EXHIBIT 2.1
Agreement and Plan of Merger
Among
Duramed Pharmaceuticals, Inc.,
WCC Merger Sub, Inc.
and
Women's Capital Corporation
February 6, 2004
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.
[ * * * ] INDICATES WHERE TEXT HAS BEEN OMITTED PURSUANT TO THE CONFIDENTIAL
TREATMENT REQUEST.
TABLE OF CONTENTS
1. Definitions.............................................................. 1
2. Basic Transaction........................................................ 9
(a) Merger............................................................ 9
(b) Closing........................................................... 9
(c) Deliveries at Closing............................................. 9
(d) Effect of Merger.................................................. 9
(e) Payment of Merger Consideration by Buyer and Surviving Corporation 10
(f) Per Share Merger Consideration.................................... 11
(g) Conversion of Target Shares and Stock Options; Dissenting Shares.. 11
(h) Surrender of Certificates and Stock Option Agreements; Payment of
Per Share Merger Consideration and Option Cancellation Payments... 11
(i) Effect of Target Stockholder Approval; Stockholder Representative. 14
(j) Adjustment of Merger Consideration for Cash and Receivables....... 15
3. Target's Representations and Warranties.................................. 15
(a) Organization of Target............................................ 15
(b) Capital Stock and Related Matters; No Subsidiaries................ 16
(c) Authorization of Transaction...................................... 16
(d) No Conflicts; No Bankruptcy....................................... 17
(e) Brokers' Fees..................................................... 17
(f) Financial Statements; Cash........................................ 17
(g) Events Subsequent to Most Recent Fiscal Year End.................. 18
(h) Undisclosed Liabilities........................................... 19
(i) Legal Compliance.................................................. 20
(j) Tax Matters....................................................... 20
(k) Intellectual Property............................................. 21
(l) Inventory......................................................... 23
(m) Contracts......................................................... 24
(n) Notes and Accounts Receivable..................................... 24
(o) Powers of Attorney................................................ 24
(p) Insurance......................................................... 24
(q) Litigation........................................................ 24
(r) Product Warranty.................................................. 24
(s) Product Liability................................................. 25
(t) Certain Business Relationships With Target........................ 25
(u) Customers and Suppliers; Xxxxxx Xxxxxxx........................... 25
(v) Regulatory Matters................................................ 25
(w) Employees......................................................... 26
(x) ERISA............................................................. 26
(y) Real and Personal Property........................................ 27
(z) Environmental Matters............................................. 28
(aa) Investment ..................................................... 29
(bb) Disclosure ..................................................... 29
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4. Buyer's and Transitory Subsidiary's Representations and Warranties....... 29
(a) Organization of Buyer and Transitory Subsidiary................... 29
(b) Authorization of Transaction...................................... 29
(c) No Conflict....................................................... 30
(d) Brokers' Fees..................................................... 30
5. Pre-Closing Covenants.................................................... 30
(a) General........................................................... 30
(b) Notices and Consents.............................................. 30
(c) Operation of Business............................................. 30
(d) Preservation of Business.......................................... 30
(e) Full Access....................................................... 30
(f) Notice of Developments............................................ 31
(g) Exclusivity....................................................... 31
(h) Stockholder Vote.................................................. 31
6. Conditions to Obligation to Close........................................ 31
(a) Conditions to Buyer's and Transitory Subsidiary's Obligation...... 31
(b) Conditions to Target's Obligation................................. 33
7. Termination.............................................................. 34
(a) Termination of Agreement.......................................... 34
(b) Effect of Termination............................................. 35
8. Remedies for Breaches of This Agreement.................................. 35
(a) Survival of Representations and Warranties........................ 35
(b) Adjustment of Merger Consideration................................ 35
(c) Indemnification Provisions for Target's Benefit................... 36
(d) Matters Involving Third Parties................................... 36
(e) Maximum Amount of Reduction of Merger Consideration and Maximum
Indemnification Amount for Certain Claims......................... 37
(f) Recoupment Under Buyer Note....................................... 38
(g) Resolution of Conflicts; Arbitration.............................. 38
9. Post-Closing Covenants................................................... 38
(a) Public Sector Supply.............................................. 38
(b) Earnout Payment................................................... 38
(c) General........................................................... 39
(d) Buyer Note........................................................ 39
10. Miscellaneous......................................................... 39
(a) Press Releases and Public Announcements........................... 40
(b) No Third-Party Beneficiaries...................................... 40
(c) Entire Agreement.................................................. 40
(d) Succession and Assignment......................................... 40
(e) Counterparts...................................................... 40
(f) Headings.......................................................... 40
(g) Notices........................................................... 40
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(h) Governing Law..................................................... 41
(i) Amendments and Waivers............................................ 41
(j) Severability...................................................... 42
(k) Expenses.......................................................... 42
(l) Construction...................................................... 42
(m) Incorporation of Annexes, Exhibits and the Disclosure Schedules... 42
(n) Specific Performance.............................................. 42
(o) Submission to Jurisdiction........................................ 43
Exhibits
Exhibit I - Form of Certificate of Merger
Exhibit II - Form of Buyer Note
Exhibit III - Form of Letter of Transmittal -- Target Stockholders Exhibit IV -
Form of Letter of Transmittal -- Target Stock Option Holders Exhibit V -
Financial Statements
Annexes
Annex A - Contracts
Annex B - NDA
Annex C - Intellectual Property
Disclosure Schedule - Exceptions to Representations and Warranties
Share and Option Exchange Schedule
[The Exhibits, Annexes and Schedules listed above are omitted from this filing
with the Commission. The registrant agrees to furnish supplementally to the
Commission a copy of any omitted Exhibit, Annex, or Schedule upon the
Commission's request.]
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is entered into as of
February 6, 2004, by and between Duramed Pharmaceuticals, Inc. ("Buyer"), a
Delaware corporation and a wholly-owned Subsidiary of Xxxx Pharmaceuticals,
Inc., a Delaware corporation ("Xxxx"), WCC Merger Sub, Inc., a Delaware
corporation and a wholly-owned Subsidiary of Buyer ("Transitory Subsidiary"),
and Women's Capital Corporation, a Delaware corporation ("Target"). Xxxx is a
party hereto solely as unconditional guarantor of performance by Buyer. Each of
Buyer, Transitory Subsidiary and Target are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
This Agreement contemplates a transaction in which Buyer will acquire all
of Target's outstanding stock for cash, a promissory note and the satisfaction
of certain liabilities through a reverse subsidiary merger of Transitory
Subsidiary with and into Target.
Now, therefore, in consideration of the premises and the mutual promises
herein made, the sufficiency of which is hereby acknowledged, and in
consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Bankruptcy and Equity Exception" has the meaning set forth in Section
3(c) below.
"Xxxx" has the meaning set forth in the preface above.
"Xxxx Labs" means Xxxx Laboratories, Inc., a Delaware corporation.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction of which Target has Knowledge that forms or could
form the basis for any specified consequence.
"Business Expenses" means all of the following costs and expenses as
allocated to Products sold in Canada by Buyer or its Affiliates and calculated
in accordance with Buyer's internal accounting principles in accordance with
GAAP: (i) any costs or expenses incurred or borne by, or on behalf of, Buyer or
any of its Affiliates in connection with any recalls, litigation, proceedings,
licenses or settlements relating to the Products or the conduct of Target's
business in Canada; (ii) costs or expenses incurred or borne by or on behalf of
Buyer or its Affiliates in connection with the preparation and making of any
filings to maintain, amend or supplement any regulatory filings in Canada
regarding the Products or Target's business in Canada or in connection with the
filing, prosecution or maintenance of any patents, registrations or applications
for Intellectual Property related to the Products or Target's business in
Canada; (iii) product liability insurance costs for Products sold in Canada; and
(iv) [ * * * ] ([ * * * ])
of Net Sales, which the Parties agree fairly and accurately represents the
approximate costs associated with regulatory and other miscellaneous business
expenses associated with the Products sold in Canada.
"Business Intellectual Property" has the meaning set forth in Section 3(k)
below.
"Buyer" has the meaning set forth in the preface above.
"Buyer Indemnified Party" and "Buyer Indemnified Parties" have the
meanings set forth in Section 8(b) below.
"Buyer Note" has the meaning set forth in Section 2(e)(i) below.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Certificate of Merger" has the meaning set forth in Section 2(c) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Cash Payment" has the meaning set forth in Section 2(e)(i) below.
"Closing Date" has the meaning set forth in Section 2(b) below.
"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Code Section
4980B, and any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning Target's
business, property and assets that is not already generally available to the
public.
"Contracts" means the agreements, contracts, instruments, Liens,
guaranties, customer orders, purchase orders, dealer and distributorship
agreements, supply agreements, development agreements, licenses, sublicenses,
joint venture agreements, promotion agreements, partnership agreements,
insurance and reimbursement agreements and other similar arrangements and
commitments of Target (including any rights thereunder), including, without
limitation, those set forth on Annex A attached hereto, but excluding this
Agreement.
"Costs of Goods Sold" means the total amount of the following allocated to
Products sold in Canada by Buyer or its Affiliates and calculated in accordance
with Buyer's internal accounting principles and GAAP: (i) Buyer's, or its
Affiliates', fully allocated manufacturing cost; (ii) if the Products are not
manufactured by Buyer or its Affiliates', the purchase price paid by Buyer to a
manufacturer for such Products; and (iii) all costs or expenses incurred or
borne by, or on behalf of, Buyer or any of its Affiliates in connection with (x)
any supply defaults under any agreement entered into by Buyer pursuant to which
Buyer is supplied with the Products (including any raw materials) for sale in
Canada, and (y) the qualification of a second source of supply of the Products
(including any raw materials) for sale in Canada.
"Damages" has the meaning set forth in Section 8(b) below.
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"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Dissenting Share" means any Target Share held of record by any Target
Stockholder who or which has exercised his, her or its appraisal rights under
the Delaware General Corporation Law or has delivered to Target a written demand
for appraisal of such Target Stockholder's Target Shares pursuant to Section
262(d)(1) of the Delaware General Corporation Law.
"Dissenting Shares Fraction" has the meaning set forth in Section
2(e)(iii) below.
"Dissenting Shares Reduction" has the meaning set forth in Section
2(e)(iii) below.
"Earnout Calculations" has the meaning set forth in Section 9(b) below.
"Earnout Payments" has the meaning set forth in Section 9(b) below.
"Earnout Payment Date" has the meaning set forth in Section 9(b) below.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plan" means any "employee benefit plan" (as such term is
defined in ERISA Section 3(3)) and any other employee benefit plan, program or
arrangement of any kind, at any time maintained, sponsored or contributed to by
Target or any ERISA Affiliate or with respect to which Target or any ERISA
Affiliate has any Liability.
"Equity Security Holders" means the holders of issued and outstanding
equity securities of Target, including Target Shares and Target Stock Options,
who, pursuant to the terms hereof, are, or were at the time of Closing, entitled
to receive Merger Consideration (whether or not they actually receive the same).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity that, with Target, is considered a
single employer under Code Section 414.
"FDA" means the United State Food and Drug Administration, and any
successor agency or entity thereto that may be established hereafter.
"Financial Statements" has the meaning set forth in Section 3(f) below.
"Foreign Authorities" has the meaning set forth in Section 3(v)(i) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied.
"Xxxxxx Xxxxxxx" shall mean, collectively, Chemical Works of Xxxxxx
Xxxxxxx, Ltd., 1103 Budapest X, GYOMROut, 00-00, Xxxxxxx, x Xxxxxxxx xx Xxxxxxx
company, and Xxxxxx Xxxxxxx USA, Inc., 0000 Xxxx Xxxxxxxxx Xxx., Xxxx Wing, 0xx
Xxxxx, Xxxxxxxxx, Xxx Xxxxxx, 00000, XXX.
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"Governmental Entity" means any federal, state, local or foreign
governmental or regulatory authority, agency, commission, body or other
governmental entity.
"GR Escrow Fund" shall have the meaning set forth in Sections 6(a)(xxiii)
and 9(e).
"Gross Sales" means the product of (i) the number of units of Products
shipped to third party customers in Canada by Buyer and its Affiliates and (ii)
the invoiced price per unit by Buyer and its Affiliates, as the case may be, for
the applicable Product.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Independent Auditor" has the meaning set forth in Section 9(b) below.
"Intellectual Property" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes, standard operating
procedures and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all advertising and promotional materials,
(f) all other proprietary rights, and (g) all copies and tangible embodiments
thereof (in whatever form or medium).
"Inventory" means all stock sales Products and sample Products owned by
Target.
"Knowledge" or "aware" means, when used in reference to any Party to this
Agreement, the actual knowledge of the directors, officers and key employees of
such Party.
"Leased Real Property" has the meaning set forth in Section 3(y)(i) below.
"Liability" means any liability or obligation of whatever kind or nature
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including without limitation any liability
for Taxes or unpaid employment compensation.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest other than (a) liens for Taxes not yet due and payable, (b)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (c) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Material Adverse Effect" or "Material Adverse Change" means with respect
to any Person or business at any time any change, development, event,
circumstance, effect, inaccuracy or violation that has been or would reasonably
be expected to be materially adverse to the business, assets, condition
(financial or otherwise), operating results, operations, earnings, customer and
supplier relations, employee
4
relations or business prospects of Target's business, taken as a whole, or on
the ability of any Party to consummate timely the transactions contemplated
hereby (regardless of whether or not such adverse effect or change can be or has
been cured at any time or whether any other Party has knowledge of such effect
or change on the date hereof); provided, however, that any adverse change,
development, event, circumstance, effect, inaccuracy or violation resulting from
or arising in connection with any of the following shall be deemed to not
constitute a Material Adverse Effect: (a) general business or economic
conditions; (b) conditions generally affecting the industry in which such person
or business operates (other than any adverse change, event, circumstance,
effect, inaccuracy or violation (x) resulting from any action or inaction taken
by or on behalf of Target or (y) that disproportionately affects Target); (c)
the terms of this Agreement; or d) the execution, announcement or pendency of
this Agreement or the transactions contemplated hereby, including without
limitation, (i) any litigation related thereto, (ii) any loss of, or change in
relationship with, any employees, suppliers, customers, distributors, or
business affiliates, or (iii) any failure to keep intact or renew any agreements
with any such parties.
"Merger" has the meaning set forth in Section 2(a) below.
"Merger Consideration" has the meaning set forth in Section 2(e) below.
"Most Recent Financial Statements" has the meaning set forth in Section
3(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 3(f)
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(f)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"NDA" means (i) Target's new drug application which is approved and on
file with the FDA and described on Annex B attached hereto, including the drug
master file, and any and all filed, pending or approved amendments and
supplements thereto, and any similar applications or filings in Canada and (ii)
drafts of any new drug applications owned by Target, or to which Target has any
rights, which have not been submitted and are not on file with the FDA or in
Canada.
"Net Profits" means Net Sales, less the total of the following as
allocated according to Buyer's internal accounting principles and GAAP with
respect to the Products sold: [ * * * ]
"Net Sales" means Gross Sales less accrued deductions for the following as
allocated according to Buyer's internal accounting principles and GAAP with
respect to Products sold in Canada:
(i) [ * * * ]
(ii) [ * * * ]
(iii) [ * * * ]
(iv) [ * * * ]
If any of the permitted deductions set forth above in subsections (i) or (iv)
have already been charged to a customer as a separate line item on an invoice
(separate from the invoice line item for the Products), then Buyer shall not
also take such deduction when calculating Net Sales hereunder.
In addition, [ * * * ].
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Where [ * * * ] . Where a [ * * * ]. Notwithstanding the foregoing, [ * * * ].
"Option Cancellation Payment" has the meaning set forth in Section
2(g)(ii) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OTC Study" means the study submitted by Target to the FDA in support of
its application for over-the-counter status for the Product.
"Packard Foundation" means the Xxxxx and Xxxxxxx Xxxxxxx Foundation.
"Packard Loan" means the loan due 2008 in the principal amount of
$6,500,000 from the Packard Foundation to Target.
"Packard Loan Payoff" has the meaning set forth in Section 2(e)(i) below.
"Party" has the meaning set forth in the preface above.
"Payment Account" has the meaning set forth in Section 2(e)(i) below.
"Permits" means the franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
Governmental Entities relating to the business of Target.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity, or a
Governmental Entity.
"Per Share Merger Consideration" has the meaning set forth in Section 2(f)
below.
"Private Sector Sales" means the shipment and/or sale of Product either
directly to and through retail drug chains and independent drugstores and/or
indirectly through a drug distributor/wholesaler which then distributes to
retail drug chains and independent drugstores and to for-profit hospitals. For
the avoidance of doubt, any shipments and/or sales that are not considered
Public Sector Sales shall be considered Private Sector Sales.
"Proceeding" has the meaning set forth in Section 3(i) below.
"Products" mean the emergency contraceptive products developed,
distributed, promoted, marketed, used or sold by Target prior to the Effective
Time, including, without limitation, Plan B(R).
"Product Royalties" means any royalty payments made by Buyer in connection
with the Products to any third parties, including Xxxxxx Xxxxxxx.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Public Sector Agencies" means Governmental Entities, and each department
or instrumentality thereof, and Title X Clinics (family planning clinics
receiving federal subsidies under Title X of the U.S. Public Health Act),
including without limitation Xxxxxxx Xxxxxxxxxx Clinics, abortion provider
clinics, college health centers, city, state, and county health departments,
hospital emergency rooms (other than for-profit hospitals).
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"Public Sector Sales" means the shipment, distribution and/or sale of
Products to Public Sector Agencies.
"Receivables" means all receivables arising from Target's business.
"Receivables Account" has the meaning set forth in Section 2(j) below.
"Recoverable Grant" means that certain recoverable expenditure
responsibility grant, No. 98-1411, previously advanced to Target by the Packard
Foundation pursuant to the Award Letter of April 8, 1998 and the Agreement for
Expenditure Responsibility Grant, which pursuant to separate agreements between
Target and the Packard Foundation is subject to repayment in installments of (a)
$[ * * * ] on the first anniversary of the Closing Date and (b) $[ * * * ] on
the second anniversary of the Closing Date.
"Recoverable Grant Payoff" has the meaning set forth in Section 2(e)(ii)
below.
"Registered Business Intellectual Property" has the meaning set forth in
Section 3(k)(iv) below.
"Regulatory Approval" means an approval issued by the FDA for an NDA.
"Representative's Authorized Actions" shall have the meaning set forth in
Section 2(i)(ii) below
"Representative Reserve Fund" shall have the meaning set forth in Section
2(j)(iv) below.
"Requisite Stockholder Approval" means the affirmative vote of the holders
of a majority of the Target Shares in favor of this Agreement and the Merger.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Semi-Annual Earnout Payment" has the meaning set forth in Section 9(b)
below.
"Share and Option Exchange Schedule" has the meaning set forth in Section
2(f) below.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the fair market value of the assets of such Person is greater than
the total amount of Liabilities (including contingent Liabilities) of such
Person, (b) the present salable value of the assets of such Person is greater
than the amount that will be required to pay the probable Liabilities of such
Person on its debts as they become absolute and mature, and (c) such Person is
able to realize upon its assets and pay its debts and other Liabilities,
including contingent obligations, as they mature.
"Stock Option" means an option issued pursuant to Target's 2000 Stock
Option Plan allowing the holder of such option to purchase shares of Target's
common stock.
"Stock Option Agreement" means a written agreement for the purchase of
Stock Options setting forth the terms upon which the Stock Option holder may
exercise or otherwise receive the benefits of the Stock Option.
"Stockholder Representative" shall mean the WCC Equity Holders'
Distribution Trust, a Delaware Trust established as of the Effective Time to
serve as the representative of the Equity Security Holders. Villa K.
Enterprises, Inc. shall serve as the initial Trustee of the Stockholder
Representative.
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"Stockholder Vote" has the meaning set forth in Section 5(h) below.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or other business entity of which
(a) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (b) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons owns a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity's gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term "Subsidiary" shall include all Subsidiaries
of such Subsidiary.
"Surplus Assets" has the meaning set forth in Section 10(p) below.
"Surviving Corporation" has the meaning set forth in Section 2(a) below.
"Target" has the meaning set forth in the preface above.
"Target AR Payments" has the meaning set forth in Section 2(e)(ii) below.
"Target Indemnified Party" and "Target Indemnified Parties" have the
meanings set forth in Section 8(c) below.
"Target's Cash at Closing" means Cash held by Target immediately prior to
the Effective Time.
"Target's Closing Accounts Receivable" means the Receivables of Target
immediately prior to the Effective Time.
"Target Share" means a share of the common stock, $.0005 par value per
share, of Target, and "Target Shares" refers collectively to the 1,012,076
shares of common stock, $.0005 par value per share outstanding, and does not
include shares held by Target as treasury shares.
"Target Stockholder" means any Person other than Target who or which holds
any Target Shares immediately prior to the Effective Time.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, whether computed on a
separate or consolidated, unitary or combined basis or in any other manner,
including any interest, penalty, or addition thereto, whether disputed or not
and including any obligation to indemnify or otherwise assume or succeed to the
Tax Liability of any other Person.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
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"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Transitory Subsidiary" has the meaning set forth in the preface above.
"WCC Supply Agreement" has the meaning set forth in Section 6(a)(x) below.
2. Basic Transaction.
(a) Merger. On and subject to the terms and conditions of this Agreement,
Transitory Subsidiary will merge with and into Target (the "Merger") at the
Effective Time. Target shall be the corporation surviving the Merger (the
"Surviving Corporation").
(b) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx
LLP, in New York, New York commencing at 10:00 a.m. local time on the first
business day following the satisfaction or waiver of all conditions to the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the
"Closing Date"). The Closing shall occur in accordance with mutually agreeable
closing instructions and a flow of funds memorandum adopted by the parties.
(c) Deliveries at Closing. At the Closing, (i) Target will deliver to
Buyer and Transitory Subsidiary the various certificates, instruments, and
documents referred to in Section 6(a) below; (ii) Buyer and Transitory
Subsidiary will deliver to Target the various certificates, instruments, and
documents referred to in Section 6(b) below; (iii) Target and Transitory
Subsidiary will file with the Secretary of State of Delaware a Certificate of
Merger in the form attached hereto as Exhibit I (the "Certificate of Merger");
and (iv) the Merger Consideration payable at the Closing will be delivered to
the recipients thereof in the manner provided below in this Section 2.
(d) Effect of Merger.
(i) The Merger shall become effective at the time (the "Effective
Time") Target and Transitory Subsidiary file the Certificate of Merger
with the Secretary of State of the State of Delaware. The Merger shall
have the effect set forth in the Delaware General Corporation Law.
Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and
on behalf of either Target or Transitory Subsidiary in order to carry out
and effectuate the transactions contemplated by this Agreement.
(ii) The Certificate of Incorporation of Surviving Corporation shall
be amended and restated at and as of the Effective Time to read as did the
Certificate of Incorporation of Transitory Subsidiary immediately prior to
the Effective Time (except that the name of Surviving Corporation will
remain unchanged).
(iii) The Bylaws of Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the Bylaws of
Transitory Subsidiary immediately prior to the Effective Time (except that
the name of the Surviving Corporation will remain unchanged).
(iv) The directors and officers of Transitory Subsidiary shall
become the directors and officers of Surviving Corporation at and as of
the Effective Time (retaining their respective positions and terms of
officer).
9
(e) Payment of Merger Consideration by Buyer and Surviving Corporation.
The amounts to be paid, repaid or delivered pursuant to this Section 2(e) at the
Effective Time and following the Closing are referred to herein collectively as
the "Merger Consideration."
(i) At the Effective Time, subject to appropriate adjustment
pursuant to Section 2(e)(iii) below in the event there are Dissenting
Shares, (A) Buyer shall deliver to an account established and administered
by the Stockholder Representative for the benefit of the Equity Security
Holders as recipients of the Merger Consideration (the "Payment Account"),
cash in an amount equal to [ * * * ] plus [ * * * ]% of the Target Cash at
Closing [ * * * ] (the "Closing Cash Payment"), (B) Buyer shall deliver a
promissory note substantially in the form attached hereto as Exhibit II,
executed by Buyer and unconditionally guaranteed by Xxxx, registered in
the name of the Stockholder Representative or its nominee in an aggregate
principal amount equal to $6,500,000 (the "Buyer Note"), and (C) Buyer
shall cause and enable the Surviving Corporation to pay to the Packard
Foundation $6,500,000 plus accrued but unpaid interest thereon (computed
in accordance with the Packard Loan on principal up to $6,500,000) as of
the Closing Date by delivery of cash by wire transfer or delivery of other
immediately available funds as payment in full of Target's obligations to
the Packard Foundation under the Packard Loan (the "Packard Loan Payoff").
(ii) Following the Closing, subject to appropriate adjustment
pursuant to Section 2(e)(iii) below in the event there are Dissenting
Shares, (A) Buyer shall cause the Surviving Corporation to pay 50% of the
cash generated from collecting Target's Closing Accounts Receivable
pursuant to Section 2(j) below (the "Target AR Payments") to the Payment
Account and undertake related performance following the Closing in
accordance with Section 2(j) below, (B) Buyer shall cause Surviving
Corporation to deliver Earnout Payments to the Stockholder Representative
for the benefit of the Equity Security Holders and undertake related
performance following the Closing in accordance with Section 9(b) below,
and (C) Buyer shall cause the Surviving Corporation to repay the
Recoverable Grant by making payments to the non-profit institution
designated by the Packard Foundation in the amount of [ * * * ], in such
installments as determined by the Packard Foundation not to exceed an
aggregate amount of [ * * * ] in any calendar year, provided that the
first such installment shall not be sooner than the first anniversary of
the Closing Date and the second such installment shall not be sooner than
the second anniversary of the Closing Date (the "Recoverable Grant
Payoff").
(iii) In the event that there are Dissenting Shares, the Merger
Consideration shall be reduced as follows ("Dissenting Shares Reduction"):
(A) the Closing Cash Payment shall be reduced by an amount equal to the
product of (x) a fraction, the numerator of which is the number of
Dissenting Shares and the denominator of which is the sum of the number of
Target Shares outstanding immediately prior to the Effective Time plus the
number of Target Shares which would be issued upon the exercise of all
outstanding Stock Options as of the Effective Time (the "Dissenting Shares
Fraction") multiplied by (y) the sum of (1) the Closing Cash Payment, plus
(2) the aggregate principal amount of the Buyer Note immediately after the
Effective Time, plus (3) the amount of the Packard Loan Payoff, plus (4)
the amount of the Recoverable Grant Payoff; (B) the Target AR Payments
shall be reduced by an amount equal to the product of (x) the Dissenting
Shares Fraction multiplied by (y) the Target AR Payment to be paid by the
Surviving Corporation pursuant to Section 2(e)(ii)(A) above in accordance
with Section 2(j) below if there had been no Dissenting Shares; and (C)
the Earnout Payments shall be reduced by an amount equal to the product of
(x) the Dissenting Shares Fraction multiplied by (y) the Earnout Payments
to be paid the Surviving Corporation pursuant to Section 2(e)(ii)(B) above
in accordance with Section 9(b) below if there had been no Dissenting
Shares. The Buyer and the Surviving Corporation shall use the Dissenting
Shares Reduction solely to satisfy statutory obligations to holders of
10
Dissenting Shares. If and to the extent less than the full Dissenting
Shares Reduction is adjudged necessary to satisfy such obligations, the
Dissenting Shares Reduction shall be reduced and Buyer shall make
appropriate payment to the Payment Account, and if and to the extent an
amount more than the full Dissenting Shares Reduction is adjudged
necessary to satisfy such obligations, the principal amount of the Buyer
Note shall be reduced by such amount.
(f) Per Share Merger Consideration. Each Target Share outstanding as of
the Effective Time shall be converted into the right to receive, upon and
following surrender of the share certificate which immediately prior to the
Effective Time represented such Target Share to the Stockholder Representative,
an amount equal to the quotient obtained by dividing (i) the difference of (A)
the Merger Consideration minus (B) the aggregate of the Option Cancellation
Payments by (ii) the number of Target Shares outstanding as of the Effective
Time (such amount, the "Per Share Merger Consideration"). The Share and Option
Exchange Schedule attached hereto (the "Share and Option Exchange Schedule")
shall set forth at Closing for each Equity Security Holder the holdings of such
Equity Security Holder as of immediately prior to the Effective Time and
Target's estimate of the portion of the Merger Consideration payable in respect
thereof.
(g) Conversion of Target Shares and Stock Options; Dissenting Shares.
(i) At the Effective Time, by virtue of the Merger and without any
action on the part of any Party hereto or the holder thereof, each issued
and outstanding Target Share, other than (A) each Target Share held by
Target and (B) any Dissenting Shares, shall be canceled and extinguished
and be converted into and shall represent the right to receive the Per
Share Merger Consideration, payable to the holder thereof in accordance
with the procedures set forth in Section 2(h)(i) below.
(ii) At the Effective Time, by virtue of the Merger and without any
action on the part of any Party hereto or the holder thereof, each issued
Stock Option outstanding as of the Effective Time, shall, in accordance
with Section 2(h)(ii) hereof, be canceled in exchange for the right to
receive an amount equal to the product of (A) the Per Share Merger
Consideration less the exercise price per share (as set forth in the Stock
Option Agreement pursuant to which such Stock Option was issued), and (B)
the number of Target Shares which may be received upon the exercise of
such Stock Option (each, an "Option Cancellation Payment").
(iii) At the Effective Time, each Dissenting Share shall be
converted into the right to receive payment from the Surviving Corporation
with respect thereto in accordance with the provisions of the Delaware
General Corporation Law.
(h) Surrender of Certificates and Stock Option Agreements; Payment of Per
Share Merger Consideration and Option Cancellation Payments.
(i) Prior to the Stockholder Vote, Target will provide each Target
Stockholder with (A) a form of letter of transmittal in the form attached
hereto as Exhibit III, and (B) a proxy statement in a form reasonably
acceptable to Buyer containing among other things a description of the
transactions contemplated hereby, instructions for effecting the surrender
of Target Shares in exchange for Merger Consideration, and a copy of
Section 262 of the Delaware General Corporation Law. At or following the
Effective Time, if a Target Stockholder shall have perfected such Target
Stockholder's right to receive Merger Consideration by surrender to the
Stockholder Representative by such Target Stockholder of the certificates
representing such Target Stockholder's Target Shares or affidavit
attesting that the same has been lost in accordance with Section 2(h)(vii)
below, accompanied by all documents required to evidence and effect such
11
1
transfer, together with the letter of transmittal, then the Stockholder
Representative shall pay, by check or wire transfer, to such Target
Stockholder such Target Stockholder's portion of the cash in the Payment
Account to which such Target Stockholder is entitled pursuant to Sections
2(e)(i) above, less such Target Stockholders' pro rata share (based upon
the amount of the Merger Consideration to be received by such Target
Stockholder) of any amounts that may be withheld by the Stockholder
Representative pursuant to the terms of Section 2(i)(iv) below. Upon or
within a reasonable period of time following the subsequent receipt of
cash from time to time pursuant to Section 2(e)(ii) above or otherwise, as
a result of the redemption or repayment of the Buyer Note, and as a result
of Earnout Payments, the Stockholder Representative shall pay, by check or
wire transfer, to each Target Stockholder (other than a holder of
Dissenting Shares) his, her or its pro rata share of such cash. If a
Target Stockholder has not perfected such Target Stockholder's right to
receive Merger Consideration pursuant to the foregoing within two years of
the Effective Time, such Target Stockholder shall look only to the
Surviving Corporation pursuant to Section 2(h)(vi) below in connection
with any claim for Merger Consideration.
(ii) Prior to the Stockholder Vote, Target will provide each Stock
Option holder with (A) a form of letter of transmittal in the form
attached hereto as Exhibit IV, and (B) instructions and an agreement
containing the terms for the surrender of Stock Options in exchange for
Option Cancellation Payments. At or following the Effective Time, if a
Stock Option holder shall have perfected such Stock Option holder's right
to receive Option Cancellation Payments by surrender to the Stockholder
Representative by such Stock Option holder of such Stock Option holder's
Stock Option Agreement or affidavit attesting that the same has been lost
in accordance with Section 2(h)(vii) below, accompanied by all documents
required to evidence and effect such transfer, together with the letter of
transmittal and the agreement setting forth the acceptance of terms of
surrender, then the Stockholder Representative shall pay, by check or wire
transfer, to such Stock Option holder such Stock Option holder's portion
of the cash in the Payment Account to which such Stock Option holder is
entitled as Option Cancellation Payments pursuant to Sections 2(e)(i)
above, less such Stock Option holder' pro rata share (based upon the
amount of the Merger Consideration to be received by such Stock Option
holder) of any amounts that may be withheld by the Stockholder
Representative pursuant to the terms of Section 2(i)(iv). Upon or within a
reasonable period of time following the subsequent receipt of cash from
time to time pursuant to Section 2(e)(ii) below or otherwise, as a result
of the redemption or repayment of the Buyer Note, and as a result of
Earnout Payments, the Stockholder Representative shall pay, by check or
wire transfer, to each Stock Option holder his, her or its pro rata share
of such cash. If a Stock Option holder has not perfected such Stock Option
holder's right to receive Option Cancellation Payments pursuant to the
foregoing within two years of the Effective Time, such Stock Option holder
shall look only to the Surviving Corporation pursuant to Section 2(h)(vi)
below in connection with any claim for Option Cancellation Payments.
(iii) Until so surrendered and exchanged as provided above, each
certificate representing Target Shares shall, from and after the Effective
Time, be deemed to represent only the right to receive the Per Share
Merger Consideration to which such Target Stockholder is entitled pursuant
to this Agreement. Upon surrender of each certificate representing Target
Shares to the Stockholder Representative, the Stockholder Representative
shall promptly deliver such certificate to Surviving Corporation, and such
certificate shall forthwith be canceled.
(iv) Until so surrendered and exchanged as provided above, each
Stock Option Agreement shall, from and after the Effective Time, be deemed
to represent only the right to receive the Option Cancellation Payments to
which such Stock Option holder is entitled. Upon surrender of each Stock
Option Agreement to the Stockholder Representative, the Stockholder
12
Representative shall promptly deliver such Stock Option Agreement to the
Surviving Corporation, and such Stock Option Agreement shall forthwith be
canceled.
(v) At the Effective Time, the stock transfer books of Target shall
be closed and there shall be no further registration or transfers of
Target Shares or Stock Options thereafter on the stock transfer books of
Target. From and after the Effective Time, each Target Stockholder and
Stock Option holder shall cease to have any rights as a holder of capital
stock of Target or otherwise with respect to any Target Shares, as
applicable, except as otherwise provided herein or by applicable law.
(vi) Two years following the Effective Time, the Stockholder
Representative shall pay over and assign to Surviving Corporation the
Merger Consideration (including any earnings thereon) it holds on behalf
of Equity Security Holders who have not perfected their rights to receive
Per Share Merger Consideration pursuant to Section 2(h)(i) above or Option
Cancellation Payments pursuant to Section 2(h)(ii) above, as the case may
be, and thereafter all former Equity Security Holders shall be entitled to
look to Surviving Corporation (subject to abandoned property, escheat, and
other similar laws) as general creditors thereof with respect to receipt
of Per Share Merger Consideration or Option Cancellation Payments.
(vii) In the event any certificate or other instrument representing
Target Shares or Stock Option Agreements shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate, Stock Option Agreement, or other instrument to
be lost, stolen or destroyed in form and substance reasonably acceptable
to Buyer, the Stockholder Representative will issue in exchange for such
lost, stolen or destroyed certificate the Merger Consideration deliverable
in respect thereof pursuant to this Agreement or the Option Cancellation
Payments deliverable in respect thereof pursuant to this Agreement, as the
case may be; provided, however, that Buyer may, in its reasonable
discretion, require the delivery of a suitable indemnity agreement.
(viii) Notwithstanding anything to the contrary in this Section
2(h), none of Buyer, the Surviving Corporation nor any other Party hereto
shall be liable to a holder of a certificate formerly representing Target
Shares or the right to subscribe for, purchase or acquire Target Shares
for any amount properly paid to a public official pursuant to any
applicable property, escheat or similar law.
(ix) If, after the Effective Time, certificates representing Target
Shares are presented to the Stockholder Representative for any reason, the
Stockholder Representative shall deliver such certificates to the
Surviving Corporation and they shall be canceled and exchanged as provided
in this Section 2. Any certificates that are not delivered to the
Stockholder Representative at or prior to the Effective Time, may be
delivered to the Stockholder Representative at the address referenced in
Section 10(g) below. Any amounts remaining unclaimed by Target
Stockholders and Stock Option holders two years after the last date any
amount due hereunder is payable to the Stockholder Representative or the
Equity Security Holders (or such earlier date immediately prior to such
time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law,
become the property of Buyer free and clear of any claim or interest of
any Person previously entitled thereto.
13
(i) Effect of Target Stockholder Approval; Stockholder Representative.
(i) As an effect of approval of this Agreement and the Merger
through the Stockholder Vote, the Target Stockholders (subject to rights
of holders of Dissenting Shares) shall be contractually bound to: (A) this
Agreement; (B) the appointment of WCC Equity Holders' Distribution Trust,
a Delaware Trust, as the representative of the Target Stockholders (the
"Stockholder Representative") under this Agreement and as the
attorney-in-fact and agent for and on behalf of each Target Stockholder
for the purposes of this Agreement and the transactions contemplated
hereby; (C) the reserve of the Representative Reserve Fund and payments
thereunder; and (D) the taking by the Stockholder Representative of any
and all actions and the making of any decisions required or permitted to
be taken by the Stockholder Representative under this Agreement,
including, without limitation, the Representative's Authorized Actions.
(ii) The Stockholder Representatives shall be specifically
authorized to take any or all of the following actions ("Representative's
Authorized Actions"): (A) authorize delivery to a Buyer Indemnified Party
of payment in satisfaction of indemnity claims by a Buyer Indemnified
Party with respect to Damages pursuant to Section 8 hereof; (B) agree to,
negotiate, enter into settlements and compromises of, demand arbitration
of, and comply with orders of courts and awards of arbitrators with
respect to such claims; (C) arbitrate, resolve, settle or compromise any
claim for Damages pursuant to Section 8 hereof; (D) act on behalf of each
Target Stockholder with respect to all matters provided for in this
Agreement, including, without limitation, the resolution or dispute of any
matter related to Section 2(i) below; (E) consent to the assignment of
rights under this Agreement in accordance with Section 10(d); (F) give and
receive notices under this Agreement; and (G) take all actions necessary
in the judgment of the Stockholder Representative for the accomplishment
of the foregoing.
(iii) The Stockholder Representative will have authority and power
to act on behalf of each Target Stockholder with respect to this Agreement
and the disposition, settlement or other handling of all Damages under
Section 8 hereof. The Target Stockholders will be bound by all actions
taken and documents executed by the Stockholder Representative in
connection with this Agreement, and Buyer and Surviving Corporation will
be entitled to rely on any action or decision of the Stockholder
Representative. In performing the functions specified in this Agreement,
the Stockholder Representative will not be liable to any Target
Stockholder in the absence of gross negligence or willful misconduct on
the part of the Stockholder Representative. The Target Stockholders agree
to indemnify the Stockholder Representative against any loss, liability,
claims, damage or expense incurred by the Stockholder Representative as a
result of claims by third parties arising in connection with the
Stockholder Representative's service and performance as such under this
Agreement, other than any such claims which result from actions taken in
bad faith or gross negligence on the part of the Stockholder
Representative. The responsibilities of the Stockholder Representative set
forth herein shall terminate upon the later of the final disposition of
the Merger Consideration or such time as all claims made within the
survival period set forth in Section 8(a) are finally resolved.
(iv) The Stockholder Representative shall establish and maintain a
fund (the "Representative Reserve Fund") in its reasonable discretion,
retained on a pro rata basis from the Merger Consideration and otherwise
payable to the Equity Security Holders at or following the Closing, in an
amount reasonably necessary to pay its expenses and administrative costs
as Stockholder Representative, any out-of-pocket costs and expenses
reasonably incurred in connection with actions taken pursuant to the terms
of this Agreement, and costs in connection with indemnity claims hereunder
or to allow it to participate in any defense of any claim by a third
party, and to pay the costs and expenses to be borne by the Equity
Security Holders pursuant
14
to this Agreement and the indemnity provisions hereof. Any amounts
retained and not used to pay such expenses and administration costs shall
be distributed, at such time as the Stockholder Representative reasonably
determines such funds are no longer necessary, to the former Equity
Security Holders of the Company to whom the Representative Reserve Fund is
otherwise payable in the proportion that the amounts were retained. The
amount retained by the Stockholder Representative pursuant to this Section
2(i)(iv) shall be deducted from amounts in the Payment Account from time
to time before distributions to Equity Security Holders. The Stockholder
Representative shall be solely and exclusively accountable to the Equity
Security Holders for the disposition of such funds.
(j) Adjustment of Merger Consideration for Cash and Receivables.
(i) For a period of ninety (90) days after the Closing (the
"Collection Period"), Surviving Corporation shall use its commercially
reasonable efforts to collect all unpaid Receivables that are Target's
Closing Accounts Receivable. During the Collection Period, Surviving
Corporation shall hold any such Receivables collected by Surviving
Corporation in a segregated interest-bearing lock-box account (the
"Receivables Account"). Neither Buyer nor the Stockholder Representative
shall withdraw any amounts from the Receivables Account except as
permitted by this Agreement. Expenses of the Receivables Account shall be
paid out of funds in the account prior to distributions. Distributions
from the Receivables Account shall be made in the following manner:
(A) On the 15th day of each month during the Collection
Period, the positive balance of the Receivables Account as of the
last day of the preceding month ended shall be distributed evenly to
the Stockholder Representative for the benefit of the Equity
Security Holders and to Surviving Corporation;
(B) On the 90th day following the Closing, the full amount of
the positive balance of the Receivables Account shall be distributed
evenly to the Stockholder Representative for the benefit of the
Equity Security Holders and to Surviving Corporation;
(C) Any Receivables collected from the end of the Collection
Period until the 360th day following the Closing shall be
distributed evenly to the Stockholder Representative for the benefit
of the Equity Security Holders and to Surviving Corporation on a
quarterly basis;
(D) After the 360th day following the Closing, any uncollected
Receivables shall be distributed to Surviving Corporation and the
Equity Security Holders shall have no further interest in such
Receivables.
3. Target's Representations and Warranties. Target represents and warrants
to Buyer and Transitory Subsidiary that the statements contained in this Section
3 are true, correct and complete as of the date hereof and will be correct and
complete as of the Closing Date (as though then made and as though the Closing
Date were substituted for the date of this Agreement throughout Section 3),
except as set forth in the corresponding section of the disclosure schedule
accompanying this Agreement, as updated at Closing (the "Disclosure Schedule").
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3.
(a) Organization of Target. Target is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own
15
or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is conducted
by it. The copies of the charter documents of Target, as amended to date, and
the bylaws of Target, as amended to date, and heretofore delivered to Buyer's
counsel, are complete and correct, and no amendments thereto are pending. Target
is qualified to do business as a foreign corporation in each jurisdiction in
which such qualification is necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. The minute books (containing the records of meetings of the
stockholders, the board of directors and any committees of the board of
directors), the stock certificate books and the stock record books of Target are
correct and complete.
(b) Capital Stock and Related Matters; No Subsidiaries.
(i) As of immediately prior to the Closing, the authorized capital
stock of Target consists of 3,000,000 shares of common stock, $0.0005 par
value, of which 1,012,076 shares are issued and outstanding and 400,000
shares are held in treasury. The Target Shares constitute all of the
outstanding capital stock of Target and are held beneficially and of
record by the Target Stockholders (free and clear of all Liens) as set
forth on the Section 3(b) of the Disclosure Schedule. Except as set forth
on Section 3(b) of the Disclosure Schedule, which list all outstanding
Stock Options issued under Target's 2000 Stock Option Plan, Target does
not have outstanding (A) any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor any rights or options to subscribe for or to
purchase its capital stock or (B) any stock or securities convertible into
or exchangeable for its capital stock or any stock appreciation rights or
phantom stock or similar plans or rights. As of the Closing, Target will
not have outstanding (A) any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor any rights or options to subscribe for or to
purchase its capital stock or (B) any stock or securities convertible into
or exchangeable for its capital stock or any stock appreciation rights or
phantom stock or similar plans or rights. Except as set forth on Section
3(b) of the Disclosure Schedule, Target is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to
acquire its capital stock. As of the Closing and immediately thereafter,
all of the outstanding shares of Target's capital stock shall be validly
issued, fully paid and nonassessable.
(ii) Target has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of
its capital stock or the offer, sale or issuance of any of its debt
securities. There are no voting trusts, proxies, or other agreements or
understandings among Target's Stockholders or any other Person with
respect to the voting, transfer or registration of Target's capital stock
or with respect to any other aspect of Target's affairs.
(iii) Target has no Subsidiaries. Target does not control directly
or indirectly or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association.
(c) Authorization of Transaction. Target has full power and authority
(including full corporate power) to execute and deliver this Agreement and each
agreement, document and instrument to be executed and delivered by it pursuant
to or contemplated by this Agreement and to perform its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement and
each such other agreement, document and instrument by Target has been duly
authorized by all necessary corporate action of Target, and no other action on
the part of Target is required in connection therewith. This Agreement and each
agreement, document and instrument to be executed and delivered by Target
16
pursuant to or as contemplated by this Agreement constitute, or when executed
and delivered by Target will constitute, the valid and legally binding
obligations of Target, enforceable in accordance with their respective terms and
conditions, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of creditors
generally and subject to the rules of law and principles of equity governing
(and all limitations on) specific performance, injunctive relief and other
equitable remedies (the "Bankruptcy and Equity Exception").
(d) No Conflicts; No Bankruptcy. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Entity to which Target is, or its assets or properties are,
subject, (ii) contravene, conflict with or result in a breach or violation of
any provision of the charter or bylaws of Target, or (iii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which Target is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Lien upon any
of the assets of Target), in any such case in a manner that could reasonably be
expected to materially affect the consummation of the transactions contemplated
hereby or the ownership or operation of the assets or the business by Target
after the Closing. Target does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Governmental
Entity or any other Person in order for the Parties to consummate the
transactions contemplated by this Agreement. There is no proceeding pending or,
to the Knowledge of Target, threatened against Target that challenges, or may
have the effect of preventing, delaying, making illegal or otherwise interfering
with the transactions contemplated by this Agreement. Target was Solvent before
and at the time of the consummation of the transactions contemplated hereby. No
order has been entered or petition presented for the winding up, insolvency,
liquidation, or bankruptcy of Target.
(e) Brokers' Fees. Target has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(f) Financial Statements; Cash.
(i) Attached hereto as Exhibit V are the following financial
statements (collectively the "Financial Statements"): (i) the consolidated
audited balance sheets of Target as of December 31, 2000, December 31,
2001 and December 31, 2002 (the "Most Recent Fiscal Year End"), and the
related consolidated statements of income for the fiscal years ended
December 31, 2000, December 31, 2001 and December 31, 2002, which in each
case reflect the business of Target on a consolidated basis (the "Audited
Financial Statements"); and (ii) the consolidated unaudited balance sheet
of Target (the "Most Recent Balance Sheet") as of December 31, 2003 (the
"Most Recent Fiscal Month End"), and the related consolidated statements
of income of Target for the twelve (12) months ended December 31, 2003,
which in each case reflect the business of Target on a consolidated basis
(collectively, the "Most Recent Financial Statements"). The Financial
Statements (including the notes thereto if provided) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of Target
(including the business of Target on a consolidated basis) as of such
dates and the results of operations of Target (including the business of
Target on a consolidated basis) for such periods, subject, in the case of
the Most Recent Financial Statements, to year-end audit adjustments.
(ii) As of the date hereof Target has, and as of the Closing Date
Target will have, Cash in an amount equal to at least [ * * * ].
17
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any Material Adverse Change. Without
limiting the generality of the foregoing, except as set forth in the appropriate
subsection of Section 3(g) of the Disclosure Schedule and to the extent approved
in writing by Buyer, since that date:
(i) Target has not authorized or effected any change in its charter
or bylaws;
(ii) Target has not issued any notes, bonds or other debt securities
or any capital stock or other equity securities or any securities or
rights convertible, exchangeable or exercisable into any capital stock or
other equity securities;
(iii) Target has not declared, set aside, or paid any dividend or
distribution with respect to its stock (whether in cash or in kind), or
redeemed, repurchased, or otherwise acquired any of its capital stock;
(iv) Target has not made any capital investment in, made any loan
to, or acquired the securities or assets of any other Person;
(v) Target has only sold Product with an expiration dating of more
than twelve (12) months as of the date of delivery of the Product to a
customer;
(vi) Target has distributed commercial samples of Products and has
conducted marketing and promotional activities with respect to Products
that comply with all applicable laws and Regulatory Approvals;
(vii) Target has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(viii) Target has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses) except in the ordinary course of business;
(ix) no Person (including Target) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which
Target is a party or by which it is bound;
(x) Target has not made or entered into any oral or written
guaranties;
(xi) Target has not filled any order for Products except as set
forth on Section 3(g)(viii) of the Disclosure Schedule;
(xii) Target has not discounted, marked down or made any price
reductions with respect to any products or services of the business of
Target, except those consistent with current business practices;
(xiii) Target has not imposed or permitted to exist any Lien upon
any of its assets, tangible or intangible;
(xiv) Target has not delayed or postponed the payment of accounts
payable or other Liabilities outside the Ordinary Course of Business;
18
(xv) Target has not issued an invoice to any third party prior to
the delivery of the product or service to which such invoice relates;
(xvi) Target has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) involving more
than $10,000;
(xvii) Target has not transferred, assigned, or granted any license
or sublicense of any rights under or with respect to any of its
Intellectual Property;
(xviii) Target has not licensed any of its Intellectual Property
from any third party;
(xix) Target has not failed to take any action necessary or
customary in accordance with reasonable industry practice to maintain,
renew, or protect any of its Intellectual Property;
(xx) Target has not experienced any damage, destruction, or loss
(whether or not covered by insurance) affecting any of its properties or
assets;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving Target;
(xxii) Target has not materially changed any of the types or levels
of support services provided to the business of Target by Target in the
conduct of such business;
(xxiii) there has not been any change in the kind and amount of
insurance maintained by Target;
(xxiv) Target has not entered into any written or oral agreement
with any employee or independent contractor to provide services to or on
behalf of Target;
(xxv) Target has not laid off or terminated any employee or
independent contractor in breach or violation of any contractual or other
obligation to such Person, nor has any layoff or termination of such
Person given rise to any Target obligations for severance or other
consideration payable after the Closing;
(xxvi) there has not been any material increase or notice thereof in
the cost of raw materials used in the business of Target;
(xxvii) Target has not discharged a material Liability or Lien;
(xxviii) there has not been any change in the manner of keeping
books, accounts or records, accounting methods or practices, standard
costs, credit practices or collection or pricing policies used by Target;
(xxix) Target has not disclosed any Confidential Information
relating to its business, except to Buyer or in the Ordinary Course of
Business and pursuant to written agreements obligating the recipient to
maintain the confidentiality thereof; and
(xxx) Target has not committed to do any of the foregoing.
(h) Undisclosed Liabilities. Target does not have any Liability (and there
is no Basis for any present or, to the Knowledge of Target, future action, suit,
proceeding, hearing, investigation, charge,
19
complaint, claim, or demand against any of them giving rise to any Liability),
except for (i) Liabilities set forth on the face of the balance sheet for the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the date of the Most Recent Balance Sheet in
the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law and none of which is
material).
(i) Legal Compliance.
(i) Each of Target and its predecessors and Affiliates has complied
in all material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder and including, without limitation, the
Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq. and all such laws
relating to the import, export, storage, handling treatment and/or
disposal of or otherwise relating to animals and biologic materials
(including transgenic animals and materials)) of all Governmental
Entities, and to the Knowledge of Target no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice (a
"Proceeding") has been filed or commenced against any of them alleging any
failure so to comply.
(ii) Section 3(i)(ii) of the Disclosure Schedule sets forth each
instance in which Target (A) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (B) is a party or, to the
knowledge of Target, is threatened to be made a party to any Proceeding
of, in, or before any court, arbitrator or Governmental Entity. None of
the Proceedings set forth in Section 3(i)(ii) of the Disclosure Schedule
would reasonably be likely to result in any material Liability to Target
or to Buyer. Target has no Basis to believe that any such Proceeding may
be brought or threatened against Target or that there is a Basis for the
foregoing.
(j) Tax Matters.
(i) Target has timely filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by Target (whether or not shown or required to be
shown on any Tax Return) have been paid. Target is not currently the
beneficiary of any extension of time within which to file any Tax Return.
To Target's Knowledge, no claim has ever been made by an authority in a
jurisdiction where Target does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of
Target's assets that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) Target has withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party, and all Forms W-2 and 1099 required with respect thereto have been
properly completed and timely filed.
(iii) There is no material dispute or claim concerning any Tax
Liability of Target either (A) claimed or raised by any authority in
writing or (B) as to which Target and the directors and officers (and
employees responsible for Tax matters) of Target has any Knowledge based
upon personal contact with any agent of such authority.
(iv) Target has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
20
(v) Target has not filed a consent under Code Section 341(f)
concerning collapsible corporations. Target is not a party to any
agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of (i) any "excess
parachute payment" within the meaning of Code Section 280G (or any
corresponding provision of state, local or foreign Tax law) and (ii) any
amount that will not be fully deductible as a result of Code 162(m) (or
any corresponding provision of state, local or foreign Tax law). Target
has not been a United States real property holding corporation within the
meaning of Code Section 897(c)(2) during the applicable period specified
in Code Section 897(c)(1)(A)(ii). Target has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of
Code Section 6662.
(vi) Target is not a party to any Tax allocation or sharing
agreement. Target (A) has not been a member of an Affiliated Group filing
a consolidated federal income Tax Return and (B) has no Liability for the
Taxes of any Person under Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(k) Intellectual Property.
(i) Target owns all right, title and interest in and to, or has the
right to use pursuant to a valid and enforceable contract listed on Annex
C attached hereto, all Intellectual Property necessary for the operation
of its business. The Intellectual Property set forth on Annex C attached
hereto constitutes all Intellectual Property necessary for or material to
the operation of the Target's business (the "Business Intellectual
Property"). Each item of Business Intellectual Property owned or used by
Target immediately prior to the Closing will be owned or available for use
by Buyer on identical terms and conditions immediately subsequent to the
Closing. Target has taken all action necessary or customary in accordance
with reasonable industry practice to maintain and protect all current
federal, state and foreign registrations or applications pertaining to any
of the Business Intellectual Property.
(ii) Target follows reasonable commercial practices common in the
industry to protect its proprietary and confidential information,
including requiring its employees, consultants and agents (other than line
employees not involved in the creation of Intellectual Property) to be
bound in writing by obligations of confidentiality and non-disclosure, and
requiring its employees, consultants and agents to assign to it any and
all inventions and discoveries and other Intellectual Property conceived,
reduced to practice, developed or discovered by such employees,
consultants and/or agents (other than line employees not involved in the
creation of Intellectual Property) made within the scope of, and during
their employment (to the extent permitted by law) pursuant to written
agreements executed by each such employee, consultant or agent, and only
disclosing proprietary and confidential information to third parties
pursuant to written confidentiality and non-disclosure agreements.
(iii) The conduct of the business of Target has not and, to the
Knowledge of Target, as of the Closing Date, will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with any
Intellectual Property rights of any third parties, and Target has never
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or other conflict (including
any claim or written notice that Target must license or refrain from using
any Intellectual Property rights of any Person) and Target is not aware of
any Basis for the same. To the Knowledge of Target, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Business Intellectual Property, and no licensee or
sublicensee of Target has provided Target with any information of any of
the foregoing by such licensee or sublicensee in connection with such
21
licensee's or sublicensee's practice of any Intellectual Property licensed
or sublicensed to it by Target.
(iv) Annex C attached hereto identifies (A) each patent or
registration which has been issued to Target with respect to any of the
Business Intellectual Property and each pending patent application or
application for registration which Target has made with respect to any of
the Business Intellectual Property (collectively, the "Registered Business
Intellectual Property"), and (B) each license, sublicense, agreement, or
other permission (other than non-exclusive licenses arising in the
Ordinary Course of Business in connection with the sale of Products) which
Target has granted to any third party with respect to any of the Business
Intellectual Property (together with any exceptions). Target has made
available to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, sublicenses, agreements, and
permissions (as amended to date) and has made available to Buyer correct
and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Annex C
attached hereto also identifies each material unregistered trademark,
material unregistered service xxxx, trade name, corporate name or Internet
domain name, computer software item (other than commercially available
off-the-shelf software purchased or licensed for less than a total per
seat cost of $500) and each material unregistered copyright used by Target
in connection with its business. Except as otherwise set forth in Section
3(k)(iv) of the Disclosure Schedule, with respect to each item of the
Business Intellectual Property, including the Registered Business
Intellectual Property:
(A) Target owns and possesses all right, title, and interest
in and to the item, free and clear of any Lien, license, or other
restriction or limitation regarding use or disclosure;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) each such item is valid and enforceable and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand is pending or is, to the Knowledge of Target, threatened
which challenges the legality, validity, enforceability, use, or
ownership of the item, and there are no grounds for the same;
(D) Target has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item except in the Ordinary Course of
Business in connection with the sale of Products; and
(E) no loss or expiration of the item is threatened, pending,
or reasonably foreseeable, except for patents or copyrights expiring
at the end of their statutory terms (and not as a result of any act
or omission by Target, including without limitation, a failure by
Target to pay any required maintenance fees).
(v) Section 3(k)(v) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that Target uses or
holds for use in it business as currently conducted and as proposed to be
conducted pursuant to license, sublicense, agreement, or permission.
Target has delivered to Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be
identified on Annex C attached hereto, except as set forth in Section
3(k)(v) of the Disclosure Schedule, Target has not granted any sublicense
or similar right
22
with respect to the license, sublicense, agreement, or permission. With
respect to each item of Intellectual Property required to be identified
Annex C attached hereto:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following consummation of the
transactions contemplated hereby;
(C) Target and, to the Knowledge of Target, all other parties
to the license, sublicense, agreement, or permission is not in
breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections 3(k)(v)(A) through (D) above are
true and correct with respect to the underlying license;
(F) to the Knowledge of Target, the underlying item of
Intellectual Property is not subject to any outstanding attachment,
injunction, judgment, order, decree, ruling, or charge;
(G) to the Knowledge of Target, each such item is valid and
enforceable and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or is threatened that
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property, and there are no grounds
for the same; and
(vi) Target has complied in all material respects with and is
presently in compliance in all material respects with all foreign,
federal, state, local, governmental (including, but not limited to, the
FDA (as defined below), the Federal Trade Commission and State Attorneys
General), administrative or regulatory laws, regulations, guidelines and
rules applicable to the conduct of the business of Target and Target shall
take all steps necessary to ensure such compliance until the Closing.
(l) Inventory. Section 3(l) of the Disclosure Schedule accurately and
completely lists the amount of existing good and marketable Inventory, including
Inventory under quarantine, with expiration dates (i) not less than 18 months
after the Closing Date for Products produced for sale and (ii) not less than 15
months after the Closing Date for samples of Products. Target and its Affiliates
and agents have properly handled and stored all Products included in the
Inventory in compliance with all applicable laws, rules and regulations and none
of the Products included in the Inventory are adulterated, misbranded or
defective. All of the Products included in the Inventory (a) currently meet, and
have been manufactured in accordance with, the applicable specifications for the
Product, and are in substantial compliance with all applicable laws, rules and
regulations and the applicable Regulatory Approvals (provided that in the case
of Inventory currently in quarantine, this representation is qualified by the
knowledge of Target), and (b) upon delivery to Buyer, (x) all of the foregoing
will be, and shall remain true and correct, (y) all Products included in the
Inventory that are produced for sale has expiration dating of at least 18
months, and (z) all samples of Products have expiration dating of at least 15
months. Target is not aware of any
23
matters, other than the completion of microtesting and the processing of
documents in the ordinary course, that would result in any delay in the supply
of Products or their release from quarantine.
(m) Contracts. Annex A sets forth a complete and correct list of the
Contracts and Target has delivered to Buyer a correct and complete copy of each
Contract (as amended to date). Other than the Contracts, Target is not a party
to or bound by any oral or written contract, agreement, license or other
undertaking pursuant to which Target would have any Liability or other
obligation after the Closing. With respect to each such Contract: (i) such
Contract is valid and enforceable, and in full force and effect; (ii) such
Contract will continue to be valid and enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (iii) no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under such Contract; and (iv) no
party has repudiated any provision of the Contract or provided the other party
with any default notice.
(n) Notes and Accounts Receivable. All notes and accounts receivable of
Target are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Target.
(o) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Target.
(p) Insurance. Target's assets are insured to the extent disclosed in
Section 3(p) of the Disclosure Schedule and all insurance policies and
arrangements of Target are disclosed in Section 3(p) of the Disclosure Schedule.
Said insurance policies and arrangements are in full force and effect, all
premiums with respect thereto are currently paid, and Target is in compliance in
all material respects with the terms of such policies. There is no claim by
Target pending under any such policies as to which coverage has been questioned,
denied or disputed by the insurer. Each such insurance policy shall continue to
be in full force and effect through the date of the Closing. To the Knowledge of
Target, such policies of insurance are of the type and in amounts customarily
carried by persons conducting business similar to that of the business of
Target.
(q) Litigation. Section 3(q) of the Disclosure Schedule sets forth each
instance in which Target (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of
Target, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court, arbitrator or
Governmental Entity. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 3(q) of the Disclosure Schedule could result
in a material Liability to Target or a Material Adverse Change. Target does not
have any reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against Target or that there is a
Basis for the foregoing.
(r) Product Warranty. Each product, including the Products, sold, leased,
or delivered by Target has been in conformity in all material respects with all
applicable contractual commitments and all applicable express and implied
warranties, and Target does not have any Liability (and there is no Basis for
any present or, or to the Knowledge of Target, future Proceeding giving rise to
any Liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Target. Section 3(r) of the Disclosure Schedule
includes complete and correct copies of
24
the standard terms and conditions of sale or lease (containing applicable
guaranty, warranty, and indemnity provisions) that Target uses in its business.
No product manufactured, sold, leased, or delivered by Target is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease set forth in Section 3(r) of the Disclosure
Schedule.
(s) Product Liability. Target does not have any Liability (and there is no
Basis for any present or, to the Knowledge of Target, future Proceeding against
Target giving rise to any Liability) arising out of any personal injury and/or
death or damage to property relating to or arising in connection with the
products marketed, distributed, sold or otherwise provided by, or on behalf of,
Target or any of its Affiliates.
(t) Certain Business Relationships With Target. None of Target's
stockholders and their Affiliates, and to the Knowledge of Target, Target's
directors, officers and employees has been involved in any business arrangement
or relationship with Target within the past twelve (12) months, and none of
Target's stockholders and their Affiliates, and Target's directors, officers and
employees owns any asset, tangible or intangible, which is used in the business
of Target.
(u) Customers and Suppliers; Xxxxxx Xxxxxxx.
(i) Section 3(u) of the Disclosure Schedule lists the customers of
Target accounting for [ * * * ] of Target's revenues (on a consolidated
basis) for each of the two most recent fiscal years (the "Customers") and
sets forth opposite the name of each such Customer the percentage of
consolidated net sales attributable to such Customer. Section 3(u) of the
Disclosure Schedule also lists any additional current customers that
Target anticipates shall account for [ * * * ] of Target's revenues for
the current fiscal year.
(ii) No material supplier of Target has indicated that it shall
stop, or materially decrease the rate of, supplying materials, products or
services to Target, and no Customer has indicated that it shall stop, or
materially decrease the rate of, buying materials, products or services
from Target.
(iii) Target is current on all amounts due to Xxxxxx Xxxxxxx
pursuant to current payment terms.
(v) Regulatory Matters.
(i) To the Knowledge of Target, Target is in material compliance
with all applicable laws, rules and regulations of the United States or
any foreign jurisdiction, including of the FDA or similar foreign
governmental authority ("Foreign Authorities") with respect to the
manufacture, sale, labeling, storing, testing, distribution, promotion and
marketing of the Products. Target has all requisite permits, approvals,
registrations, licenses or the like from the FDA or Foreign Authorities to
conduct its business. Target has previously delivered or made available to
Buyer an index of all applications, approvals, registrations, licenses or
the like obtained by Target from the FDA and Foreign Authorities or
required from Target in connection with the conduct of its business and
has made all such information available to Buyer.
(ii) Target has made available to Buyer all written communications
and oral communications to the extent reduced to written or other tangible
form between Target and the FDA or Foreign Authorities from the date the
NDA was initially filed with the FDA through the date hereof. Target shall
promptly deliver or make available to Buyer copies of all written
communications and information (and records regarding all oral
communications reduced to
25
written form), between Target and the FDA or Foreign Authorities from the
date hereof through the Closing Date. Except as otherwise set forth in
Section 3(v)(ii) of the Disclosure Schedule, Target is not in receipt of
notice of, and is not subject to, any adverse inspection, finding of
deficiency, finding of non-compliance, compelled or voluntary recall,
investigation, penalty for corrective or remedial action or other
compliance or enforcement action, in each case relating to the Products or
to the Knowledge of Target, to the facilities in which the Products are
manufactured, collected or handled, by the FDA or Foreign Authorities.
There are no pending or, to the knowledge of Target, threatened,
Proceedings or complaints by the FDA or Foreign Authorities which would
prohibit or impede the conduct of the Target's business.
(iii) To the Knowledge of Target, Target has not made any material
false statements on, or omissions from, the applications, approvals,
reports and other submissions to the FDA or Foreign Authorities prepared
or maintained to comply with the requirements of the FDA or Foreign
Authorities.
(iv) Target has not received any notification, written or oral, that
remains unresolved, from Foreign Authorities, the FDA or other authorities
indicating that any Product is misbranded or adulterated as defined in the
U.S. Food, Drug & Cosmetic Act, 21 U.S.C. 321, et seq., as amended, and
the rules and regulations promulgated thereunder or any similar law, rule
or regulation, whether under the jurisdiction of the FDA or any similar
Foreign Authority.
(v) No Products have been recalled, suspended or discontinued as a
result of any action by the FDA or any Foreign Authority against Target
or, to the knowledge of Target, any licensee, distributor or marketer of
the Products, in the United States or outside of the United States or
otherwise.
(vi) To the Knowledge of Target, Target has not committed any act,
made any statement or failed to make any statement that would violate the
FDA's policy with respect to "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any similar laws, rules or regulations, whether
under the jurisdiction of the FDA or any Foreign Authority, and any
amendments thereto. Neither Target, nor to the knowledge of Target, any
officer, employee, or third party vendors of Target has been convicted of
any crime or engaged in any conduct that would reasonably be expected to
result in debarment under 21 U.S.C. Section 335a or any similar state or
foreign law or regulation or (ii) exclusion under 42 U.S.C. Section
1320a-7 or any similar state or foreign law or regulation.
(w) Employees. Section 3(w) of the Disclosure Schedule contains a true and
complete list as of the date hereof of the employees and former employees
employed by Target in the past twenty-four (24) months, and the rate of all
current compensation or other payments payable by Target to each such employee
and former employee, including any bonus, severance, commission, contingent or
deferred compensation. Target has no Liabilities to any of its employees or
former employees for which Buyer or Target could be liable after the Effective
Time. Target has not engaged in any plant closing or employee layoff activities
within the last two (2) years that would violate or in any way implicate the
Worker Adjustment Retraining and Notification Act of 1988, as amended, or any
similar state or local plant closing or mass layoff statute, rule or regulation.
(x) ERISA.
(i) Section 3(x)(i) sets forth a complete and correct list of each
Employee Benefit Plan.
26
(ii) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered in
accordance with its terms and with the applicable requirements of ERISA,
the Code, and other applicable laws. All contributions (including all
employer contributions and employee salary reduction contributions) and
premiums that are due with respect to any Employee Benefit Plan have been
paid and all contributions and premiums for any period ending on or before
the Closing Date that are not yet due have been paid or properly accrued.
(iii) Each Employee Benefit Plan that is intended to be qualified
under Code Section 401(a) has received a favorable determination letter
from the Internal Revenue Service and nothing has occurred since the date
of such determination letter that could adversely affect the qualified
status of such plan, and each such Employee Benefit Plan has been timely
amended to comply with the provisions of recent legislation commonly
referred to as "GUST" and "EGTRRA" and has been or will be timely
submitted to the Internal Revenue Service for a determination letter that
takes such amendments into account.
(iv) Neither Target nor any ERISA Affiliate contributes to, has any
obligation to contribute to, or has any Liability under or with respect to
any "defined benefit plan" (as defined in ERISA Section 3(35)) or any
Multiemployer Plan, or otherwise has any Liability under Title IV of
ERISA.
(v) Target has delivered to Buyer and Transitory Subsidiary correct
and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 annual report, and all related trust
agreements, insurance contracts, and other funding agreements that
implement each Employee Benefit Plan.
(vi) There have been no Prohibited Transactions with respect to any
Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any Employee Benefit
Plan. No claim, action, suit, proceeding, hearing, or investigation with
respect to any Employee Benefit Plan (other than routine claims for
benefits) is pending or threatened, and there is no basis for any such
claim, action, suit, proceeding, hearing, or investigation.
(vii) Neither Target nor any ERISA Affiliate has any obligation to
provide post-employment medical, health, or life insurance or other
welfare-type benefits to any individual (other than in accordance with
COBRA). Target and each ERISA Affiliate have complied with the
requirements of COBRA.
(y) Real and Personal Property.
(i) Real Property. Target owns no real property. All real property
which Target leases is set forth on Section 3(y)(i) of the Disclosure
Schedule (the "Leased Real Property").
(A) Status of Leases. All leases of Leased Real Property are
set forth on Section 3(y)(i) of the Disclosure Schedule, and true
and complete copies thereof have been delivered to Buyer. Target is
not in default in the payment of rent or otherwise in any material
respect under any of said leases, nor has any event occurred which,
with notice or the passage of time, or both, would give rise to such
a default. To Target's Knowledge, the other party to each of said
leases is not in default under any of said leases and there is no
event which, with notice or the passage of time, or both, would give
rise
27
to such a default. Target has not received any notice and is not
otherwise aware that any security deposit or portion thereof
deposited with respect to such leases has been applied for a breach
or default under such leases which has not been redeposited in full.
Target does not owe any brokerage commissions or finder's fees with
respect to any lease. Target has not subleased, licensed or
otherwise granted any Person the right to use or occupy the Leased
Real Property or any portion thereof. Target has not collaterally
assigned or granted any other security interest in any lease or any
interest therein. Target has not created any Liens or encumbrances
on the estate or interest created by such leases.
(B) Consents. Except as set forth on Section 3(y)(i)(B) of the
Disclosure Schedule, no consent or approval is required with respect
to the transactions contemplated by this Agreement from the other
parties to any lease of Leased Real Property.
(C) Compliance with Law. Target has not received any written
notice from any Governmental Entity of any violation of any law,
ordinance, regulation, license, permit or authorization issued with
respect to the Leased Real Property that has not been heretofore
corrected and to Target's Knowledge no such violation exists which
could have a material adverse affect on Target's operations at the
Leased Real Property. To Target's Knowledge, improvements located on
or constituting part of the Leased Real Property and their use and
operation by Target were and are now in compliance with all
applicable laws, ordinances, regulations, licenses, permits and
authorizations.
(ii) Personal Property. Except as specifically set forth on Section
3(y)(ii) of the Disclosure Schedule, Target has good and marketable title
to all of its personal property. None of such personal property or assets
is subject to any mortgage, pledge, lien, conditional sale agreement,
security title, encumbrance or other charge except as specifically set
forth on Section 3(y)(ii) of the Disclosure Schedule, other than (A) liens
securing taxes or other governmental charges not yet due; (B) deposits or
pledges made in connection with social security obligations; and (C) liens
of carriers, warehousemen, mechanics and materialmen, less than 120 days
old as to obligations not yet due. All machinery and equipment of Target
is in good working order, reasonable wear and tear excepted.
(z) Environmental Matters. Except as set forth on Section 3(z) of the
Disclosure Schedule, to Target's Knowledge:
(i) Target is in compliance with all Environmental Laws applicable
to the Leased Real Property or to any facilities or improvements or any
operations or activities thereon.
(ii) There has been no release of any Hazardous Material (as defined
in this Section 3(z)) on or from the Leased Real Property as a result of
Target's operations.
(iii) No Lien has been imposed on the Leased Real Property by any
governmental agency at the federal, state, or local level in connection
with the presence of any Hazardous Material.
(iv) Target has not: (i) entered into or been subject to any consent
decree, compliance order, or administrative order with respect to the
Leased Real Property; or (ii) received in writing any request for
information, notice, demand letter, administrative inquiry, or complaint
with respect to environmental matters relating to the Leased Real
Property.
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(v) Target has obtained all material permits that are required for
the lawful operation of the Leased Real Property under any Environmental
Laws.
(vi) For purposes of this Agreement, (A) "Hazardous Material" means
and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, asbestos, pollutant or
contaminant, as defined or regulated under any Environmental Law, and (B)
"Environmental Law" means any environmental or health and safety related
statute, regulation, rule, ordinance or law at the federal, state or local
level.
(aa) Investment. The Stockholder Representative (i) understands that the
Buyer Note has not been, and will not be, registered under the Securities Act,
or under any state securities laws, and is being offered and sold in reliance
upon federal and state exemptions for transactions not involving any public
offering, (ii) is acquiring the Buyer Note solely for the account of the Equity
Security Holders for investment purposes, and not with a view to the
distribution thereof, (iii) is a trust, the trustee of which is a sophisticated
investor with knowledge and experience in business and financial matters, (iv)
has received certain information concerning Buyer and Xxxx and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Buyer Note, (v) is able to bear the
economic risk and lack of liquidity inherent in holding the Buyer Note, and (vi)
is a trust, the trustee of which is an Accredited Investor for the reasons set
forth in Section 3(aa) of the Disclosure Schedule.
(bb) Disclosure. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 3 not misleading.
4. Buyer's and Transitory Subsidiary's Representations and Warranties.
Each of Buyer and Transitory Subsidiary represents and warrants to Target and to
the Target Stockholders that the statements contained in this Section 4 are
correct and complete as of the date hereof and will be correct and complete as
of the Closing Date (as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout Section 4).
(a) Organization of Buyer and Transitory Subsidiary. Each of Buyer and
Transitory Subsidiary is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation with full
power and authority to own or lease its properties and to conduct its business
in the manner and in the places where such properties are owned or leased or
such business is conducted by it. Each of Buyer and Transitory Subsidiary is
qualified to do business as a foreign corporation in each jurisdiction in which
such qualification is necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Authorization of Transaction. Each of Buyer and Transitory Subsidiary
has full power and authority (including full corporate power) to execute and
deliver this Agreement and each agreement, document and instrument to be
executed and delivered by it pursuant to or contemplated by this Agreement and
to perform its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and each such other agreement, document and
instrument by each of Buyer and Transitory Subsidiary has been duly authorized
by all necessary corporate action of each of Buyer and Transitory Subsidiary,
respectively, and no other action on the part of either Buyer or Transitory
Subsidiary is required in connection therewith. This Agreement and each
agreement, document and instrument to be executed and delivered by each of Buyer
and Transitory Subsidiary pursuant to or as contemplated by this Agreement
constitute, or when executed and delivered by each of Buyer and Transitory
Subsidiary will constitute, the valid and legally binding obligations of each of
29
Buyer and Transitory Subsidiary, respectively, enforceable in accordance with
their respective terms and conditions, except as the same may be limited by the
Bankruptcy and Equity Exception.
(c) No Conflict. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Entity to which
either Buyer or Transitory Subsidiary is, or the assets or properties of either
Buyer or Transitory Subsidiary are, subject, (ii) contravene, conflict with or
result in a breach or violation of any provision of the charter or bylaws of
either Buyer or Transitory Subsidiary, or (iii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either Buyer or Transitory Subsidiary is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets), in any such case in a manner
that could reasonably be expected to materially affect the consummation of the
transactions contemplated hereby. Neither Buyer nor Transitory Subsidiary needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Governmental Entity or any other Person in order for
the Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Neither Buyer nor Transitory Subsidiary has any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
Target Stockholders could become liable or obligated.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the Closing conditions set
forth in Section 6 below).
(b) Notices and Consents. Target will give any notices to third parties,
and Target will use its best efforts to obtain any third party consents referred
to in Section 3(d) above. Each of the Parties will give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of Governmental Entities in connection with the matters referred
to in Section 3(d) and Section 4(c) above.
(c) Operation of Business. Target will not engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business, provided that Target may take any action it deems necessary to keep
trade payables current and retire debts. Without limiting the generality of the
foregoing, Target will not engage in any practice, take any action, or enter
into any transaction of the sort described in Section 3(g) above without Buyer's
written consent.
(d) Preservation of Business. Target will keep its business substantially
intact, including its present operations, physical facilities, working
conditions, insurance policies, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) Full Access. Target will permit representatives of Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of Target, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the business of Target.
30
(f) Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of any of
its own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. Target will not (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition,
in part or in whole, of its business except sales of its products in the
Ordinary Course of Business or (ii) participate or continue to participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Target will notify
Buyer immediately if any Person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
(h) Stockholder Vote. Target shall call a Stockholder Vote (the
"Stockholder Vote") of the Target Stockholders as soon as practicable after the
date hereof, in order that (i) the Target Stockholders may consider and vote
upon the adoption of this Agreement and the approval of the Merger in accordance
with the Delaware General Corporation Law, and (ii) the Target Stockholders may
consider and vote amendments to Target's 2000 Stock Option Plan to authorize
terms that will allow payment of the Option Cancellation Payments to satisfy
rights of Stock Option holders as specified herein.
(i) New Xxxxxx Xxxxxxx Agreement. Pursuant to Section 6(a)(xxiv) below,
Buyer is seeking to enter into a new supply agreement with Xxxxxx Xxxxxxx
reasonably satisfactory to Buyer. Buyer agrees to seek implementation of the new
supply agreement and termination of the WCC Supply Agreement at Closing.
6. Conditions to Obligation to Close.
(a) Conditions to Buyer's and Transitory Subsidiary's Obligation. The
obligation of Buyer and Transitory Subsidiary to consummate the transactions to
be performed by it in connection with the Closing is subject to satisfaction of
the following conditions:
(i) this Agreement, the Merger, and the amendment to Target's 2000
Stock Option Plan shall have received the Requisite Stockholder Approval;
(ii) the representations and warranties set forth in Section 3 above
shall be true and correct at and as of the date hereof and true and
correct in all material respects at and as of the Closing Date, except to
the extent that such representations and warranties are qualified by terms
such as "material", "Material Adverse Change" and "Material Adverse
Effect", in which case such representations and warranties shall be true
and correct in all respects at and as of the Closing Date;
(iii) Target shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except
to the extent that such covenants are qualified by terms such as
"material" and "Material Adverse Effect," in which case Target shall have
performed and complied with all of such covenants in all respects through
the Closing;
(iv) Target shall have procured all of the third party consents
specified in Section 3(d) above;
31
(v) no Proceeding shall be pending or threatened before any court or
Governmental Entity or before any arbitrator involving Target wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) affect adversely
the right of Target after the Effective Time to own Target's assets and to
operate Target's business (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(vi) Target shall have delivered to Buyer and Transitory Subsidiary
a certificate to the effect that each of the conditions specified above in
Section 6(a)(i) through (v) is satisfied in all respects;
(vii) the amount of Target's Liabilities under the Packard Loan
shall not exceed $6,500,000 plus all accrued but unpaid interest thereon
as of the Closing Date;
(viii) the amount of Target's Liabilities under the Recoverable
Grant shall not exceed [ * * * ];
(ix) intentionally left blank;
(x) if the Closing has occurred by March 1, 2004, Target shall have
delivered notice which will have the effect of terminating the Amended and
Restated Licensing Agreement dated as of September 24, 2001 by and between
Target and Xxxxxx Xxxxxxx regarding the supply of the Products (the "WCC
Supply Agreement") as of March 31, 2004;
(xi) Buyer shall have obtained a satisfactory completion of all
administrative agency reviews Buyer deems appropriate in its sole
discretion;
(xii) Target shall have delivered an updated Disclosure Schedule to
Buyer, the form and contents of which shall be satisfactory to Buyer in
its sole discretion;
(xiii) Buyer and Transitory Subsidiary shall have received all other
authorizations, consents, and approvals of Governmental Entities referred
to in Section 4(c) above;
(xiv) Target shall have delivered an estimated unaudited balance
sheet of Target as of the Closing Date, which reflects the business of
Target on a consolidated basis, which shall have been prepared to the
extent commercially reasonable in accordance with GAAP applied on a
consistent basis, and which shall present fairly the estimated financial
condition of Target as of such date, subject to year-end audit
adjustments;
(xv) Target shall have filed all Tax Returns with respect to the
most recently completed fiscal year of Target;
(xvi) all actions to be taken by Target in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance
to Buyer and Transitory Subsidiary;
(xvii) Buyer and Transitory Subsidiary shall have received the
resignations, effective as of the Effective Time, of each director,
officer and employee of Target;
32
(xviii) Target shall have delivered to Buyer and Transitory
Subsidiary copies of the Certificate of Incorporation (or comparable
document) of Target certified on or soon before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of Target's
incorporation;
(xix) Target shall have delivered to Buyer and Transitory Subsidiary
copies of the certificate of good standing of Target issued on or soon
before the Closing Date by the Secretary of State (or comparable officer)
of the jurisdiction of Target's organization and of each jurisdiction in
which Target is qualified to do business;
(xx) Target shall have delivered to Buyer and Transitory Subsidiary
a certificate of the secretary or an assistant secretary of Target, dated
the Closing Date, in form and substance reasonably satisfactory to Buyer,
as to (A) no amendments to the Certificate of Incorporation of Target
since the date specified in clause (ix) above; (B) the bylaws (or other
organizational documents) of Target; (C) the resolutions of the board of
directors (or other authorizing body) (or a duly authorized committee
thereof) of Target authorizing the execution, delivery, and performance of
this Agreement and the transactions contemplated hereby; and (D)
incumbency and signatures of the officers of Target executing this
Agreement or any other agreement contemplated by this Agreement;
(xxi) Target shall have delivered to Buyer and Transitory Subsidiary
the most recently available consolidated unaudited balance sheet of Target
and the related consolidated statements of income of Target as of a date
satisfactory to Buyer, which shall (A) reflect Target's business on a
consolidated basis, (B) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, (C) present
fairly the financial condition of Target as of such dates and the results
of operations of Target for such periods, subject to year-end audit
adjustments;
(xxii) Target shall have delivered to Buyer a written opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to Target, dated as of the
Closing Date, addressed to Buyer, in a form reasonably acceptable to
Buyer;
(xxiii) Target shall have paid Xxxxxx Xxxxxxx all amounts incurred
and/or accrued under the WCC Supply Agreement as of the Closing Date; plus
shall have paid into an escrow pursuant to Section 9(e) below (the "GR
Escrow Fund") [ * * * ] provided further that for the purposes of this
Section 6(a)(xxiii), the [ * * * ] shall be deemed to have been [ * * * ];
and
(xxiv) Buyer or, at Buyer's election, Target shall have entered into
a supply agreement with Xxxxxx Xxxxxxx reasonably satisfactory to Buyer.
Buyer and Transitory Subsidiary may waive any condition specified in this
Section 6(a) if they execute a writing so stating at or prior to the Closing.
(b) Conditions to Target's Obligation. Target's obligation to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(i) this Agreement, the Merger, and the amendment to the Target 2000
Stock Option Plan shall have received the Requisite Stockholder Approval;
(ii) the representations and warranties set forth in Section 4 above
shall be true and correct at and as of the date hereof and true and
correct in all material respects at and as of the
33
Closing Date, except to the extent that such representations and
warranties are qualified by terms such as "material", "Material Adverse
Change" and "Material Adverse Effect", in which case such representations
and warranties shall be true and correct in all respects at and as of the
Closing Date;
(iii) Buyer and Transitory Subsidiary shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing, except to the extent that such covenants are
qualified by terms such as "material" and "Material Adverse Effect," in
which case Buyer and Transitory Subsidiary shall have performed and
complied with all of such covenants in all respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or Governmental Entity or before any arbitrator involving
Buyer or Transitory Subsidiary wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement or (B) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) Buyer and Transitory Subsidiary shall have delivered to Target a
certificate to the effect that each of the conditions specified above in
Section 5(b)(i) through (iii) is satisfied in all respects;
(vi) Buyer shall have irrevocably arranged for payment of the
Packard Loan at Closing in an amount not to exceed $6,500,000 plus all
accrued but unpaid interest thereon as of the Closing Date;
(vii) Buyer and Transitory Subsidiary shall have received all other
authorizations, consents, and approvals of Governmental Entities referred
to in Section 4(c) above; and
(viii) all actions to be taken by Buyer and Transitory Subsidiary in
connection with consummation of the transactions contemplated hereby and
all certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Target.
Target may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) Any of Buyer, Transitory Subsidiary and Target may terminate
this Agreement by written notice to the other parties at any time prior to
the Closing;
(ii) Buyer and Transitory Subsidiary may terminate this Agreement by
giving written notice to Target at any time prior to the Closing (A) in
the event Target has breached any representation, warranty or covenant
contained in this Agreement in any material respect, Buyer has notified
Target of the breach, and the breach has continued without cure for a
period of thirty (30) days after the notice of breach or (B) if the
Closing shall not have occurred on or before April 30, 2004 by reason of
the failure of any condition precedent under Section 6(a) hereof
34
(unless the failure results primarily from either Buyer or Transitory
Subsidiary breaching any representation, warranty, or covenant contained
in this Agreement); and
(iii) Target may terminate this Agreement by giving written notice
to Buyer and Transitory Subsidiary at any time prior to the Closing (A) in
the event Buyer or Transitory Subsidiary has breached any representation,
warranty or covenant contained in this Agreement in any material respect,
Target has notified Buyer and Transitory Subsidiary of the breach, and the
breach has continued without cure for a period of thirty (30) days after
the notice of breach or (B) if the Closing shall not have occurred on or
before April 30, 2004 by reason of the failure of any condition precedent
under Section 6(b) hereof (unless the failure results primarily from
Target itself breaching any representation, warranty, or covenant
contained in this Agreement).
(b) Effect of Termination If any Party terminates this Agreement pursuant
to Section 7(a) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of Target contained in Section 3 of this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
Closing (even if Buyer knew or had reason to know of any misrepresentation or
breach of warranty at the time of Closing) and continue in full force and effect
until the second anniversary of the Closing Date; provided, however, that the
representations and warranties of Target contained in (i) Section 3(j) above
shall survive the Closing and continue in full force and effect until the
earlier of the fourth anniversary of the Closing Date or 60 days after the
expiration of all applicable statutes of limitations, (ii) Sections 3(k) and
3(z) above shall survive the Closing and continue in full force and effect until
the sixth anniversary of the Closing Date, (iii) Sections 3(a) through 3(d)
above shall survive the Closing and continue in full force and effect until the
fourth anniversary of the Closing Date. All of the representations and
warranties of Buyer and Transitory Subsidiary contained in Section 4 of this
Agreement or in any certificate or instrument delivered pursuant to this
Agreement shall survive the Closing (even if Target knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect until the fourth anniversary of the Closing
Date.
(b) Adjustment of Merger Consideration. Subject to Section 8(a) above and
Sections 8(e) and 8(f) below, the amount of the Merger Consideration may be
decreased from time to time to the extent that Buyer, Surviving Corporation and
each of their officers, directors, agents, and each person, if any, who controls
Buyer or Transitory Subsidiary within the meaning of the Securities Act (each a
"Buyer Indemnified Party" and collectively, the "Buyer Indemnified Parties")
incurs or suffers any and all debts, obligations and other Liabilities, monetary
damages, fines, fees, penalties, interest obligations, deficiencies, losses and
expenses (including without limitation amounts paid to enforce the provisions of
this Section 8 and amounts paid in settlement, interest, court costs, costs of
investigators, reasonable fees and out-of-pocket expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) ("Damages") resulting from, relating to or constituting:
(i) fraud, intentional misrepresentation or a deliberate or willful
breach by Target of any of its representations or warranties under this
Agreement (including any representations or warranties deemed to have been
made by the delivery of any certificate or instrument delivered pursuant
to this Agreement);
35
(ii) any other misrepresentation or breach of warranty of Target
contained in this Agreement (including any misrepresentation or breach of
warranty deemed to have been made by the delivery of any certificate or
instrument delivered pursuant to this Agreement), or by reason of any
Proceeding asserted or instituted arising out of any matter constituting a
breach of such representations or warranties (including any breach of any
representations or warranties deemed to have been made by the delivery of
any certificate or instrument delivered pursuant to this Agreement);
(iii) any breach by Target of any of its obligations or covenants
contained in this Agreement, unless specifically waived in writing by
Buyer at or prior to the Effective Time;
(iv) any Liability of Target for returns, chargebacks, rebates,
allowances or credits (including rebates to social and welfare systems and
amounts paid to third parties on account of rebate payments) related to
(A) Products sold prior to the Closing or (B) the Inventory, in excess of
[ * * * ];
(v) any Liability paid by the Surviving Corporation with respect to
holders of Dissenting Shares as a result of the transactions contemplated
hereby in excess of amounts that holders of Dissenting Shares would have
received had they accepted the Merger Consideration; or
(vi) any Liability arising out of any inaccuracy in the Share and
Option Exchange Schedule, arising out of any materials distributed in
connection with the Stockholder Vote, or arising from any action or
inaction by the Stockholder Representative.
(c) Indemnification Provisions for Target's Benefit. Subject to Section
8(a) above and Section 8(e) below, Buyer and Transitory Subsidiary shall
indemnify each of the individuals of Target who were officers or directors of
Target prior to the Effective Time, the Target Stockholders and their respective
officers, directors, and agents (each a "Target Indemnified Party" and
collectively, the "Target Indemnified Parties") in respect of, and hold them
harmless against, any and all Damages incurred or suffered by any of the
foregoing parties resulting from, relating to or constituting:
(i) fraud, intentional misrepresentation or a deliberate or willful
breach by either Buyer or Transitory Subsidiary of any of its
representations or warranties under this Agreement (including any
representations or warranties deemed to have been made by the delivery of
any certificate or instrument delivered pursuant to this Agreement);
(ii) any other misrepresentation or breach of warranty of either
Buyer or Transitory Subsidiary contained in this Agreement (including any
misrepresentation or breach of warranty deemed to have been made by the
delivery of any certificate or instrument delivered pursuant to this
Agreement), or by reason of any Proceeding asserted or instituted arising
out of any matter constituting a breach of such representations or
warranties (including any breach of any representations or warranties
deemed to have been made by the delivery of any certificate or instrument
delivered pursuant to this Agreement); or
(iii) any breach by either Buyer or Transitory Subsidiary of any of
its obligations or covenants contained in this Agreement, unless
specifically waived in writing by Target at or prior to the Effective
Time.
(d) Matters Involving Third Parties.
36
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for reduction of the Merger Consideration or a claim for
indemnification against the other Party (the "Indemnifying Party") under
this Section 8, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Damages the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests or the reputation of the Indemnified Party,
and (E) the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Party will remain responsible for any
Damages the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
(e) Maximum Amount of Reduction of Merger Consideration and Maximum
Indemnification Amount for Certain Claims. The maximum aggregate amount by which
the Merger Consideration may be reduced and the maximum indemnification amount
that may be due from an Indemnifying Party for Damages pursuant to Section
8(b)(ii) shall not [ * * * ].
37
(f) Recoupment Under Buyer Note. [ * * * ] pursuant to Section 8(b)(ii)
above, [ * * * ] pursuant to this Section 8) [ * * * ] in accordance with
Section 8(g) below. [ * * * ]
(g) Resolution of Conflicts; Arbitration.
(i) In the event of any dispute among the Parties, the Parties shall
first work together for a period of thirty (30) days to mediate or resolve
the dispute amicably. At the end of such period, either Party, by written
notice to the other, may demand arbitration of the matter under the
commercial rules then in effect of the American Arbitration Association,
unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both Parties agree to arbitration; and
in either such event the matter shall be settled by arbitration conducted
by three arbitrators. If either Party demands arbitration with respect to
a dispute, it shall be the exclusive venue and forum for settlement of the
dispute. Within fifteen (15) days after such written notice is sent, each
Party shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator. The decision of the arbitrators
as to the validity and amount of any claim shall be binding and conclusive
upon the Parties to this Agreement.
(ii) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be
held in New York City, New York. In any arbitration hereunder related to
the payment of amounts claimed due, the Party asserting a claim shall be
deemed to be the non-prevailing Party unless the arbitrators award an
amount of more than one-half (1/2) of the amount in dispute, plus any
amounts not in dispute; otherwise, the other Party to the arbitration
shall be deemed to be the non-prevailing Party. The non-prevailing Party
to an arbitration shall pay its own expenses, the fees of each arbitrator,
the administrative fee of the American Arbitration Association, and the
expenses, including without limitation, attorneys' fees and costs,
reasonably incurred by the other Party to the arbitration.
9. Post-Closing Covenants.
(a) Public Sector Supply.
(i) [ * * * ]
(ii) [ * * * ]
(b) Earnout Payment. Subject to Section 2(e)(iii)(C) above, for a period
of [ * * * ] following the Closing Date, Buyer shall pay to the Payment Account
as part of the Merger Consideration an amount [ * * * ] from sales of the
Products in Canada by Buyer, its affiliates, successors, licensees or assigns
(the "Earnout Payment"). Within ninety (90) days after the end of each fiscal
year of Buyer and the end of each second quarter of the fiscal year of Buyer
during such [ * * * ] period (the "Earnout Payment Date"), Buyer shall pay to
the Stockholder Representative the amount of the Earnout Payment earned during
such half fiscal year (a "Semi-Annual Earnout Payment"). Past due amounts shall
bear interest at the default rate of one percent (1.0%) per month from the
Earnout Payment Date until paid. Concurrently with the payment of a Semi-Annual
Earnout Payment, Buyer shall deliver to the Stockholder Representative a
statement with reasonable supporting detail reflecting Buyer's calculation of
the Net Profits from sales of the Products in Canada and the amount of the
Semi-Annual Earnout Payment payable by Buyer in respect of such fiscal period
(the "Earnout Calculations"). At any time, upon fifteen (15) days prior written
notice to Buyer, the Stockholder Representative may appoint, subject to Buyer's
reasonable approval, a nationally recognized independent auditor (the
"Independent Auditor"), to audit and examine, at Buyer's offices during normal
business hours, solely for the purpose of
38
confirming the accuracy of payments hereunder, the Earnout Calculations against
all business records of Buyer on which the Earnout Calculations rely, as
reasonably requested by the Independent Auditor. Such audit may be made no more
often than once in every twelve (12) calendar month period. In the event that an
audit reveals an overpayment by Buyer, the Stockholder Representative agrees to
promptly refund or credit Buyer for such overpaid amount. In the event that such
audit reveals an underpayment by Buyer, Buyer agrees to promptly pay to the
Stockholder Representative the amount of such underpayment with interest
accumulated thereon at the rate of one percent (1.0%) per month from the
applicable Earnout Payment Date until such payment. The fees, costs and expenses
of the Independent Auditor shall be advanced by the Stockholder Representative
and borne by Buyer and the Stockholder Representative in the same proportion
that their respective positions are confirmed or rejected by the Independent
Auditor.
(c) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
(d) Buyer Note. The Buyer Note will be imprinted with a legend
substantially in the following form:
The payment of principal and interest on this Note is subject to certain
recoupment provisions set forth in an Agreement and Plan of Merger dated
as of [__________], 2004 (the "Agreement") between the issuer of this Note
and the person to which this Note originally was issued. This Note was
originally issued on [__________], 2004, and has not been registered under
the Securities Act of 1933, as amended. The transfer of this Note is
subject to certain restrictions set forth in the Agreement. The issuer of
this Note will furnish a copy of these provisions to the holder hereof
without charge upon written request.
Each holder desiring to transfer a Buyer Note first must furnish Buyer with (i)
a written opinion reasonably satisfactory to Buyer in form and substance from
counsel reasonably satisfactory to Buyer by reason of experience to the effect
that the holder may transfer the Buyer Note as desired without registration
under the Securities Act and (ii) a written undertaking executed by the desired
transferee reasonably satisfactory to Buyer in form and substance agreeing to be
bound by the recoupment provisions and the restrictions on transfer contained
herein.
(e) GR Escrow Fund. Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, attorneys for WCC,
as escrow agent, shall hold funds paid pursuant to Section 6(a)(xxiii) above as
the GR Escrow Fund. If pursuant to Section 6(a)(xxiii) above, WCC pays amounts
into the GR Escrow Fund, the funds will be released as follows:
(i) Release to Surviving Corporation: On [ * * * ] funds equal to [ * * *
] under the WCC Supply Agreement for the period between [ * * * ] and [ *
* * ] and [ * * * ] will be released to the Surviving Corporation;
provided further that for the purposes of this Section 9(e), [ * * * ]
shall be deemed to have been [ * * * ].
(ii) Release to Shareholder Representative and Surviving Corporation: On [
* * * ] any funds [ * * * ] shall be released [ * * * ] to the Stockholder
Representative, [ * * * ] and to the Surviving Corporation.
10. Miscellaneous.
39
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party (which approval shall not be unreasonably withheld or delayed);
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its commercially reasonable efforts to advise the other Party prior to
making the disclosure); provided, further, that in no event shall any such press
release or public announcement disclose any of the terms or conditions of this
Agreement unless, in the opinion of counsel, such disclosure is reasonably
required in order to satisfy any law, regulation or any listing or trading
agreement concerning its publicly-traded securities.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates, (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder), (iii) assign any or all of its
rights and interests hereunder as part of a transaction in which Buyer sells all
or substantially all of its assets or otherwise undergoes a change in control.
(e) Counterparts. This Agreement may be executed in one or more
counterparts (including by means of facsimile), each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) one business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) one
business day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four business days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:
If to Target prior to the Closing:
Women's Capital Corporation
0000 X Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Dell X. Xxxxx
Facsimile: (000) 000-0000
40
And to the initial Trustee of the Stockholder Representative:
Dell X. Xxxxx, President
Villa K. Enterprises, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxx Xxxxxx, XX 00000
Copy to (which shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: G. Xxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer, Xxxx, and Transitory Subsidiary:
Duramed Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
and to:
Xxxx Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties. No waiver by any Party of any
41
provision of this Agreement or any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be valid
unless the same shall be in writing and signed by the Party making such waiver
nor shall such waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such default,
misrepresentation, or breach of warranty or covenant.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. Without limiting the generality of the
foregoing, all transfer, documentary, sales, use, stamp, registration and other
such Taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid by
Target when due, and Target will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Taxes, fees and
charges, and, if required by applicable law, the Parties will, and will cause
their Affiliates to, join in the execution of any such Tax Returns and other
documentation.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Nothing in the Disclosure Schedules shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedules identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
The Parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Annexes, Exhibits and the Disclosure Schedules. The
Annexes, Exhibits and the Disclosure Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any provision of this
Agreement not performed in accordance with its specific terms or otherwise is
breached, so that a Party shall be entitled to injunctive relief to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in addition to any other remedy to
which such Party may be entitled, at law or in equity. In particular, the
Parties acknowledge that Target's business is unique and recognize and affirm
that in the
42
event Target breaches this Agreement, money damages would be inadequate and
Buyer would have no adequate remedy at law, so that Buyer shall have the right,
in addition to any other rights and remedies existing in its favor, to enforce
its rights and the other Parties' obligations hereunder not only by action for
damages but also by action for specific performance, injunctive, and/or other
equitable relief.
(o) Submission to Jurisdiction. Subject to Section 8(g) above, each of the
Parties submits to the jurisdiction of any state or federal court sitting in New
York City, New York, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court. Each Party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto. Any Party may make service on the other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 10(g) above. Nothing in this
Section 10(o), however, shall affect the right of any Party to serve legal
process in any other manner permitted by law or in equity. Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
law or in equity.
(p) Sale of Office Assets to Stockholder Representative. Immediately
following the Effective Time, the Surviving Corporation shall sell and release
to the Stockholder Representative, for an aggregate purchase price of $1.00, all
office furniture, fixtures and fittings, personal computers, PDAs, wireless
telephones and devices, and related software licenses, printers, cables and
peripherals held by WCC and located at the premises at 0000 X Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX (collectively the "Surplus Assets"), and the Stockholder
Representative shall assume full responsibility for the same and shall
immediately remove the Surplus Assets from said premises.
* * * * *
43
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
DURAMED PHARMACEUTICALS, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx, President
Title:
WCC MERGER SUB, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: President
WOMEN'S CAPITAL CORPORATION
By: /s/ Dell X. Xxxxx
-------------------------------------
Name: Dell X. Xxxxx
Title: President
Executing solely as Guarantor of Performance by Buyer:
XXXX PHARMACEUTICALS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President, General
Counsel and Corporate Secretary
