds
(a) The Sellers' Agents shall set aside separate funds out of the
Escrow Funds ("Segregated Cost Fund") in an amount equal to two hundred percent
(200%) of the estimated costs and expenses to be incurred in connection with the
transactions contemplated under the Purchase Agreement (the "Transaction Costs")
as set forth on Schedule A. Schedule A represents Sellers' Agents best current
estimates of Transaction Costs, but the items listed and the amounts related
thereto, as well as the list of advisors, may change prior to the Closing Date.
In all cases, amounts paid for actual Transaction Costs shall be paid only
against delivery of properly supported invoices from the appropriate advisor. To
the extent that any advisor acting on behalf of the Sellers demands partial
payment prior to the Closing Date for approved expenses or fees, such amounts
may be advanced by Pel-Freez Rabbit Meat, Inc. on behalf of the Sellers, with
appropriate approval of the
-2-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
95
Sellers' Agents, and any amounts so advanced will be repaid following the
Closing Date out of the Segregated Cost Fund.
(b) Within three business days following the Closing Date, the Sellers'
Agents shall make payments to individual Sellers which payments as to each
individual Seller shall be calculated as follows:
(i) Net Initial Payment multiplied by such Seller's ownership
percentage as set forth in Schedule B, less
(ii) such Seller's pro rata share of Transaction Costs
calculated by multiplying Transaction Costs by the percentage interest set forth
in Schedule B, less
(iii) amounts paid directly by Buyer at closing for repayment
of such Seller's obligations as contemplated by paragraph 2 hereof.
The amounts so calculated shall be paid in accordance with
instructions of Sellers' Agents.
(c) Upon determination of the actual Transaction Costs by the parties
hereto, which shall be within 30 days following the closing date hereof, the
Sellers' Agents shall pay from the Segregated Cost Fund all actual Transaction
Costs. Immediately following the payment and settlement of all Transaction
Costs, the Sellers' Agents shall distribute the entire remaining balance of the
Segregated Cost Fund, including any investment gains, to Sellers in the
percentage interest set forth in Schedule B.
4. Deposit and Disbursement of Earn-Out Amount.
(a) In accordance with the Purchase Agreement, if an Earn-Out Amount is
due to the Sellers, including audit adjustments, then Buyer shall, on or prior
to the March 31 following each of the years ending December 31, 1998, 1999 and
2000, deposit with the Sellers' Agents the sum equal to the aggregate Earn-Out
Amount due to the Sellers, which such amount shall be held by Sellers' Agents in
the Escrow Fund.
(b) Within 10 business days following the receipt of any Earn-0ut
Amount Sellers' Agents shall distribute such amount to the Sellers as follows:
(i) for any Earn-Out Amount received for the year ending December 31, 1998,
distribute amounts up to the first $80,000, including any investment gains, to
the Sellers in the percentage interest set forth in Schedule C, and distribute
any amounts exceeding $80,000, including any investment gains, in the percentage
interest set forth in Schedule D; and (ii) for any Earn-Out Amount received for
each of the years ending December 31, 1999, and December 31, 2000, respectively,
distribute amounts up to the first $160,000 in each year, including any
investment
-3-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
96
gains in the percentage interest set forth in Schedule C, and distribute any
amounts exceeding $160,000 in each year, including any investment gains, in the
percentage interest set forth in Schedule D. Any amounts to be distributed to
the Sellers under this Section 4 and Section 3, above may be made by wire
transfer, certified check or any other mutually agreeable means between the
Sellers' Agents and the Sellers.
5. Net Worth Adjustment.
The Purchase Agreement provides for adjustments to the Purchase Price (as such
term is defined in the Purchase Agreement) which may be paid to the Sellers'
Agents. In the event that the adjustment to the purchase price results in
additional proceeds to Sellers, such amounts shall be distributed by the
Sellers' Agents in accordance with the percentage interest set forth in Schedule
B. In the event that the adjustment to the purchase price results in amounts
being owed to Buyers, upon the request of the Sellers' Agents, the Sellers shall
promptly pay to the Sellers' Agents their individual share of such amount owed
in accordance with the percentage interest set forth in Schedule B.
6. Termination.
Upon distribution to the Sellers of any final Earn-Out Amount earned for the
year ended December 31, 2000, including any investment gains, or upon
determination that no earnout amounts are due for such period, this Agreement
shall terminate in accordance with its own terms; [*****************************
********************************************************************************
********************************************************************************
*****************************************************************]
7. Duties of Sellers' Agents.
(a) Sellers' Agents shall invest any funds held hereunder only as
directed in or pursuant to this Agreement.
(b) Sellers' Agents shall not be liable, except for their own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Sellers' Agents, the other parties hereto shall jointly and severally
indemnify and hold harmless Sellers' Agents from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of or in connection with this
Agreement. Without limiting the foregoing, Sellers' Agents shall in no event be
liable in connection with their investment or reinvestment of any cash held by
them hereunder in good faith, in accordance with the terms hereof, including,
without limitation, any liability for
-4-
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
97
any delays (not resulting from their gross negligence or willful misconduct) in
the investment, reinvestment or distribution of the Escrow Fund, or any loss of
interest incident to any such delays.
(c) Sellers' Agents shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to them
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Sellers' Agents may act in reliance upon any instrument or
signature believed by them to be genuine and may assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so. Sellers' Agents may conclusively presume that the undersigned representative
of any party hereto which is an entity other than a natural person has full
power and authority to instruct Sellers' Agents on behalf of that party unless
written notice to the contrary is delivered to Sellers' Agents.
(d) Sellers' Agents may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not e liable for any
action taken or omitted by them in good faith in accordance with such advice.
(e) In their capacity as Sellers' Agents, Sellers' Agents do not have
any interest in the Escrow Fund deposited hereunder and are serving as escrow
holder only while having only possession thereof. Any payments of income from
this Escrow Fund shall be subject to withholding regulations then in force with
respect to United States taxes. The Sellers will provide Sellers' Agents with
appropriate Internal Revenue Service Forms W-9 for tax identification number
certification. This Section 6(e)and Section 6(b) above shall survive
notwithstanding any termination of this Agreement.
(f) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Fund or in the event that Sellers' Agents are in doubt as to what action they
should take hereunder, Sellers' Agents shall be entitled to retain the Escrow
Fund until Sellers' Agents shall have received (i) a final non-appealable order
of a court of competent jurisdiction directing delivery of the Escrow Fund or
(ii) a written agreement executed by the other parties hereto directing delivery
of the Escrow Fund, in which event Sellers' Agents shall disburse the Escrow
Fund in accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to Sellers' Agents to the effect that the order is final and non-appealable.
Sellers' Agents shall act on such court order and legal opinion without further
question.
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98
(g) The parties hereto agree that Sellers' Agents shall not receive a
fee for their services as escrow agent under this Agreement. Sellers' Agents
shall be entitled to reimbursement for all customary out of pocket expenses
incurred by them for acting as escrow agent hereunder. Such reimbursement shall
be paid from the Escrow Fund from time to time as such costs are incurred by
Sellers' Agents.
(h) Sellers' Agents shall, upon request from any individual Seller,
make available to such Seller supporting documentation showing amounts computed
pursuant to this Agreement. If any Seller shall dispute any calculation made by
the Sellers' Agents under this Agreement, such Seller shall notify the Sellers'
Agents of the nature and amount of such dispute. If the Sellers' Agents and such
Seller, after reasonable efforts, are unable to resolve such dispute, such
Seller shall have the right to engage an independent accountant to examine and
opine on the calculations made hereunder. Costs of such independent accountant
shall be borne by the Seller, if such accountant confirms the calculations of
the Sellers' Agents, or by the Sellers' Agents if such accountant confirms in
favor of such Seller the amounts so disputed.
8. Limited Responsibility.
This Agreement expressly sets forth all the duties of Sellers' Agent
with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against Sellers' Agents.
9. Resignation of Sellers' Agents.
(a) A Sellers' Agent may resign as escrow agent and be discharged from
his duties or obligations hereunder by giving at least 30 days written notice to
the other parties hereto specifying a date when such resignation shall take
effect; provided, however, that no such resignation shall become effective until
the appointment of a successor escrow agent which shall be accomplished as
follows: the parties hereto shall use their best efforts to mutually agree on a
successor escrow agent within 30 days after receiving such notice of
resignation. If the parties fail to agree on a successor escrow agent within
such time, the resigning Sellers' Agent shall have the right to appoint his
successor escrow agent.
(b) The successor escrow agent shall execute and deliver an instrument
accepting his appointment and agreeing to be bound by the terms and conditions
of this Agreement and shall, without further acts, be vested with all the
rights, powers, and duties of the predecessor escrow agent as if originally
named as escrow agent hereunder. Upon the effective appointment of a successor
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escrow agent, the resigning Sellers' Agent shall be discharged from any further
duties under this Agreement.
10. Notices.
All notices, consents, waivers and other communications required or permitted to
be given under this Agreement must be in writing and will be deemed to have been
duly given (a) when delivered by hand (with written confirmation of receipt),
(b) when sent by facsimile (with electronic confirmation of receipt), or (c) on
the third day after being sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addressees and
facsimile numbers set forth below (or to such other addresses ad facsimile
numbers as a party may designate by notice to the other parties):
Sellers' Agents or Sellers: Xxxxx X. Xxxxxxx
Pel-Freez, Inc.
000 Xxxxx Xxxxxxxx
X.X. Xxx 00
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
and
Xxxxxx X. Xxxxxxxxxx
Novagen, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx & Xxxxxxx
0000 Xxxxx Xxxxx Tower
00 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Will
Facsimile No.: (000) 000-0000
11. Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original land all of which, when taken together, will be
deemed to constitute one and the same.
12. Section Headings.
The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.
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13. Waiver.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercises of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to e a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13. Exclusive Agreement and Modification.
This Agreement supersedes all prior agreements among the parties with respect to
its subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not e
amended except by a written agreement executed by all of the parties hereto.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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14. Governing Law.
This Agreement shall be governed by the laws of the State of New York, without
regard to conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
SELLERS' AGENTS: SELLERS:
----------------------- --------------------------
Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
----------------------- ---------------------------
Xxxxxx Xxxxxxxxxx Xxxxxx Xxxxxx
--------------------------
Xxxxxxx Xxxxxxxxxx
---------------------------
Xxxx Xxxxxxx
---------------------------
Xxxxxx Xxxxxxxxxx
---------------------------
Xxxxxx Xxxxxxx
---------------------------
Xxxxxxx Xxxxxx
---------------------------
Xxxxxx Xxxx
---------------------------
Xxx Van Oosbree
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SCHEDULE A
TRANSACTION COSTS
Estimated Costs and Expenses:
Vector Securities International, Inc. $450,000
Xxxxxx and Xxxxxxx 170,000
Coopers and Xxxxxxx 170,000
Xxxx Xxxxx 10,000
--------
TOTAL $800,000
========
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SCHEDULE B
STOCK OWNERSHIP PERCENTAGE
Name of Seller Seller's Stock Ownership Percentage
-------------- -----------------------------------
Xxxxx X. Xxxxxxx 90.0%
Xxxxxxx Xxxxxxxxxx 0.8%
Xxxx Xxxxxxx 0.8%
Xxxxxx Xxxxxxxxxx 4.0%
Xxxxxxx Xxxxxx 0.8%
Xxxxxx Xxxx 0.8%
Xxx Van Oosbree 0.8%
Xxxxxx Xxxxxx 1.0%
Xxxxxx Xxxxxxx 1.0%
------
TOTAL 100.0%
======
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SCHEDULE C
SELLERS' THRESHOLD PERCENTAGE
Name of Seller Seller's Threshold Percentage
-------------- -----------------------------
Xxxxx X. Xxxxxxx 90%
Xxxxxxx Xxxxxxxxxx 1-1/3
Xxxx Xxxxxxx 1-1/3
Xxxxxx Xxxxxxxxxx 1-1/3
Xxxxxxx Xxxxxx 1-1/3
Xxxxxx Xxxx 1-1/3
Xxx Van Oosbree 1-1/3
Xxxxxx Xxxxxx 1
Xxxxxx Xxxxxxx 1
----
TOTAL 100%
====
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SCHEDULE D
SELLERS' INCENTIVE PERCENTAGE
Name of Seller Seller's Incentive Percentage
-------------- -----------------------------
Xxxxx X. Xxxxxxx 50%
Xxxxxxx Xxxxxxxxxx 8
Xxxx Xxxxxxx 8
Xxxxxx Xxxxxxxxxx 8
Xxxxxxx Xxxxxx 8
Xxxxxx Xxxx 8
Xxx Van Oosbree 8
Xxxxxx Xxxxxx 1
Xxxxxx Xxxxxxx 1
---
TOTAL 100%
===
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EXHIBIT F
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Commission pursuant to a request for confidential treatment.]
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with the Commission pursuant to a request for confidential treatment.
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Commission pursuant to a request for confidential treatment.]
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108
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Commission pursuant to a request for confidential treatment.]
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109
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Commission pursuant to a request for confidential treatment.]
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110
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Commission pursuant to a request for confidential treatment.]
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111
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Commission pursuant to a request for confidential treatment.]
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112
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Commission pursuant to a request for confidential treatment.]
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113
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Commission pursuant to a request for confidential treatment.]
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Commission pursuant to a request for confidential treatment.]
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Commission pursuant to a request for confidential treatment.]
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Commission pursuant to a request for confidential treatment.]
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EXHIBIT G
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the ___ day of ________, 199_,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and Xxxxxx
X. Xxxxxxxxxx (the "Employee").
1. Effective Date. This Employment Agreement shall become effective on
the ___ day of _______, 199_ (the "Effective Date").
2. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment all upon the terms and conditions herein set forth.
3. Duties. The Employee is engaged as President and General Manager of
Novagen, a wholly owned subsidiary of CN Biosciences, Inc. located in Madison,
WI, and will report to the Chairman and Chief Executive Officer of the Company
and hereby promises to perform and discharge well and faithfully all duties of
this position.
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during the
term of this Employment Agreement be engaged in any other business activity
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage; but this shall not be construed as preventing the Employee
from investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any services on the part of
the Employee in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, nor shall this be construed as preventing the Employee from purchasing
securities in any corporation whose securities are regularly traded provided
that such purchases shall not result in his collectively owning beneficially at
any time one percent (1%) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company, without the express
prior written consent of the Company.
5. Compensation.
(a) For services rendered under this Employment Agreement, the
Company shall pay the Employee a salary at the rate of $_______ per annum (the
"Base Salary"), payable (after deduction of applicable payroll taxes as an
employee in
Initials: _____ _____
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
118
the State of Wisconsin) in equal bi-weekly installments. The Employee shall also
be eligible for and participate in such fringe benefits as shall be generally
provided to executives of the Company, including medical insurance and
retirement programs which may be adopted from time to time during the term
hereof by the Company. On an annual basis, the Company shall review Employee's
salary and make such adjustment as may be warranted based upon Employee
performance, Company financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee shall
be eligible for, and the Company in its sole discretion, may award an executive
bonus up to a maximum of 30% of Base Salary, based upon a number of factors
including achievement of the Company's financial objectives, Employee
performance and achievement of mutually acceptable objectives and input from the
Compensation Committee of the Board of Directors.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to paid time off consistent with the Company's "Cal
Time" policy regarding vacation and sick time. For purposes of determining the
amount of such benefit, Employee's term of employment shall be determined based
upon the hire date at Novagen, prior to acquisition by the Company.
7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data.
8. Term.
(a) The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. Notwithstanding the foregoing, the Company may at its
election, terminate the Employee's employment hereunder as follows:
(i) Upon thirty (30) days notice if the Employee
becomes physically or mentally incapacitated or is injured so that he is unable
to perform the services required of him hereunder and such inability to perform
continues for a period in excess of ninety (90) days and is continuing at the
time of such notice; or
Initials: _____ _____
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(ii) For "Cause" upon notice of such termination to
the Employee. For purposes of this Employment Agreement, the Company shall have
"Cause" to terminate its obligations hereunder upon (A) the reasonable
determination by the Chief Executive Officer that the Employee has ceased to
perform his duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an intentional
and extended neglect of his duties hereunder, (B) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about to engage in
conduct materially injurious to the Company, (C) the Employee's having been
convicted of a felony, or (D) A material breach by the Employee of any of the
other covenants or representations herein; or
(iii) Without Cause by honoring the terms of a
separate Severance Agreement executed between the Company and Employee.
(iv) Upon the death of the Employee.
(b) Not later than ninety (90) days prior to the expiration of
the stated term of this Employment Agreement, the parties shall begin to
negotiate in good faith the terms of any extension of this Employment Agreement,
provided that neither party shall be under any obligation to enter into such an
extension. In the case of a renewal and unless otherwise agreed to in writing by
both parties, the terms and conditions of this Employment Agreement shall apply
to any renewals or extensions thereto.
9. Stock Options. The Company will grant incentive stock options to
Employee at the earliest practicable date following the Effective Date of this
Employment Agreement. The Company anticipates the granting of ________ options
to purchase the Company's common stock, at the fair market value of the stock on
the date which the Stock Option Committee of the Board of Directors meets to
finalize such grant. It is anticipated that such options will vest 20% per year
from the date of grant.
10. Representations. The Employee hereby represents to the Company that
(a) he is legally entitled to enter into this Employment Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to grant
to the Company the rights contemplated by paragraph 11 hereof, and (c) he does
not now have, nor within the last three years has he had, any ownership interest
in any business enterprise (other than interest in publicly traded corporations
where his ownership does not exceed one percent (1%) or more of the equity
capital) which is a customer of the Company, any
Initials: _____ _____
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120
of its subsidiaries, or from which the Company or any of its subsidiaries
purchases any goods or services or to whom such corporations owe any financial
obligations or are required or directed to make any payments.
11. Inventions.
(a) The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, during the term
hereof which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by the Company
or any of its subsidiaries, or which otherwise relate to or pertain to the
business, functions or operations of the Company or any of its subsidiaries or
which arise from the efforts of the Employee during the course of his employment
for the Company or any of its subsidiaries. The Employee shall communicate
promptly and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
subsidiaries and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that the
provisions of this Section 11 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement which
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:
Initials: _____ _____
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(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.
(b) Result from any work performed by the
employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under subsection (i), the provision
is against the public policy of this state and is unenforceable.
12. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith. The Company will ensure that Employee, as an
officer of the Company, is added to the Company's insurance policy for Officers
and Directors Liability insurance.
13. Notices. Any notice required or permitted to be given under this
Employment Agreement shall be sufficient if in writing and if sent by registered
mail to Xx. Xxxxxx X. Xxxxxxxxxx at his home address as reflected on the records
of the Company, in the case of the Employee, or Xx. Xxxxxxx X. Xxxxxxxxxxxx,
Chief Executive Officer, CN Biosciences, Inc., 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx
Xxxxx, XX 00000, in the case of the Company.
14. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
15. Governing Law. This Employment Agreement shall be governed by and
construed and enforce in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of laws provisions
thereof.
16. Assignment. This Employment Agreement may be assigned, without the
consent of the Employee, by the Company to any person, partnership, corporation,
or other entity which has purchased substantially all the assets of the Company,
provided such assignee assumes all the liabilities of the Company hereunder.
17. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of intent
or
Initials: _____ _____
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understandings between the Employee and (a) the Company, (b) any member of the
Calbiochem Novabiochem Group or (c) any of the Company's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement may
be changed only by an agreement in writing signed by a party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
Initials: _____ _____
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day first herein above written.
CN BIOSCIENCES, INC.
By:_________________________________________
Xxxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
By:_________________________________________
Xxxxxx X. Xxxxxxxxxx
Employee
Initials: _____ _____
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EXHIBIT H
ASSIGNMENT AND LICENSE AGREEMENT
This Agreement is made this ___ day of ___________, 199__, by and among
NOVAGEN, INC. (the "Company"), a corporation organized and existing under the
laws of the State of Arkansas; PEL-FREEZ, INC. (the "Parent"), a corporation
organized and existing under the laws of the State of Arkansas; and PEL-FREEZ
RABBIT MEAT, INC. ("PFRM"), a corporation organized and existing under the laws
of the State of Arkansas.
RECITALS:
A. The Company or the Parent currently owns all right, title and
interest in and to the Patent Right and possesses the rRTF Technology.
B. The Company and the Parent are being acquired by CN Biosciences,
Inc. (the "Buyer") under a Stock Purchase Agreement, dated _____________ (the
"SPA"), pursuant to which the Buyer will acquire control of all of the issued
and outstanding stock of the Company (the transaction contemplated under the SPA
is hereinafter referred to as the "Transaction").
C. As part of the consideration under the SPA, the Company, or the
Parent, as applicable, agrees to transfer and/or assign all right, title and
interest in and to the rRTF Technology and the Patent Right to PFRM under the
terms and conditions hereinafter set forth.
D. The parties acknowledge that in order to practice the rRTF
Technology and the Patent Right and produce rRTF products, PFRM must obtain
certain rights to other technologies which the Company currently possesses under
the Existing Licenses. PFRM desires the Company's assistance in obtaining such
rights and the Company is willing to provide such assistance. Until PFRM can
obtain such rights, the Company is willing to enter into an agreement to
manufacture and sell rRTF products exclusively for PFRM.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below and in the PSA, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I - DEFINITIONS
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1.1 "Patent Right" means pending U.S. Patent Application 08/683,007,
entitled _____________, any patent issuing therefrom, any reissues,
reexaminations, or extensions thereof, and any corresponding foreign patents or
patent applications.
1.2 "rRTF" shall mean recombinant rabbit tissue factor.
1.3 "rRTF Technology" means the production protocols, biological
materials and know-how necessary for the production of rRTF together with the
process disclosed in the Patent Right.
1.4 "Research Reagent Market" means the sale of packaged quantities of
rRTF in up to 1.0 mg containers for use in academic and commercial product
research applications.
1.5. "Licensed Products" means any products, except coagulation
diagnostic products, that employ or are in any way produced by the practice of
an invention claimed in the Patent Right or that would otherwise constitute
infringement of any claims of the Patent Right.
1.6 "Licensed Territory" is Worldwide.
1.7 "Existing Licenses" means the licenses entered into by the Company
granting it certain rights necessary to practice the rRTF Technology and produce
rRTF products and that are set forth on the attached Appendix 1.
ARTICLE II - ASSIGNMENT AND TRANSFER
2.1 The Company and/or Parent, as applicable, hereby sell, assign and
transfer to PFRM all right, title and interest in and to the Patent Right,
except as specifically provided herein, and agree to take all steps necessary to
record such assignment with the United States Patent and Trademark Office.
Furthermore, the Company and/or Parent, as applicable, agree to transfer all
right, title and interest in and to, and possession of any and all rRTF
Technology to PFRM as soon as practicable following the closing of the
Transaction, as set forth in the PSA.
2.2 Upon the assignment and transfer set forth in Section 2.1 above,
the Company and Parent shall be prohibited from practicing any part of the rRTF
Technology, except that the Company shall not be prohibited from using
generalized know-how also utilized in the manufacture of rRTF for manufacture of
non-rRTF products, provided that (i) such know-how was also used by Company in
the manufacture of such other products as of the date of the closing
2
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126
of the Transaction or (ii) such know-how is now, or at any time in the future
becomes, generally known or available to the public through no fault of the
Company or the Parent.
ARTICLE III - EXISTING LICENSES AND SUPPLY AGREEMENT
3.1 The Company and PFRM hereby acknowledge and agree that the Company
shall continue to hold and benefit from the Existing Licenses, provided,
however, that the Company agrees that it shall not exercise any rights under
such licenses to do any of the following, except with the prior written consent
of PFRM:
(a) make or sell coagulation diagnostic products;
(b) sublicense rights to any third party to make, use or sell
coagulation diagnostic products; or
(c) assert rights to prevent PFRM from obtaining and
exercising rights to practice the technologies that are the subject of the
Existing Licenses to make, have made, use or sell coagulation diagnostic
products or to sublicense such rights.
3.2 The Company shall use its best efforts to assist PFRM in obtaining
licenses (or sublicenses) from the licensors of the Existing Licenses that are
necessary to practice the rRTF Technology and to make, use, and sell rRTF
products on terms comparable to those contained in the Existing Licenses. Upon
request by PFRM, the Company shall release any rights it has under the Existing
Licenses related to coagulation diagnostic products, provided that the Company
receive $5,000 as consideration for releasing such rights.
3.3 Recognizing that PFRM cannot practice the rRTF Technology and make,
use, and sell rRTF products until it can obtain the rights discussed in this
Article III, the parties agree to negotiate and execute a supply agreement,
pursuant to which the Company will manufacture and sell exclusively for PFRM
between 500 and 800 milligrams of rRTF product in accordance with agreed upon
specifications at a price to PFRM of $156/mg.
ARTICLE IV - LICENSE GRANT
4.1 PFRM hereby grants to the Company a nonexclusive license, limited
to the Research Reagent Market, under the Patent Right and the rRTF Technology
to make, use and sell Licensed Products in the Licensed Territory.
3
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with the Commission pursuant to a request for confidential treatment.
127
ARTICLE V - ROYALTY
5.1 In consideration for the license granted in Article IV, the Company
agrees to pay to PFRM a royalty on sales of Licensed Products equal to $54/mg.
If, however, the Licensed Product is purchased by the Company directly from PFRM
for resale, the cost of such product to the Company, including royalty, shall be
$156/mg.
ARTICLE VI - PAYMENTS AND REPORTS
6.1 The Company shall provide PFRM with a written report of all sales
of Licensed Products for which a royalty is due or payable under this Agreement.
Such report shall be due within thirty (30) days of the end of each calendar
quarter, whether or not royalties are due, and shall be accompanied by a payment
to PFRM of all earned royalties due under Section 5.1.
6.2 The Company shall keep books and records sufficient to verify the
accuracy and completeness of the Company's accounting referred to above,
including without limitation, the manufacture, use and sale of Licensed Products
for which a royalty is due hereunder and shall make such books and records
available for inspection by PFRM, or its designee, upon reasonable notice and
during normal hours of operation.
ARTICLE VII - SUBLICENSING AND ASSIGNMENT
7.1 The Company is not granted the right to sublicense any rights under
the Patent Right or the rRTF Technology granted hereunder.
ARTICLE VIII - CHALLENGE TO VALIDITY
8.1 In the event the Company or a third party contests or otherwise
challenges the validity of the Patent Right, the Company shall continue to pay
royalties with respect to the patent as if such contest or challenge were not
underway until the patent is adjudicated invalid or unenforceable by a court of
last resort. In the event any such claims are ultimately held valid by a court
of last resort, then the Company shall reimburse PFRM for its actual expenses,
including reasonable attorneys fees, incurred in defending said contest of
validity.
ARTICLE IX - TERM AND TERMINATION
4
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with the Commission pursuant to a request for confidential treatment.
128
9.1 The term of the license granted hereunder shall begin on the
effective date of this Agreement and continue until the Patent Right is no
longer an enforceable patent unless this Agreement is otherwise terminated as
provided herein or as permitted by law.
9.2 If the Company at any time defaults in the timely payment of any
monies due to PFRM or commits any breach of any covenant herein contained, and
the Company fails to remedy any such breach or default within thirty (30) days
after written notice thereof, PFRM may, at its option, terminate this Agreement
and the license granted hereunder by giving written notice of such termination
to the Company.
9.3 This Agreement may be terminated at any time upon the mutual
written agreement of the parties.
ARTICLE X - WARRANTIES
10.1 The Company represents and warrants that as of the effective date
of this Agreement, it has the power to enter into this Agreement.
10.2 PFRM represents and warrants that it has the power to enter into
this Agreement and that, upon the assignment and transfer of the Patent Right
and rRTF Technology as provided herein, it has the right to grant the license
granted to the Company in this Agreement. However, nothing in this Agreement
shall be construed as:
(a) A warranty or representation by PFRM as to the validity or
scope of the Patent Right;
(b) A warranty or representation that anything made, used, or
sold under the license granted hereunder shall not infringe the patent rights of
third parties; or
(c) An obligation to furnish any know-how or any services
other than those specified in this Agreement.
10.3 The Company represents and warrants that it is relying solely on
its own technical expertise in the manufacture, use and sale of Licensed
Products, and is not relying on PFRM in any way.
5
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
129
ARTICLE XI - MISCELLANEOUS
11.1 This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by,
and completely expressed in this Agreement. Neither party shall be bound by any
definition, condition, warranty, or representation other than as expressly
stated in this Agreement or as subsequently set forth in a writing signed by the
party to be bound thereby.
11.2 If any provision of this Agreement shall be held unenforceable or
invalid, that provision shall be considered severable from this Agreement and
shall neither act to terminate this Agreement nor affect the validity of the
remaining provisions.
11.3 The parties hereto are independent contractors and not joint
venturers or partners.
11.4 This Agreement may not be amended or modified except by mutual
written agreement. Neither party may waive or release any of its rights or
interests in this Agreement except in writing. Failure to assert any right
arising from the Agreement shall not be deemed or construed as a waiver of such
right.
11.5 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
11.6 Any notice or payment required to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the time when actually received as a consequence of any effective
method of delivery, including but not limited to personal delivery, transmission
by facsimile or delivery by a professional courier service or the time when sent
by certified or registered mail, addressed to the other party at the appropriate
address below or at such changed address as the parties shall have specified by
written notice, provided that any notice of change of address shall be effective
only upon actual receipt:
To Company/Parent: Novagen, Inc.
Attn: _______________
_____________________
_____________________
_____________________
6
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
130
To PFRM: Pel-Freez Rabbit Meat, Inc.
Attn: _____________________
___________________________
___________________________
7
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with the Commission pursuant to a request for confidential treatment.
131
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
NOVAGEN, INC.
By: ___________________________
Its: ___________________________
PEL-FREEZ, INC.
By: ___________________________
Its: ___________________________
PEL-FREEZ RABBIT MEAT, INC.
By: ___________________________
Its: ___________________________
8
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
132
APPENDIX 1
1. Research License dated February 1, 1990, between Novagen, Inc. and
Associated Universities, Inc., operator of Brookhaven National Laboratory, for
technology represented by U.S. Patent Application Serial No. 002,408 (now U.S.
Patent ___________________ (Studier et al), issued ___________), entitled,
"Cloning and Expression of the Gene for Bacteriophage T7 RNA Plymerase."
2. License dated June 20, 1994, as amended July 11, 1995, between
Novagen, Inc. and Associated Universities, Inc., operator of Brookhaven National
Laboratory, for technology represented by U.S. Patent 4,952,496 (Studier et al),
issued August 28, 1990, entitled, "Cloning and Expression of the Gene for
Bacteriophage T7 RNA Polymerase."
3. License dated May 26, 1995, between Novagen, Inc. and Genetics
Institute, Inc., for certain patent rights relating to thioredoxin fusion
expression systems and recombinant enterokinase cleavage enzyme.
4. License dated May 11, 1995, between Novagen, Inc. and the President
and Fellows of Harvard College, for certain biological materials identified as
the trxB strain of E. coli developed by Xx. Xxxxxxxx Xxxxxxxx and Xxxx Xxxxxx
("Xxxxxxxx Plasmid Strain").
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
133
EXHIBIT I
BEVSCO AGREEMENT
This Agreement is made this ___ day of ___________, 199__, by and among
NOVAGEN, INC. (the "Company"), a corporation organized and existing under the
laws of the State of Arkansas; PEL-FREEZ, INC. (the "Parent"), a corporation
organized and existing under the laws of the State of Arkansas; and PEL-FREEZ
RABBIT MEAT, INC. ("PFRM"), a corporation organized and existing under the laws
of the State of Arkansas.
RECITALS:
A. The Company and the Parent are being acquired by CN Biosciences,
Inc. (the "Buyer") under a Stock Purchase Agreement, dated _____________ (the
"SPA"), pursuant to which the Buyer will acquire control of all of the issued
and outstanding stock of the Company (the transaction contemplated under the SPA
is hereinafter referred to as the "Transaction").
B. The Parent entered into license agreements related to the
baculovirus expression vector system with: (i) BevsCo, Inc. ("BEVSCO"), dated
August 30, 1995 (the "BEVSCO License"); and (ii) Texas A&M University System
("TAMUS"), dated September 12, 1995 (the "TAMUS License"). (The BEVSCO License
and the TAMUS License are hereinafter collectively referred to as the "BEVS
Licenses" and BEVSCO and TAMUS are hereinafter referred to as the "BEVS
Licensors".)
C. PFRM desires rights similar to those granted to the Company and/or
the Parent under the BEVS Licenses and further wishes to limit the Company's and
the Parent's exercise of their respective rights under such licenses.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below and in the SPA, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. BEVS LICENSES. The parties hereby acknowledge that the Company, or
the Parent, as applicable, shall retain the BEVS Licenses, provided, however,
that the Company and the Parent agree that neither shall exercise any rights
under such licenses to do any of the following, except with the prior written
consent of PFRM, such consent not to be unreasonably withheld:
(a) make, use or sell coagulation diagnostic products;
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
134
(b) sublicense rights to any third party to make, use or sell
coagulation diagnostic products; or
(c) assert rights to prevent PFRM from obtaining and
exercising rights to use the technology that is the subject of the BEVS Licenses
to make, have made or sell coagulation diagnostic products or to sublicense such
rights (collectively, the "Licensed Rights").
2. ASSISTANCE. The Company or the Parent shall use its commercially
reasonable efforts to assist PFRM in obtaining licenses from the BEVS Licensors
to exercise the Licensed Rights on terms comparable to those contained in the
BEVS Licenses. Upon request by PFRM, the Company or the Parent shall use
commercially reasonable efforts to negotiate with BEVSCO and/or TAMUS to release
or assign, transfer or otherwise provide to PFRM all the Company's or the
Parent's rights under the BEVS Licenses related to coagulation diagnostic
products (but not with respect to any academic and commercial product research
applications), provided that PFRM shall pay to the Company $50,000 as
consideration for the transfer of such rights.
3. SUPPLY AGREEMENT. In the event that PFRM is unable to obtain a
license from BEVSCO or TAMUS to exercise the Licensed Rights on terms acceptable
to PFRM, the Company shall enter into good faith negotiations with PFRM
regarding a supply agreement, pursuant to which PFRM would release the Company
from the restrictions set forth in Section 1 and the Company would manufacture
and sell exclusively to PFRM any coagulation product requested by PFRM subject
to the BEVS Licenses at a price approximately equal to 1.5 times the direct cost
to develop and manufacture such product.
4. TERM. The term of this Agreement shall begin on the effective date
of this Agreement and continue for a period of ________ years. This Agreement
may be renewed upon such termination by written notice signed by both parties.
5. ASSIGNMENT. This Agreement may not be transferred or assigned by
either party, except with the prior written consent of the other party, which
consent shall not be unreasonably withheld, provided, however, the Company may
assign its rights under this Agreement in connection with the transfer of all or
substantially all of the assets of the Company or may assign such rights to any
affiliate.
6. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between
the parties relating to the subject matter hereof and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by,
and completely expressed in this Agreement. Neither party shall be bound by any
definition, condition, warranty, or representation other than as expressly
stated in this Agreement or as subsequently set forth in a writing signed by the
party to be bound thereby.
2
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with the Commission pursuant to a request for confidential treatment.
135
(b) If any provision of this Agreement shall be held
unenforceable or invalid, that provision shall be considered severable from this
Agreement and shall neither act to terminate this Agreement nor affect the
validity of the remaining provisions.
(c) The parties hereto are independent contractors and not
joint venturers or partners.
(d) This Agreement may not be amended or modified except by
mutual written agreement. Neither party may waive or release any of its rights
or interests in this Agreement except in writing. Failure to assert any right
arising from the Agreement shall not be deemed or construed as a waiver of such
right.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(f) Any notice given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the time when
actually received as a consequence of any effective method of delivery,
including but not limited to personal delivery, transmission by facsimile or
delivery by a professional courier service or the time when sent by certified or
registered mail, addressed to the other party at the appropriate address below
or at such changed address as the parties shall have specified by written
notice, provided that any notice of change of address shall be effective only
upon actual receipt:
To Company/Parent: Novagen, Inc.
Attn: _______________
_____________________
_____________________
To PFRM: Pel-Freez Rabbit Meat, Inc.
Attn: _____________________
___________________________
___________________________
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
NOVAGEN, INC.
By: ___________________________
Its: ___________________________
3
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
136
PEL-FREEZ, INC.
By: ___________________________
Its: ___________________________
PEL-FREEZ RABBIT MEAT, INC.
By: ___________________________
Its: ___________________________
4
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
137
Exhibit J
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT ("Assignment") is made as of this ____ day of
December, 1997 by and between MAI SYSTEMS CORPORATION ("MAI"), PEL-FREEZ, INC.
("PFI"), PEL-FREEZ RABBIT MEAT, INC. ("PFRMI") and NOVAGEN, INC. ("NOVAGEN").
In consideration of the mutual promises and covenants contained herein,
MAI, PFI and NOVAGEN agree as follows:
1. Acquisition. On March 7, 1997 Oracle Corporation, through its
Datalogix International, Inc. division ("Datalogix"), sold to MAI certain of the
assets of Datalogix relating to the CIMPRO product line, including a Software
License and Support Agreement with PFI (the "CIMPRO Agreement"), by and between
PFI as licensee and Datalogix as licensor. MAI represents that it is the owner
of the CIMPRO Software and the authorized licensor under the CIMPRO Agreement.
2. Assignment of CIMPRO AGREEMENT. PFI has advised MAI that it desires
to assign to PFRMI and Novagen certain of its rights under the CIMPRO Agreement
as follows: PFI and Novagen shall receive one "Site License" and 30 PC user
licenses as defined in the CIMPRO Agreement, and (b) and PFRMI shall receive two
"Site Licenses," 66 PC user licenses and "40+" module as defined in the CIMPRO
Agreement.
3. Consent to Assignment to PFRMI and NOVAGEN. Conditioned upon PFRMI's
and NOVAGEN's agreement to be bound by the terms and conditions of the CIMPRO
Agreement, MAI hereby consents to the assignment of the CIMPRO Agreement from
PFI to PFRMI and NOVAGEN effective upon the full execution of this assignment by
all parties referenced in Section 1.
4. Acknowledgment by MAI That Software Support Fees Paid Through
September 30, 1998. MAI hereby acknowledges that all software support fees have
been paid for the CIMPRO Agreement (e.g. for all 3 site licenses and all 96 PC
user licenses and the 40+ module) through September 30, 1998.
5. Ability to Transfer License from NOVAGEN to PFRMI. MAI hereby
consents to the possible future transfer of the license assigned to NOVAGEN
herein, from NOVAGEN to PFRMI, provided that PFRMI agrees to be bound by all the
conditions of the CIMPRO Agreement.
[SIGNATURE BLOCKS ON NEXT PAGE]
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
138
IN WITNESS WHEREOF, MAI, PFI, PFRMI and NOVAGEN have executed
this Assignment as of the dates set forth below.
PEL-FREEZ, INC. PEL-FREEZ RABBIT MEAT, INC.
By: _________________________ By: ________________________
Name: _______________________ Name: ______________________
Title: ______________________ Title: _____________________
Date: _______________________ Date: ______________________
MAI SYSTEMS CORPORATION NOVAGEN, INC.
By: _________________________ By: ________________________
Name: Xxxx Xxxxx Name:
Title: Vice President Title:
Date: _______________________ Date: ______________________
2
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with the Commission pursuant to a request for confidential treatment.
139
EXHIBIT K
The following are the principal terms of agreements to be negotiated in
good faith prior to the Closing.
1. HUMAN HERPES VIRUS 6 ANTIBODIES (HHV6 AB)
The parties will agree that all know-how, production protocols and
biological materials necessary for the production of Human Herpes Virus 6
antibodies (collectively, "HHV6 AB") and all patent rights to the process
disclosed in pending U.S. Application 08/683,060 shall be transferred from the
Parent to PFRM. The Company shall not be prohibited from using after Closing
generalized know-how also utilized in the manufacture of HHV6 for other non-HHV6
products if such know-how was also used to manufacture other products as of
Closing by the Company or if such know-how is in the public domain.
PFRM and the Company shall negotiate in good faith the terms of a
nonexclusive license for the use of the HHV6 AB rights in the manufacture and
sale of research reagents in the Research Reagent Market. The "Research Reagent
Market" shall constitute academic and commercial product research applications.
The Company shall not sell any kit containing the HHV6 AB or HHV6 AB as reagents
to be used for diagnostic purposes or for inclusion in a diagnostic kit.
2. OEM SUPPLY AGREEMENT FOR E. COLI BLOCKER, PELLET PAINT(TM) AND PCR
MARKER.
PFRM and the Company shall negotiate in good faith the terms of a
supply agreement for the Company to manufacture on a nonexclusive OEM basis E.
coli blocker, Pellet Paint(TM) and PCR marker. The agreement shall be for the
following volumes and prices:
PRODUCT PRICE QUANTITY
E. COLI BLOCKER $2,828.00/ from 100 liter fermentation
cell pellet
PELLET PAINT(TM) $10.00 100 microliter package
PCR MARKER $46/Unit 50-300
$40/Unit 301-500
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
140
PRODUCT PRICE QUANTITY
$35/Unit 501-800
All technology rights, not otherwise used by PFRM as of Closing for the
manufacture of other products or in the public domain, related to these products
shall remain with the Company, including rights to the trademark Pellet
Paint(TM). PFRM shall not be licensed to use the xxxx Pellet Paint(TM), except
with attribution on the same page in all product literature and labels that the
xxxx is found that it is the trademark of the Company.
3. DIAGNOSTIC APPLICATION RIGHTS, GENERALLY
The Company shall not be prohibited from using after Closing
generalized know-how also utilized in the manufacture of non-diagnostic products
if such know-how was also used to manufacture such products as of Closing by the
Company or if such know-how is in the public domain or independently developed.
In any event, the Company will agree that it shall not (1) use any such rights
for the manufacture or sale of transplantation and coagulation diagnostic
products, (2) sublicense such rights to any third party for transplantation and
coagulation diagnostic products or (3) assert such rights to prevent PFRM from
using such rights to make, have made or sell or sublicense others to make, have
made or sell such transplantation and coagulation diagnostic products.
4. RED NOVA(R) LYSATE TECHNOLOGY RIGHTS
The Company has developed a special protocol for the manufacture of a
raw material for the Company's Red Nova(R) Lysate (Red Nova(R) Technology). PFRM
agrees not to use the Company Red Nova(R) Lysate Technology (or the registered
trademark for such product), except however, that PFRM shall not be precluded
from using any (1) technology it previously used, (2) technology it
independently developed without reference to the Company Red Nova(R) Lysate
technology, (3) information in the public domain or (4) information lawfully
obtained without reference to the Company Red Nova(R) Lysate Technology or
confidential information of the Company. A copy of the Company Red Nova(R)
Lysate Technology shall be preserved for evidentiary purposes by counsel for the
parties.
PFRM and the Company shall negotiate in good faith the terms of a
supply agreement for the Company to supply the following quantities at the
stated price:
2
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
141
PRODUCT PRICE/QUANTITY
------- --------------
Red Nova(R) Lysate $15.26/milliliter
5. INTER-COMPANY AGREEMENT
The parties shall negotiate in good faith the terms of a continuing
cooperation agreement related to shared leasehold space in Madison, Wisconsin,
the use by the Company of a DNA sequencer, the use by PFRM of the Company
supplies and the reimbursement by PFRM of local telephone expenses charged to
the Company. PFRM shall continue to occupy the leasehold space which consists of
a maximum of the same area occupied at time of closing for an additional
six-month term and thereafter on a month-to-month basis, provided that either
party may give 90 days notice of termination following the end of the six-month
term. The rent (including appropriate utilities) shall be determined on a pro
rata basis based upon the relative square footage of usable space occupied. PFRM
will obtain appropriate insurance for its employee(s).
6. THE XXXXXXX XXXXX BONE MARROW TRUST RIGHTS
All contractual rights between the Parent and The Xxxxxxx Xxxxx Bone
Marrow Trust shall be transferred from the Parent to PFRM.
7. MOLECULAR BIOLOGY APPLICATION RIGHTS, GENERALLY
PFRM will not assert any rights or any claim against the Company for
the Company products sold prior to the Closing.
3
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
142
[All schedules listed in the Table of Contents have been intentionally omitted.
The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request.]
*Portions of this document have been intentionally omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
