AGREEMENT AND PLAN OF MERGER
By and Among
Sheffield Medical Technologies Inc.
CP Pharmaceuticals, Inc.
Camelot Pharmacal, L.L.C.
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
and
Xxxxx X. Xxxxx
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Dated as of April 25, 1997
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April
25, 1997, by and among Sheffield Medical Technologies Inc., a Delaware
corporation ("Parent"), CP Pharmaceuticals, Inc., a Delaware corporation
("Acquisition Corp."), Camelot Pharmacal, L.L.C., a Missouri limited liability
company ("Camelot"), and Xxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxxx X. Xxxxx
(each a "Member" and, collectively, "Members").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Camelot is a new, development stage limited liability
company which is in the process of acquiring and/or developing promising
late-stage pharmaceuticals and pharmaceutical technology for commercialization;
WHEREAS, the Board of Directors of the Parent and Acquisition
Corp. have determined that it is desirable and in the best interests of their
respective corporations and shareholders for Camelot to merge with and into
Acquisition Corp. and each of them has unanimously approved this Agreement and
the transactions contemplated hereby; and
WHEREAS, the Members have determined that it is desirable and in
their best interest to merge Camelot with and into Acquisition Corp. and each of
them have approved this Agreement and the transactions contemplated hereby; and
WHEREAS, upon the terms and subject to the conditions hereinafter
set forth: (a) Camelot shall be merged with and into Acquisition Corp. (the
"Merger") and Acquisition Corp. shall be the surviving entity in the Merger and
(b) the issued and outstanding membership interests of Camelot shall be
converted into shares of the Parent's common stock, par value $.01 per share
("Parent Common Stock").
WHEREAS, it is intended that the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and that this Agreement shall constitute a
"plan of reorganization."
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, and mutual covenants and agreements herein
contained, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time (as defined in
Section 1.2), subject to and upon the terms and conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware (the
"Delaware Act") and the Limited Liability Company Act of the State of Missouri
(the "Missouri Act"), Camelot shall be merged with and into Acquisition Corp.,
the separate existence of Camelot shall cease, and following the Merger,
Acquisition Corp. shall continue as the surviving corporation (as such, the
"Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Articles VII and VIII, the
parties hereto shall cause the Merger to be consummated by filing certificates
of merger with the Secretary of State of each of Delaware and Missouri, in such
form as is required by, and executed in accordance with, the relevant provisions
of the Delaware Act and the Missouri Act. The time of filing the certificate of
merger in respect of the Merger with the Secretary of State of the State of
Delaware shall be the "Effective Time."
SECTION 1.3 EFFECT OF THE MERGER. At the Effective Time, the
Merger shall be effective as provided in the applicable provisions of the
Delaware Act and the Missouri Act. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of Camelot shall vest in Acquisition Corp.,
and all debts, liabilities and duties of Camelot shall become the debts,
liabilities and duties of Acquisition Corp. From and after the Effective Time,
the Surviving Corporation shall be a wholly-owned subsidiary of the Parent.
SECTION 1.4 SUBSEQUENT ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to perfect, confirm, record or otherwise vest in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Camelot acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger, or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of Camelot, all such deeds, bills of sale, assignments and
assurances, and to take and do, in the name and on behalf of Camelot, all such
other actions and things as may be necessary or desirable to perfect, confirm,
record or otherwise vest any and all right, title and interest in,
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to and under such rights, properties or assets in the Surviving Corporation, or
otherwise to carry out this Agreement.
SECTION 1.5 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS. (i) The Certificate of Incorporation of Acquisition Corp., as in
effect immediately before the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
(ii) The By-Laws of Acquisition Corp., as in effect immediately
before the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by law, the Articles of Incorporation of
the Surviving Corporation or such By-Laws.
(iii) The directors of Acquisition Corp. immediately before the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Acquisition Corp. immediately before the Effective Time will be
the initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by the
Delaware Act and the By-Laws of the Surviving Corporation.
SECTION 1.6 CONVERSION OF SECURITIES. As of the Effective Time, by
virtue of the Merger and without any action on the part of Parent Acquisition
Corp., Camelot or the Members, the issued and outstanding Member Interests in
Camelot owned by all of the Members immediately prior to the Effective Time (the
"Member Interest") shall cease to be outstanding and shall be converted to the
right to receive an aggregate of 600,000 fully paid and non- assessable shares
of Parent Common Stock (the "Merger Consideration").
SECTION 1.7 DELIVERY OF MERGER CONSIDERATION.
(i) On the terms and subject to the conditions set forth in this
Agreement, the Parent will issue and contribute to the capital of Acquisition
Corp. a sufficient number of shares of Parent Common Stock to enable it to pay
the Merger Consideration in full in accordance with the terms of this Agreement.
(ii) On the terms and subject to the conditions set forth in this
Agreement, Acquisition Corp. shall deliver the Merger Consideration to the
Members by delivering to each Member certificates representing the number of
shares of Parent Common Stock as set forth opposite each Member's name in
Schedule 1.7.
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ARTICLE II
CLOSING
Subject to the satisfaction or waiver of all conditions to the
parties' obligations to consummate the Merger set forth herein, the closing of
the Merger (the "Closing") shall take place at 10:00 a.m. on May 16, 1997 at the
offices of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, 505 Park Avenue, New York,
New York, or at such other time and place as Camelot, the Parent, Acquisition
Corp. and the Members shall agree (the date and time of such Closing being
herein referred to as the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CAMELOT AND THE MEMBERS
Camelot and each of the Members jointly and severally represent
and warrant to the Parent and Acquisition Corp. as follows:
Section 3.1 CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO CONDUCT
BUSINESS; ARTICLES OF ORGANIZATION AND OPERATING AGREEMENT, ETC. Camelot is a
limited liability company duly organized, validly existing and in good standing
under the laws of Missouri. Camelot has provided Parent with true and complete
copies of Camelot's articles of organization (certified by the appropriate
public official in the State of Missouri) and the operating agreement of Camelot
and any amendment thereto (the "Camelot Operating Agreement"), in each case as
in effect on the date hereof. Camelot has all necessary power and authority to
own, operate and lease its properties and to carry on its business as the same
is now being conducted, and is duly qualified or licensed to do business and is
in good standing as foreign limited liability company in every jurisdiction in
which the conduct of its business or the ownership or leasing of its properties
requires it to be so qualified or licensed, except where the failure to be so
qualified or licensed, individually or in the aggregate, will not have a
material adverse effect on the business, properties, assets, liabilities,
financial condition or operations of Camelot (a "Camelot Material Adverse
Effect").
Section 3.2 MEMBERS' INTEREST. All outstanding Member Interests in
Camelot are held by the Members. Camelot does not have outstanding, and is not
bound by or subject to, any subscription, option, warrant, call, right,
contract, commitment, agreement, understanding or arrangement to issue any
additional Member Interests.
Section 3.3 MEMBERS APPROVAL OF MERGER. The Members have approved
this Agreement and the transactions contemplated hereby.
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Section 3.4 SUBSIDIARIES, ETC. Camelot does not have any
subsidiaries and holds no equity interest in any corporation, partnership,
limited liability company or other entity.
Section 3.5 AUTHORITY RELATIVE TO AND VALIDITY OF THIS AGREEMENT.
Camelot has full corporate power and authority to execute and deliver this
Agreement and to assume and perform all of its obligations hereunder. The
execution and delivery of this Agreement by Camelot and the performance by
Camelot of its obligations thereunder have been duly authorized by all of the
Members and no further authorization on the part of Camelot or the Members is
necessary to authorize the execution, delivery and the performance by it of this
Agreement. There are no contractual, statutory or other restrictions of any kind
upon the power and authority of Camelot to execute and deliver this Agreement
and to consummate the transactions contemplated hereunder and no action, waiver
or consent by any federal, state, municipal or other governmental department,
commission or agency ("Governmental Authority") is necessary to make this
Agreement valid and binding upon Camelot and the Members in accordance with the
terms hereof. This Agreement has been duly executed and delivered on behalf of
Camelot and constitutes the legal, valid and binding obligations of Camelot
enforceable against Camelot in accordance with its terms, except (i) as such
enforceability may be limited by or subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws or by public policy.
Section 3.6 REQUIRED FILINGS AND CONSENTS; NO CONFLICT. Neither
Camelot nor any Member is required to submit any notice, report or other filing
with any Governmental Authority in connection with the execution, delivery or
performance of the this Agreement, other than the filing of the certificate of
merger referred to in Section 8.7. The execution, delivery and performance of
the this Agreement by Camelot and the Members and the consummation of the
transactions contemplated hereby do not and will not (a) conflict with or
violate any law, regulation, judgment, order or decree binding upon Camelot or
any Member, (b) conflict with or violate any provision of the Camelot Articles
or the Camelot Operating Agreement or (c) conflict with or result in a breach of
any condition or provision of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of Camelot under, any indenture, loan agreement, mortgage, deed of trust,
lease, contract, license, franchise or other agreement or instrument to which
Camelot is a party or which is or purports to be binding upon Camelot or by
which any of Camelot's properties are bound. The execution, delivery and
performance of this Agreement
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by Camelot and the consummation of the transactions contemplated hereby will not
result in the loss of any license, franchise, legal privilege or permit
possessed by Camelot or give a right of termination to any party to any
agreement or other instrument to which Camelot is a party or by which any of
Camelot's properties are bound.
Section 3.7 FINANCIAL STATEMENTS. The following internally
prepared financial statements have been previously delivered to the Parent
(collectively the "Financial Statements"):
(i) balance sheet of Camelot as of March 31, 1997 (the
"Balance Sheet").
(ii) statement of operations for the three month period ended
March 31, 1997 (the "Statement of Operations").
The Financial Statements thereto fairly present in all material
respects the financial condition and results of operations of Camelot as of the
date thereof with respect to the Balance Sheet and as to the period then ended
with respect to the Statement of Operations and have been prepared in accordance
with generally accepted accounting principles ("GAAP"), except that a statement
of cash flows and all footnote disclosure otherwise required by GAAP have been
omitted. Except as disclosed on Schedule 3.7 hereto, Camelot had at March 31,
1997 no material liability or obligation of any kind or manner, either
liquidated, unliquidated, direct, accrued, absolute, contingent or otherwise,
whether due or to become due which was not accurately reflected in the Financial
Statements.
Section 3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since March 31,
1997, except as set forth on Schedule 3.8 hereto, there has not been, with
respect to Camelot, (i) any change or event that has caused a Camelot Material
Adverse Effect; (ii) any material damage, destruction or loss (whether or not
covered by insurance) with respect to any assets or properties; (iii) any
distribution in cash, stock or property in respect of Member Interests; (iv) any
entry into any material commitment or transaction (including, without
limitation, any borrowing or capital expenditure); (v) any transfer, assignment
or sale of, or rights granted under, any material leases, licenses, agreements,
patents, trademarks, trade names, copyrights or other assets; (vi) any mortgage,
pledge, security interest or imposition of any other encumbrance on any assets
or properties; (vii) any payment of any debts, liabilities or obligations
("Liabilities") of any kind other than Liabilities currently due; (viii) any
cancellation of any debts or claims or forgiveness of amounts owed to Camelot;
or (ix) any change in accounting principles or methods. Since March 31, 1997,
Camelot has conducted its business only in the ordinary course consistent with
it past practices and has not made any
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material change in the conduct of its business or operations except as otherwise
disclosed herein or in connection with the transactions contemplated hereby.
Section 3.9 TAXES AND TAX RETURNS. (a) For purposes of this
Agreement, (i) the term "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, license, payroll and franchise taxes, imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof whether computed on a unitary, combined or any other basis; and
such term shall include any interest and penalties or additions to tax; and (ii)
the term "Tax Return" shall mean any report, return or other information
required to be filed with, supplied to or otherwise made available to a taxing
authority in connection with Taxes.
(b) Camelot has (i) duly filed with the appropriate taxing
authorities all Tax Returns required to be filed by or with respect to Camelot
or such Tax Returns are properly on extension and all such duly filed Tax
Returns are true, correct and complete in all material respects, and (ii) paid
in full or made adequate provisions for on the Balance Sheet (in accordance with
GAAP) all Taxes shown to be due on such Tax Returns. There are no liens for
Taxes upon the assets of Camelot, except for statutory liens for current Taxes
not yet due and payable or which may thereafter be paid without penalty or are
being contested in good faith. Camelot has not received any notice of audit, is
not to Camelot's and the Members' knowledge, undergoing any audit of its Tax
Returns, and has not received any notice of deficiency or assessment from any
taxing authority with respect to liability for Taxes of Camelot that has not
been fully paid or finally settled.
(c) Each of the Members has duly (i) filed with the appropriate
taxing authorities all Tax Returns required to be filed by them with respect to
Camelot, or are properly on extension, and all such duly filed Tax Returns are
true, correct and complete in all material respects and (ii) paid in full or
made adequate provision for all Taxes, if any, shown to be due on such Tax
Returns.
(d) Camelot has filed with the Internal Revenue Service on a
timely basis all appropriate election forms required for Camelot to elect to be
treated as an association taxable as a corporation.
Section 3.10 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.10 hereto
comprises a listing of each bonus, benefit, profit sharing, savings, retirement,
liability, insurance, incentive, deferred compensation, and other similar fringe
or employee benefit plans, programs or arrangements for the benefit of or
relating to, any employee of, or independent contractor or consultant to, and
all
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other compensation practices, policies, terms or conditions, whether written or
unwritten of Camelot (the "Camelot Employee Plans") that Camelot presently
maintains, to which Camelot presently contributes or under which Camelot has any
liability. The Camelot Employee Plans administered by Camelot have been
administered in all material respects in accordance with all requirements of
applicable law and terms of each such plan. All contributions (including
premiums) in material amounts required by law or contract to have been made or
accrued by Camelot under or with respect to any Camelot Employee Plan have been
paid or accrued by Camelot. Camelot has not received notice of any
investigation, litigation or other enforcement action against Camelot with
respect to any of the Camelot Employee Plans. There are no pending actions,
suits or claims by former or present employees of Camelot (or their
beneficiaries) with respect to Camelot Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(b) None of Camelot, any trustee, administrator or other fiduciary
has engaged in any transaction or acted in a manner that could, or failed to act
so as to, subject Camelot or any fiduciary to any liability for breach of
fiduciary duty under ERISA or other applicable Law.
Section 3.11 TITLE TO PROPERTY. Camelot has good and marketable
title, or valid leasehold rights (in the case of leased property), to all
personal property owned or leased by it or used by it in the operation of its
business, free and clear of all encumbrances, excluding (i) liens for taxes,
fees, levies, imposts, duties or governmental charges of any kind which are not
yet delinquent or are being contested in good faith by appropriate proceedings
which suspend the collection thereof; (ii) liens for mechanics, materialmen,
laborers, employees, suppliers or other which are not yet delinquent or are
being contested in good faith by appropriate proceedings; (iii) liens created in
the ordinary course of business in connection with the leasing or financing of
office, computer and related equipment and supplies; (iv) easements and similar
encumbrances ordinarily created for xxxxxx utilization and enjoyment of
property; and (v) liens or defects in title or leasehold rights that either
individually or in the aggregate do not and will not have an Camelot Material
Adverse Effect. Camelot owns no real property.
Section 3.12 TRADEMARKS, PATENTS AND COPYRIGHTS. Schedule 3.12
hereto sets forth all patents, trademarks, copyrights, service marks and trade
names, all applications for any of the foregoing, and all permits, grants and
licenses or other rights running to or from Camelot relating to any of the
foregoing ("Camelot Rights"). There are no other patents, trademarks,
copyrights, service marks or trade names which are material to the business of
Camelot or any Subsidiary as presently conducted. To the best of their
knowledge, Camelot has the right to use, free and
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clear of any claims or rights of others, all trade secrets, know-how, processes,
technology, blue prints and designs utilized in or incident to its business as
presently conducted ("Trade Secrets") and such use does not infringe on any
patent, trademark, copyright, service xxxx or trade name. Camelot has not
received notice of any adversely held patent, invention, trademark, copyright,
service xxxx or trade name of any other person or notice of any claim of any
other person relating to any of the Camelot Rights set forth on Schedule 3.12
hereto or any Trade Secret of Camelot and Camelot does not know of any basis for
any such charge or claim. To the best of Camelot's and the Members' knowledge,
there is no present or threatened use or encroachment of any Trade Secret.
Section 3.13 LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC.
Except as set forth on Schedule 3.13, there is no legal, administrative,
arbitration or other action or proceeding or governmental investigation pending,
or to the knowledge of Camelot, threatened, against Camelot. Camelot has not
been informed of any violation of or default under, any laws, ordinances,
regulations, judgments, injunctions, orders or decrees (including without
limitation, any immigration laws or regulations) of any court, governmental
department, commission, agency, instrumentality or arbitrator applicable to the
business of Camelot. Camelot is not currently subject to any material judgment,
order, injunction or decree of any court, arbitral authority, administrative
agency or other governmental authority.
Section 3.14 INSURANCE. Camelot has insurance policies in such
amounts as the management of Camelot has reasonably determined to be necessary
in regard to its respective business properties, personnel or assets. Camelot is
not in default with respect to any provision contained in any insurance policy,
and has not failed to give any notice or present any claim under any insurance
policy in due and timely fashion. Any such policies shall have been delivered
prior to the Closing to the Parent and are in full force and effect. All
payments with respect to such policies are current and Camelot has received any
notice threatening a suspension, revocation, modification or cancellation of any
such policy.
Section 3.15 MATERIAL CONTRACTS. (a) Set forth in Schedule 3.15
hereto is a description of each contract and commitment (including contracts or
commitments pertaining to employment), whether written or oral to which Camelot
is a party. Each of the contracts and commitments set forth in Schedule 3.15
hereto and each of the other material contracts and commitments to which Camelot
is a party, is valid and existing, in full force and effect and enforceable in
accordance with its terms (subject to laws affecting creditors' rights and
equitable principles) and there is no material default or claim of default
against Camelot or any notice of termination with respect thereto. To the extent
required thereby, Camelot has complied in all material respects
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with all requirements of, and performed all of its obligations under, such
contracts and commitments. In addition, no other party to any such contract or
commitment is, to the best of Camelot's knowledge, in default under or in breach
of any material term or provision thereof, and there exists no condition or
event which, after notice or lapse of time or both, would constitute a material
default by any party to any such contract or commitment. Copies of all the
written documents and a synopsis of all oral contracts and commitments described
in Schedule 3.15 hereto have heretofore been made available to the Parent and
are true and complete and include all amendments and supplements thereto and
modifications thereof to and including the date hereof.
(b) Except as set forth in Schedule 3.15 hereto, Camelot is not a
party to any oral or written (i) agreement with any consultant, executive
officer or other key employee the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of the transactions
contemplated by this Agreement, or (ii) agreement or plan, including any stock
option plan and the like, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of the
transactions contemplated by this Agreement.
Section 3.16 CERTAIN TRANSACTIONS. Except as set forth in Schedule
3.16 hereto, neither any Member nor any officer or any employee of Camelot, nor
any member of any such person's immediate family is presently a party to any
material agreement or transaction with Camelot, including without limitation,
any contract, agreement or other arrangement (i) providing for the furnishing of
services by, (ii) providing for the rental of real or personal property from, or
(iii) otherwise requiring payments to (other than for services as officers or
employees of Camelot), any such person or any corporation, partnership, trust or
other entity in which any such person has a substantial interest as a
stockholder, officer, director, trustee or partner.
Section 3.17 BROKER. No broker, finder or investment banker is
entitled to any brokerage or finder's fee or other commission in connection with
the transactions contemplated hereby based on the arrangements made by or on
behalf of Camelot or the Members.
Section 3.18 ENVIRONMENTAL MATTERS. (a) Camelot is not the subject
of, or to the knowledge of Camelot or the Members, being threatened to be the
subject of (i) any enforcement proceeding, or (ii) any investigation, brought in
either case under any Federal, state or local environmental law, rule,
regulation, or ordinance at any time in effect or (iii) any third party claim
relating to environmental conditions on or off the properties of Camelot.
Camelot has not been notified that it must obtain any permits and licenses or
file documents for the operation of its
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business under federal, state and local laws relating to pollution protection of
the environment. Except as set forth in Schedule 3.18 hereto, Camelot has not
been notified of any conditions on or off the properties of Camelot which may
give rise to any liabilities of Camelot under any Federal, state or local
environmental law, rule, regulation or ordinance or as the result of any claim
of any third party. For the purposes of this Section 3.18, an investigation
shall include, but is not limited to, any written notice received by Camelot
that relates to the onsite or offsite disposal, release, discharge or spill of
any waste, waste water, pollutant or contaminants.
(b) To Camelot's knowledge, there are no toxic wastes or other
toxic or hazardous substances or materials, pollutants or contaminants that
Camelot (or, to Camelot's knowledge, any previous occupant of Camelot's
facilities) has used, stored or otherwise held in or on any of the facilities of
Camelot. Camelot has not disposed of or arranged (by contract, agreement or
otherwise) for the disposal of any material or substance that was generated or
used by Camelot at any off-site location that has been or is listed or proposed
for inclusion on any list promulgated by any Governmental Authority for the
purpose of identifying sites which pose a danger to health and safety. To the
knowledge of Camelot and the Members there have been no environmental studies,
reports and analyses made or prepared relating to the facilities of Camelot.
Camelot has not installed any underground storage tanks in any of its facilities
and, to the best of Camelot's and the Members' knowledge, none of such
facilities contain any underground storage tanks.
Section 3.19 COMPLIANCE WITH LAW. Camelot has complied in all
material respects with all laws, rules, regulations, arbitral determinations,
orders, writs, decrees and injunctions which are applicable to or binding upon
Camelot or its properties, except where such failure would not cause an Camelot
Material Adverse Effect.
Section 3.20 FULL DISCLOSURE. All schedules and annexes to this
Agreement (collectively, "Documents") delivered by or on behalf of Camelot or
any Member pursuant to this Agreement are true and complete in all material
respects and are authentic. No representation or warranty of Camelot or the
Members contained in this Agreement, and no Document furnished by or on behalf
of Camelot or the Members to the Parent pursuant to this Agreement, contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements made, in the context in
which made, not materially false or misleading. The Members have advised Parent
that Camelot is a new, development stage entity, without current substantial
business operations or revenues in respect of its business.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Each Member hereby represents and warrants to the Parent and the
Acquisition Corp., as follows:
Section 4.1 MEMBERS' INTERESTS. Such Member owns the percentage of
the outstanding Member Interests of Camelot set forth opposite his name under
the column "Member Interests Held" on Schedule 1.7 hereto, free and clear of all
liens, claims or encumbrances.
Section 4.2 AUTHORITY RELATIVE TO AND VALIDITY OF THIS AGREEMENT.
This Agreement has been duly executed and delivered by such Member and
constitutes the legal, valid and binding obligations of such Member enforceable
against such Member in accordance with its terms, except (i) as such
enforceability may be limited by or subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws or by public policy. Neither the execution and delivery by this Agreement
nor the consummation of the transactions contemplated thereby will violate any
provision of law, any order of any court or other agency of government, or any
judgment, award or decree or any agreement or instrument to which such Member is
a party, or by which he or any of his properties or assets is bound or affected,
or result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such agreement or instrument, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of such Member.
Section 4.3 BROKERS' OR FINDERS' FEES. All negotiations relative
to the this Agreement and the transactions contemplated hereby have been carried
out by such Member or the other Members directly with the Parent, without the
intervention of any person on behalf of the Members, in such manner as not to
give rise to any claim by any person against the Parent or Acquisition Corp. for
a finder's fee, brokerage commission or similar payment.
Section 4.4 MEMBERS' ADDRESSES, ACCESS TO INFORMATION, EXPERIENCE,
ETC.
(a) The address set forth under such Member's name on the
signature pages of this Agreement is such Member's true and correct business,
residence or domicile address. Such Member has received, read and is familiar
with the Parent's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996 (the "1996 10-KSB"). Such Member has had an opportunity to ask
questions of
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and receive answers from representatives of the Parent concerning the terms and
conditions of this transaction. Such Member has received such documentation
relating to Parent's business, results of operations and financial condition as
such Member has deemed necessary. Such Member has substantial experience in
evaluating non-liquid investments such as the Merger Consideration and is
capable of evaluating the merits and risks of an investment in the Parent.
(b) Such Member acknowledges that he has had an opportunity to
evaluate all information regarding the Parent as he has deemed necessary or
desirable in connection with the transactions contemplated by this Agreement,
has independently evaluated the transactions contemplated by this Agreement and
has reached his own decision to enter into this Agreement.
Section 4.5 ACCREDITED INVESTOR; PURCHASE ENTIRELY FOR OWN
ACCOUNT. Such Member is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). The Merger Consideration to be received by such Member
pursuant to the terms hereof will be acquired for investment for such Member's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof. Such Member has no present plan or arrangement
to dispose of the Merger Consideration in any manner.
Section 4.6 RESTRICTED SECURITIES. Such Member understands that
the Merger Consideration he is receiving is characterized as "restricted
securities" under the federal securities laws inasmuch as such securities are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this regard, Such Member represents that he is familiar with Rule 144
promulgated under the Securities Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Section 4.7 LEGENDS. It is understood that the certificates
evidencing the shares of Parent Common constituting the Merger Consideration
shall bear a legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE ACT SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE CORPORATION TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."
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The legend referred to above shall be removed by the Parent from
any certificate at such time as the Parent receives an opinion of counsel
reasonably satisfactory to the Parent to the effect that such legend is not
required in order to establish compliance with any provisions of the Securities
Act, or at such time as the holder of such shares satisfies the requirements of
Rule 144 under the Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND ACQUISITION CORP.
The Parent and Acquisition Corp. hereby represent and warrant to
Camelot and the Members as follows:
Section 5.1 CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO CONDUCT
BUSINESS; ARTICLES OF INCORPORATION AND BY-LAWS. Each of the Parent and
Acquisition Corp. is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of Parent and Acquisition
Corp. have provided Camelot with true and complete copies of their respective
certificate of incorporation (certified by the Secretary of State of Delaware)
and By-laws (certified by the Secretary of the Parent) as in effect on the date
hereof. Parent and Acquisition Corp. have all corporate power and authority to
own, operate and lease their properties and to carry on their respective
businesses as the same are now being conducted, and are duly qualified or
licensed to do business and are in good standing as foreign corporations in
every jurisdiction in which the conduct of their business or the ownership or
leasing of their respective properties requires them to be so qualified or
licensed, except where the failure to be so qualified or licensed, individually
or in the aggregate, will not have a material adverse effect on the business,
properties, financial condition or operations of Parent and Acquisition Corp.,
taken as a whole (a "Sheffield Material Adverse Effect"). Each of the Parent and
Acquisition Corp. has all necessary corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
Section 5.2 EXECUTION AND DELIVERY. Neither Parent nor Acquisition
Corp. are required to submit any notice, report or other filing with any
Governmental Authority in connection with the execution, delivery or performance
of this Agreement, other than the filing of the certificate of merger referred
to in Section 7.7. This Agreement has been duly executed and delivered by each
of the Parent and Acquisition Corp. and constitutes the legal, valid and binding
obligations of Parent and Acquisition Corp. enforceable against the Parent and
Acquisition Corp. in accordance with its terms, except (i) as such
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium
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or other similar laws affecting creditors' rights generally, (ii) as such
obligations are subject to general principles of equity and (iii) as rights to
indemnity may be limited by federal or state securities laws or by public
policy.
Section 5.3 CAPITALIZATION. The authorized capital stock of the
Parent consists of (i) 30,000,000 shares of Common Stock, of which 11,388,274
shares were issued and outstanding as of the date of this Agreement and (ii)
3,000,000 shares of preferred stock, par value $.01 per share, of which 35,700
shares of Series A Cumulative Convertible Redeemable Preferred Stock are issued
and outstanding as of the date of this Agreement.
Section 5.4 SEC REPORT; ABSENCE OF MATERIAL ADVERSE EFFECT. Parent
has made available to Camelot and the Members copies of the 1996 10-KSB as filed
with the Securities and Exchange Commission (the "SEC"). As of its date, the
1996 10-KSB (including without limitation, any financial statements or schedules
included therein) did not contain any untrue statement of a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated financial statements included in the SEC
Reports has been prepared from, and are in accordance with, the books and
records of the Parent, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial condition, results of operations and cash flows of the Parent as of
the dates thereof and for the periods presented therein. Parent had at December
31, 1996 no material liability or obligation of any kind or manner, either
liquidated, unliquidated, direct, accrued, absolute, contingent or otherwise,
whether due or to become due which was not accurately reflected in the 1996
10-KSB.
Section 5.5 BROKER. No broker, finder or investment banker is
entitled to any brokerage or finder's fee or other commission in connection with
the transactions contemplated hereby based upon the arrangements made by or on
behalf of the Parent or Acquisition Corp.
Section 5.6 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Acquisition Corp. has full corporate power and authority to execute and
deliver this Agreement and to assume and perform all of its obligations
hereunder. The execution and delivery of the this Agreement by each the Parent
and Acquisition Corp. and the performance by Parent and Acquisition Corp. of
their respective obligations hereunder have been duly authorized by their
respective Boards of Directors and no further authorization on the part of
Parent or Acquisition Corp. or their shareholders is
15
necessary to authorize the execution and delivery by them of, and the
performance of their respective obligations under, this Agreement.
Section 5.7 REQUIRED FILINGS AND CONSENTS; NO CONFLICT. Neither
Parent nor Acquisition Corp. is required to submit any notice, report or other
filing with any Governmental Authority in connection with the execution,
delivery or performance of this Agreement. The execution, delivery and
performance of this Agreement by Acquisition Corp. and Parent and the
consummation of the transactions contemplated hereby do not and will not (a)
conflict with or violate any law, regulation, judgment, order or decree binding
upon Acquisition Corp. or Parent, (b) conflict with or violate any provision of
their certificates of incorporation or by-laws, or (c) conflict with or result
in a breach of any condition or provision of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or result in the creation or imposition of any lien, charge or encumbrance upon,
any properties or assets of Parent or Acquisition Corp. pursuant to any
indenture, loan agreement, mortgage, deed of trust, lease, contract, license,
franchise or other agreement or instrument to which Parent or Acquisition Corp.
is a party or which is or purports to be binding upon Parent or Acquisition
Corp. or by which either of their properties are bound, except for conflicts,
breaches, defaults, events of default or impositions that would not have a
Sheffield Material Adverse Effect.
Section 5.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
disclosed in the 1996 10-KSB, since December 31, 1996, there has not been, with
respect to the Parent, (i) any change or event that has caused a Sheffield
Material Adverse Effect, (ii) any material damage, destruction or loss (whether
or not covered by insurance) with respect to any assets or properties or (iii)
any change in accounting principles or methods (except insofar as may have been
required by a change in GAAP). Except as disclosed in the 1996 10-KSB or in
Schedule 5.8 or as contemplated by this Agreement, Parent has not incurred any
material liability or entered into any material commitment other than in the
ordinary course of the Company's business consistent with past practice.
Section 5.9 TITLE TO PROPERTY. Parent has good and marketable
title or valid leasehold rights (in the case of leased property) to all real
property and all personal property purported to be owned or leased by it or used
by it in the operation of its business.
Section 5.10 LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC. There
is no legal, administrative, arbitration or other action or proceeding or
governmental investigation pending, or to the knowledge of Parent, threatened,
against Parent.
16
Section 5.11 COMPLIANCE WITH LAW. Parent has complied in all
material respects with all laws, rules, regulations, arbitral determinations,
orders, writs, decrees and injunctions which are applicable to or binding upon
Parent or its properties, except where such failure would not cause a Sheffield
Material Adverse Effect.
Section 5.12 TAXES AND TAX RETURNS. Parent has (i) duly filed with
the appropriate taxing authorities all Tax Returns required to be filed by or
with respect to Parent or such Tax Returns are properly on extension and all
such duly filed Tax Returns are true, correct and complete in all material
respects, and (ii) paid in full or made adequate provisions for all Taxes shown
to be due on such Tax Returns. There are no liens for Taxes upon the assets of
Parent, except for statutory liens for current Taxes not yet due and payable or
which may thereafter be paid without penalty or are being contested in good
faith. Parent has not received any notice of audit, is not to Parent's
knowledge, undergoing any audit of its Tax Returns, and has not received any
notice of deficiency or assessment from any taxing authority with respect to
liability for Taxes of Parent that has not been fully paid or finally settled.
ARTICLE VI
COVENANTS OF CAMELOT, PARENT, ACQUISITIONS CORP.
AND THE MEMBERS
Section 6.1 COVENANTS OF CAMELOT AND THE MEMBERS REGARDING CONDUCT
OF BUSINESS OPERATIONS PENDING THE CLOSING. Camelot and the Members covenant and
agree that between the date of this Agreement and the Closing Date, Camelot will
carry on its business in the ordinary course and consistent with past practice
and (i) will use its best efforts to preserve its business organization intact,
(ii) will use its best efforts to retain the services of its present employees,
(iii) will not enter into any material commitments for services or otherwise
without the prior written notification to, and written approval of, such
contemplated action by the Parent and (iv) will not purchase, sell, lease or
dispose of any material property or assets or incur any material liability or
enter into any other material transaction without prior written notification to,
and receipt of written approval of, such contemplated action by the Parent. By
way of example and not limitation, (except as contemplated hereunder), between
the date of this Agreement and the Closing Date, Camelot shall not, directly or
indirectly, do any of the following without the prior written consent of the
Parent:
(i) issue, sell, pledge, dispose of, encumber, authorize, or
propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any Member Interests in Camelot;
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(ii) take any action other than in the ordinary course of business
and in a manner consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the grant of any
severance or termination pay (otherwise than pursuant to its policies
in effect on the date hereof) or with respect to any increase of
benefits payable under its severance or termination pay policies in
effect on the date hereof;
(iii) make any payments (except in the ordinary course of business
and in amounts and in a manner consistent with past practice) under any
Camelot Employee Plan to any employee, independent contractor or
consultant, enter into any new Camelot Employee Plan or any new
consulting agreement or grant or establish any awards under such
Camelot Employee Plan or agreement, or adopt or otherwise amend any of
the foregoing;
(iv) take any action except in the ordinary course of business and
in a manner consistent with past practice (none of which actions shall
be unreasonable or unusual) with respect to accounting policies or
procedures (including without limitation its procedures with respect to
the payment of accounts payable);
(v) enter into or terminate any material contract or agreement or
make any material change in any of its material contracts or
agreements, other than agreements, if any, relating to the transactions
contemplated hereby; or
(vi) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of their
respective representations or warranties contained in this Agreement
untrue or incorrect in any material respect as of the date when made or
as of a future date.
Section 6.2 COVENANTS OF PARENT REGARDING CONDUCT OF BUSINESS
OPERATIONS PENDING THE CLOSING. Parent covenants and agrees that between the
date of this Agreement and the Closing Date, Parent will carry on its respective
businesses in the ordinary course and consistent with past practice and (i) will
use its best efforts to preserve its business organization intact, (ii) will use
its best efforts to retain the services of its present employees, (iii) will not
enter into any material commitments for services or otherwise without giving
prior written notification of such contemplated action to Camelot and the
Members and (iv) will not purchase, sell, lease or dispose of any material
property or assets or incur any material liability or enter into any other
material transaction without prior written notification of such action to
Camelot and the Members.
18
Section 6.3 NO OTHER NEGOTIATIONS. Camelot and the Members agree
that they will not, prior to the termination of this Agreement, (i) take any
action intended to encourage discussions or negotiations, (ii) participate in
discussions or negotiations or (iii) provide any information, access to books or
records to or with any person or entity other than the Parent and Acquisition
Corp. relating to a merger of Camelot, the sale of Camelot or the Members'
employment.
Section 6.4 REGULATORY APPROVALS. Camelot, the Members, and
Acquisition Corp. covenant and agree to fully cooperate in obtaining any
Required Filings and Consents.
Section 6.5 DUE DILIGENCE REVIEW. (a) Camelot and the Members
shall, upon reasonable notice, give access to, and cooperate fully with, the
attorneys, auditors, representatives and agents of the Parent to conduct a due
diligence review of the business activities of Camelot, including all
appropriate management matters, all appropriate financial, accounting and
business records and all contracts and other legal documents reasonably
requested by the Parent.
(b) The Parent shall, upon reasonable notice, give access to, and
cooperate fully with, the attorneys, auditors, representatives and agents of
Camelot to conduct a due diligence review of the business activities of the
Parent, including all appropriate management matters, all appropriate financial,
accounting and business records and all contracts and legal documents,
including, but not limited to, all financial information, reasonably requested
by Camelot.
Section 6.6 ANNOUNCEMENTS. None of Camelot, any Member or the
Parent shall issue any report, statement or press release to the public, the
trade or the press or any third party relating to this Agreement or the
transactions contemplated hereby, except as agreed to in writing by Camelot and
the Parent before the issuance thereof; PROVIDED, HOWEVER, that Parent may make
any disclosure relating to this Agreement or the transactions contemplated
hereby that Parent deems necessary to comply with its disclosure obligations
under applicable law (including securities laws).
Section 6.7 PARENT PROXY FILING. Parent will use its best efforts
to mail to its stockholders a proxy statement in respect of an annual meeting of
its stockholders containing, among other items, the matters referred to in (i) -
(iv) of Section 7.9 on or before June 6, 1997.
Section 6.8 DELIVERY OF MERGER CONSIDERATION. On the earlier to
occur of (i) the listing of the Parent Common Stock constituting the Merger
Consideration for sale on the American Stock Exchange or (ii) 30 days after the
Closing Date, the Parent will issue and contribute to the capital of Acquisition
Corp. a
19
number of shares of Parent Common Stock equal to the Merger Consideration and
Acquisition Corp. shall deliver the Merger Consideration to the Members by
delivery to each Member of certificate(s) representing the numbers of shares of
Parent Common Stock as set forth opposite such Member's name in Schedule 1.7.
Section 6.9 ADDITIONAL COVENANTS OF CAMELOT, THE MEMBERS, THE
PARENT AND ACQUISITION CORP. Each of Camelot, the Members, Parent and
Acquisition Corp. covenant and agree:
(a) BEST EFFORTS. To proceed diligently and use its best efforts
to take or cause to be taken all actions and to do or cause to be done all
things necessary, proper and advisable to consummate the transactions
contemplated by this Agreement.
(b) COMPLIANCE. To comply in all material respects with all
applicable rules and regulations of any Governmental Authority in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby; to use all reasonable efforts to obtain in a
timely manner all necessary waivers, consents and approvals and to take, or
cause to be taken, all other actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
(c) NOTICE. To give prompt notice to the other party or parties of
(i) the occurrence, or failure to occur, of any event whose occurrence or
failure to occur, would be likely to cause any representation or warranty
contained in this Agreement to be untrue or incorrect in any material respect at
any time from the date hereof to the Closing Date and (ii) any material failure
on its part, or on the part of any of its officers, directors, employees or
agents, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any such notice shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(d) CONFIDENTIALITY. To hold in strict confidence all data and
information obtained from the other party hereto or any subsidiary, division,
associate, representative, agent or affiliate of any such party (unless such
information is or becomes publicly available without the fault of any
representative of such party, or public disclosure of such information is
required by law in the opinion of counsel to such party) and shall insure that
such representatives do not disclose information to others without the prior
written consent of the other party hereto, and in the event of the termination
of this Agreement, to cause its representatives to return promptly every
document furnished by the other party hereto or any subsidiary, division,
associate, representative, agent or affiliate of any such party in connection
with the
20
transactions contemplated hereby and any copies thereof which may have been
made, other than documents which are publicly available.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
CAMELOT AND THE MEMBERS
The obligations of Camelot and the Members under this Agreement
are subject to the satisfaction, on or prior to the Closing Date, unless waived
by them in writing, of each of the following conditions:
Section 7.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Parent and Acquisition Corp. contained in
this Agreement shall be true and correct in all material respects as of the date
when made and at and as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date, and the Members shall have received a
certificate to that effect and as to the matters set forth in Section 7.2
hereof, dated the Closing Date, from the Chairman of the Parent.
Section 7.2 PERFORMANCE OF COVENANTS. Parent and Acquisition Corp.
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by it on or before the Closing Date.
Section 7.3 NO PROCEEDINGS. No preliminary or permanent injunction
or other order (including a temporary restraining order) of any state, federal
or local court or other governmental agency or of any foreign jurisdiction which
prohibits the consummation of the transactions which are the subject of this
Agreement shall have been issued or entered and remain in effect.
Section 7.4 CONSENTS AND APPROVALS. All filings and registrations
with, and notifications to, all federal, state, local and foreign authorities
required for consummation of the transactions contemplated by this Agreement
shall have been made, and all consents, approvals and authorizations of all
federal, state, local and foreign authorities and parties to material contracts,
licenses, agreements or instruments required for consummation of the
transactions contemplated by this Agreement (the "Required Filings and
Consents") shall have been received and shall be in full force and effect.
Section 7.5 RESIGNATIONS FROM PARENT'S BOARD. Messrs. Alphin,
Laurent, Xxxx and Xxxxxx shall have resigned as directors of the Parent and the
Members shall have received copies of their resignation letters.
21
Section 7.6 ELECTION TO PARENT BOARD. Xxxxx X. Xxxxxxxx shall have
been elected a Director of Parent.
Section 7.7 MERGER CERTIFICATE FILED. The Parent shall have filed
a certificate of merger in accordance with the General Corporation Law of
Delaware effecting the merger of Camelot with and into Acquisition Corp.
Section 7.8 OPINION OF PARENT'S COUNSEL. Camelot and the Members
shall have received the opinion of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP,
counsel to the Parent, dated as of the Closing Date in substantially the form of
Exhibit A hereto.
Section 7.9 PROXIES. Preparation of proxy materials substantially
ready for filing with the SEC promptly after the Closing providing for:
(i) the election of Xxxxxxx X. Xxxx, Xxxxxx Xxxxxxxxxx and Xxxxx
X. Xxxxxxxx as directors of Parent and the election of such other persons as
directors of Parent as may be approved by Members (it being understood that Xxxx
X. Xxxxxx and Digby X. Xxxxxxx have been so approved by Members);
(ii) an increase of the number of shares of Common Stock available
for issuance under the 1993 Stock Option Plan to at least 2,500,000 shares of
Common Stock;
(iii) the change in Parent's name to "Sheffield Pharmaceuticals,
Inc." or such other name as may be reasonably acceptable to Members; and
(iv) a description of the employment agreements entered into
between Parent and each of the Members reasonably acceptable to the Members.
Section 7.10 EMPLOYMENT AGREEMENT. Each of the Members shall have
executed an employment agreement with the Parent in form and substance
satisfactory to each such Member (collectively the "Employment Agreements").
Section 7.11 MATERIAL CHANGES. Since the date hereof, there shall
not have been any material change in the business, operations, financial
condition, assets or liabilities of Parent.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE PARENT AND ACQUISITION CORP.
The obligations of the Parent and Acquisition Corp. under this
Agreement are subject to the satisfaction, on or prior to the
22
Closing Date, unless waived in writing, of each of the following conditions:
Section 8.1 REPRESENTATION AND WARRANTIES TRUE. The
representations and warranties of Camelot and the Members contained in this
Agreement shall be true and correct in all material respects as of the date when
made and at and as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date, and the Parent shall have received a
certificate to that effect and as to the matters set forth in Section 8.2
hereof, dated the Closing Date, from Camelot and the Members.
Section 8.2 PERFORMANCE OF COVENANTS. Camelot and the Members
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Closing Date.
Section 8.3 NO PROCEEDINGS. No preliminary or permanent injunction
or other order, whether pending or threatened, (including a temporary
restraining order) of any state, federal or local court or other governmental
agency or of any foreign jurisdiction which prohibits the consummation of the
transactions which are the subject of this Agreement or prohibits the Parent's
operation of Camelot's business shall have been issued or entered and remain in
effect.
Section 8.4 CONSENTS AND APPROVALS. All Required Filings and
Consents shall have been received and shall be in full force and effect and the
Board of Directors of Parent shall have approved the transactions contemplated
by this Agreement.
Section 8.5 RESIGNATIONS FROM PARENT'S BOARD. Messrs. Alphin,
Laurent, Xxxx and Xxxxxx shall have resigned as directors of the Parent and the
Members shall have received copies of their resignation letters.
Section 8.6 EMPLOYMENT AGREEMENT. The Employment Agreements shall
have been executed by the parties thereto in form and substance satisfactory to
Parent.
Section 8.7 OPINION OF CAMELOT'S AND THE MEMBERS' COUNSEL. The
Parent shall have received the opinion of Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.,
counsel to Camelot and the Members, in substantially the form of Exhibit B
hereto.
Section 8.8 MATERIAL CHANGES. Since the date hereof, there shall
not have been any material adverse change in the business, operations, financial
condition, assets or liabilities, of Camelot.
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ARTICLE IX
INDEMNIFICATION
Section 9.1 INDEMNIFICATION BY CAMELOT AND THE MEMBERS. Subject to
the limitations set forth below, Camelot and the Members jointly and severally
agree to indemnify, defend and hold the Parent, Acquisition Corp. and each of
their respective directors, officers, employees, affiliates and agents harmless
from and against any and all loss, liability, damage, costs and expenses
(including interest, penalties and reasonable attorneys' fees and disbursements)
(collectively, "Losses") that Parent, Acquisition Corp. or such other persons
may incur or become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty or covenant of Camelot or any
Member contained in this Agreement. Subject to the limitations set forth below,
Camelot and the Members jointly and severally agree to reimburse the Parent,
Acquisition Corp. and such other persons for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding. The liabilities of each
member pursuant to the Section 9.1 shall be limited to $100,000 per Member.
Section 9.2 INDEMNIFICATION BY THE PARENT AND ACQUISITION CORP.
Parent and Acquisition Corp. jointly and severally agree to indemnify, defend
and hold the Camelot and the Members and their affiliates harmless from and
against any and all Losses that Camelot, the Members and their affiliates may
incur or become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty or covenant of Parent or
Acquisition Corp. contained in this Agreement. Parent and Acquisition Corp.
jointly and severally agree to reimburse Camelot, the Members and their
affiliates for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding.
Section 9.3 SURVIVAL. The representations, warranties and
covenants of Camelot, the Members, the Parent and Acquisition Corp. set forth in
this Agreement shall survive the Closing for a period of one (1) year after the
Closing Date.
Section 9.4 THIRD PARTY CLAIMS. In order for a party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of, or involving a claim or demand or
written notice made by any third party against the indemnified party (a "Third
Party Claim") after the Closing Date, such indemnified party must notify the
indemnifying party (the "indemnifying party") in writing of the Third Party
Claim within 30 business days after receipt by such indemnified party of written
notice of the Third Party Claim; provided that the failure of any indemnified
party to give timely notice shall not affect his right of indemnification
hereunder
24
except to the extent the indemnifying party has actually been prejudiced or
damaged thereby. If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled, if it so chooses, to assume the
defense thereof with counsel selected by the indemnifying party (which counsel
shall be reasonably satisfactory to the indemnified party), unless the
indemnified party reasonably concludes that the assumption of control by the
indemnifying party creates a risk of a significant adverse effect on the
indemnified party's business operations, in which case the indemnifying party
shall not be entitled to assume the defense thereof and shall be freed of any
responsibility for indemnification thereunder. If the indemnifying party assumes
the defense of a Third Party Claim, the indemnified party will cooperate in all
reasonable respects with the indemnifying party in connection with such defense,
and shall have the right to participate in such defense with counsel selected by
it. The fees and disbursements of such counsel, however, shall be at the expense
of the indemnified party; PROVIDED, HOWEVER, that in the case of any Third Party
Claim of which the indemnifying party has not employed counsel to assume the
defense, the fees and disbursements of such counsel shall be at the expense of
the indemnifying party.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement abandoned at any time prior to the
Closing (unless otherwise specified) as follows:
(a) by mutual written consent duly executed by all the parties
hereto;
(b) by Parent or Acquisition Corp. (i) if any representation or
warranty of Camelot or the Members set forth in this Agreement shall be untrue
when made or shall have become untrue such that any condition set forth in
Article VIII would not be satisfied as of the Closing Date or (ii) upon a breach
of any covenant or agreement on the part of Camelot or any of the Members set
forth in this Agreement such that any condition set forth in Article VIII would
not be satisfied as of the Closing Date;
(c) by Camelot (i) if any representation or warranty of the Parent
or Acquisition Corp. set forth in this Agreement shall be untrue when made or
shall have become untrue such that any condition set forth in Article VII would
not be satisfied as of the Closing Date or (ii) upon a breach of any covenant or
agreement on the part of the Parent or Acquisition Corp. set forth in this
Agreement such that any condition set forth in Article VII would not be
satisfied as of the Closing Date;
25
(d) by either Camelot or the Parent if the Closing does not occur
on or before June 6, 1997.
Section 10.2 EFFECT OF TERMINATION. In the event of any
termination of this Agreement in accordance with Section 10.1(a) or (d) hereof,
this Agreement shall forthwith become void, except as provided in Section 10.3,
and there shall be no liability under this Agreement on the part of any party
hereto or their respective affiliates, officers, directors, employees or agents
by virtue of such termination.
Section 10.3 AMENDMENT. This Agreement may be amended only by the
written agreement of Camelot, the Members, the Parent and Acquisition Corp.
ARTICLE XI
MISCELLANEOUS
Section 11.1 EXPENSES. Each of the parties hereto shall bear their
own expenses in connection with this Agreement and the transactions contemplated
hereby regardless of the failure to consummate transactions contemplated hereby;
provided, however, that Parent shall reimburse Camelot for all out-of-pocket
travel and lodging costs individually incurred by the Members in connection with
the negotiation of the transactions contemplated hereby, regardless of whether
such transactions are consummated. Such costs shall be paid within fifteen days
of submission to Parent or appropriate evidence of the incurrence of such costs.
Section 11.2 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered personally
or by facsimile transmission, in either case with receipt acknowledged, or three
days after being sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If the Parent or Acquisition Corp. to:
Sheffield Medical Technologies Inc.
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
26
(b) If to any of the Members, to their respective addresses listed
on the signature pages hereto.
(c) If to Camelot to:
Camelot Pharmacal, L.L.C.
00000 Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
2000 Equitable Building
00 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: M. Xxxxxxx Xxxxxxx, Esq.
or to such other address as any party shall have specified by notice in writing
to the other in compliance with this Section 11.2.
Section 11.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof.
Section 11.4 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns; nothing in this Agreement, expressed or
implied, is intended to confer on any other person, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. This Agreement
may not be assigned by any party hereto without the prior written consent of the
other parties hereto.
Section 11.5 APPLICABLE LAW. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
Section 11.6 HEADINGS. The headings and captions in this Agreement
are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
Section 11.7 ARBITRATION. Any disputes arising under this
Agreement shall be submitted to and determined by arbitration in New York City,
New York; provided, however, that such
27
arbitration shall be held in St. Louis, Missouri in the event that the Company's
principal executive offices have been relocated to St. Louis, Missouri. Such
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. Any award or decision of the arbitration shall be
conclusive in the absence of fraud and judgment thereon may be entered in any
court having jurisdiction thereof. The costs of such arbitration shall be paid
by the non-prevailing party to the extent directed by the arbitrator(s).
Section 11.8 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY BE ENFORCED BY
THE PARTIES.
28
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year hereinabove first set forth.
CAMELOT PHARMACAL, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx, as authorized
Member
SHEFFIELD MEDICAL TECHNOLOGIES INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxx, Vice President
and Chief Financial Officer
CP PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxx, Vice President
and Chief Financial Officer
/s/ XXXXX X. XXXXXXXX
------------------------
XXXXX X. XXXXXXXX
Address:
0000 Xxxxxx Xxxx Xxxxx
Xxxx & Xxxxxxx, XX 00000
/s/ XXXX X. XXXXXXXX
------------------------
XXXX X. XXXXXXXX
Address:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
/s/ XXXXX X. XXXXX
------------------------
XXXXX X. XXXXX
Address:
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
29
Schedule 1.7
------------
% of Members' Parent Common Stock to be
Name of Member Interest Held Received
-------------- ------------- -------------------------
Xxxxx Xxxxxxxx 331/3% 200,000
Xxxx X. Xxxxxxxx 331/3% 200,000
Xxxxx X. Xxxxx 331/3% 200,000
Schedule 3.7
------------
Financial Statements
--------------------
Camelot and its Members have incurred legal and other fees in
connection with the Merger, including, without limitation, fees in regard to the
negotiation of this Agreement, the Employment Agreements and stock options
issued in connection therewith, the payment for which shall become the
obligations of Acquisition Corp. and Parent.
Schedule 3.8
------------
Absence of Certain Changes
--------------------------
NONE
Schedule 3.10
-------------
Employee Benefit Plans
----------------------
Insurance Policy/Member Number Term
--------- -------------------- ----
United HealthCare One Individual coverage No term
Choice Plan C for Xxxxx Xxxxxx
77 West Port Plaza 51001-498884307
Xxxxx 000
Xx. Xxxxx, XX 00000-0000
(000)000-0000
Rate: $171.29/month
United Dental Care of Individual coverage One year
Missouri, Inc. for Xxxxx Xxxxxx
00000 Xxxxx Xxxx XX####-##-####
Xxxxx 000
Xx. Xxxxx, XX 00000
Rate: $135/year
Schedule 3.12
-------------
Trademarks, Patents and Copyrights
----------------------------------
NONE
Schedule 3.13
-------------
Legal Proceedings, Claims, Investigations, etc.
-----------------------------------------------
NONE
SCHEDULE 3.15
MATERIAL CONTRACTS
Camelot has entered into two (2) letter agreements granting
rights of first refusal with respect to certain pharmaceutical products as
follows:
1. Letter Agreement dated March 24, 1997 with Entropin, Inc.
regarding investigation and potential development of its
Esterom product.
2. Letter Agreement dated February 17, 1997, as extended on
April 8, 1997, with Xxxxxxx Technologies, Inc. regarding
investigation and development of a proprietary form of
metroprolol for migraine prophylaxis and a proprietary form
of valproic acid for treatment of certain phases of bipolar
disorder.
SCHEDULE 3.16
CERTAIN TRANSACTIONS
NONE
SCEDULE 3.18
ENVIRONMENTAL MATTERS
NONE
Schedule 5.8
------------
Absence Of Certain Changes And Events
-------------------------------------
In March 1997 Parent exercised its option and entered into an
exclusive supply and license agreement with an affiliate of Siemens AG
("Siemens") for the world-wide rights to Siemens' multi-dose inhaler, a
hand-held portable pulmonary delivery system.
