ASSET PURCHASE AGREEMENT
among
ELECTROPHARMACOLOGY, INC.,
and
ADM TRONICS UNLIMITED, INC.
and
AA NORTHVALE MEDICAL ASSOCIATES, INC.
dated
May 27, 1998
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into this
27th day of May 1998, by and among Electropharmacology, Inc., a Delaware
corporation ("Seller"), AA Northvale Medical Associates, Inc., a New Jersey
corporation ("Purchaser") and ADM Tronics Unlimited, Inc., a Delaware
corporation ("ADM").
W I T N E S S E T H:
WHEREAS, Seller has been engaged, among other things, in the business
of developing, manufacturing, selling and renting the SofPulse, as hereinafter
defined; and
WHEREAS, Seller desires to transfer to Purchaser, and Purchaser desires
to acquire from Seller certain of the assets associated with the development,
manufacture, sale and rental of the SofPulse as specified herein, for the
consideration and on the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE
1
PLAN OF ACQUISITION
1.1 Assets to be Purchased. On the terms and subject to the conditions set
forth herein, effective on the Closing Date (as defined below) Seller
shall sell, assign, convey, transfer and deliver to Purchaser, its
successors and assigns forever, and Purchaser shall purchase and
acquire from Seller, the following assets, properties and certain
rights of Seller used in the development, manufacture, sale and rental
of the SofPulse (collectively, the "Assets"), free and clear of any and
all liens, claims and encumbrances, other than Permitted Liens (as
hereafter defined). As used herein, SofPulse shall mean the pulsed
electromagnetic stimulation device designed, developed, manufactured
and marketed by Seller under the name MRT-SofPulse or SofPulse and
related models including electrical and mechanical design modifications
that are deemed substantially equivalent for use in the label
indication specified in the Section 510(k) premarket notification (the
"Notification") attached hereto as Exhibit 1.1, pursuant to which
Magnetic Resonance Therapeutics, Inc. (the predecessor of Seller)
received clearance for commercial marketing of the MRT 100 SofPulse
pulsed electromagnetic stimulation device from the United States Food
and Drug Administration (the "FDA") in January 1991.
The Assets shall consist of:
(a) the trade names, logos and other trade designations,
including, but not limited to, all rights to the names
"SofPulse" and "MRT 100" or variants thereof as a corporate or
trade name of Seller, and all applications therefor and
registrations thereof or rights to apply for the same and all
other statutory or common law rights Seller has or may have
therein, all of which are described on Schedule 1.1(a) hereto;
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(b) the customer list and information relating to customers in
Seller's possession pertaining to the SofPulse, including, but
not limited to, names, addresses and ordering, billing, claims
and other historical data relating to such customers;
(c) the rights of Seller, by agreement or contract, with customers
or any other persons pertaining to the SofPulse, all of which
contracts and agreements are listed on Schedule 1.1(c) hereto;
(d) all open orders from customers for the SofPulse and related
work in progress that have not been completed on or before the
Closing Date, as set forth on Schedule 1.1(d) hereto and the
right to complete, xxxx and collect for the same;
(e) two (2) prototype units of the SofPulse, one of which shall be
the smart card unit and the other of which shall be the
portable battery operated unit, together with drawings and
schematics for both units;
(f) all reasonably available financial, marketing and business
data, business and marketing plans, marketing techniques,
literature, materials, development plans, price lists and
policies for the SofPulse, in Seller's possession, whether
proprietary or not;
(g) three hundred forty five (345) SofPulse Model 912 units as set
forth on Schedule 1.1(g) hereto (the "Devices"), of which
certain Devices are new and certain Devices are refurbished,
as set forth on Schedule 1.1(g) and of which certain Devices
are in the possession of Seller (the "Seller Devices") and
certain Devices are in the possession of lessees,
representatives or study and trial investigators, as set forth
on Schedule 1.1(g), provided, however, that if through the use
of diligent efforts Purchaser is not able to confirm the
recoverability of any of the forty-nine (49) Devices under the
control of study and trial investigators before the Closing
Date, Seller shall replace such Devices with Devices currently
in the possession of Seller and Seller shall retain all right,
title and interest in the Devices with respect to which
Purchaser could not confirm recoverability;
(h) all parts and supply inventory owned by Seller relating to the
SofPulse listed on Schedule 1.1(h) hereto (the "Parts");
(i) insurance recoveries or rights of Seller to the same relating
to damage to or loss of the Devices under any insurance policy
effective on the Closing Date;
(j) all permits, approvals, licenses and authorizations held by
Seller relating to the manufacture and marketing of the
SofPulse, to the extent they are transferable or assignable,
all as listed and described on Schedule 1.1(j) hereto;
(k) all reasonably available marketing materials, including but
not limited to, trade show displays, masters, proofs, photos,
computer files and artwork in Seller's possession relating to
the SofPulse;
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(l) the instruments and equipment used for quality control,
quality assurance and calibration activities of SofPulse owned
by Seller as set forth on Schedule 1.1(l) hereto (the
"Equipment");
(m) except for the rights of Seller against the persons or
entities listed on Schedule 1.1(m), all of Seller's rights
with respect to enforcement of any and all noncompetition,
nonsolicitation, confidential and proprietary information
obligations between Seller and the employees or former
employees of Seller not employed by Purchaser after the
Closing (as defined below) with respect to the SofPulse to the
extent relating to the label indication set forth in the
Notification and all claims of Seller with respect thereto, to
the extent assignable by Seller; provided, however, that
Seller makes no representation or warranty as to the
enforceability of Seller's rights; and
(n) inventory racks and quality control equipment racks (the
"Racks").
1.2 Purchaser's Freedom to Practice Under Seller's Patents and Seller's
Technology and Xxxx-xxx.Xx long as this Agreement is effective and
Purchaser continues to meet its material obligations hereunder, from
and after the Closing Date, Seller hereby grants Purchaser a
royalty-free freedom, under Seller's Patents and Seller's Technology
and Know-how, to exclusively manufacture and market, worldwide,
SofPulse for the label indication specified in the Notification.
Notwithstanding anything herein to the contrary, if Purchaser is not
meeting its material obligations hereunder, Seller shall give Purchaser
written notice of such fact and Purchaser shall have twenty (20) days
in which to remedy such situation.
"Seller's Patents" as used herein shall mean patents and patent
applications listed on Schedule 1.2 attached hereto, continuations,
continuations-in-part, divisions and reissues thereof.
"Seller's Technology and Know-how" as used herein shall mean all
reasonably available data, information, trade secrets, know-how,
drawings, design specifications (electrical and mechanical designs and
redesigns) and operating instructions and procedures owned by Seller
related to SofPulse.
Notwithstanding anything herein to the contrary, Seller expressly
reserves the sole (except as contemplated by the proviso to this
sentence) right to research, have researched, develop, have developed,
manufacture, have manufactured, market and have marketed all products
based on Seller's Patents and Seller's Technology and Know-how for use,
throughout the world, other than for or in connection with the SofPulse
for the label indication specified in the Notification; provided,
however that if Seller pursues a premarket approval from the FDA for
SofPulse using the current setting specifications set forth in the
Notification, then Seller agrees to negotiate in good faith with
Purchaser an agreement on commercially reasonable terms to share the
costs and benefits of the approval and marketing SofPulse based on such
premarket approval. Notwithstanding the foregoing, if Seller's research
program leads to the identification of pulsed electromagnetic signals
based on an understanding of the mechanism of action of such signals at
the tissue, cell or molecular level, then Seller shall have no such
obligation to Purchaser. Nothing contained in this paragraph shall
detract from the rights granted to Purchaser's in the first paragraph
of this Section 1.2, and any new innovations made by Purchaser
independently of the use of Seller's Patents or Seller's Technology and
Know-how shall be the sole property of Purchaser.
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If in the opinion of patent counsel acceptable both to Seller and to
Purchaser, any of Seller's Patents as defined in this Agreement is
infringed by a third party who manufactures and markets a product
deemed substantially equivalent to SofPulse for the label indication in
the Notification, then when requested to do so by Purchaser, Seller
shall file an infringement action in a Federal Court against the third
party to enjoin such infringement and to collect damages therefor. All
legal and other expenses incurred in this action shall be borne by
Purchaser and all damages recovered in this action shall be transferred
to Purchaser.
1.3 Purchaser's Rights to Additional Information and Know-how of Seller.
From and after the Closing Date, Seller further agrees to provide to
Purchaser the following for use by Purchaser in the development,
manufacture and marketing of SofPulse, to the extent in Seller's
possession:
(a) copies of all manuals and documents relating to manufacturing
and operating procedures for the SofPulse including but not
limited to GMP records, Schematics and sourced Xxxx of
Materials;
(b) copies of the supplier list for the SofPulse and all
information and records relating to such suppliers, including,
but not limited to, names, addresses and ordering, billing and
other historical data relating to such suppliers;
(c) copies of all FDA related documentation concerning SofPulse,
including DMR, DHR, MDR, customer complaint files, FDA audit
results and closing letters, any FDA communications or
follow-up letters, any unredacted FDA filings and
correspondence; and
(d) copies of all accounting and other files and records of Seller
principally relating to the SofPulse including, but not
limited to, transactions consummated by Seller on or prior to
the Closing Date.
1.4 Assets Not Purchased: Except for the Assets and the rights specifically
set forth in Sections 1.2 and 1.3 above, Seller specifically does not
agree to sell, assign or otherwise convey to Purchaser any other assets
or properties, all of which other assets and properties shall remain
the sole property of Seller, including without limitation, the
following assets and properties:
(a) furniture, fixtures and other assets used by Seller in the
business of developing, manufacturing or marketing SofPulse;
(b) accounts receivable of Seller accruing prior to the Closing
Date, including open orders for sales of SofPulse (it being
understood and agreed, however, that Purchaser has certain
rights to accounts receivable accruing on and after the
Effective Date, including those relating to sales and leases
of SofPulse, as provided in Section 1.14); and
(c) SofPulse units other than those set forth on Schedule 1.1(g).
Purchaser agrees to promptly endorse and remit to Seller any funds
received by Purchaser from any of Seller's customers with respect to an
invoice for any period ending on or prior to the Closing Date, except
to the extent Purchaser is entitled to retain such funds pursuant to
Section 1.14. Seller agrees to promptly endorse and remit to Purchaser
any funds received by Seller from any of Seller's
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customers with respect to an invoice for any period subsequent to the
Closing Date and, to the extent Purchaser is entitled thereto pursuant
to Section 1.14, any funds received by Seller from any customer with
respect to an invoice for any period subsequent to the Effective Date.
Purchaser agrees that any such funds received by it from all such
customers shall be recorded against the oldest unpaid invoices for such
customer until all unpaid invoices through the Closing Date are cleared
and such funds are received by Seller (to the extent provided herein),
provided, however, that if a customer specifically denies any such
invoice on documented grounds of denial of reimbursement by Medicare,
Purchaser's obligations with respect to that invoice shall be void to
the extent of such denial.
1.5 Consideration. In full consideration of the sale and transfer of the
Assets as set forth in Section 1.1 and the rights granted pursuant to
Sections 1.2 and 1.3, Purchaser shall:
(a) deliver the following consideration to or at the direction of
Seller (collectively, the "Purchase Price"):
(i) 1,400,000 shares (the "Fixed Shares") of the $.0005
par value common stock of ADM ("ADM Stock") plus a
number of shares of ADM Stock (together with the
Fixed Shares, the "Shares") equal to $650,000.00
divided by the average of the closing high bid and
low ask price of ADM Stock as reported on the NASDAQ
Small Cap Market for the five trading days
immediately preceding the Effective Date, which
Shares shall be registered in the name of Seller or
Xxxxx, Day, Xxxxxx & Xxxxx ("JDRP"), with the actual
number of Shares to be registered in each name to be
designated by Seller to Purchaser not later than one
(1) day prior to the Closing Date; all of which
Shares shall be delivered to Seller and JDRP as
provided in Section 1.10; and
(ii) two cash payments, each in the amount of $75,000, the
first such payment to be made on the Effective Date
and the second such payment to be made thirty (30)
days after the Effective Date (each a "Cash
Payment"), provided however that the payment owed by
Seller in the amount of $15,000 in expenses incurred
in connection with the preparation of the
Registration Statement pursuant to Article 11.4(a)
may be withheld by Purchaser from the second Cash
Payment (any excess withholding to be refunded to
Seller); and
(iii) a warrant (the "Warrant"), registered in the name of
Seller, in the form attached hereto as Exhibit
1.5(a)(iii), which Warrant shall be delivered to
Seller as provided in Section 1.10; and
(b) as of the Closing Date, assume and perform, satisfy and
discharge all obligations of Seller pursuant to the agreements
set forth on Schedule 1.5(b) and perform and fulfill all
regulatory (including FDA) obligations associated with the
development, manufacture, marketing and use of the SofPulse,
in all cases as and when the same shall be required to be
performed, satisfied, discharged or fulfilled, as the case may
be (the "Assumed Liabilities"), it being understood that
between the Effective Date and the Closing Date, Purchaser
shall perform, satisfy, discharge and fulfill the Assumed
Liabilities pursuant to Section 1.14; provided, however, that
Seller shall remain solely responsible to remedy the matters
set
5
forth in the letters from the FDA to Seller dated January 14,
1998 and May 12, 1998 (the "FDA Letters").
1.6 Registration of Shares, Limitations on Sale of Shares, Repurchase of
Shares and Voting of Shares.
(a) The Shares and the shares of ADM Stock to be issued pursuant
to the Warrant, if any (the "Warrant Shares") shall be
registered under the Securities Act of 1933 as amended (the
"Securities Act") and under applicable state securities laws
in accordance with the provisions of Section 11 of this
Agreement.
(b) Seller agrees that it shall not sell any Shares until sixty
(60) days following the Closing Date and JDRP agrees that it
shall not sell or otherwise dispose of any Shares until thirty
(30) days following the Closing Date. Seller and JDRP each
further agrees that for the ninety (90) day period commencing
thirty-one (31) days after the Closing Date and terminating
one hundred twenty (120) days after the Closing Date, in any
calendar month, collectively, they will not sell or otherwise
dispose of a number of Shares in excess of five percent (5%)
of the average reported trading volume of ADM Stock during the
immediately preceding calendar month (such limitation not
being cumulative) and during the period commencing on the one
hundred twenty first (121st) day after the Closing Date and
terminating on the first anniversary of the Closing Date, in
any calendar month, collectively, they will not sell or
otherwise dispose of a number of Shares in excess of ten
percent (10%) of the average reported trading volume of ADM
Stock during the immediately preceding calendar month (such
limitation not being cumulative). Furthermore, until the first
anniversary of the Closing Date, Seller and JDRP each agrees
that prior to making any sale of any Shares, it shall give
verbal notice to ADM and ADM shall have until 5:00 pm on the
business day following receipt of such notice to give verbal
notice to Seller or JDRP, as applicable, that it will purchase
all, but not less than all of the Shares with respect to which
notice was given, at a price equal to the Fair Market Value
(as defined in the Warrant) of ADM Stock, with the
determination of Fair Market Value being made as of the date
Seller or JDRP, as the case may be, gives such notice. If ADM
elects to purchase Shares as provided in clause (ii) of the
proviso to the immediately preceding sentence, the closing of
such purchase and sale shall take place within three (3)
business days following the date ADM gives such notice. If ADM
fails to timely give notice that it will purchase the Shares
subject to Seller's or JDRP's notice, as applicable, or if ADM
fails to timely close such purchase and sale, Seller or JDRP,
as applicable, shall be free to sell the Shares subject to its
notice without again offering such Shares to ADM. All notices
pursuant to this Section 1.6(b) shall be irrevocable.
Notwithstanding anything in this Section 1.6(b) to the
contrary, the restrictions and limitations set forth in this
Section 1.6(b), including the obligation to first offer Shares
to ADM, shall not apply to Shares transferred pursuant to a
Change of Control or a Change of Control Offer, where a Change
of Control means any merger, consolidation, share exchange or
other extraordinary business combination concerning ADM and a
Change of Control Offer means any bona fide offer by any
person or group to acquire more than ten percent (10%) of the
outstanding shares of ADM Stock at a price not less than the
price of ADM Stock on the day such Change of Control Offer is
made, determined as set forth in Section 1.6(d).
(c) Seller agrees that for a one (1) year period commencing on the
date the Warrant Shares are issued to Seller, in any calendar
month Seller will not sell or otherwise dispose of a number of
Warrant Shares in excess of ten percent (10%) of the average
reported trading volume of ADM Stock during the immediately
preceding calendar month (such limitation not being
cumulative).
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(d) If the Shares have not been registered under the Securities
Act and under applicable state securities laws by the sixtieth
(60th) day following the Closing Date, then on such sixtieth
(60th) day and on each thirty (30) day anniversary thereof
until the Shares are registered under the Securities Act and
under applicable state securities laws (each such day being a
"Purchase Date", provided that if any such day is not a
business day the next following business day shall be the
Purchase Date), if requested by JDRP by verbal notice to ADM
on the business day immediately preceding such Purchase Date,
ADM will purchase from JDRP for a purchase price of Twenty
Thousand Dollars ($20,000) a number of Shares equal to Twenty
Thousand (20,000) divided by (a) if the ADM Stock is listed on
a national securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on NASDAQ,
the last reported sale price of ADM Stock on such exchange or
system on the business day immediately prior to the Purchase
Date or if no such sale is made on such day, the average of
the closing high bid and low asked prices for such day on such
exchange or system, (b) if the ADM Stock is not so listed or
admitted to unlisted trading privileges but bid and asked
prices are reported by the National Quotation Bureau, Inc.
(the "Bureau"), the average of the last reported high bid and
low asked prices reported by the Bureau on the business day
immediately prior to the Purchase Date, or (c) if the ADM
Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the
book value of a share of ADM Stock as at the end of the fiscal
quarter of ADM ending immediately prior to the Purchase Date.
ADM's obligation pursuant to this Section 1.6(d) shall be
limited to the purchase of an aggregate of $60,000 worth of
Shares if such registration has not occurred due to
circumstances not reasonably within the control of ADM.
(e) Seller and JDRP each agrees to permit the Chief Executive
Officer of ADM to vote the Shares owned by it pursuant to a
Voting Trust Agreement in form and content satisfactory to
counsel to Seller, JDRP and ADM, each acting reasonably.
1.7 Liabilities Not Assumed. Except for the Assumed Liabilities, Purchaser
specifically does not assume or agree to pay or discharge any debts,
liabilities or obligations of Seller, all of which shall be retained by
Seller (the "Retained Liabilities").
1.8 Purchase Price Allocation. The Purchase Price shall be allocated among
the Assets in a manner determined by Purchaser in its reasonable
discretion.
1.9 Effective Date and Closing Date. The Effective Date of this Agreement
shall be the date this Agreement is executed by all parties. The
closing of the transactions contemplated by this Agreement (the
"Closing") shall take place as of the close of business, Pompano Beach,
Florida time, at the offices of Seller at 0000 XX 00xx Xxxxx, Xxxxx
000, Xxxxxxx Xxxxx, Xxxxxxx 00000 not more than ten days after all of
the conditions to Closing set forth in Article 6 are satisfied or
waived (the date on which the Closing takes place being the "Closing
Date") or at such other time and place as the parties hereto shall
agree. If the Closing Date has not occurred on or before September 30,
1998, each party shall have the right to terminate this Agreement as
provided in Article 8.
1.10 Execution and Delivery of Closing Documents. At the Closing, (i) Seller
will deliver to Purchaser such assignments, consents to assignments and
good and sufficient instruments of transfer and conveyance as shall be
necessary to transfer, assign and convey to, and to vest in, Purchaser
good
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and merchantable title to the Assets, free and clear of all liens,
claims and encumbrances other than Permitted Liens and such lists and
descriptions of the Assets and such other documents as Purchaser may
reasonably request and (ii) Purchaser will deliver to Seller and/or
JDRP, as the case may be, (a) the Shares registered as provided in
Section 1.5(a)(i) and (b) the Warrant registered in the name of Seller
and (c) an Assumption Agreement in the form of Schedule 1.10(ii)(c). At
the Closing, each party also will execute and deliver such other
appropriate and customary documents as any other party reasonably may
request for the purpose of consummating the transactions contemplated
by this Agreement. All actions taken at the Closing will be deemed to
have been taken simultaneously at the time the last of any such actions
is taken or completed.
1.11 Covenant to Defend Title. Effective as of the Closing Date, Seller
hereby binds itself, and its successors and assigns, except with
respect to Permitted Liens, at Seller's sole cost and expense, to
warrant and defend title to the Assets unto Purchaser, and its
successors and assigns against every person whomsoever lawfully
claiming the same or any part thereof.
1.12 Further Assurances. After the Closing, the parties hereto shall execute
and deliver such additional documents and take such additional actions
as either party may reasonably deem to be practical and necessary or
advisable in order to consummate the transactions contemplated by this
Agreement and to vest more fully in Purchaser the ownership of and
rights to the Assets and the other rights granted hereunder as they
existed immediately prior to the Closing and to vest more fully in
Seller or JDRP, as applicable, the ownership of and rights to the
Shares and the Warrant, and, if and when they are issued, the Warrant
Shares.
1.13 Option for Additional SofPulse Devices. For a period of 18 months after
the Closing Date, if Purchaser elects to manufacture or acquire
additional SofPulse Model 912 units (or variations thereof), then
Purchaser agrees to notify Seller of the number of such units that it
desires to manufacture or acquire and Seller shall have the option, for
a period of thirty (30) days, to sell to Purchaser such units at a
price of $3,400 per unit for refurbished units and $4,500 per unit for
new units; provided that Seller's option hereunder shall be limited to
80 refurbished SofPulse Model 912 units and 45 new SofPulse Model 912
units. If Seller is unable to or elects not to sell such units to
Purchaser, then Purchaser will have no further obligation or option to
purchase such units from Seller. This Section 1.13 shall not prevent
Purchaser from setting up a manufacturing operation provided that it
does not sell or lease any such units manufactured by it until and
unless it has complied with this Section 1.13.
1.14 Interim Operation of Business. During the period between the Effective
Date and the Closing Date, Purchaser shall manage and operate Seller's
business concerning the Assets (the "Business"), including, without
limitation, performing, satisfying and discharging all obligations of
Seller pursuant to the agreements set forth on Schedule 1.5(b) and
perform and fulfill all regulatory (including FDA other than the
matters set forth in the FDA Letters) obligations associated with the
development, manufacture, marketing and use of the SofPulse, in all
cases as and when the same shall be required to be performed,
satisfied, discharged or fulfilled, as the case may be. To enable
Purchaser to manage and operate the Business, promptly after the
Effective Date, Seller shall deliver to Purchaser (at the sole cost and
expense of Seller) the Seller Devices, the Parts, the Equipment, the
Racks and such other of the Assets as are necessary to manage and
operate the Business. In consideration of such management and operation
of the Business by Purchaser, Purchaser shall be entitled to retain all
rental and sales revenues generated by the Assets with respect to the
period
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commencing on the Effective Date and terminating on the Closing Date or
such earlier date as is provided in the following sentence
("Revenues"). If this Agreement is terminated pursuant to Article 8,
(i) Purchaser's right to manage and operate the Business shall
terminate concurrently with the termination of this Agreement, (ii)
Purchaser shall deliver to Seller any of the Assets still in its
possession or subject to its control that had been delivered to
Purchaser, (iii) Purchaser shall deliver to Seller the excess of
Revenues over Purchaser's out-of-pocket expenses actually incurred in
operating the Business (and shall promptly deliver to Seller any
Revenues subsequently received by Purchaser), and (iv) Seller shall
deliver to Purchaser any Cash Payments paid to Seller by Purchaser;
provided, however, that if such termination is pursuant to Section 8.2
and is due to the nonsatisfaction of the conditions set forth in
Section 6.2(a), (d) or (e). Purchaser shall be entitled to retain all
Revenues received by Purchaser with respect to its operation of the
Business during the period from the Effective Date through such
termination date. Notwithstanding anything herein to the contrary,
Purchaser shall be entitled to set off against its obligation to
deliver any Assets or monies to Seller any Cash Payment not delivered
to Purchaser as required by the immediately preceding sentence.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.1 Organization and Good Standing of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
2.2 Power and Authority. Seller has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its
business relating to the Assets as currently being conducted.
2.3 Authorization and Validity. Seller has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the other documents executed or required to be executed
by it in connection with this Agreement. This Agreement and the other
documents executed or required to be executed by Seller in connection
with this Agreement have been or will be duly authorized by all
necessary corporate action; provided that Seller needs to receive
shareholder approval to the transactions contemplated by this
Agreement.
2.4 Binding Effect. This Agreement and the other documents executed or
required to be executed by Seller in connection with this Agreement
have been or will have been duly executed and delivered by Seller and
are or will be, when executed and delivered, the legal, valid and
binding obligations of Seller enforceable in accordance with their
terms except to the extent that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
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2.5 No Violation. Neither the execution and performance of this Agreement
or the agreements described herein nor the consummation of the
transactions described herein or therein will:
(a) result in a violation or breach of (i) the certificate of
incorporation or by-laws of Seller; or (ii) subject to
obtaining the consents referred to in Schedule 2.8 hereto, any
material agreement or other material instrument under which
Seller is bound or to which any of the Assets are subject, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of the Assets other than Permitted Liens,
or
(b) violate, in any material respect, any applicable law or
regulation or any judgment or order of any court or
governmental agency.
Seller has complied in all material respects with all applicable laws,
regulations and licensing requirements, and has filed with the proper
authorities all necessary statements, applications, notices, reports
and any other filings with respect to Seller's business, except where
the failure to do so would not reasonably be expected to have a
material adverse effect on the Assets or the intended use thereof by
Purchaser.
2.6 Permits and Licenses; Compliance. Seller possesses all necessary
governmental licenses, franchises, permits, approvals, authorizations,
and rights, whether federal, state, local or foreign, that are
necessary for Seller to engage in the manufacture and marketing of the
SofPulse Model 912 units and that, if not possessed, could reasonably
be expected to have a material adverse effect on the Assets or the
intended use thereof by Purchaser. Seller is in compliance with all
such governmental licenses, franchises, permits, approvals,
authorizations, or rights, and all federal, state or local laws or
regulations applicable to the Assets except where the failure to be in
compliance would not reasonably be expected to have a material adverse
effect on the Assets or the intended use thereof by Purchaser.
2.7 Title to Assets. Seller owns the Assets free and clear of all liens,
claims and encumbrances except as contemplated by this Agreement and
except for the following:
(a) liens for non-delinquent ad valorem taxes and non-delinquent
statutory liens arising other than by reason of its default,
provided that the aggregate of such liens shall not exceed Ten
Thousand dollars ($10,000);
(b) such liens and minor imperfections of title as do not in any
material respect detract from the value thereof and do not
interfere with the present use of the properties subject
thereto; and
(c) the liens described on Schedule 2.7 hereto, which liens will
be discharged (or Purchaser will be provided with releases of
such liens) on or before the Closing Date.
Upon consummation of the transactions contemplated hereby, Purchaser
shall receive good and valid title to the Assets, free and clear of all
liens, claims and encumbrances other than those set forth in Section
2.7(a) and (b) (the "Permitted Liens").
10
2.8 Consents. Except as set forth on Schedule 2.8 hereto, no authorization,
consent, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any
other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this
Agreement or the agreements or transactions contemplated hereby on the
part of Seller.
2.9 Absence of Certain Changes. Except as set forth on Schedule 2.9, since
April 15, 1998, Seller has not, with respect to the Assets:
(a) suffered any material adverse change in the Assets;
(b) mortgaged, pledged or subjected to any lien, lease, security
interest or other charge or encumbrance the Assets other than
Permitted Liens;
(c) suffered any damage or destruction to or loss of the Assets
(whether or not covered by insurance) that could reasonably be
expected to or does materially and adversely affect the
Assets;
(d) acquired or disposed of the Assets, other than in the ordinary
course of business;
(e) written up or written down the carrying value of the Assets in
any material amounts;
(f) waived any material rights or forgiven any material claims
with respect to the Assets;
(g) lost or terminated any customers (or had any customer fail to
renew its relationship with Seller) that could reasonably be
expected to materially and adversely affect the Assets or the
Business; or
(h) entered into any other commitment or transaction or
experienced any other event that is material to this Agreement
or to any of the other agreements and documents executed or to
be executed pursuant to this Agreement or to the transactions
described herein or therein, or that could reasonably be
expected to have, or has had, a material adverse effect on the
Assets.
2.10 Litigation. Except as set forth on Schedule 2.10 hereto, no legal or
administrative or other adversary proceeding or investigation is
currently pending against Seller and, to the best knowledge of Seller,
none is threatened or contemplated by any governmental agency or other
third party with respect to the Assets. Seller is not subject to any
continuing court or administrative order, writ, injunction or decree
applicable specifically to the Assets or which would affect the
obligations of Seller or the rights of Purchaser hereunder. Seller has
not received any notice from a customer for any claim that could be
made by such customer based upon inadequate or negligent services,
defective products, or improper performance of or other breach of any
contract with such customer by Seller.
2.11 Condition of Assets. The Devices and Parts are in good working
condition and (except for ordinary wear and tear) repair for their
intended use in the ordinary course of business and conform in all
material respects with all applicable ordinances, regulations and other
laws and there are no known defects therein.
11
2.12 Contracts. The agreements set forth on Schedule 1.1(c) are a complete
and accurate listings of all agreements of the character referred to in
Section 1.1(c) and include all amendments and modifications of the
agreements so listed. All such agreements are in full force and effect
and are valid, binding, subsisting and enforceable. No material
defaults exist under any of such agreements, and there is no existing
breach, violation, default, event of default, or event or act by Seller
that, with or without the giving of notice, lapse of time, or the
occurrence of any other event, would constitute a material default by
Seller under any such agreement.
2.13 Patents, Trademarks and Copyrights. Seller owns or is licensed to use
all patents, trademarks, and copyrights, if any, necessary to
manufacture and market the SofPulse without conflict with the rights of
others and following the Closing, Purchaser shall be entitled to use
all such patents, trademarks and copyrights as are necessary to
manufacture and market the SofPulse for its label indication as set
forth in the Notification, it being understood that between the
Effective Date and the Closing Date, Purchaser shall be entitled to use
such patents, trademarks and copyrights in its operation of the
Business pursuant to Section 1.14. Schedule 1.2 contains a true and
correct description of the following:
(a) all trademarks, trade names, service marks, and other trade
designations, common law rights, registrations, and
applications for registration, and all patents, copyrights,
and applications currently owned, in whole or in part, by
Seller and used in the manufacture and marketing of the
SofPulse, and all licenses, royalties, assignments, and other
similar agreements relating to the foregoing to which Seller
is a party; and
(b) all material agreements relating to technology, know-how or
processes that Seller is licensed or authorized to use by
others and used in the manufacture and marketing of the
SofPulse.
2.14 Finder's Fee. Seller has not incurred any obligation for any finder's,
broker's, or agent's fee in connection with this Agreement or the
transactions contemplated hereby.
2.15 Affiliated Party Transactions. Neither any of Seller's affiliates,
associates, employees nor consultants has entered into any
transactions, arrangements, agreements, oral or written, with Seller
relating to SofPulse or the Assets.
2.16 Environmental and Other Matters. Seller has manufactured and marketed
the SofPulse with valid permits, licenses, authorizations,
certificates, consents, exemptions and approvals (collectively,
"Permits") required under any applicable law, rule or regulation
relating to or addressing the environment, health, safety or hazardous
materials (collectively, "Environmental Law"), including Permits
necessary for the ownership of the Assets or the operation of Seller's
business. There are no unresolved past or pending or to Seller's
knowledge, threatened claims under any Environmental Law against Seller
with respect to the Assets, nor to Seller's knowledge are there any
circumstances that may form a basis of any such claim.
2.17 Full Disclosure. There are no facts pertaining to Seller or the
business of Seller that are reasonably likely to have a material
adverse effect on the Assets that have not been disclosed in this
Agreement or the attached Schedules. No representation or warranty of
Seller in this Agreement, any attached Schedule, any certificate
furnished or to be furnished by Seller to Purchaser pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will
12
contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained
herein or therein not misleading.
2.18 Liens on Assets. Seller represents that there are no liens held by any
party on the Assets except as set forth in Section 2.7.
2.19 FDA Matters. Set forth on Schedule 2.19 is a list of all complaints
received since January 1, 1997 by Seller from customers and others with
respect to the SofPulse. Seller has notified the FDA of such complaints
to the extent required by applicable law.
2.20 Customers. Set forth on Schedule 2.20 is a list of all customers that
currently are more than sixty (60) days delinquent, from the date of
billing, in their payments to Seller.
2.21 Disclaimer. Notwithstanding anything in this Agreement or elsewhere to
the contrary, Seller does not warrant that Purchaser will be
successful, either in a business or a technical sense (for example, the
design of products, materials or processes used in manufacture or in
the sales and marketing methods used by Seller), as a result of
purchasing the Assets or exercising the rights granted by Seller to
Purchaser hereunder. In addition, Seller makes no representation or
warranty that any design, drawing, computer software, documentation,
materials used, equipment used or processes used or adapted for the
development or manufacture of the Assets or the use thereof by
Purchaser is sufficient or is fit for a particular purpose and Seller
makes no representation or warranty that Purchaser should rely on such
design, drawings, materials, documentation, equipment or process.
Seller makes no representation or warranty that Purchaser can or should
continue to conduct the business of manufacturing and marketing of
SofPulse in the same manner as it was conducted by Seller. Seller has
advised Purchaser that there are many competing and overlapping
patents, proprietary rights and trade secret claims in this area of
business, and that Purchaser shall rely on its own independent
evaluation of the patents, proprietary rights and trade secrets in the
conduct of its business.
Purchaser acknowledges that in making the decision to enter into this
Agreement and to consummate the transactions contemplated hereby,
Purchaser has relied solely on the basis of its own independent
investigation and due diligence and upon the express written
representations, warranties and covenants in this Agreement. Without
diminishing the foregoing sentence, Purchaser acknowledges that
Purchaser has (a) received and reviewed the information regarding the
Assets and the business of manufacturing and marketing of SofPulse, (b)
reviewed the past adverse events relating to the business of
manufacturing and marketing SofPulse disclosed on Schedule 2.21, and
(c) has had an opportunity to ask questions regarding SofPulse,
Seller's Patents and Seller's Technology and Know-how. All of the
representations and warranties of Seller under this Agreement are
reduced to writing and contained in this Agreement and in the Schedules
attached hereto. Without diminishing the scope of the express written
representations, warranties and covenants of Seller in this Agreement
(including, without limitation the covenant made by Seller in Section
4.5) and without affecting or impairing its right to rely thereon,
Purchaser acknowledges that Seller has not made, AND SELLER HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, ANY OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, RELATING TO THE ASSETS AND SELLER'S PATENTS AND
SELLER'S TECHNOLOGY AND KNOW-HOW (INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED OR EXPRESS WARRANTY OF
13
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS).
2.22 Access to Information. From the date hereof until the earlier of the
Closing or the termination of this Agreement, upon reasonable notice,
Seller shall and shall cause its officers, directors, employees,
agents, representatives, accountants and counsel to: (i) afford the
officers, employees and authorized agents, accountants, counsel and
representatives of Purchaser reasonable access to the facilities, books
and records of Seller and to those officers, directors, employees,
managers, members, agents, accountants and counsel of Seller who have
any knowledge relating to, and to the books and records of Seller
relating to, the Assets and (ii) furnish to such representatives of
Purchaser such additional financial and operating data and other
information regarding the assets, properties and good will of the
Assets (or legible copies thereof) as Purchaser or such representatives
may from time to time reasonably request.
2.23 Financial Information. Seller has heretofore delivered to Seller true
and correct copies of all forms, statements and documents filed by
Seller with the Securities and Exchange Commission (the "SEC") since
January 1, 1997 (the "Seller SEC Documents"). As of their respective
dates, the Seller SEC Documents did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements contained in the Seller SEC Documents are true, complete and
correct in all material respects and were prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
and fairly present the financial position of Seller as of the dates and
for the periods indicated.
2.24 Investment Representations and Warranties.
(a) The Shares being acquired by Seller, the Warrant and the
shares to be issued pursuant to the Warrant, if any (the
"Warrant Shares") are being acquired by Seller for its own
account and not with a view to or for sale or other
disposition in connection with any distribution of all of such
Shares, the Warrant or the Warrant Shares, or any part
thereof, in any transaction that would be in violation of the
Securities Act or the securities laws of any state, without
prejudice, however, to the rights of Seller at all times to
sell or otherwise dispose of all or any part of such Shares,
the Warrant and the Warrant Shares under an effective
registration statement under the Act or under an exemption
from such registration available under the Securities Act.
(b) Seller represents that it is capable of evaluating the merits
and risks of an investment in such Shares, the Warrant and the
Warrant Shares and has such knowledge, experience and skill in
financial and business matters that it is capable of
evaluating the merits and risks of the investment in ADM and
the suitability of such Shares, the Warrant and the Warrant
Shares as an investment and can bear the economic risk of an
investment in such Shares, the Warrant and the Warrant Shares.
No guarantees have been made or can be made with respect to
the future value, if any, of such Shares, the Warrant, or the
Warrant Shares or the profitability or success of the business
of ADM.
(c) Seller understands that such Shares, the Warrant and the
Warrant Shares will not have been registered pursuant to the
Securities Act or any applicable state securities laws, that
such
14
Shares, the Warrant and the Warrant Shares will be
characterized as "restricted securities" under federal
securities laws, and that under such laws and applicable
regulations such Shares, the Warrant and the Warrant Shares
cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom. In this
connection, Seller represents that it is familiar with Rule
144 promulgated under the Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to
the transfer agent for securities of ADM (or a notation may be
made in the appropriate records of ADM) in connection with
such Shares, the Warrant and the Warrant Shares, but only to
the extent customary for securities which are "restricted
securities."
ARTICLE 2A
REPRESENTATIONS AND WARRANTIES OF JDRP
JDRP represents and warrants to ADM as follows:
(a) The Shares being acquired by JDRP are being acquired by JDRP
for its own account and not with a view to or for sale or
other disposition in connection with any distribution of all
of such Shares, or any part thereof, in any transaction that
would be in violation of the Securities Act or the securities
laws of any state, without prejudice, however, to the rights
of JDRP at all times to sell or otherwise dispose of all or
any part of such Shares under an effective registration
statement under the Act or under an exemption from such
registration available under the Securities Act.
(b) JDRP represents that it is capable of evaluating the merits
and risks of an investment in such Shares and has such
knowledge, experience and skill in financial and business
matters that it is capable of evaluating the merits and risks
of the investment in ADM and the suitability of such Shares as
an investment and can bear the economic risk of an investment
in such Shares. No guarantees have been made or can be made
with respect to the future value, if any, of such Shares or
the profitability or success of the business of ADM.
(c) JDRP understands that such Shares will not have been
registered pursuant to the Securities Act or any applicable
state securities laws, that such Shares will be characterized
as "restricted securities" under federal securities laws, and
that under such laws and applicable regulations such Shares
cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom. In this
connection, JDRP represents that it is familiar with Rule 144
promulgated under the Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to
the transfer agent for securities of ADM (or a notation may be
made in the appropriate records of ADM) in connection with
such Shares, but only to the extent customary for securities
which are "restricted securities."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
15
Purchaser and ADM, jointly and severally, represent and warrant to Seller as
follows:
3.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New Jersey. ADM is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.2 Power and Authority. Purchaser and ADM each has the corporate power and
authority to own, lease and operate its respective properties and
assets and to carry on its respective business as currently being
conducted and ADM has the corporate power and authority to issue the
Shares, the Warrant and the Warrant Shares as provided in Section 1.5.
3.3 Authority and Validity. Purchaser and ADM each has the corporate power
and authority to execute, deliver and perform its respective
obligations under this Agreement and the other documents executed or
required to be executed by it in connection with this Agreement, and
this Agreement and the other documents executed or required to be
executed by Purchaser and/or ADM in connection with this Agreement have
been duly authorized by all necessary corporate action of Purchaser or
ADM, as the case may be.
3.4 Binding Effect. This Agreement and the other documents executed or
required to be executed by Purchaser and/or ADM in connection with this
Agreement have been or will have been duly authorized, executed and
delivered by Purchaser or ADM, as the case may be, and are or will be,
when executed and delivered, the legal, valid and binding obligations
of Purchaser or ADM, as the case may be, enforceable in accordance with
their terms except to the extent that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
3.5 No Violation. Neither the execution and performance of this Agreement
or the agreements described herein nor the consummation of the
transactions described herein or therein will:
(a) result in a violation or breach of (i) the respective
certificate of incorporation or by-laws of Purchaser or ADM or
(ii) subject to obtaining the consents referred to on Schedule
3.6 hereto, any material agreement or other material
instrument under which Purchaser or ADM is bound or to which
any of the assets of Purchaser or ADM are subject, or result
in the creation or imposition of any lien, charge or
encumbrance upon any of the assets or properties of Purchaser
or ADM; or
(b) violate, in any material respect, any applicable law or
regulation or any judgment or order of any court or
governmental agency.
Purchaser and ADM each has complied in all material respects with all
applicable laws, regulations and licensing requirements, and has filed
with the proper authorities all necessary statements,
16
applications, notices, reports and any other filings with respect to
Purchaser's and ADM's business, as applicable, except where the failure
to do so would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), assets, properties or
prospects of Purchaser or ADM, as the case may be.
3.6 Consents. Except as set forth on Schedule 3.6 hereto, no authorization,
consent, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any
other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this
Agreement or the agreements or transactions contemplated hereby on the
part of Purchaser or ADM.
3.7 Finder's Fee. Neither Purchaser nor ADM has incurred any obligation on
behalf of itself or Seller for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby, except to Xxxxxx
Xxxxxxxx, which fee Purchaser and ADM agree they shall pay in
accordance with its terms.
3.8 ADM's Stock and Securities Compliance. Since January 1, 1997, ADM has
timely filed all required forms, statements and documents with the SEC,
all of which have complied in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act of
1934, as amended. ADM has heretofore delivered to Seller true and
correct copies of all such forms, statements and documents filed by ADM
with the SEC since January 1, 1997 (the "ADM SEC Documents"). As of
their respective dates, the ADM SEC Documents did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements contained in the ADM SEC Documents
are true, complete and correct in all material respects and were
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, and fairly present the financial
position of ADM as of the dates and for the periods indicated. Since
the date that the last ADM SEC Document filed with the SEC was filed
with the SEC, no event or condition has occurred that (i) may
reasonably be expected to result in a material adverse effect on the
condition (financial or otherwise) of ADM or on its assets, properties
or prospects or (ii) requires the filing by ADM of any form, statement
or document with the SEC. Since the date of the last financial
statement included in the ADM SEC Document, ADM has not incurred any
material liabilities other than liabilities incurred in the ordinary
and usual course of business consistent with past practice. Seller and
JDRP each acknowledge having received copies of correspondence from
NASDAQ regarding the possible delisting of ADM Stock and also
acknowledge being informed that ADM might effect a reverse split, and
that either of such matters could have an adverse effect on ADM Stock.
The capitalization of ADM is as set forth on Schedule 3.8. Except as
described on Schedule 3.8, there is not outstanding any security,
right, subscription, warrant, option, stock appreciation right or other
agreement or other security that is convertible into, exercisable for,
or entitles the holder to purchase or acquire any capital stock from
ADM. The Shares, the Warrant and the Warrant Shares have been duly and
validly authorized. The Shares and the Warrants when issued as provided
herein, will have been duly and validly issued and registered in the
name of Seller or JDRP, as applicable. The Shares and the Warrant, when
issued as provided herein, shall be fully paid and nonassessable. The
issuance of the Shares and the Warrant shall comply in all respects
with all requirements under the Securities Act (subject to the accuracy
of the representations and warranties
17
made by Seller and JDRP in Section 2.24 and Article 2A, respectively)
and with all requirements of the NASDAQ. The Warrant Shares have been
duly and validly reserved for issuance and when issued as provided
herein and paid for as provided in the Warrant, shall be duly and
validly issued and registered in the name of Seller, shall be fully
paid and nonassessable, and shall comply in all respects with all
applicable requirements of the Securities Act (subject to the accuracy
of the representations and warranties made by Seller and JDRP in
Section 2.24 and Article 2A, respectively) and with all applicable
requirements of NASDAQ.
3.9 Permits and Licenses; Compliance. Purchaser and ADM each possesses all
necessary governmental licenses, franchises, permits, approvals,
authorizations, and rights, whether federal, state, local or foreign,
that are necessary for Purchaser and ADM, as applicable, to engage in
its respective business and that, if not possessed, could reasonably be
expected to have a material adverse effect on the condition of
Purchaser or ADM (financial or otherwise) or on its respective assets,
properties or prospects. Purchaser and ADM each is in compliance with
all such governmental licenses, franchises, permits, approvals,
authorizations, or rights, and all federal, state or local laws or
regulations applicable to its respective business except where the
failure to be in compliance could not reasonably be expected to have a
material adverse effect on the condition of Purchaser or ADM (financial
or otherwise) or on its respective assets, properties or prospects.
3.10 Absence of Certain Changes. Except as set forth on Schedule 3.10, since
December 31, 1997, neither Purchaser not ADM has:
(a) suffered any material adverse change in its business;
(b) suffered any damage or destruction or loss that could
reasonably be expected to or does materially and adversely
affect the condition of Purchaser or ADM (financial or
otherwise) or its respective assets, properties or prospects;
(c) acquired or disposed of any assets or properties other than in
the ordinary course of business; or
(d) entered into any other commitment or transaction or
experienced any other event that is material to this Agreement
or to any of the other agreements and documents executed or to
be executed pursuant to this Agreement or to the transactions
described herein or therein, or that could reasonably be
expected to have, or has had, a material adverse effect on the
condition of Purchaser or ADM (financial or otherwise) or on
its respective assets, properties or prospects.
3.11 Litigation. Except as set forth on Schedule 3.11, no material legal or
administrative or other adversary proceeding or investigation is
currently pending against Purchaser or ADM and, to the best knowledge
of Purchaser and ADM, none is threatened or contemplated by any
governmental agency or other third party. Neither Purchaser nor ADM is
subject to any continuing court or administrative order, writ,
injunction or decree.
ARTICLE 4
COVENANTS OF SELLER
18
4.1 Consents. Seller will use its reasonable commercial efforts to obtain
the necessary written consents and approvals of the parties listed on
Schedule 2.8 hereto to the transactions contemplated in this Agreement.
Within ten (10) days after the Effective Date, Seller shall deliver to
Purchaser agreements by the holders of greater than fifty percent (50%)
of Seller's outstanding common stock approving the transactions
contemplated by this Agreement and agreeing to vote in favor of any
shareholder resolution approving the transactions contemplated by this
Agreement.
4.2 Ownership and Operation of the Assets. After the Closing Date Purchaser
will have the sole control of the Assets set forth herein.
4.3 Exclusive Negotiations. Until the earlier of the Closing Date or the
termination of this Agreement, and subject to the fiduciary duties of
the directors of Seller, Seller agrees that none of Seller or any of
the officers, directors, employees, investment bankers, attorneys,
accountants or other agents of Seller will, directly or indirectly,
solicit or accept from any person or entity any offer or expression of
interest in, or with respect to an acquisition, combination, merger or
similar transaction involving Seller with respect to the Assets. Upon
receipt of any unsolicited bona fide offer or expression of interest in
or with respect to any such transaction, Seller agrees to promptly
inform Purchaser of the existence and terms of such offer or expression
of interest.
4.4 Non-Compete. For a period of five (5) years from the Closing Date, (i)
Seller, Xxxx Xxx and Xxxxx Xxxxxx each agrees neither to manufacture
and sell nor to assist a third party (other than Purchaser, ADM and
their affiliates) to manufacture and sell a medical device that is
substantially equivalent to SofPulse for the label indication in the
Notification and (ii) Seller agrees to grant Purchaser the right of
first refusal to manufacture and sell for the label indication in the
Notification, any pulsed electromagnetic stimulation therapeutic device
product developed by Seller to the extent that it is cleared for
commercial marketing for the label indication in the Notification,
provided that the foregoing shall not diminish any of the rights
granted to Purchaser hereunder. During this five-year period, Seller
agrees to keep Purchaser informed of research and development conducted
by Seller on Seller's Patents and Seller's Technology and Know-how
related to the label indication in the Notification and Purchaser
agrees to keep confidential all such information until such time as
Seller makes public disclosure of such new information. In the course
of Seller's future research and development program during said
five-year period, if Seller receives a premarket approval (PMA) from
the FDA on a variant of SofPulse for a label indication other than as
set forth in the Notification, then Seller agrees to first offer
Purchaser the opportunity to negotiate the right to manufacture such a
device to the extent that Seller, at the time of such PMA, has the
right and desire to offer the manufacturing right to a third party.
4.5 Warranty Obligation. Between the Effective Date and the Closing Date,
and in accordance with Purchaser's management and operation of the
Business as set forth in Section 1.14, Purchaser shall be responsible
for performing all repair work on the Devices, whether or not such
Devices are within any applicable warranty period; provided, however,
that Seller shall reimburse Purchaser for Purchaser's (i) out-of-pocket
costs for materials in connection with such repair work to the extent
such materials are not included within the Parts and (ii) Purchaser's
actual labor costs excluding any allocation of overhead. After the
Closing Date, Purchaser shall be responsible for performing all repair
work on the Devices, whether or not such Devices are within any
applicable warranty period; provided, however, that for the period
commencing on the Effective Date and terminating on the
19
earlier of (i) one year after the last Seller Device is sold or rented
by Purchaser or (ii) eighteen (18) months after the Effective Date,
Seller shall reimburse Purchaser for Purchaser's (i) out-of-pocket
costs for materials in connection with such repair work to the Seller
Devices to the extent such materials are not included within the Parts
and (ii) Purchaser's actual labor costs in connection with such repair
work to the Seller Devices excluding any allocation of overhead.
4.6 Sales and Use Tax. Seller shall be responsible for any sales or use tax
payable in connection with the sale of the Assets hereunder; provided
that Purchaser will reasonably assist Seller to minimize any such sales
or use tax.
4.7 Insurance. Seller shall obtain and pay for a "tail" insurance policy
insuring Seller and Purchaser against product liability claims with
respect to the use of Devices prior to the Closing Date, which
insurance policy will be substantially in the form of Exhibit 4.7.
4.8 Assistance. For a period of two (2) months following the Effective
Date, Seller at no charge to Purchaser (other than for out-of-pocket
expenses) shall cause Xxxxx Xxxxxx and Se Yong Oh (or such other
qualified individual as Seller may designate if either of such
individuals is unable to provide such assistance) to provide reasonable
assistance (not exceeding in the case of either individual, on average
30 hours per week or 40 hours in any specific week) to Purchaser in
connection with the operation of the Business.
ARTICLE 5
COVENANTS OF PURCHASER
5.1 Consents. Purchaser and ADM each will use its reasonable commercial
efforts to obtain the necessary written consents and approvals of the
parties listed on Schedule 3.6 hereto to the transactions contemplated
in this Agreement.
5.2 Exclusive Negotiations. Until the earlier of the Closing Date or the
termination of this Agreement, and subject to the fiduciary duties of
the directors of ADM, Purchaser and ADM each agrees that none of
Purchaser or ADM or any of the officers, directors, employees,
investment bankers, attorneys, accountants or other agents of Purchaser
or ADM will, directly or indirectly, solicit or accept from any person
or entity any offer or expression of interest in, or with respect to a
similar transaction involving, Purchaser or ADM with respect to a
product or a business that competes, directly or indirectly, with the
commercial use of the Assets (limited to the label indications).
5.3 Operation of Business. Until the earlier of the Closing Date or the
termination of this Agreement, Purchaser agrees to operate its business
under its normal business practice and not enter into any transaction
other than those listed on Schedule 5.3 hereto, that could reasonably
be expected to have a material adverse effect on the condition of
Purchaser (financial or otherwise) or on its assets, properties or
prospects.
5.4 Conduct of Business. Purchaser agrees, for the twelve month period
commencing on the Closing Date, to conduct the business of
manufacturing and marketing of SofPulse in the ordinary course of
business and not alter its reasonable business practice or take or omit
to take any action that in any manner could reasonably be expected to
adversely affect revenues from the manufacturing and
20
marketing of SofPulse; provided, however, that this shall not prevent
Purchaser from making such changes in the manner in which it
manufactures and markets the SofPulse as it deems appropriate in the
exercise of its reasonable business judgment, including, without
limitation, pricing changes. ADM agrees that it and its affiliates
shall assist Purchaser with the manufacturing and marketing of
SofPulse, provided that such assistance is on arms' length terms and
conditions. Purchaser acknowledges that Seller is relying on
Purchaser's obligations under this Section 5.4 in setting the
thresholds for exercise of the Warrant pursuant to Section 1.5.
5.5 Audit Rights. Purchaser agrees that Seller shall have the right to
examine Purchaser's books and records for the purpose of determining
whether, and to what extent, the Warrant is exercisable, and Purchaser
agrees to make such books and records available for inspection and
copying by Seller and its authorized representatives; provided,
however, that (i) Seller and its representatives agree to keep such
information confidential and to use such information solely for the
purpose of determining whether and to what extent the Warrant is
exercisable, (ii) all copying shall be at the sole cost and expense of
Seller, and (iii) such inspection shall occur during Purchaser's normal
business hours.
5.6 Insurance. Purchaser shall obtain and pay for an insurance policy
insuring Seller and Purchaser against products liability claims with
respect to the use of Devices from and after the Closing Date.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement (other than
the covenants and agreements of Seller that under the terms hereof are
to be fulfilled prior to the Closing Date) shall be subject to the
fulfillment, at or prior to the Closing of each of the following
conditions in all material respects:
(a) Representations, Warranties and Covenants. The representations
and warranties of Purchaser and ADM contained in this
Agreement shall have been true and correct as of the date they
were made or deemed to have been made and shall be true and
correct as of the Closing Date, with the same force and effect
as if made as of the Closing Date, except for such changes as
are permitted or contemplated by this Agreement, and other
than such representations and warranties as are made as of
another date. The covenants and agreements contained in this
Agreement to be complied with by Purchaser and ADM, as the
case may be, on or before the Closing Date shall have been
complied with. Seller shall have received a certificate from
Purchaser and from ADM to such effect, dated as of the Closing
Date and signed by the Chief Executive Officer of Purchaser or
ADM, as the case may be.
(b) No Proceeding or Litigation. No legal or regulatory action
shall have been commenced or threatened by or before any court
or any federal, state or local governmental authority
(collectively, "Governmental Authority") against Seller,
Purchaser or ADM seeking to restrain or adversely alter the
transactions contemplated by this Agreement or which is likely
to render it impossible or unlawful to consummate such
transactions or which could reasonably be expected to have a
material adverse effect on the condition of Purchaser or ADM
(financial or otherwise) or on its respective assets,
properties or prospects.
21
(c) Consents and Approvals. Seller shall have received, each in
form and content satisfactory to Seller, all authorizations,
consents, orders and approvals listed on Schedule 2.8 which,
in each case, shall not contain any material conditions or
limitations that are reasonably unacceptable to Seller.
(d) Legal Opinion. Seller shall have received the legal opinion of
counsel to Purchaser and ADM in form and content satisfactory
to counsel to Seller, Purchaser and ADM, each acting
reasonably (the "Purchaser Legal Opinion").
(e) Registration of Shares. The Registration Statement (as defined
in Section 11.1) shall have been filed with the SEC pursuant
to the Securities Act.
6.2 Conditions to Obligations of Purchaser and ADM. The obligations of
Purchaser and ADM to consummate the transactions contemplated by this
Agreement (other than the covenants and agreements of Purchaser and ADM
that under the terms hereof are to be fulfilled prior to the Closing
Date) shall be subject to the fulfillment, at or prior to the Closing,
of each of the following conditions in all material respects:
(a) Representations, Warranties and Covenants. The representations
and warranties of Seller contained in this Agreement shall
have been true and correct as of the date as of which they
were made or deemed to have been made and shall be true and
correct as of the Closing Date, with the same force and effect
as if made as of the Closing Date except for such changes as
are permitted or contemplated by this Agreement, other than
such representations and warranties as are made as of another
date. The covenants and agreements contained in this Agreement
to be complied with by Seller on or before the Closing Date
shall have been complied with. Purchaser shall have received a
certificate from Seller to such effect dated as of the Closing
Date and signed by the Chief Executive Officer of Seller;
(b) No Proceeding or Litigation. No legal or regulatory action
shall have been commenced or threatened by or before any
Governmental Authority against Seller, Purchaser or ADM
seeking to restrain or adversely alter the transactions
contemplated hereby or which is likely to render it impossible
or unlawful to consummate the transactions contemplated by
this Agreement or which could have a material adverse effect
on the Assets.
(c) Consents and Approvals. Purchaser and ADM each shall have
received, each in form and substance reasonably satisfactory
to Purchaser or ADM, as the case may be, all authorizations,
consents, orders and approvals listed on Schedule 3.6 which,
in each case, shall not contain any material conditions or
limitations that are reasonably unacceptable to Purchaser or
ADM, as the case may be.
(d) Legal Opinion. Purchaser and ADM shall have received the legal
opinion of counsel to Seller in form and content satisfactory
to counsel to Seller, Purchaser and ADM, each acting
reasonably (the "Seller Legal Opinion").
(e) Seller Shareholder Approval. Seller shall have obtained the
approval of its shareholders to the transactions contemplated
by this Agreement; provided that this shall not be a condition
22
to Closing if Seller provides Purchaser and ADM with an
opinion of counsel, reasonably acceptable to Purchaser, that
such shareholder approval is not required.
ARTICLE 7
INDEMNIFICATION
7.1 Survival of Representations and Warranties. The representations and
warranties contained in Article 2 and Article 3 shall expire on June
30, 1999, except that the provisions of Sections 2.2, 2.3 2.7, 2.19,
2.21 and Sections 3.2, 3.3 and 3.8 shall survive the Closing forever.
7.2 Indemnification of Seller.
(a) Subject to the terms and conditions of this Article 7,
Purchaser hereby agrees to indemnify, defend and hold each of
Seller and its officers, directors, agents, attorneys and
affiliates harmless from and against all losses, obligations,
assessments, penalties, liabilities, costs, damages,
reasonable attorneys' fees and expenses (collectively,
"Damages") asserted against or incurred by Seller or such
identified persons by reason of or resulting from (i) a
representation or warranty made by Purchaser or ADM in Article
3 being incorrect or untrue or (ii) a breach by Purchaser of
any covenant contained herein or in any of the agreements
executed pursuant hereto or (iii) any failure by Purchaser to
pay, perform or otherwise discharge any of the Assumed
Liabilities.
(b) Subject to the terms and conditions of this Article 7, ADM
hereby agrees to indemnify, defend and hold each of Seller and
its officers, directors, agents, attorneys and affiliates
harmless from and against all Damages asserted against or
incurred by Seller or such identified persons by reason of or
resulting from (i) a representation or warranty made by ADM in
Article 3 being incorrect or untrue or (ii) a breach by ADM of
any covenant made by ADM contained herein or in any of the
agreements executed pursuant hereto.
(c) Seller agrees to cooperate with Purchaser and ADM in the event
of any settlement negotiated by Purchaser or ADM with regard
to the indemnification provided herein. In no event shall the
total amount payable pursuant to this Section 7.2(c) with
respect to the incorrectness of a representation or warranty
exceed the Purchase Price or with respect to a breach of a
covenant or agreement exceed the sum of the Purchase Price
plus the net profit earned by Purchaser with respect to the
operation of the Assets (including all rights granted to
Purchaser hereunder).
7.3 Indemnification of Purchaser and ADM. Subject to the terms and
conditions of this Article 7, Seller hereby agrees to indemnify, defend
and hold Purchaser and ADM and their officers, directors, agents,
attorneys and affiliates harmless from and against all Damages asserted
against or incurred by Purchaser, ADM or such indemnified persons by
reason of or resulting from:
(a) a representation or warranty contained in Article 2 being
incorrect or untrue or a breach by Seller of any covenant
contained herein or in any agreement executed pursuant hereto
or any failure by Seller to pay, perform or discharge any of
the Retained Liabilities; or
23
(b) the APS, X'Xxxxxxx, and 1993 and 1994 Diapulse litigations as
disclosed in Seller's annual report for the fiscal year ended
December 31, 1997 filed with the SEC on Form 10-K; or
(c) the subject matter or content of the FDA Letters.
Purchaser and ADM agree to cooperate with Seller in the event of any
settlement negotiated by Seller with regard to the indemnification
provided herein. In no event shall the total amount payable pursuant to
this Section 7.3 exceed the Purchase Price.
7.4 Assertion and Resolution of Indemnification Claim.
(a) Any permitted indemnitee under Sections 7.2 and 7.3 (an
"Indemnified Party") shall give notice to the person
responsible for indemnification (an "Indemnifying Party") of
any claim as to which indemnification may be sought as soon as
possible after the Indemnified Party has actual knowledge
thereof and the amount thereof, if known; provided, however,
that in the case of a claim based upon a representation or
warranty being incorrect or untrue notice of such claim must
be given to the Indemnifying Party before the expiration of
such representation or warranty pursuant to Section 7.1. The
Indemnified Party shall supply to the Indemnifying Party any
other information in the possession of the Indemnified Party
regarding such claim, and will permit the Indemnifying Party
(at its expense) to assume the defense of any third party
claim and any litigation resulting therefrom, provided that
counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably
satisfactory to the Indemnified Party, and provided further
that the failure by the Indemnified Party to give notice as
provided herein will not relieve the Indemnifying Party of its
indemnification obligations hereunder except to the extent
that the Indemnifying Party is damaged as a result of the
failure to give notice and except that any claim not made
within the time period set forth in the proviso to the first
sentence of this Section 7.4(a) shall be forever barred. If
the Indemnifying Party has assumed the defense of a third
party claim, the Indemnifying Party shall not be entitled to
settle such third party claim without the prior written
consent of the Indemnified Party, which consent shall not be
unreasonably withheld, provided that such consent shall not be
required if such settlement involves only the payment of money
and the claimant provides to the Indemnified Party, in form
and substance reasonably satisfactory to such Indemnified
Party, a release from all liability in respect of such third
party claim.
(b) The Indemnified Party shall have the right at all times to
participate in the defense, settlement, negotiations or
litigation relating to any third party claim or demand at its
own expense. If the Indemnifying Party does not assume the
defense of any matter as above provided, then the Indemnified
Party shall have the right to defend any such third party
claim or demand, and will be entitled to settle any such claim
or demand in its discretion for the account or benefit of the
Indemnified Party. In any event, the Indemnified Party will
cooperate in the defense of any such action at the expense of
the Indemnifying Party and the records of each party shall be
available to the other with respect to such defense.
7.5 Indemnification of Negligence of Indemnitee. The indemnification
provided in this Article 7 shall be applicable whether or not
negligence of the indemnified party is alleged or proven.
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ARTICLE 8
TERMINATION
8.1 Termination by Seller. Seller shall have the right to terminate this
Agreement if (i) the conditions in Section 6.1 have not been satisfied
or waived by Seller on or before September 30, 1998 or (ii) the form
and content of the Seller Legal Opinion and the Purchaser Legal Opinion
have not been agreed upon on or before June 5, 1998.
8.2 Termination by Purchaser. Purchaser shall have the right to terminate
this Agreement if (i) the conditions in Section 6.2 have not been
satisfied or waived by Purchaser on or before September 30, 1998 or
(ii) the form and content of the Seller Legal Opinion and the Purchaser
Legal Opinion have not been agreed upon on or before June 5, 1998.
8.3 Termination by Agreement of Seller and Purchaser. Seller and Purchaser
may terminate this Agreement at any time by their mutual consent.
8.4 Damages. If this Agreement is terminated pursuant to Article 8, the
parties shall retain any rights they may have against each other for
any breach of any of the terms and conditions of this Agreement.
ARTICLE 9
GUARANTEE BY ADM
ADM hereby irrevocably and unconditionally guarantees the timely performance by
Purchaser of all of Purchaser's obligations pursuant to Section 1.5(a)(ii) and
the penultimate sentence of Section 1.14, subject to the provisions of the last
sentence of Section 1.14.
ARTICLE 10
MISCELLANEOUS
10.1 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated
hereby.
10.2 Entire Agreement. This Agreement and the schedules and exhibits hereto
contain the complete agreement among the parties with respect to the
transactions contemplated hereby and supersede all prior agreements and
understandings among the parties with respect to such transactions.
10.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute
only one original.
10.4 Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery, telegram,
facsimile, or telex, addressed as follows:
25
(a) If to Seller: (b) If to Purchaser or ADM:
Electropharmacology, Inc. ADM Tronics Unlimited, Inc.
0000 XX 00xx Xxxxx, Xxxxx 000 000-X Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
Attn: Xxxx Xxx Attn: Xxxxx XxXxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request or communication
that is mailed, delivered or transmitted in the manner described above
shall be deemed sufficiently given, served, sent and received for all
purposes at such time as it is delivered to the addressee, with the
return receipt, the delivery receipt, the affidavit of messenger, or
(with respect to a telecopy or telex) the answerback or confirmation of
receipt being deemed conclusive evidence of such delivery, or at such
time as delivery is refused by the addressee upon presentation.
10.5 Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during
the term hereof, the provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision were never a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as part
of this Agreement a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
10.6 Successors and Assigns. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
10.7 Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed, construed and enforced in accordance
with the laws of the State of New Jersey and exclusive venue shall lie
in the state and federal courts in the State of Jersey.
10.8 Amendment, Waiver and Other Action. This Agreement may be amended,
modified or supplemented only by a written instrument executed by the
parties against which enforcement of the amendment, modification or
supplement is sought.
10.9 Legal Representation. All of the parties to this Agreement acknowledge
that they have been advised that they should seek and have had the
opportunity to seek counsel to review this Agreement and to obtain the
advice of such counsel relating thereto.
10.10 Assignment. Neither this Agreement nor any right created hereby shall
be assignable by either party hereto without the consent of the other
party, which consent shall not be unreasonably withheld, provided that
this shall not prevent Seller or JDRP from selling any ADM Stock in
accordance with the terms and conditions of this Agreement.
26
10.11 Confidentiality. Each party shall maintain the confidentiality of, and
not divulge or disclose to any other person, the existence of or any
terms and conditions of this Agreement or any of the financial or other
information provided to it by the other party to this Agreement.
10.12 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms
or provisions hereof.
10.13 Number and Gender. Whenever the context requires, references in this
Agreement to the singular number shall include the plural; the plural
number shall include the singular; and words denoting gender shall
include the masculine, feminine, and neuter.
10.14 Public Announcements. Except to the extent that Seller or Purchaser
believes on the advice of counsel that public disclosure is required by
law, no party to this Agreement shall make, or cause to be made, any
press release or public announcement in respect of this Agreement or
the transactions contemplated hereby or otherwise communicate with any
news media without prior notification to the other parties. The parties
shall cooperate as to the time and contents of any such press release
or public announcement, but if they are unable to reach an agreement as
to the time and contents of such press release or public announcement,
each shall be free to make such press release or public announcement as
it deems necessary.
ARTICLE 11
REGISTRATION RIGHTS
11.1 Registration Rights.
(a) As soon as practicable following the Effective Date and as
expeditiously as possible, ADM shall prepare a registration
statement to effect a registration under the Securities Act of
the Shares by means of a "shelf" registration statement
pursuant to Rule 415 under the Securities Act (as well as
necessary amendments or supplements thereto) (a "Registration
Statement"). As soon as possible following the Closing Date,
ADM shall file with the SEC the Registration Statement and use
its best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable
after such filing.
(b) As soon as practicable following the date the condition to the
issuance of the Warrant Shares has been satisfied and as
expeditiously as possible, ADM shall prepare and file a
registration statement to effect a registration under the
Securities Act of the Warrant Shares by means of a "shelf"
registration statement pursuant to Rule 415 under the
Securities Act (as well as necessary amendments or supplements
thereto) (a "Registration Statement"). ADM shall use its best
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such
filing.
11.2 Registration Procedures. In connection with such registration under
either Section 11.1(a) or 11.1(b), ADM shall:
27
(a) prepare and file with the SEC the Registration Statement, and
use its best efforts to cause such Registration Statement to
become and remain effective until the earlier of (i) the date
on which all Shares or Warrant Shares, as applicable, included
in the Registration Statement have been sold or (ii) two years
after the effective date of such Registration Statement;
(b) prepare and file with the SEC such amendments to such
Registration Statement and supplements to the prospectus
contained therein as may be necessary to keep such
Registration Statement effective and current until the earlier
of (i) the date on which all Shares or Warrant Shares, as
applicable, have been sold or (ii) two years from the
effective date of such Registration Statement;
(c) furnish to Seller and JDRP and to the underwriters, if any, of
the securities being registered such reasonable number of
copies of the Registration Statement, preliminary prospectus,
final prospectus and such other documents as such underwriters
may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under the state
securities or blue sky laws of not more than five
jurisdictions as Seller or JDRP may reasonably request in
writing within five days following the mailing, by first class
mail, of a notice of the original filing of such Registration
Statement, such notice to be mailed within five business days
of such filing, except that ADM shall not for any purpose be
required to execute a general consent to service of process or
to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(e) notify Seller and JDRP, promptly after it shall receive notice
thereof, of the time when such Registration Statement has
become effective or a supplement to any prospectus forming a
part of such Registration Statement has been filed;
(f) notify Seller and JDRP promptly of any request by the SEC for
the amending or supplementing of such Registration Statement
or prospectus or for additional information and promptly
deliver to Seller and JDRP copies of any comments received
from the SEC;
(g) prepare and file with the SEC, promptly upon the request of
Seller or JDRP, any amendments or supplements to such
Registration Statement or prospectus which, in the opinion of
counsel for Seller or JDRP (and concurred in by counsel for
ADM), is required under the Act or the rules and regulations
thereunder in connection with the distribution of ADM Stock by
Seller or JDRP;
(h) promptly prepare and file with the SEC and promptly notify
Seller and JDRP of the filing of such amendment or supplement
to such Registration Statement or prospectus as may be
necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required
to be delivered under the Act, any event shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement
of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
28
(i) advise Seller and JDRP, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order
by the SEC suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; and
(j) upon the effectiveness of such Registration Statement, the
Shares or Warrant Shares, as applicable, included in the
Registration Statement shall be listed on the Nasdaq National
Market or the Nasdaq Small Cap Market if other shares of
outstanding ADM Stock are so listed and on each national
securities exchange on which other shares of outstanding ADM
Stock are then listed.
11.3 Agreements of Seller and JDRP. Seller and JDRP each hereby agrees to
provide ADM, or its agents or designees, with all information
reasonably requested in connection with the registration under the Act
or any applicable state securities law of the Shares or Warrant Shares,
as applicable.
11.4 Expenses.
(a) With respect to the registration pursuant to Section 11.1
hereof, all fees, costs and expenses of and incidental to such
registration and public offering (as specified in paragraph
(b) below) in connection therewith shall be borne by Seller;
provided that the Purchaser shall bear any such fees, costs
and expenses in excess of $15,000 in the case of the
registration of the Shares and $7,500 in the case of the
registration of the Warrant Shares.
(b) The fees, costs and expenses of registration to be borne by
Seller (up to $15,000 or $7,500, as applicable) or ADM (in
excess of $15,000 or $7,500, as applicable) as provided in
paragraph (a) above shall include, without limitation, all
registration, filing, and NASD fees, printing expenses, fees
and disbursements of counsel and accountants of ADM and all
legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdictions in
which the securities to be offered are to be registered and
qualified; provided that if Seller or JDRP want to comply with
the blue sky laws of any jurisdiction other than Texas or New
York, the filing fees with respect to such jurisdictions shall
be paid by Seller or JDRP, as applicable. Fees and
disbursements of counsel and accountants for Seller and any
other expenses incurred by Seller not expressly included above
shall be borne by Seller. Fees and disbursements of counsel
and accountants for JDRP and any other expenses incurred by
JDRP not expressly included above shall be borne by JDRP.
11.5 Indemnification.
(a) ADM will indemnify and hold harmless each of Seller and each
of its directors and officers, and JDRP and each of its
partners and employees and any underwriter (as defined in the
Act) for such holder and each person, if any, who controls
such holder or such underwriter within the meaning of the Act,
from and against, and will reimburse Seller and JDRP and each
such underwriter and controlling person with respect to, any
and all loss, damage, liability, reasonable cost and expense
to which such holder or any such underwriter or controlling
person may become subject under the Act or otherwise, insofar
as such losses,
29
damages, liabilities, reasonable costs or expenses are caused
by any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any
prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading; provided, however, that ADM will not be liable in
any such case to the extent that any such loss, damage,
liability, reasonable cost or expenses arises out of or is
based upon (i) an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with
written information furnished by such holder, such underwriter
or such controlling person in writing specifically for use in
the preparation thereof or (ii) the failure to deliver a
current prospectus.
(b) Each of Seller and JDRP will indemnify and hold harmless ADM,
its directors and officers, any controlling person and any
underwriter from and against, and will reimburse ADM, its
directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage,
liability, cost or expense to which ADM or any controlling
person and/or any underwriter may become subject under the Act
or otherwise, insofar as such losses, damages, liabilities,
reasonable costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact
contained in such Registration Statement, any prospectus
contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by
or on behalf of Seller or JDRP, as applicable, specifically
for use in the preparation thereof. Notwithstanding anything
herein to the contrary, the indemnification obligation of JDRP
shall be limited to the assets of JDRP and none of the
partners or employees of JDRP shall have any personal
liability in connection therewith.
(c) If the indemnification provided for in subsection (a) and (b)
of this Section 11.5 is unavailable or insufficient to hold
harmless an indemnified party, then each indemnifying party
shall contribute to the amount paid or payable by such
indemnified party referred to in subsections (a) and (b) of
this Section 11.5 in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the
one hand and the indemnified party on the other hand in
connection with statements or omissions which result in
losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates
to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such untrue statements or omissions. The parties agree that it
would not be just and equitable if contributions pursuant to
this clause were to be determined by pro rata --- ----
allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in
the first sentence of this subsection (c). The amount paid by
an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of
this subsection (c) shall be deemed to include any legal or
other expense
30
reasonably incurred by such indemnified party in connection
with investigating or defending any loss, claim, damage,
liability or proceeding which is the subject of this clause.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding anything
herein to the contrary, no person who sold ADM Stock shall
have to indemnify or otherwise contribute an amount to any
other party in excess of the total proceeds received by such
person from the sale of Shares or Warrant Shares, as
applicable.
(d) Promptly after receipt by an indemnified party pursuant to the
provisions of subsection (a) or (b) of this Section 11.5 of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said
subsection (a) or (b), promptly notify the indemnifying party
of the commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
hereunder or any liability hereunder except to the extent it
is damaged by such omission to so notify. In case such action
is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in,
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party,
provided, however, if the defendants in any action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties which are different from or in addition to those
available to the indemnifying party, or if there is a conflict
of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the
indemnified party or parties have the right to select separate
counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election
to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions
of said subsection (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the provisions of the
preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
the notice of the commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying
party.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
ELECTROPHARMACOLOGY, INC.: ADM TRONICS UNLIMITED, INC.
By: s/ Xxxx Xxx By: s/ Xxxxx Xx Xxxx
-------------------- -------------------------
Its: Chairman & CEO Its: Executive Vice President
-------------------- -------------------------
Date: May 27, 1998 Date: May 27, 1998
------------ ------------
AA NORTHVALE MEDICAL ASSOCIATES,
INC.
By: s/ Xxxxx Xx Xxxx
-------------------------
Its: President
-------------------------
Date: May 27, 1998
------------
INTERVENTION
Each of Xxxx Xxx and Xxxxx Xxxxxx intervene in this Agreement solely for the
purpose of agreeing to be bound by the terms and conditions of Section 4.4, to
the extent the same is applicable to him.
s/ Xxxx Xxx s/ Xxxxx Xxxxxx
----------------------- -------------------------
Xxxx Xxx Xxxxx Xxxxxx
Xxxxx, Day, Xxxxxx & Xxxxx intervenes in this Agreement solely for the purposes
of making the representations and warranties set forth in Article 2A and
agreeing to be bound by the terms and conditions of Section 1.6 and Article 11,
in each case, to the extent the same is applicable to it.
Xxxxx, Day, Xxxxxx & Xxxxx
By: s/ Xxxxxxx X. Xxxxxxxxx
------------------------
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