CONTRIBUTION AGREEMENT
----------------------
AGREEMENT dated as of August 18 , 1998 by and between Epi Sub Inc.
("Epi Sub"), a Delaware corporation and Electropharmacology, Inc., a Delaware
corporation (hereinafter referred to as "Epi").
BACKGROUND
----------
WHEREAS, EPi Sub is a wholly-owned subsidiary of EPI;
WHEREAS, EPi desires to contribute to the capital of Epi Sub, and Epi
desires to accept as a capital contribution from EPi, all of EPi's right, title
and interest in, to and under all of the Contributed Assets (as hereinafter
defined), all on the terms and subject to the conditions herein set forth (the
"Capital Contribution");
WHEREAS, in connection with the Capital Contribution, EPi Sub will
assume all of the Assumed Liabilities (as hereinafter defined); and
WHEREAS it is intended that the transfer of the Contributed Assets will
qualify as a Section 351 transfer under the Internal Revenue Code of 1986, as
amended.
NOW THEREFORE, in consideration of the mutual promises herein set forth
the parties hereto, desiring legally to be bound, hereby agree as follows:
1. Contribution of Assets:
----------------------
1.1 EPi hereby contributes to the capital of EPi Sub and EPi
Sub hereby accepts as a contribution to its capital, all of
EPi's right, title and interest, in, to and under all of EPi's
Assets other than the Excluded Assets (collectively, the
"Contributed Assets"), including, without limitation:
1.1.1 all of the accounts receivable of EPi as at the Effective
Time, which accounts receivable are set forth on Schedule
1.1.1.
1.1.2 all of the inventory of finished goods, work in process, raw
materials and supplies of EPi at the Effective Time, which
inventory is set forth in Schedule 1.1.2;
1.1.3 all machinery, equipment, furniture, fixtures, tools, computer
hardware and software, leasehold improvements and other fixed
assets of EPi as at the Effective Time, which machinery,
equipment, furniture, fixtures, tools, computer hardware and
software, leasehold improvements and other fixed assets is set
forth on Schedule 1.1.3.
1.1.4 all of the Proprietary Rights owned or licensed by EPi as at
the Effective Time, which Proprietary Rights are set forth on
Schedule 1.1.4.
1
1.1.5 all customer orders to which EPi is a party as at the
Effective Time (the "Customer Orders");
1.1.6 all orders for supplies and services to which EPi is a party
as the Effective Time (the "Purchase Orders");
1.1.7 all Permits of EPi (the "Assigned Permits"), a list of which
is set forth on Schedule 1.1.7;
1.1.8 all files, books, records, customer and supplier lists, price
lists and other business documents of EPi (the "Books and
Records");
1.1.9 all deposits and prepaid items of EPi, which deposits and
prepaid items are set forth on Schedule 1.1.9;
1.1.10 all contracts to which EPi is a party as at the Effective
Time, which contracts are set forth on Schedule 1.1.10
(collectively, the "Assigned Contracts");
1.1.11 all real property leased by EPi as at the Effective Time (the
"Real Property");
1.1.12 Intentionally Omitted
1.1.13 the cash in the bank accounts set forth on Schedule 1.1.13
(the "Contributed Cash"); and
1.1.14 all other assets of any kind of EPi and not otherwise set
forth in this Section 1.1, other than the Excluded Assets,
including without limitation, the name "EPi", goodwill,
telephone numbers and telecopy numbers.
1.2 The Contributed Assets are conveyed to EPi Sub free and clear
of all Liabilities and Liens such that after such conveyance,
EPi Sub shall have good and marketable title thereto, free and
clear of all Liabilities and Liens except to the extent of the
Assumed Liabilities.
1.3 The Assets set forth on the Schedules are not an exclusive
list of the Contributed Assets and the fact that any Assets
that otherwise are within the definition of Contributed Assets
are not set forth on a Schedule to this Agreement shall not
prevent such Assets from being deemed to be Contributed Assets
hereunder.
1.4 Notwithstanding anything in this Agreement to the contrary,
the following Assets of EPi shall be excluded from and shall
not constitute Contributed Assets (the "Excluded Assets"):
1.4.1 all assets of EPi being sold to AA Northvale Medical
Associates, Inc. ("AA Northvale") pursuant to that Asset
Purchase Agreement dated May 27, 1998, by and among EPi, AA
Northvale and ADM Tronics Unlimited, Inc. (the "ADM
Agreement");
2
1.4.2 EPi's minute books, seals, stock record books, stock
certificates and other similar corporate documents; and
1.4.3 The Assets set forth on Schedule 1.4.3.
1.5 To the extent that any Customer Orders, Purchase Orders, Assigned
Permits or Assigned Contracts are not assignable or transferable
without the consent or waiver of the issuer thereof or the other party
thereto or any third party (including any governmental authority) or if
such assignment or transfer or attempted assignment or transfer would
constitute a breach thereof or a violation of any Law, EPi shall use
its reasonable efforts, and EPi Sub shall reasonably cooperate
therewith, to obtain the consents and waivers referred to in this
Section 1.5. To the extent that any consent or waiver referred to in
this Section 1.5 is not obtained by EPi, EPi shall (A) provide to EPi
Sub the benefits of any such Customer Orders, Purchase Orders, Assigned
Permits or Assigned Contracts; (B) cooperate in any reasonable and
lawful arrangement requested by EPi Sub designed to provide such
benefits to EPi Sub; and (C) at the request of EPi Sub, enforce for the
account of EPi Sub any right of EPi arising from any such Customer
Orders, Purchase Orders, Assigned Permits or Assigned Contracts against
such issuer or the other party or parties thereto (including the right
to elect to terminate in accordance with the terms thereof on the
advice of EPi Sub). To the extent that EPi Sub is provided the benefits
pursuant to this Section 1.5 of any such Customer Orders, Purchase
Orders, Assigned Permits or Assigned Contracts, EPi Sub shall perform
for the benefit of the issuer thereof or the other party or parties
thereto, the obligations of EPi thereunder or in connection therewith,
but only to the extent that (I) such performance would not result in
any default thereunder or in connection therewith and (ii) such
obligations would have been Assumed Liabilities, but for the
non-assignability or non-transferability thereof.
1.6 To further evidence the contribution of the Contributed Assets by EPi
to EPi Sub, EPi shall deliver to EPi Sub:
1.6.1 a xxxx of sale, duly executed by EPi, transferring all of
EPi's right, title and interest in, to and under the
Contributed Assets to EPi Sub, free and clear of all
Liabilities and Liens other than the Assumed Liabilities;
1.6.2 Intentionally Omitted
1.6.3 a patent assignment, duly executed by EPi, transferring all of
EPi's right, title and interest in, to and under the patents
set forth on Schedule 1.1.4 to EPi Sub, free and clear of all
Liabilities and Liens;
1.6.4 the Books and Records, which shall be delivered
constructively;
1.6.5 Intentionally Omitted
1.6.6 assignments of the Assigned Contracts, duly executed by EPi
and the other parties thereto;
3
1.6.7 such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance satisfactory to
EPi Sub's counsel, as shall be required to vest in EPi Sub
good title to the Contributed Assets free and clear of all
Liabilities and Liens other than the Assumed Liabilities; and
1.6.8 All other documents required to be delivered to EPi Sub under
the provisions of this Agreement.
1.7 At any time and from time to time, at EPi Sub's request and without
further consideration, EPi will execute and deliver such other
instruments of sale, transfer, conveyance, assignment and confirmation
and take such other actions as EPi Sub may reasonably deem necessary or
desirable in order to more effectively transfer, convey and assign to
EPi Sub, and to confirm EPi Sub's title to, all of the Contributed
Assets, to put EPi Sub in actual possession and operating control
thereof and to assist EPi Sub in exercising all rights with respect
thereto.
1.8 The contribution of the Contributed Assets shall be deemed to be
effective as of the Effective Time, notwithstanding that any of the
instruments referred to in Section 1.6 are not executed and/or
delivered and/or filed until after the Effective Date.
2. Assumption of Liabilities
-------------------------
2.1 Subject to and upon the terms and conditions set forth in this
Agreement, EPi Sub hereby assumes all of the Liabilities of
EPi other than the Excluded Liabilities (collectively, the
"Assumed Liabilities"), including, without limitation:
2.1.1 all of the trade accounts payable of EPi as at the Effective
Time, which trade accounts payable are set forth on Schedule
2.1.1 (the "Accounts Payable");
2.1.2 all of EPi Sub's Liabilities under the Customer Orders and the
Purchase Orders; and
2.1.3 all of the EPi Sub's Liabilities under the Assigned Permits
and the Assigned Contracts.
2.2 The fact that any Liabilities that otherwise are within the definition
of Assumed Liabilities are not set forth on a Schedule to this
Agreement shall not prevent such liabilities from being deemed to be
Assumed Liabilities hereunder.
2.3 Notwithstanding anything in this Agreement to the contrary, the
following liabilities shall be excluded from and shall constitute
Assumed Liabilities (the "Excluded Liabilities"):
2.3.1 all Liabilities of EPi being assumed by AA Northvale pursuant
to the ADM Agreement; and
2.3.2 those Liabilities set forth on Schedule 2.3.2.
4
3. Employees
---------
3.1 EPi hereby transfers to EPi Sub all of the Employees of EPi
(the "Transferred Employees"). The Transferred Employees shall
include, without limitation, the persons set forth on Schedule
3.1. EPi Sub shall assume all of the Liabilities of EPi with
respect to the Transferred Employees with effect as of the
Effective Time, provided however, that EPi Sub shall not
assume any Liabilities of EPi with respect to any employee
stock option plans.
3.2 Until EPi Sub establishes its own employee benefit plans, and
at the request of EPi Sub, EPi, to the extent it can
reasonably do so, shall provide benefit coverage to the
Transferred Employees and any new employees EPi Sub may hire
and EPi Sub shall reimburse EPi for all costs incurred by EPi
in connection therewith.
4. Transfer of Contributed Assets and Assumed Liabilities
------------------------------------------------------
EPi acknowledges that pursuant to a Capital Contribution Agreement
dated as of June 18, 1998, among EPi, EPi Sub, Gemini Biotech L.P.,
Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx Xxxxxxxxx and Gemini Biotech Inc. (the
"Capital Contribution Agreement") EPi Sub will be contributing the
Contributed Assets to Health Technologies L.P. (the "Partnership") and
the Partnership will be assuming the Assumed Liabilities. EPi consents
to such contribution and assumption. Furthermore, EPi hereby represents
and warrants to EPi Sub that the representations and warranties made by
EPi and EPi Sub pursuant to Section 5.2 of the Capital Contribution
Agreement are true and correct.
5. Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings unless the context otherwise requires:
5.1 "Assets" means all assets, properties and business, real, personal or
mixed, tangible or intangible, moveable or immovable, including the
goodwill of a person or entity;
5.2 "Contract" means all contracts, agreements, indentures, guarantees,
notes, bonds, leases, mortgages, deeds of trust, licenses, franchises,
commitments, arrangements, sales orders, purchase orders, warranties to
third persons, plans or understandings, whether oral or written,
express or implied;
5.3 "Effective Time" means the opening of business on August 18, 1998;
5.4 "Laws" means all laws, statutes, codes, rules, regulations and
ordinances of any jurisdiction;
5.5 "Liabilities" means all liabilities, debts and obligations, whether
direct or indirect, whether absolute, accrued, contingent or otherwise
and whether due or to become due;
5
5.6 "Lien" means any lien, pledge, license, mortgage, security interest,
claim, lease, charge , condition, restriction, assessment, conditional
sales agreement, title retention agreement, hypothec, option, right of
first refusal, preemptive right, easement or any other encumbrance
whatsoever, whether direct or indirect, contingent, accrued, absolute
or otherwise;
5.7 "Permits" means and includes all permits, licenses, concessions,
franchises, governmental authorizations and similar rights and
privileges; and
5.8 "Proprietary Rights" means all patents, patent applications, patent
licenses, trademarks, trademark registrations and applications
therefor, service marks, service names, trade names, copyrights,
copyright registrations and applications therefor, trade secrets and
any other proprietary rights or intellectual property rights, whether
domestic or foreign;
6. Miscellaneous
-------------
6.1 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of Florida applicable
to contracts made and to be performed therein without giving
effect to the principles of conflict of laws thereof.
6.2 Captions. Captions herein are inserted for reference purposes
only and shall not affect the interpretation or construction
of this Agreement.
6.3 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but
all of which together shall constitute one and the same
agreement.
6.4 Amendments. This Agreement may be amended or varied only by a
document, in writing, of even or subsequent date hereto,
executed by EPi and EPi Sub.
6.5 Further Assurances. Each party hereto, at their own expense,
shall deliver all such further instruments and documents as
may reasonably be requested by the other party in order to
fully carry out the intent and accomplish the purposes of the
transactions referred to therein.
6.6 Successors and Assigns. The rights and obligations of the
parties hereunder shall inure to the benefit of, and be
binding and enforceable upon, the respective successors,
assigns and transferees of either party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
EPi SUB ELECTROPHARMACOLOGY, INC.
By: s/ Xxxx Xxx By: s/ Xxxx Xxx
---------------------- -------------------------------
Xxxx Xxx, President Xxxx Xxx, Chief Executive
Officer and President
6
