Contract
EXECUTION
COPY
ASSET
PURCHASE AGREEMENT dated as of August 17, 2005 among VivoQuest, Inc., a Delaware
corporation (“Seller”),
and
XTL Biopharmaceuticals Inc., a Delaware corporation (“Purchaser”).
In
consideration of the mutual covenants, representations and warranties made
herein and other good and valuable consideration, the receipt and sufficiency
of
which hereby are acknowledged, the parties hereto agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF THE ASSETS
Section
1.1 Assets.
Subject
to and upon the terms and conditions set forth in this Agreement, at the
closing
of the transactions contemplated hereby (the “Closing”),
Seller shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase and acquire from Seller, all right, title and interest
of Seller in and to all properties, assets and rights of every nature, kind
and
description, tangible and intangible (including goodwill), whether accrued,
contingent or otherwise, that relate to or are used or held for use in the
Business (such term and other capitalized terms used herein being defined
in
Article X) (collectively, the “Assets”),
including without limitation the following Assets:
(a) all
computer hardware, furniture, furnishings, equipment, machinery and other
tangible personal property;
(b) all
rights under the Contracts listed on Schedule I (the “Included
Contracts”);
(c) all
notes
and accounts receivable (in all cases, whether or not billed) and the benefit
of
any security therefor;
(d) all
Books
and Records; and
(e) to
the
extent their transfer is permitted by applicable Law, all Governmental
Approvals, including all applications therefore.
Without
limitation of the foregoing, the Assets shall include the assets of Seller
listed on Section 1.1 of the Seller Disclosure Schedule (as defined below).
At
the Closing, the Assets shall be transferred or otherwise conveyed to Purchaser
free and clear of all Liens excepting only Permitted Exceptions.
Section
1.2 Excluded
Assets.
Notwithstanding Section 1.1, Seller shall retain Seller’s right, title and
interest in and to the following assets (collectively, the “Excluded
Assets”):
(a) all
cash
and cash equivalents of Seller (it being understood that all such cash and
cash
equivalents shall be applied to reduce Seller’s pre-Closing liabilities);
(b) all
Intellectual Property and technology, including the compounds and compound
libraries (the “Licensed
Property”),
subject to that certain License Agreement dated as of the date hereof between
Seller and Purchaser (the “License
Agreement”);
(c) insurance
policies and causes of action, lawsuits, claims, demands, rights of recovery
and
set-off under or with respect to, and the proceeds of, insurance
policies;
(d) causes
of
action, lawsuits, claims, demands, and rights of recovery and set-off with
respect to any Excluded Assets or Excluded Liability;
(e) prepaid
Taxes and any claims for any refund, rebate or abatement with respect to
Taxes
for any period or portion thereof through the date (the “Closing
Date”)
of the
Closing;
(f) subject
to the last paragraph of this Section 1.2, Contracts other than Included
Contracts;
(g) any
and
all income tax returns and related workpapers used to prepare the same for
periods ending on or prior to the Closing Date;
(h) all
Employee Benefit Plans, and Pension Plans; and
(i) the
rights of Seller under this Agreement and the other Transaction
Documents.
Notwithstanding
the foregoing, Purchaser shall have the sole and exclusive right, but shall
not
be required, to enforce the provisions of the Contracts that are not Included
Contracts (the “Excluded
Contracts”)
relating to the allocation of Intellectual Property rights, confidentiality
obligations, publication restrictions and all related matters. Should Purchaser
elect to bring a claim or be required to defend a claim involving any such
matter, Purchaser shall have the right, at its sole expense, to join Seller
as a
party for such purpose.
Purchaser
may elect at any time prior to, on or after the Closing Date to have any
Excluded Contract (other than one relating to a scientific advisory or
consulting relationship) included in the Assets in its sole discretion and,
if
Purchaser elects to have any such Excluded Contract included in the Assets,
such
Excluded Contract shall thereupon become an Included Contract (and, to the
extent applicable, a Delayed Asset). Notwithstanding Section 2.3, with respect
to any such Excluded Contract that Purchaser elects to include in the Assets
after the Closing Date, Purchaser shall assume only liabilities and obligations
of Seller under such Excluded Contract included that, by the terms of such
Excluded Contracts, arise after the date of assignment, relate to periods
following the assignment and are to be observed, paid, discharged, or performed
as the case may be, at any time after the assignment. With respect to Seller’s
scientific advisory and consulting relationships with Xxxxxxx Xxxx, Xxxxx
Xx,
Xxxxxxx Xxxxxxx, Chi-Xxxx Xxxx and X.X. Xxxxxxx Seller shall, to the extent
desired by Purchaser, use its best reasonable efforts to cause such persons
to
enter into comparable scientific advisory and consulting relationships with
Purchaser following the Closing (including by way of assignment of any prior
agreement if the advisor consents to such assignment), provided that the
entry
by such persons into scientific advisory and consulting relationships with
Purchaser shall not be a condition to the Closing.
2
Section
1.3 Required
Consents.
Notwithstanding anything to the contrary in this Agreement, this Agreement
shall
not constitute an agreement to assign or transfer any Asset or interest therein
as to which (i) an assignment or transfer thereof or an attempt to make such
an
assignment or transfer without a Consent (a “Required
Consent”)
would
constitute a breach or violation thereof or of applicable Law, or would
adversely affect the rights or obligations thereunder to be assigned or
transferred to or for the account of Purchaser and (ii) all such Required
Consents shall not have been obtained with respect to such Asset or interest
therein prior to the Closing. Any transfer or assignment to Purchaser by
Seller
of any such Asset or interest therein (a “Delayed
Asset”),
and
any assumption by Purchaser of any corresponding Assumed Liability (a
“Delayed
Liability”),
shall
be made subject to all such Required Consents in respect of such Delayed
Asset
being obtained. If there are any Delayed Assets, Seller shall use its reasonable
best efforts to obtain all Required Consents in respect thereof as promptly
as
practicable following the Closing without any further cost to Purchaser or
any
of its Affiliates. Until all Required Consents with respect to each Delayed
Asset (other than one relating to a scientific advisory or consulting
relationship) have been obtained, (a) Seller shall hold the Delayed Asset
on
behalf of Purchaser, (b) Seller shall cooperate with Purchaser for no additional
consideration in any lawful arrangement (including subleasing or subcontracting,
or performance thereunder by Seller as Purchaser’s agent) to provide Purchaser
with all of the benefits of or under any such Delayed Asset, (c) to the extent
of any benefits received by or for the account of Purchaser under clause
(b)
above, Purchaser shall assume and perform any corresponding Delayed Liabilities
and (d) Seller shall otherwise enforce and perform for the account of Purchaser
and as directed by Purchaser any other rights of Seller arising from such
Delayed Asset. At such time and on each occasion after the Closing Date as
all
Required Consents with respect to a Delayed Asset have been obtained, such
Delayed Asset shall automatically be transferred and assigned by Seller to
Purchaser for no additional consideration, and all corresponding Delayed
Liabilities shall be simultaneously assumed by Purchaser, without the need
for
any further act on the part of any party.
3
ARTICLE
II
PURCHASE
PRICE AND CLOSING
Section
2.1 Purchase
Price; Allocation.
i)
The
consideration for the Assets (the “Purchase
Price”)
shall
consist of (i) a number of unregistered ordinary shares, par value NIS 0.02
per
share (“Parent
Ordinary Shares”),
of
XTL Biopharmaceuticals Ltd., an Israeli corporation (“Parent”)
equal
to the quotient of (x) $450,000, divided by (y) the Fair Market Value of
one
Parent Ordinary Share as of the Closing Date (the
“Shares”)
and
(ii) the assumption by Purchaser at the Closing of the Assumed Liabilities.
On
the Closing Date, Purchaser shall deliver to the transfer agent for the Parent
Ordinary Shares irrevocable instructions to issue the Shares in the name
of
Seller. The Shares shall be issued without any deduction in respect of
withholding taxes.
(b)
The
Purchase Price shall be allocated by Purchaser among the Assets in the manner
required by Section 1060 of the Code and regulations thereunder. Purchaser
shall
deliver to Seller a copy of such allocation within seventy five (75) days
after
the Closing. The portion of the Purchase Price, if any, allocated to one
or more
covenants set forth in a Transaction Document shall not be offered by any
party
hereto as evidence, or otherwise taken into account, in connection with a
determination of the damages arising from a breach of any such covenant.
Purchaser and Seller shall file on a timely basis with the IRS substantially
identical initial and supplemental IRS Forms 8594 consistent with such
allocation. Purchaser and Seller agree, for all Tax purposes, to report the
transactions effected pursuant to the Transaction Documents in a manner
consistent with the terms of this Agreement (including the Purchase Price
allocation prepared by Purchaser) and neither of them shall take a position
on
any Tax return, before any Tax authority or in any judicial proceeding that
is,
in any manner, inconsistent with such allocation without the consent of the
other or unless specifically required pursuant to a determination by an
applicable Tax authority. The parties shall promptly advise one another of
the
existence of any Tax audit, controversy or litigation related to any allocation
hereunder.
Section
2.2 Closing
Date.
The
Closing shall, subject to Section 9.4, take place at the Law Office of Xxxxxxx
X. Xxxxxxxxxx PLLC, 000 Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on the earlier of (i) a date determined
by Purchaser, which date shall be within two weeks after American Depository
Receipts for the Parent Ordinary Shares begin trading on NASDAQ and (ii)
September 22, 2005, provided that the conditions set forth in Sections 5.1
and
5.2 have been satisfied (or waived by the party entitled to waive such
conditions). At the Closing, the parties shall make the deliveries provided
for
in Section 2.1 and Article VI hereof. The Closing shall become effective
as of
11:59 P.M. EST on the Closing Date.
Section
2.3 Assumption
of Liabilities .
Subject
to the terms and conditions set forth herein, at the Closing, Purchaser shall
assume and agree to pay and discharge when due all liabilities and obligations
of Seller under Included Contracts included in the Assets that, by the terms
of
such Included Contracts, arise after the Closing, relate to periods following
the Closing and are to be observed, paid, discharged, or performed as the
case
may be, at any time after the Closing and no other liabilities or obligations
of
Seller (the “Assumed
Liabilities”).
Liabilities and obligations for periods that include the Closing Date shall
be
allocated on a per diem basis.
4
Section
2.4 Excluded
Liabilities.
Purchaser shall not be responsible for any Liabilities, obligations or
commitments of Seller that are not specifically set forth in Section 2.3
(collectively, the “Excluded
Liabilities”).
In
addition, notwithstanding anything to the contrary in this Agreement (including
Section 2.3), Purchaser shall not be responsible for any of the following
(each
of which shall also constitute Excluded Liabilities):
(a) any
Liability relating to any cause of action or judicial or administrative action,
suit, proceeding or investigation, (i) pending or threatened on or prior
to the
Closing Date, or (ii) relating to Excluded Assets or Excluded
Liabilities;
(b) any
Liability relating to any failure or alleged failure to comply with, or any
violation or alleged violation of, (i) any Law, Order or Governmental
Approval applicable to the Business or the Assets, including without limitation
any Tax Law or any Law relating to employment practices, or (ii) any
Contract, in each case which failure or violation occurred or was alleged
to
have occurred on or prior to the Closing Date;
(c) any
Liability, severance obligation, termination fee or other obligation or
commitment relating to or arising out of (i) the employment by Seller of
any of
its employees or the engagement by Seller of any of its independent contractors
(or any employee of an independent contractor), (ii) any Employee Benefit
Plan
or Pension Plan, including any sponsorship, administration or contribution
obligation of any Person under any Employee Benefit Plan or Pension Plan
or the
termination prior to any such assumption of any Employee Benefit Plan or
Pension
Plan or (iii) the termination of employment or engagement of any employee
or independent contractor of Seller, including as a consequence of any
constructive termination resulting from the consummation of the transactions
contemplated by the Transaction Documents;
(d) any
Liability relating to any infringement or alleged infringement of the rights
of
any other Person arising out of the use of any Intellectual Property in
connection with the Business on or prior to the Closing Date;
(e) any
Liability for (i) any Taxes attributable to Seller, or (ii) for Taxes
attributable to the Assets or the Business with respect to any taxable period
(or portion thereof) ending on or prior to the Closing Date;
(f) any
Liability relating to any Excluded Asset; or
5
(g) any
Liability imposed by any Environmental Law and incurred in connection with
(i)
conditions existing or events occurring on or prior to the Closing Date on
Seller Property (as defined below), (ii) any real property, business
entities or assets, whether domestic or foreign, formerly owned, leased,
occupied or operated by or in connection with the Business on or prior to
the
Closing Date or (iii) the transportation or disposal of any Hazardous Materials
to or at any offsite facility or location by or in connection with the Business
occurring prior to the Closing Date.
For
purposes of Section 2.4(g), in the case of any taxable period that begins
before
and ends after the Closing Date (a “Straddle Period”), the amount of any Tax for
the portion of such taxable period ending on the Closing Date shall be deemed
to
be the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days in the taxable period through
the
Closing Date and the denominator of which is the number of days in such Straddle
Period.
Section
2.5 Transferability;
Legending of Shares.
(a)
Seller acknowledges that the Shares are being acquired pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the
“Securities
Act”)
and
that the Shares may be transferred only pursuant to an effective registration
statement or an exemption from registration under the Securities Act. Seller
represents that it is familiar with Rule 144 under the Securities Act. Seller
shall not be permitted to transfer any Shares in the absence of an effective
registration statement unless Seller has furnished Parent with an opinion
of
counsel, reasonably satisfactory to Parent, that such disposition does not
require registration of such Shares under the Securities Act. It is agreed
that
Parent will not require opinions of counsel for transfers made pursuant to
Rule
144 if Parent is provided with any certificates or other evidence of compliance
with Rule 144 reasonably required by it in connection with such transfer
(including without limitation a copy of the relevant Form 144).
(b)
It is
understood that the certificates evidencing the Shares shall bear a legend
to
the following effect:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTES OF SUCH ACT.
The
certificates evidencing the Shares may also bear any legends required by
applicable blue sky laws.
(c)
(i)
The Shares shall be freely tradeable on the London Stock Exchange (for so
long
as the Parent Ordinary Shares are listed on the London Stock Exchange), subject
to any restrictions imposed on a party to any transaction executed on the
London
Stock Exchange by the Laws of a country other than the United Kingdom to
which
such party is subject, including the other provisions of this section
2.5).
6
(ii).
In
the event any of the Shares evidenced by a certificate bearing a restrictive
legend as provided in Section 2.5(b) above are transferred by Seller or a
transferee of Seller pursuant to Rule 904 under the Securities Act, as currently
in effect, Purchaser shall cause Parent to instruct the transfer agent for
the
Parent Ordinary Shares to issue shares upon transfer free of any restrictive
legend or notation if Purchaser is presented with a written certification
to the
following effect from the transferor in such transfer:
The
undersigned registered holder is selling some or all of the shares evidenced
by
the accompanying certificate in a resale transaction in compliance with Rule
904
under the United States Securities Act of 1933, as amended.
Any
unsold balance of the shares represented by such certificate will continue
to
bear a restrictive legend until such time as they are the subject of a
transaction executed in accordance with this Section 2.5(c) or until such
legend
may otherwise be removed in the opinion of counsel to Parent.
Section
2.6 Certain
Transactions; Share Lock-up.
(a) In
the event of a merger, consolidation or other transaction (a “Conversion
Transaction”)
as a
result of which substantially all of the outstanding Parent Ordinary Shares
are
converted into the right to receive, in whole or in part, equity securities,
if
such equity securities are traded on a recognized securities exchange or
interdealer quotation system, in the United States, Europe or Israel, or
another
securities exchange or interdealer quotation system reasonably acceptable
to
Seller (“Listed
Equity Securities”),
(i)
any issued Parent Ordinary Shares issued hereunder (“Shares”) shall be eligible
to participate in any Conversion Transaction on the same basis as other
outstanding Parent Ordinary Shares and (ii) any consideration required to
be
provided to Seller hereunder that would otherwise be permitted to be satisfied
through the issuance of Parent Ordinary Shares shall thereafter be permitted
to
be satisfied through the issuance of such Listed Equity Securities. For such
purpose, such Listed Equity Securities shall be valued at their aggregate
Fair
Market Value as of the date such Parent Ordinary Shares would have been valued.
In the event that, in any Conversion Transaction, substantially all of the
outstanding Parent Ordinary Shares are converted into the right to receive
equity securities that are not Listed Equity Securities (or are converted
into
the right to receive a combination of such equity securities and cash), then,
until such equity securities constitute Listed Equity Securities, any further
consideration required to be provided to Seller hereunder that would otherwise
be permitted to be satisfied through the issuance of Parent Ordinary Shares
shall be satisfied entirely in cash. In the event of a merger, consolidation
or
other transaction as a result of which substantially all of the outstanding
Parent Ordinary Shares are converted into the right to receive only cash,
any
further consideration required to be provided to Seller hereunder that would
otherwise be permitted to be satisfied through the issuance of Parent Ordinary
Shares shall be required to be satisfied entirely in cash, provided that
if the
surviving or transferee entity in such transaction (or an Affiliate thereof)
has
a class of Listed Equity Securities, any portion of such consideration that
would otherwise be permitted to be satisfied through the issuance of Parent
Ordinary Shares shall thereafter be permitted to be satisfied through the
issuance of such Listed Equity Securities, valued at their aggregate Fair
Market
Value as of the date such Parent Ordinary Shares would have been
valued.
7
(b)
Neither Seller nor any transferee of Seller shall sell, pledge, hedge or
otherwise dispose of any economic interest in 50% of the Shares during the
period ending 30 days after the Closing Date. Furthermore, Seller shall consult
with Purchaser prior to disposing of any Shares on the open market to determine
whether Purchaser may provide Seller with an alternate opportunity for liquidity
at the same or better pricing, taking into account transaction costs, and
without material delay.
.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Purchaser that, except as set forth in the Seller
Disclosure Schedule attached hereto, the following statements are correct
and
complete as of the date hereof. The disclosures in the Seller Disclosure
Schedule shall be arranged in sections corresponding to the sections contained
in Article III hereof and the disclosures in any section or paragraph of
the
Disclosure Schedule shall qualify only (a) the corresponding section or
paragraph in Article III hereof and (b) other sections or paragraphs in Article
III hereof to the extent that it is reasonably apparent (notwithstanding
the
absence of a specific cross reference) from a reading of the disclosure that
such disclosure is applicable to such other sections or paragraphs. The
disclosure of the existence of a contract on the Seller Disclosure Schedule
shall not, without more, constitute the disclosure of any particular provisions
of such contract or the actual or potential consequences thereof.
Section
3.1 Organization
and Good Standing.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business.
Seller is duly qualified or authorized to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which it owns
or
leases real property and each other jurisdiction in which the conduct of
its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized
would
not have a Seller Material Adverse Effect. Section 3.1 of the Seller Disclosure
Schedule sets forth a true, correct and complete list of each jurisdiction
in
which Seller is qualified or authorized to do business as a foreign
corporation.
8
Section
3.2 Authorization
and Enforceability.
Seller
has all requisite power and authority to execute and deliver this Agreement
and
each other agreement, document, instrument or certificate contemplated by
this
Agreement or to be executed by Seller in connection with the consummation
of the
transactions contemplated by this Agreement, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance
by
Seller of each of the Transaction Documents to which it is a party have been
duly authorized by all necessary corporate action on the part of Seller.
This
Agreement and the other Transaction Documents have been duly and validly
executed and delivered by Seller and constitute legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
Section
3.3 Ownership;
Subsidiaries.
Section
3.3 of the Seller Disclosure Schedule sets forth (i) the record and beneficial
ownership of all outstanding equity interests in Seller and (ii) a true and
complete list of all partnerships, joint venture arrangements or other Persons
in which Seller owns a direct or indirect equity interest, together with
the
jurisdiction of organization thereof and each record and beneficial owner
of
equity interests in such partnership, joint venture or other
Person.
Section
3.4 Seller’s
Records.
(a) The
minute books of Seller previously made available to Purchaser contain all
existing records of meetings and other corporate action of the Board of
Directors and stockholders of Seller for the last five years other than those
reflecting consideration of a possible sale of Seller or a sale or license
of a
substantial portion of its assets outside the ordinary course of business.
The
records that have been omitted because they contain such subject matter do
not
discuss any matters bearing materially on the representations and warranties
made by Seller herein (other than those relating solely to the financial
condition of Seller). The certificate books and transfer ledgers of Seller
previously made available to Purchaser are true, correct and complete.
(b) Seller
has not engaged in any material transaction with respect to its business,
maintained any bank account for its business or used any of its funds, except
for transactions, bank accounts and funds which have been and are reflected
in
the normally maintained books, records and accounts of Seller. Seller is
not
aware that any fraud, whether or not material, has occurred that involves
or
involved management or other employees who have a significant role in Seller’s
system of internal accounting control.
9
Section
3.5 Conflicts;
Consents of Third Parties.
None
of
the execution and delivery by Seller of this Agreement and the other Transaction
Documents to which it is a party, the consummation of the transactions
contemplated hereby or thereby, or compliance by Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach
of,
any provision of Seller’s certificate of incorporation or by-laws or
comparable organizational documents (collectively, “Organizational
Documents”)
of
Seller; (ii) conflict with, violate, result in the breach or termination
of, or constitute a default under any Contract to which Seller is a party
or by
which Seller or its properties or assets is bound, or require a consent or
waiver by any Person in order to avoid any such conflict, violation, breach,
termination or default; (iii) violate any Law or any Order by which Seller
is
bound; or (iv) result in the creation of any Lien upon the properties
or
assets of Seller. No governmental franchise, easement, permit, right,
application, filing, registration, license or other authorization (each a
“Permit”),
Order, waiver, declaration or filing with, or notification to any Person,
including without limitation any Governmental Body, is required on the part
of
Seller in connection with the execution, delivery and performance of this
Agreement or the other Transaction Documents to which it is a party, or the
compliance by Seller with any of the provisions hereof or thereof.
Section
3.6 Financial
Statements.
Included in Section 3.6 of the Seller Disclosure Schedule are (i) the
balance sheets of the Seller as at December 31, 2003 and 2004 and the related
statements of income and of cash flows of the Seller for the years then ended
and (ii) the unaudited balance sheet (the “Balance
Sheet”)
of the
Seller as at June 30, 2005 (the “Balance
Sheet Date”)
and
the related statements of income and cash flows of the Seller for the six-month
period then ended and for the comparable period in the prior year (such
statements, including the related notes and schedules thereto, are referred
to
herein as the “Financial
Statements”).
The
Financial Statements have been prepared from the books and records of the
Seller
and fairly present in all material respects the financial position and results
of operations, stockholders’ equity and cash flows of the Seller as at the dates
and for the periods reflected thereon in accordance with GAAP applied on
a
consistent basis throughout the periods indicated, except as may be indicated
in
the notes thereto and except, in the case of the six-month financial statements,
for the failure of the unaudited financial statements to include the footnotes
required by GAAP, and subject to normal year-end audit adjustments and any
other
adjustments specifically described therein that will not individually or
in the
aggregate be material.
Section
3.7 No
Undisclosed Liabilities.
Seller
has no indebtedness or any other material obligation or Liability of any
kind,
including any Liability as guarantor, surety or otherwise, which is not either
fully reflected in, reserved against or otherwise described in the Balance
Sheet
or the notes thereto or incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date.
10
Section
3.8 Absence
of Certain Developments.
Since
the Balance Sheet Date:
(a) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of Seller;
(b) Seller
has not made any change in the rate of compensation, commission, bonus or
other
direct or indirect remuneration payable, or paid or agreed or orally promised
to
pay, conditionally or otherwise, any bonus, incentive, retention or other
compensation, retirement, welfare, fringe or severance benefit or vacation
pay,
to or in respect of any director, officer, employee, distributor or agent
of
Seller, other than increases in the ordinary course of business consistent
with
past practice in the base salaries of employees of Seller other than officers
or
senior managers;
(c) Seller
has not entered into any employment, deferred compensation, severance or
similar
agreement (nor amended any such agreement);
(d) there
has
not been any change by Seller in accounting or Tax reporting principles,
methods
or policies;
(e) Seller
has not conducted its business other than in the ordinary course consistent
with
past practice;
(f) Seller
has not entered into (1) any Contract that is not an Included Contract or
(2)
any other material transaction;
(g) Seller
has not hired any employees or engaged independent contractors;
(h) Seller
has not materially breached any Included Contract or materially amended any
Included Contract;
(i) Seller
has not failed to promptly pay and discharge current Liabilities except where
disputed in good faith in an appropriate manner;
(j) Seller
has not mortgaged, pledged or subjected to any Lien any of its assets, or
acquired any assets or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of Seller except for assets acquired or
sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business consistent with past practice;
(k) Seller
has not discharged or satisfied any Lien, or paid any obligation or Liability,
except in the ordinary course of business consistent with past practice and
which, in the aggregate, are not material to Seller;
11
(l) Seller
has not canceled or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any Contract or right except
in the
ordinary course of business consistent with past practice and which, in the
aggregate, are not material to the Company;
(m) Seller
has not made or committed to make any capital expenditures or capital additions
or improvements;
(n) Seller
has not entered into any prepaid services transactions with any of its customers
or otherwise accelerated revenue recognition or the sales of its services
for
periods prior to any Closing hereunder;
(o) Seller
has not amended any of its Organizational Documents;
(p) Seller
has not issued any equity securities or any securities exercisable or
exchangeable for or convertible into equity securities of Seller;
(q) Seller
has not declared or made any dividend or distribution, in cash or in kind,
or
repurchased any of its equity securities; and
(r) Seller
has not entered into any agreements to do or perform in the future any actions
referred to in this Section 3.8 which have not been consummated as of the
date
hereof.
Section
3.9 Taxes.
Seller
has duly and timely filed all Tax Returns with respect to Taxes required
to be
filed on or before the Closing Date. All such Tax Returns are true, complete
and
correct in all material respects. All Taxes owed by Seller (whether or not
shown
on any Tax Return) or for which Seller is responsible have been duly and
timely
paid. Seller 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.
Seller is not currently the beneficiary of any extension of time within which
to
file any Tax Return. Seller has withheld all required amounts in respect
of
Taxes from its employees, agents, contractors and nonresidents and, to the
extent required, has remitted such amounts to the proper agencies. Seller
is not
a “foreign person” within the meaning of Section 1445(b)(2) of the Code. Seller
(a) has not been a member of an affiliated group filing a consolidated income
Tax Return and (b) does not have any liability for the Taxes of any person
under
Treasury Regulations section 1.1502-6(a) (or any analogous or similar provision
of any state, local or foreign Law), as a transferee or successor, by contract,
or otherwise. Seller is, and since the date of its formation has been, treated
as a partnership for federal, state and local income tax purposes and neither
Seller nor any of its owners, nor any taxing authority has taken any position
inconsistent with such treatment, including, without limitation, filing an
election to be treated as an association taxable as a corporation under Treasury
Regulation Section 301.7701-3(c). There
are
no liens for taxes (other than Taxes not yet due and payable) on any of the
Assets. No deficiency or proposed adjustment for any amount of Tax has been
proposed, asserted or assessed by any taxing authority against Seller that
has
not been paid, settled or otherwise resolved. There is no action, suit, claim,
examination, investigation, proceeding or audit now pending, proposed or,
to the
Knowledge of Seller, threatened against Seller with respect to Taxes. None
of
the Assumed Liabilities is an obligation to make a payment that is not
deductible under Code section 280G. No claim has ever been made by any taxing
authority in a jurisdiction where Seller did not file Tax Returns that Seller
may be subject to taxation by that jurisdiction. Seller will not be required
under applicable Law to report on any return for a period commencing on or
after
the Closing Date income realized prior to the Closing Date.
12
Section
3.10 Real
Property.
(a) Seller
does not own in fee any real property or interest in real property. Section
3.10
of the Seller Disclosure Schedule sets forth a complete list of all real
property and interests in real property leased by Seller (individually, a
“Real
Property Lease”
and the
real properties specified in such leases being referred to herein individually
as a “Seller
Property”
and
collectively as the “Company
Properties”)
as
lessee. The Seller Property constitutes all interests in real property currently
used or currently held for use in connection with the Business or which are
necessary for the continued operation of the Business as the Business is
currently conducted and proposed to be conducted. Seller has a valid and
enforceable leasehold interest under each of the Real Property Leases, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Seller has not
received any written notice of any default or event that with notice or lapse
of
time, or both, would constitute a default under any of the Real Property
Leases
and Seller and, to Seller’s Knowledge, each other party thereto is in compliance
in all material respects with all obligations of such party thereunder. All
of
the Seller Property, buildings, fixtures and improvements thereon owned or
leased by Seller are in good operating condition and repair (subject to normal
wear and tear). Seller has delivered or otherwise made available to Purchaser
true, correct and complete copies of the Real Property Leases, together with
all
amendments, modifications or supplements, if any, thereto.
(b) Seller
has all material certificates of occupancy and Permits of any Governmental
Body
necessary or useful for the current use and operation of each Seller Property,
and Seller has fully complied with all material conditions of the Permits
applicable to it. No default or violation, or event that with the lapse of
time
or giving of notice or both would become a default or violation, has occurred
in
the due observance of any Permit.
(c) To
the
Knowledge of Seller, there does not exist any actual or threatened or
contemplated condemnation or eminent domain proceeding that affects Seller
Property or any part thereof, and Seller has not received any notice, oral
or
written, of the intention of any Governmental Body or other Person to take
or
use all or any part thereof.
13
Section
3.11 Tangible
Personal Property; Title; Sufficiency of Assets.
(a) Section
3.11 of the Seller Disclosure Schedule lists all leases of personal property
(“Personal
Property Leases”)
involving annual payments in excess of $5,000 relating to personal property
used
in the Business or to which Seller is a party or by which the properties
of
Seller are bound. Seller has delivered or otherwise made available to Purchaser
true, correct and complete copies of the Personal Property Leases, together
with
all amendments, modifications or supplements thereto.
(b) Seller
has a valid leasehold interest under each of the Personal Property Leases
under
which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity), and there is no default under any Personal Property Lease by Seller
or,
to the Knowledge of Seller, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder, and Seller and, to the Knowledge of Seller,
each other party thereto is in compliance in all material respects with all
obligations of Seller or such other party, as the case may be, thereunder.
(c) Seller
has good and marketable title to the Assets used in the Business as of the
date
hereof (which include, without limitation, all of the items of tangible personal
property reflected in the Balance Sheet), free and clear of any and all Liens
other than the Permitted Exceptions. All tangible personal property included
in
the Assets, and all of the items of tangible personal property used by Seller
under the Personal Property Leases, are in good condition and in a state
of good
maintenance and repair (ordinary wear and tear excepted) and are in all material
respects suitable for the purposes used. The Assets include all assets, rights
and interests other than the Licensed IP (as defined in the License Agreement)
that are reasonably required for the continued conduct of the Business by
Purchaser as now being conducted and proposed to be conducted.
Section
3.12 Intellectual
Property.
(a) Seller
owns, free and clear from all Liens (other than Permitted Exceptions), including
without limitation any claims of joint ownership or right of use pursuant
to any
of the Contracts listed in Section 3.13 of the Seller Disclosure Schedule
or
identified in Section 3.13(b), (i) the compounds listed in Section 3.12(a)
of
the Seller Disclosure Schedule and (ii) any Intellectual Property (other
than
compounds that are not listed in Section 3.12(a) of the Seller Disclosure
Schedule) that is reasonably necessary to conduct the Business as currently
conducted (collectively, the “Section
3.12(a) Intellectual Property”)
and,
to its Knowledge, the compounds in Seller’s compound libraries, or otherwise
under Seller’s control, that are not listed in Section 3.12(a) of the Seller
Disclosure Schedule.
14
(b) Section
3.12(b)(i) of the Seller Disclosure Schedule sets forth a true, complete
and
correct list of all Intellectual Property for which a registration or
application has been filed with a Governmental Body, including patents,
trademarks, service marks and copyrights, issued by or registered with, or
for
which any application for issuance or registration thereof has been filed
with,
any Governmental Body. Section 3.12(b)(ii) of the Seller Disclosure Schedule
sets forth a complete and correct list of all trademarks, service marks and
other trade designations that are owned by Seller and not otherwise identified
in Section 3.12(b)(i) of the Seller Disclosure Schedule. Seller is not a
party
to anyl written or oral licenses and arrangements (other than ordinary course
licenses of commercially available software), (A) pursuant to which
the use
by any Person of Intellectual Property is permitted by Seller or
(B) pursuant to which the use by Seller of Intellectual Property is
permitted by any Person.
(c) Nothing
will interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties as a result
of
the continued operation of the Business as presently conducted, provided
that
the representation contained in this Section 3.12(c) is made to Seller’s
Knowledge with respect to any compound not listed in Section 3.12(a) of the
Seller Disclosure Schedule.
(d) To
the
Knowledge of Seller, no Intellectual Property owned by Seller or that is
subject
to any Intellectual Property License is being infringed by third parties.
There
is no claim or demand of any Person pertaining to, or any proceeding which
is
pending or, to the Knowledge of Seller, threatened, that challenges the rights
of Seller in respect of any Intellectual Property owned by Seller or claims
that
any default exists under any Intellectual Property License.
(e) Seller
has no Liability relating to (i) the creation by Seller or an employee or
independent contractor of Seller of Intellectual Property in connection with
the
performance of services for a customer of Seller or (ii) any failure of Seller
or any such employee or independent contractor to assign rights therein to
such
customer.
Section
3.13 Contracts.
(a)
Section 3.13 of the Seller Disclosure Schedule sets forth all of the Contracts
to which Seller is a party or by which it is bound and categorizes such
Contracts by the types described below: (i) Contracts with any current officer,
director, employee or stockholder of Seller, or any Affiliate of Seller or
any
such Person; (ii) Contracts with any employee or labor union or association
representing any employee; (iii) Contracts for the sale of any Assets
other than in the ordinary course of business; (iv) joint venture or partnership
agreements; (v) Contracts containing covenants not to compete in any line
of
business or with any person in any geographical area or covenants of any
other
person not to compete with Seller in any line of business or in any geographical
area, or otherwise concerning confidentiality or non-competition (other than
ordinary course customer contracts that would otherwise be included solely
because they contain confidentiality provisions); (vi) Contracts entered
into
within the last five years relating to the acquisition of any operating business
or the capital stock or equity interests of any other Person; (vii) Contracts
relating to the borrowing of money from or by Seller or the extension of
any
credit by Seller to any customer, employee or other Person; (viii) all customer
Contracts, (ix) Real Property Leases, (x) any other Contracts, other than
Real
Property Leases and customer contracts, with respect to which the amount
to be
paid or received thereunder in the future could reasonably be expected to
exceed
$5,000 in any calendar year or $15,000 in the aggregate and (xi) all other
Contracts except Contracts with respect to which the amount to be paid or
received thereunder in the future could not reasonably be expected to exceed
$5,000 in any calendar year or $15,000 in the aggregate and which do not
involve
the licensing, transfer, screening, development, manufacture or
commercialization of any Intellectual Property (including any drug candidate).
There have been made available to Purchaser true, correct and complete copies
of
all of the Contracts. All of the Contracts are in full force and effect.
Neither
Seller not, to the Knowledge of Seller, any other party to any Contract in
default thereunder or has otherwise failed to comply in all material respects
with its obligations thereunder. No Contract has been modified or amended
except
as described in Section 3.13 of the Seller Disclosure Schedule. Seller has
not
received any notice or communication from any party to a Contract or other
material customer or supplier (whether or not a party to a Contract) relating
to
such party’s intent to modify, terminate or fail to renew the arrangements and
relationships set forth therein. There are no outstanding powers of attorney
executed on behalf of Seller. The consummation of the transactions contemplated
hereby will not affect any of the Contracts in a manner that could reasonably
be
expected to have a Seller Material Adverse Effect.
15
(b)
(i)
There are no research, testing or other activities currently being undertaken
pursuant to the Material Transfer Agreement dated as of November 2, 2001
between
Seller and Xxxxxxxxx Xx Xxxxx-Xx; the Material Evaluation Agreement dated
March
17, 2003 between Seller and ViroLogic, Inc.; the Material Transfer Agreement
dated as of June 9, 2003 among Seller, Georgetown University and Xx. Xxxxx
Xxxxx, as amended; the Material Transfer Agreement dated as of April 18,
2003
among the University of Hong Kong, Dr. Xxxxx Xx and Seller; the Material
Transfer Agreement dated as of April 5, 2004 among Seller, New York Medical
College and Xxxxx Xxxxx, Ph.D.; the Material Transfer Agreement dated as
of
April 6, 2005 between Pharmassat, Inc. and Seller; the Asthma Pilot Research
Collaboration dated April 31, 2003 between Seller and Aptus Pharmaceuticals;
the
Letter of Intent for FPRLI Receptor dated November 11, 2004 between Seller
and
Applied Cell Science, Inc.; the Evaluation Agreement dated as of March 5,
2002
between Seller and Apath, L.L.C.; the Collaboration Agreement dated June
30,
2002 between Seller and Institute of Materia Medica; the General Agreement
for
Collaboration dated April 24, 1999 between Seller and Institute of Botany,
Chinese Academy of Sciences; the Agreement for Collaboration between Seller
and
Beijing Medical University dated May 24, 1999; the Memorandum of Understanding
dated December 4, 1998 between Seller and Hong Kong University of Science
and
Technology (“HKU”); the Contracted Traditional Chinese Medicine (TCM)-Based Drug
Screening agreement dated March 3, 1999 between Seller and HKU; the Contract
Research Services agreement dated as of May 24, 2000 between Seller and HKU;
the
Agreement for a Collaborative Venture dated May 24, 2000 between Seller and
HKU;
the Services Agreement dated June 1, 2004 between Seller and Inpharmatica
Limited; the Replizyme Agreement for Services dated February 25, 2004; the
Memorandum of Understanding dated October 28, 1998 between Seller and State
Administration of Traditional Chinese Medicine; the Agreement for a
Collaborative Venture dated as of March 3, 1999 between Seller and HKU, as
extended; the Memorandum of Understanding dated August 30, 1999 between Seller
and Shanghai Institute of Organic Chemistry; the Sponsored Research Agreement
dated February 2, 2001 among Seller, HKU and Technology RandD Corporation
Limited; the License Agreements dated February 2, 1999, June 1, 1999 and
August
20, 1999 between Seller and Institute of Chinese Materia Medica; and the
Sponsored Research Agreement dated February 2, 2001 between Seller and Xxxxx
Xxxxxxx AIDS Research Center (the “Xxxxx
Xxxxxxx Agreement”).
16
(ii)
No
research activities were ever conducted pursuant to the Corporate Research
Agreement dated as of April 1, 2001 between Seller and University of Pittsburgh.
No project budget or research proposal was ever developed pursuant to such
Contract.
(iii)
No
research activities were ever undertaken and no regulatory filings were ever
made pursuant to or in connection with the Patent and Technology License
Agreement dated February 2, 2001 among Seller, Hong Kong University of Science
and Technology and Technology RandD Corporation Limited.
(iv)
No
activity was ever undertaken pursuant to the Contract Screening Agreement
dated
as of March 15, 2004 between Seller and Beijing Kaizheng Biotech Developing
Ltd.
(v)
No
Contract has been entered into in furtherance of the letter of intent dated
January 8, 2003 between Seller and Aptanomics, S.A. No jointly owned inventions
or discoveries have been created pursuant to such agreement other than a
limited
number of compounds that have not been the subject of any further research
efforts by Seller or Aptanomics, S.A. and are not within the scope of Seller’s
current research activities.
(vi)
No
invention, discovery or other Intellectual Property was created pursuant
to the
Sponsored Research Agreement dated as of October 8, 2001 between Seller and
Peking University.
(vii)
No
potential drug candidates were identified through the work performed pursuant
to
the Material Transfer Agreement dated as of April 18, 2003 among the University
of Hong Kong, Dr. Xxxxx Xx and Seller.
(c)
All
amounts payable by Seller pursuant to the Contracts listed in Section 3.13(b)
and, except as set forth in Section 3.13 of the Seller Disclosure Schedule,
any
other Contract of Seller have been paid in full. Except as described in Section
3.13(b)(v), no jointly developed Intellectual Property, including inventions
and
discoveries, has been created pursuant to any such Contract. Where any such
Contract provides that Intellectual Property, including inventions and
discoveries, created solely by the other party to such Contract shall be
owned
by such other party, no such Intellectual Property is being used or contemplated
to be used in Seller’s research activities. No information or other Intellectual
Property applicable to the research programs of Seller as conducted or proposed
to be conducted is required to be maintained by Seller in confidence pursuant
to
any Contract Contracts listed in Section 3.13(b).
17
Section
3.14 Employee
Benefits.
(a) Section
3.14 of the Seller Disclosure Schedule sets forth a complete and correct
list of
(i) all “employee benefit plans,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
and
any other pension plans or employee benefit agreements, arrangements, programs
or payroll practices (including without limitation severance pay, other
termination benefits or compensation, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or policies,
hospitalization, medical insurance, life insurance and scholarship programs)
that is currently in effect or was maintained, sponsored or contributed to
by
Seller within the last six years to which Seller contributes or is obligated
to
contribute thereunder with respect to employees of Seller, or that has been
approved before the date hereof but is not yet effective (“Employee
Benefit Plans”)
and
(ii) all “employee pension plans,” as defined in Section 3(2) of ERISA,
maintained by Seller or any trade or business (whether or not incorporated)
which are under control, or which are treated as a single employer, Seller
under
Section 414(b), (c), (m) or (o) of the (“ERISA
Affiliate”)
or to
which Seller or any ERISA Affiliate contributed or is obligated to contribute
thereunder (“Pension
Plans”)
within
the last six years. Section 3.14 of the Seller Disclosure Schedule identifies,
in separate categories, Employee Benefit Plans or Pension Plans that are
(i) subject to Section 4063 and 4064 of ERISA (“Multiple
Employer Plans”),
(ii)
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) (“Multiemployer
Plans”)
or
(iii) “benefit plans”, within the meaning of Section 5000(b)(1) of the Code
providing continuing benefits after the termination of employment (other
than as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at
the
former employee’s or his beneficiary’s sole expense).
(b) Neither
Seller nor any ERISA Affiliate maintains, sponsors, or contributes, or has,
within the past six years, maintained, sponsored or had any obligation to
contribute to or for the benefit of current or former employees (i) a defined
benefit plan subject to Title IV of ERISA, (ii) any Multiemployer Plan or
(iii)
any Multiple Employer Plan.
(c) All
contributions and premiums required by Law or by the terms of any Employee
Benefit Plan or Pension Plan or any agreement relating thereto have been
timely
made (without regard to any waivers granted with respect thereto) to any
funds
or trusts established thereunder or in connection therewith, and no accumulated
funding deficiencies exist in any of such plans.
18
(d) Seller
and any ERISA Affiliate which maintains a “group health plan” within the meaning
of Section 5000(b)(1) of the Code and each plan sponsor or administrator
has
complied with the COBRA reporting, disclosure, notice, election, and other
benefit continuation and coverage requirements of Section 4980B of the Code
or
Part 6 of Title I of ERISA and the applicable regulations thereunder and
any
comparable state laws, and has not incurred any direct or indirect liability,
and is not subject to any loss, assessment or excise tax, penalty, loss of
federal income tax deduction or other sanction arising on account of or in
respect of any direct or indirect failure at any time to comply with any
such
federal or state benefit continuation coverage requirements.
(e) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming
due to
any employee; (ii) increase any benefits otherwise payable under any Employee
Benefit Plan or Pension Plan; or (iii) result in the acceleration of the
time of
payment or vesting of any such benefits.
(f) The
consummation of the transactions contemplated by this Agreement will not
give
rise to any liability for termination of any agreements related to any Employee
Benefit Plan or Pension Plan.
Section
3.15 Labor.
(a) Seller
is
not a party to any labor or collective bargaining agreement and there are
no
labor or collective bargaining agreements which pertain to employees of
Seller.
(b) No
employees of Seller are represented by any labor organization. No labor
organization or group of employees of Seller has made a pending demand for
recognition, and there are no representation proceedings or petitions seeking
a
representation proceeding presently pending or, to the Knowledge of Seller,
threatened to be brought or filed, with the National Labor Relations Board
or
other labor relations tribunal. There is no organizing activity involving
Seller
pending or, to the Knowledge of Seller, threatened by any labor organization
or
group of employees of Seller.
(c) There
are
no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
material grievances or other labor disputes pending or, to the Knowledge
of
Seller, threatened against or involving Seller. There are no unfair labor
practice charges, grievances or complaints pending or, to the Knowledge of
Seller, threatened by or on behalf of any employee or group of employees
of
Seller.
(d) There
are
no complaints, charges or claims against Seller pending or, to the Knowledge
of
Seller, threatened which could be brought or filed, with any public or
Governmental Body based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment by Seller, of any
individual.
19
(e) Seller
is
in compliance in all material respects with all Laws and Orders relating
to the
employment of labor, including all such Laws and orders relating to wages,
hours, the Worker Adjustment and Retraining Notification Act and any similar
state, local or foreign “plant closing” Law (“WARN”),
collective bargaining, discrimination, civil rights, safety and health, worker’s
compensation, payment of overtime wages and the collection and payment of
withholding and/or social security taxes and any similar tax.
(f) There
has
been no “mass layoff” or “plant closing” as defined by WARN with respect to
Seller within the six (6) months prior to making this
representation.
Section
3.16 Litigation.
There
is not, since the inception of Seller there has not been, any suit, action,
proceeding, investigation, claim or order pending or, to the Knowledge of
Seller, threatened by or against Seller, or to the Knowledge of Seller, pending
or threatened, against any of the officers, directors, employees or independent
contractors (or employees of independent contractors) of Seller with respect
to
their business activities on behalf of Seller, or to which Seller or any
such
officer, director, employee, independent contractor or employee of an
independent contractor, with respect thereto, is otherwise a party, before
any
court, or before any governmental department, commission, board, agency,
or
instrumentality; nor to the Knowledge of Seller is there any reasonable basis
for any such action, proceeding, or investigation. Seller is not subject
to any
Order of any Governmental Body.
Section
3.17 Compliance
with Laws; Permits.
Seller
is in compliance with all Laws applicable to it or to the conduct of the
businesses or operations of Seller. Seller has all Permits from Governmental
Bodies which are required for Seller to operate its businesses.
Section
3.18 Environmental
Matters.
(a) To
Seller’s Knowledge, the operations of Seller are in compliance with all
applicable Environmental Laws and all Permits issued pursuant to Environmental
Laws or otherwise (“Environmental
Permits”);
(b) To
Seller’s Knowledge, Seller has obtained and currently maintains all
Environmental Permits required under all applicable Environmental Laws necessary
to operate its business;
(c) Seller
is
not the subject of any outstanding written Order or Contract with any
Governmental Body or other Person respecting (i) Environmental Laws,
(ii) Remedial Action or (iii) any Release or threatened Release
of a
Hazardous Material;
20
(d) Seller
has not received any written communication alleging either that Seller may
be in
violation of any Environmental Law or Environmental Permit or that Seller
may
have any liability under any Environmental Law;
(e) Seller
has not incurred, assumed or undertaken any current contingent liability
in
connection with any Release of any Hazardous Materials into the indoor or
outdoor environment (whether on-site or off-site) and there are no facts,
circumstances or conditions relating to, arising out of or attributable to
Seller that could give rise to liability under Environmental Laws;
(f) There
are
no judicial or administrative proceedings pending or, to the Knowledge of
Seller, threatened against Seller that allege a violation of, or seek to
impose
liability pursuant to, Environmental Laws or Environmental Permits and, to
Seller’s Knowledge, there are no investigations of the business, operations, or
currently or previously owned, operated or leased property of Seller pending
or
threatened which could result in Seller incurring any liability pursuant
to any
Environmental Law;
(g) There
is
not located at any of the properties of Seller any (i) underground storage
tanks, (ii) asbestos-containing material or (iii) equipment containing
polychlorinated biphenyls; and
(h) Seller
has provided to Purchaser all environmentally related audits, studies, reports,
analyses, and results of investigations that have been performed with respect
to
the currently or previously owned, leased or operated properties of
Seller.
Section
3.19 Insurance.
Section
3.19 of the Seller Disclosure Schedule sets forth a complete and accurate
list
of all policies of insurance of any kind or nature covering Seller or any
of
Seller’s employees, properties or assets. All such policies are in full force
and effect, and Seller is not in default of any provision thereof. Section
3.19
of the Seller Disclosure Schedule describes all self-insurance arrangements
affecting Seller.
Section
3.20 Receivables;
Payables.
(a) All
accounts receivable of Seller have arisen from bona fide transactions in
the
ordinary course of business consistent with past practice. All accounts
receivable of Seller reflected on the Balance Sheet are good and believed
to be
collectible at the aggregate recorded amounts thereof and subject to no setoffs
(including without limitation reductions in respect of customer advances
or
deposits) or counterclaims. All accounts receivable arising after the Balance
Sheet Date are believed to be good and collectible at the aggregate recorded
amounts thereof and subject to no setoffs (including without limitation
reductions in respect of customer advances or deposits) or
counterclaims.
(b) All
accounts payable of Seller reflected on the Balance Sheet or arising after
the
Balance Sheet Date are the result of bona fide transactions in the ordinary
course of business and have been paid or are not yet due and payable, except
for
accounts payable that are being disputed in good faith in an appropriate
manner.
21
Section
3.21 [reserved]
Section
3.22 [reserved]
Section
3.23 No
Misrepresentation.
No
representation or warranty of Seller contained in this Agreement or in any
Schedule hereto or in any certificate or other instrument furnished by Seller
to
Purchaser pursuant to the terms hereof, contains any untrue statement of
a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
Section
3.24 Financial
Advisors.
Seller
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.
Section
3.25 Private
Placement.
Seller
was not organized for the specific purpose of acquiring the Shares. Seller
has
sufficient knowledge and experience in investing in companies similar to
Parent
in terms of Parent's market capitalization and other relevant factors so
as to
be able to evaluate the risks and merits of its investment in Parent and
it is
able financially to bear the risks thereof. Seller has had an opportunity
to
discuss the terms of the offering and sale of the Shares and Parent's business,
management and financial affairs with Parent's management and to obtain any
additional information regarding the foregoing which Parent possesses or
can
acquire without unreasonable effort or expense. The Shares are being acquired
for the Seller’s own accounts and not with a view to, or the intention of, any
distribution in violation of the Securities Act or any applicable state
securities laws. Seller understands that (i)
the
Shares have not been registered under the Securities Act by reason of the
issuance of the Shares in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
505
or 506 promulgated under the Securities Act, (ii)
the
Shares must be held indefinitely unless a subsequent disposition thereof
is
registered under the Securities Act or is exempt from such registration,
(iii)
when
issued, the Shares will bear a legend to such effect and (iv)
Parent
will issue stop transfer instructions to its transfer agent consistent with
Section 2.5.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Seller that the following statements are correct
and
complete as of the date hereof.
Section
4.1 Organization.
(a)
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware.
Purchaser is duly qualified or authorized to do business as a foreign limited
liability company and is in good standing under the laws of each jurisdiction
in
which it owns or leases real property and each other jurisdiction in which
the
conduct of its business or the ownership of its properties requires such
qualification or authorization, except where the failure to be so qualified
or
authorized would not have a material adverse effect on the business or assets
of
Purchaser.
22
(b) Purchaser
is a direct or indirect wholly-owned subsidiary of Parent. All of the issued
ownership interests in Purchaser have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or indirectly
by Parent.
Section
4.2 Authorization
of Transaction.
The
execution, delivery and performance of the Transaction Documents to which
Purchaser is a party have been duly authorized by all necessary action by
or on
behalf of Purchaser. Purchaser has full power and authority to execute and
deliver this Agreement and each other Transaction Document to which it is
a
party, and to perform its obligations hereunder and thereunder. This Agreement
and each Transaction Document to which Purchaser is or will be a party has
been
or will be duly and validly executed and delivered and constitutes the valid
and
legally binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity). Purchaser is not required to give any notice to, make any filing
with,
or obtain any authorization, consent, or approval of any Governmental Body
in
order to consummate the transactions contemplated by this Agreement and each
such Transaction Document.
Section
4.3 Noncontravention.
Neither
the execution and the delivery by Purchaser of this Agreement and the other
Transaction Documents to which it is a party, nor the consummation of the
transactions contemplated hereby and thereby on the part of Purchaser, will
(i) violate any Law or any Order by which Purchaser is bound or any
provision of its organizational documents or (ii) 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 Contract to which Purchaser is a party or by which Purchaser is
bound
or to which any of its assets is subject. No Order, Permit or waiver, or
declaration or filing with any Governmental Body is required on the part
of
Purchaser in connection with the execution, delivery and performance of this
Agreement or the other Transaction Documents to which it is a party, or the
compliance by Purchaser with any of the provisions hereof or
thereof.
Section
4.4 Brokers’
Fees.
Purchaser 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 for which Seller shall have any Liability.
23
Section
4.5 Periodic
Reports.
Each
periodic report filed by Parent with any Governmental Body or delivered to
its
shareholders since August 1, 2004 (the "Parent
Reports")
were
prepared in all material respects in accordance with all applicable legal
requirements. Each set of consolidated financial statements (including, in
each
case, any related notes thereto) contained in the Parent Reports, including
any
Parent Reports filed after the date hereof until the Closing, (i) complied
as to
form in all material respects with all applicable legal requirements and
(ii)
fairly presents in all material respects the consolidated financial position
of
Parent and its Subsidiaries at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated. Since
the
date of the last such consolidated financial statement, there has not been
and
there currently is no investigation, inquiry or other proceeding pending
or, the
Purchaser’s Knowledge, threatened related to the Parent Reports or the
consolidated financial statements contained therein.
ARTICLE
V
CONDITIONS
TO CLOSING
Section
5.1 Conditions
Precedent to Obligations of Purchaser at the Closing.
The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date,
of
each of the following conditions (any or all of which may be waived by Purchaser
in whole or in part to the extent permitted by applicable Law):
(a) all
representations and warranties of Seller contained in the Transaction Documents
shall have been true and correct on and as of the date hereof;
(b) Seller
shall have performed and complied in all material respects with all obligations
and covenants required by the Transaction Documents to be performed or complied
with by Seller on or prior to the Closing Date;
(c) there
shall not have been or occurred any Seller Material Adverse Change since
the
Balance Sheet Date;
(d) no
Legal
Proceedings shall have been instituted or threatened or claim or demand made
against Seller , Parent or Purchaser seeking to restrain or prohibit or to
obtain substantial damages with respect to the consummation of the transactions
contemplated hereby;
(e) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby;
(f) Purchaser
shall have received letters in form and substance satisfactory to it from
UPMC
Health System, Highmark Health Ventures Investment Fund, L.P. and any other
holder of indebtedness of any Person that is secured by any of the Assets
confirming the release of all related Liens; Purchaser shall be authorize
pursuant to such letters to file appropriate UCC termination statements filed
with respect thereto; and UPMC Health System, Highmark Health Ventures
Investment Fund, L.P. and each such other holder shall have delivered to
Purchaser a covenant not to bring any claim against Purchaser with respect
to
such indebtedness, including any claim based on fraudulent conveyance,
fraudulent transfer or any similar theory;
24
(g) the
employment of all employees of Seller other than Xxxxx Xxxxxxx, Xxxxxxxx
Xxxxxxxxx and Xxxxxx Xxx shall have terminated (which termination may occur
simultaneously with the Closing);
(h) Seller
shall have terminated its relationship with its scientific consultants and
advisors to the extent directed by Purchaser and shall not have taken any
action
to terminate such relationships except as so directed by Purchaser (it being
agreed that such relationship with Xxxxx Xx has been or will be terminated);
and
(i) any
waiting period under the HSR Act applicable to the transactions contemplated
by
this Agreement shall have expired or been terminated.
Section
5.2 Conditions
Precedent to Obligations of Seller at the Closing.
The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by Seller,
on behalf of the Seller, in whole or in part to the extent permitted by
applicable Law):
(a) all
representations and warranties of Purchaser contained in the Transaction
Documents shall be true and correct on and as of the Closing Date;
(b) Purchaser
shall have performed and complied in all material respects with all obligations
and covenants required by the Transaction Documents to be performed or complied
with by Purchaser on or prior to the Closing Date;
(c) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby; and
(d) any
waiting period under the HSR Act applicable to the transactions contemplated
by
this Agreement shall have expired or been terminated.
ARTICLE
VI
DOCUMENTS
TO BE DELIVERED
Section
6.1 Deliveries
by Seller to Purchaser at the Closing.
At the
Closing, Seller shall deliver, or shall cause to be delivered, to Purchaser
the
following:
25
(a) a
duly
executed xxxx of sale, assignments and assumption agreement in the form of
Exhibit
A
(b) a
duly
executed assignment of lease and estoppel certificate, dated the Closing
Date,
with respect to each Real Property Lease in form and substance satisfactory
to
Purchaser and its counsel;
(c) all
consents and waivers that are required for the assignment to and assumption
by
Purchaser of the Included Contracts (collectively, the “Closing
Consents”);
(d) certificates
of title to all motor vehicles included in the Assets (if any), duly endorsed
for transfer to Purchaser as of the Closing Date;
(e) a
certificate (dated the Closing Date and in form and substance reasonably
satisfactory to Purchaser) executed by Seller certifying as to the fulfillment
of the conditions specified in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d), 5.1(e)
and 5.1(f) hereof;
(f) an
opinion of Xxxxx Xxxx LLP, counsel for Seller, dated the Closing Date,
substantially in the form attached hereto as Exhibit
B;
(g) a
receipt
for the Shares;
(h) a
certificate of the secretary of Seller certifying to (A) Seller’s attached
Organizational Documents, (B) the adoption of resolutions of the Board of
Directors and stockholders of Seller and (C) the incumbency of the officers
signing the Transaction Documents on behalf of Seller (together with their
specimen signatures);
(i) a
certificate of good standing with respect to Seller issued by the Secretary
of
State of the State of Delaware and for each state in which Seller is qualified
to do business as a foreign limited liability company dated as soon as
practicable prior to the Closing Date;
(j) a
copy of
IRS Form W-9 duly and properly executed by Seller;
(k) a
certificate of non-foreign person status in the form prescribed by United
States
Treasury Regulation § 1.1445-2(b)(2)(iii) with respect to Seller in form
and substance acceptable to Purchaser;
(l) copies
of
letters terminating the employment and consulting/advisory relationships
to be
terminated pursuant to Sections 5.1(g) and (h);
(m) evidence
satisfactory to Purchaser that a letter in the form attached as Exhibit
C
was sent
by certified mail, return receipt requested, to Schering-Plough no later
than
five business days after the execution of this Agreement;
26
(n) (1)
copies of the documents terminating the Xxxxx Xxxxxxx Agreement and the Patent
and Technology License Agreement dated February 2, 2001 among Seller, HKU
and
Technology RandD Corporation Limited and (2) written confirmation from the
Xxxxx
Xxxxxxx AIDS Research Center that Seller has not outstanding obligations
under
the Xxxxx Xxxxxxx Agreement.
(o) a
legally
binding commitment from ReBLikon GmbH (“ReBLikon”),
for
the benefit of Parent, to enter into a license with Parent having substantially
the same terms (other than pricing terms) as those contained in the Agreement
effective May 12, 2003 between ReBLikon and Seller and a term of at least
two
years;
(p) executed
copies of inventor assignments satisfactory to Purchaser with respect to
all
issued patents and filed patent applications of Seller;
(q) an
amendment in the form attached as Exhibit
D
to the
Employee Non-Disclosure, Non-Competition and Assignment of Intellectual Property
Agreement dated as of March 3, 2003 between Xxxxxxx Xxxxxxxxxxx and Seller;
(r) a
document satisfactory to Purchaser terminating the promissory note dated
May 31,
2001made by Xxxx Xxxx in favor of Seller; and
(s) such
other documents, instruments or certificates as shall be reasonably requested
by
Purchaser or its counsel.
Section
6.2 Deliveries
by Purchaser to Seller.
At the
Closing, Purchaser shall deliver to Seller, on behalf of Seller, the
following:
(a) irrevocable
instructions to the transfer agent for the Parent Ordinary Shares to issue
the
Shares in accordance with Section 2.1;
(b) a
duly
executed xxxx of sale, assignment and assumption agreement in the form of
Exhibit
A;
(c) an
assignment of lease, dated the Closing Date, with respect to each Real Property
Lease in form and substance reasonably satisfactory to Seller and its counsel
duly executed by Purchaser;
(d) a
certificate dated the Closing Date and in form and substance reasonably
satisfactory to Seller executed by an authorized officer of Purchaser certifying
as to the fulfillment of the conditions specified in Sections 5.2(a), 5.2(b),
5.2(d) and 5.2(e) hereof;
(e) a
certificate of the secretary of Purchaser certifying to (A) Purchaser’s attached
Organizational Documents, (B) the adoption of attached resolutions of the
Board
of Directors of Purchaser approving the execution by Purchaser of the
Transaction Documents to which Purchaser is a party and the consummation
of the
transactions contemplated thereby and (C) the incumbency of the officers
signing
the Transaction Documents on behalf of Seller (together with their specimen
signatures);
27
(f) opinions
of Xxxxxx & Co. and the Law Office of Xxxxxxx X. Xxxxxxxxxx PLLC, special
counsel for Purchaser, dated the Closing Date, substantially in the forms
attached hereto as Exhibits
E-1
and
E-2;
and
(g) such
other documents, instruments or certificates as shall be reasonably requested
by
Seller or its counsel.
ARTICLE
VII
POST-CLOSING
COVENANTS
The
parties agree as follows with respect to the period following the
Closing:
Section
7.1 General.
In the
event that 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 any other party reasonably may request.
Section
7.2 Litigation
Support.
In the
event and for so long as any party actively is contesting or defending against
any action, suit, proceeding, hearing, investigation, charge, complaint,
claim,
or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstances, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to
act,
or transaction on or prior to the Closing Date involving Seller, each of
the
other parties will cooperate reasonably with such party and such party’s counsel
in the contest or defense, make available their personnel, and provide such
testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense
of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor hereunder).
Section
7.3 Confidentiality.
(a)
From and after the date hereof (unless this Agreement is terminated in
accordance with its terms), Seller will, and will cause its Affiliates and
Key
Personnel (as defined below) to, hold in strict confidence, and will not,
and
will cause its Affiliates and Key Personnel not to, disclose to any third
party
or use for any purpose, any and all information with respect to Seller, the
Business, the Transaction Documents or the transactions contemplated thereby.
Notwithstanding the foregoing, Seller may, and may permit its Affiliates
and Key
Personnel to, disclose such information (i) if compelled to disclose the
same by
judicial or administrative process or by other requirements of Law (but subject
to the following provisions of this Section), (ii) if the same hereafter
is in
the public domain through no fault of Seller or (iii) if the same is later
acquired by Seller from another source that is not under an obligation to
another Person to keep such information confidential. If Seller or any of
its
Affiliates or Key Personnel is requested or required (by oral questions,
interrogatories, requests for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose
any
such information, Seller shall provide Purchaser with prompt written notice
of
any such request or requirement so that Purchaser may seek a protective order
or
other appropriate remedy and/or waive compliance with the provisions of this
Section. If, in the absence of a protective order or other remedy or the
receipt
of a waiver by Purchaser, Seller nonetheless, based on the written advice
of
outside counsel, is required to disclose such information to any tribunal
or in
accordance with applicable Law, Seller or such Affiliate or Key Personnel,
without liability hereunder, may disclose that portion of such information
which
such counsel advises Seller or such Affiliate or Key Personnel it is legally
required to disclose. Seller acknowledges and agrees that money damages would
not be an adequate remedy for any breach of its agreements contained in this
Section 7.3 and that in addition to any other remedies available to
Purchaser, Purchaser shall be entitled to the remedies of injunction, specific
performance and other equitable relief (without any requirement to post a
bond)
for any threatened or actual breach of this Section 7.3.
28
(b)
The
Non-Disclosure Agreement dated as of April 7, 2005, as amended May 24, 2005,
between Seller and Purchaser shall terminate on the Closing Date. If the
Closing
Date does not occur, such agreement, as so amended, shall remain in full
force
and effect.
Section
7.4 Non-Competition.
As a
material inducement to Purchaser to enter into this Agreement, Seller agrees
as
follows:
(a) During
the Non-Competition Period, Seller will not engage or participate, directly
or
indirectly, as principal, agent, proprietor, joint venturer, trustee, employer,
consultant, stockholder, partner or in any other capacity whatsoever, in
the
conduct or management of, or own any stock or any other equity investment
in or
debt of, any business that is competitive with any business conducted or
proposed to be conducted by Seller as of the Closing Date, excluding passive
investments of up to 1% of the common stock of any publicly traded
company.
(b) During
the Non-Competition Period, Seller will not, for its own benefit or for the
benefit of any Person other than Purchaser, (i) solicit, or assist any person
or
entity to solicit, any officer, director, executive or employee of Purchaser
(or, prior to the Closing Date, Seller) to leave his or her employment, (ii)
hire or cause to be hired any person who is then, or who will have been at
any
point in time during the Non-Competition Period, an officer, a director,
an
executive or an employee of Purchaser (or, prior to the Closing Date, Seller),
or (iii) engage any Person who is then, or who will have been at any point
in
time during the Non-Competition Period, an officer, director, executive or
employee of Purchaser (or, prior to the Closing Date, Seller) as a partner,
contractor, sub-contractor or consultant.
29
(c) Seller
acknowledges that (i) the markets served by Seller are national and
international in scope and are not dependent on the geographic location of
the
executive personnel or the businesses by which they are employed; and (ii)
the
above covenants are manifestly reasonable on their face, and the parties
expressly agree that such restrictions have been designed to be reasonable
and
no greater than is required for the protection of Purchaser and are a
significant element of the consideration hereunder. Seller acknowledges and
agrees that money damages would not be an adequate remedy for any breach
of its
agreements contained in this Section 7.4 and that in addition to any
other
remedies available to Purchaser, Purchaser shall be entitled to the remedies
of
injunction, specific performance and other equitable relief (without any
requirement to post a bond) for any threatened or actual breach of this
Section 7.4.
If
the
final judgment of a court of competent jurisdiction declares that any term
or
provision of this Section 7.4 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
that
comes closest to expressing the intention of the invalid or unenforceable
term
or provision, and this Agreement shall be enforceable as so modified after
the
expiration of the time within which the judgment may be appealed.
Section
7.5 Corporate
Existence .
Seller
hereby agrees that it will (i) not commence any dissolution of its corporate
existence, liquidation or winding up, or commence a voluntary proceeding
under
Title 11 of the United States Code, until at least one year from the Closing
Date and (ii) timely object to the commencement of any involuntary proceeding
filed under Title 11 of the United States Code or to any action seeking the
appointment of a receiver or trustee in respect of it or its assets if such
petition, proceeding or action is commenced prior to the first anniversary
of
the Closing Date.
Section
7.6 Mail;
Payments.
From
and after the Closing, Seller agrees to refer to Purchaser all customer,
supplier, employee or other inquiries or correspondence relating to the Assets
or the conduct of the Business after the Closing Date. Seller further agrees
to
promptly remit to Purchaser all payments and invoices received after the
Closing
Date that relate to the Assets, the Assumed Liabilities or the conduct of
the
Business after the Closing Date and Purchaser agrees to promptly remit to
Seller
all payments and invoices received after the Closing Date that relate to
the
Excluded Assets or the Excluded Liabilities or (other than with respect to
the
Assets or the Assumed Liabilities) the conduct of the Business prior to the
Closing Date.
Section
7.7 [reserved]
30
Section
7.8 Certain
Financial Information.
From
and after the Closing Date, to the extent requested by Purchaser, Seller
shall
to deliver to Purchaser the financial information, management representation
letters and other documents and information with respect to Seller required
by
Parent to prepare and file the financial statements required to be filed
by
Parent pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)
or any
other applicable Law, and will use commercially reasonable efforts to cause
its
independent accountants to deliver to Purchaser such reports and consents
as may
be required in connection therewith, all reasonably in advance of the time
such
filings are required to be made.
Section
7.9 Retention
of and Access to Records.
Seller
will provide Purchaser with access to the Books and Records included in the
Excluded Assets, upon reasonable written notice from Purchaser, during ordinary
business hours and in such a manner as does not interfere with the business
operations of Seller or any of its Affiliates, for purposes reasonably related
to any actual or threatened Legal Proceedings relating to Purchaser’s operation
of the Business or to any Tax audit or proceedings in which any Purchaser
or any
of its Affiliates is involved. Seller’s undertaking in this Section 8.9 shall
survive for six years following the Closing or such longer period during
which
Seller maintain such Books and Records in the course of its business, provided
that Seller may at its option offer to deliver to Purchaser at any time any
such
Books and Records and if Purchaser shall decline to take possession of such
Books and Records, Seller shall thereafter be free to dispose of the same.
Seller may require that any Person who will obtain access to Books and Records
pursuant to this Section 7.9 execute a confidentiality undertaking reasonably
satisfactory to Seller.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 Indemnity
Obligations of Seller.
Seller
covenants and agrees to defend, indemnify and hold harmless Purchaser and
its
Affiliates (including Parent) and the respective its officers, directors,
employees, agents, advisers and representatives of the foregoing (collectively,
the “Purchaser
Indemnitees”),
from
and against, and to pay or reimburse Purchaser Indemnitees for, any and all
claims, liabilities, obligations, losses, fines, costs, proceedings or damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including all reasonable fees and
disbursements of counsel incurred in the investigation or defense of any
of the
same or in asserting any of their respective rights hereunder (collectively,
“Losses”),
resulting from or arising out of:
(i) any
misrepresentation or breach of any warranty of Seller contained in the
Transaction Documents; provided that in determining whether any such
misrepresentation or breach occurred, any dollar amount thresholds, materiality
qualifiers and Seller Material Adverse Effect qualifier contained in any
representation or warranty herein shall be disregarded;
31
(ii) any
failure of Seller to perform any covenant or agreement made or contained
in the
Transaction Documents or fulfill any obligation in respect thereof;
or
(iii) any
and
all Excluded Liabilities.
Seller
shall not be required to indemnify Purchaser Indemnitees with respect to
any
claim for indemnification (other than a claim for indemnification based on
a
breach of the representations and warranties contained in Sections 3.9, 3.11(c)
or 3.24) resulting from or arising out of matters described in clause (i)
above pursuant to this Section 8.1 (and not resulting from or arising out
of
matters described in clause (ii) or (iii) above) or arising out of
matters
described in clause (i) of Section 10(a) of the License Agreement
(and not
resulting from or arising out of matters described in clause (ii)
or (iii)
of Section 10(a) of the License Agreement) unless and until the aggregate
amount
of all such claims against all Seller exceeds $10,000 (the “Seller
Threshold Amount”),
in
which case Seller shall be required to indemnify Purchaser Indemnitees for
the
amount of such claims in excess of the Seller Threshold Amount. Claims
thereafter may be asserted regardless of amount.
Seller’s
maximum liability to Purchaser Indemnitees under clause (i) above (and not
resulting from or arising out of matters described in clause (ii)
or (iii)
above) and under clause (i) of Section 10(a) of the License Agreement
(and
not resulting from or arising out of matters described in clause (ii)
or
(iii) of Section 10(a) of the License Agreement) shall not exceed the Total
Consideration. “Total
Consideration”
means,
as of the time any liability pursuant to this Section VIII is determined
and
required to be satisfied, the sum of (i) $1,250,000, (ii) the aggregate amount
of cash paid to Seller by Parent pursuant to Sections 3(a)(ii) and (iii)
of the
License Agreement and (iii) the aggregate value (determined in accordance
with
the License Agreement) of the Parent Ordinary Shares issued to Seller pursuant
to Section 3(a)(ii) of the License Agreement.
Section
8.2 Indemnity
Obligations of Purchaser.
Purchaser covenants and agrees to defend, indemnify and hold harmless Seller
and
its Affiliates and their respective officers, directors, employees, agents,
advisers and representatives (collectively, the “Seller
Indemnitees”),
from
and against any and all Losses resulting from or arising out of:
(i) any
misrepresentation or breach of warranty of any Purchaser Indemnitor contained
in
the Transaction Documents; provided that in determining whether any such
misrepresentation or breach occurred, any dollar amount thresholds and
materiality qualifiers contained in any representation or warranty herein
shall
be disregarded;
32
(ii) any
failure of any Purchaser Indemnitor to perform any covenant or agreement
made or
contained in the Transaction Documents or fulfill any other obligation in
respect thereof;
|
(iii)
|
the
Assumed Liabilities; or
|
(iv) except
(A) as otherwise provided in the License Agreement with respect to the
Schering-Plough Agreement or (B) to the extent attributable to a breach by
Seller of a representation, warranty or covenant contained in the Transaction
Documents, Purchaser’s use of the Assets following the Closing.
Purchaser
shall not be required to indemnify Seller Indemnitees with respect to any
claim
for indemnification resulting from or arising out of matters described in
clause (i) above pursuant to this Section 8.2 (and not resulting from
or
arising out of matters described in clause (ii) or (iii) above) unless
and
until the aggregate amount of all claims against Purchaser exceeds $10,000
(the
“Purchaser
Threshold Amount”),
in
which case Purchaser shall be required to indemnify Seller Indemnitees for
the
full amount of such claims in excess of the Purchaser Threshold Amount. Claims
thereafter may be asserted regardless of amount. Purchaser’s maximum liability
to Seller Indemnitees under clause (i) above (and not resulting from or arising
out of matters described in clause (ii) or (iii) above) shall not
exceed
the Total Consideration.
Section
8.3 Indemnification
Procedures.
(a)
Third
Party Claims.
In the
case of any claim asserted by a third party against a party entitled to
indemnification under this Agreement (the “Indemnified
Party”),
notice shall be given by the Indemnified Party to the party required to provide
indemnification (the “Indemnifying
Party”)
as
soon as practicable after such Indemnified Party has actual knowledge of
any
claim as to which indemnity may be sought, and the Indemnified Party shall
permit the Indemnifying Party (at the expense of such Indemnifying Party)
to
assume the defense of any third party claim or any litigation with a third
party
resulting therefrom; provided,
however,
that
(a) the counsel for the Indemnifying Party who shall conduct the defense
of
such claim or litigation shall be subject to the approval of the Indemnified
Party (which approval shall not be unreasonably withheld or delayed),
(b) the Indemnified Party may participate in such defense at such
Indemnified Party’s expense (which shall not be subject to reimbursement
hereunder except as provided below), and (c) the failure by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party
of its indemnification obligation under this Agreement except and only to
the
extent that such Indemnifying Party is actually and materially damaged as
a
result of such failure to give notice. Except with the prior written consent
of
the Indemnified Party, no Indemnifying Party, in the defense of any such
claim
or litigation, shall consent to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief affecting
the Indemnified Party or that does not include as an unconditional term thereof
the giving by each claimant or plaintiff to such Indemnified Party of a general
release from any and all liability with respect to such claim or litigation.
If
the Indemnified Party shall in good faith determine that the conduct of the
defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party might be expected
to
affect adversely the ability of the Indemnified Party to conduct its business,
or that the Indemnified Party may have available to it one or more defenses
or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times
to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party; provided,
however,
that if
the Indemnified Party does so take over and assume control, the Indemnified
Party shall not settle such claim or litigation without the prior written
consent of the Indemnifying Party, such consent not to be unreasonably withheld
or delayed. If the Indemnifying Party does not accept the defense of any
matter
as above provided within thirty (30) days after receipt of the notice from
the
Indemnified Party described above, the Indemnified Party shall have the full
right to defend against any such claim or demand at the sole cost of the
Indemnifying Party and shall be entitled to settle or agree to pay in full
such
claim or demand. In any event, the Indemnifying Party and the Indemnified
Party
shall reasonably cooperate in the defense of any claim or litigation subject
to
this Article VIII and the records of each shall be reasonably available to
the
other with respect to such defense.
33
(b)
Non-Third
Party Claims.
With
respect to any claim for indemnification hereunder which does not involve
a
third party claim, the Indemnified Party will give the Indemnifying Party
written notice of such claim. The Indemnifying Party may acknowledge and
agree
by notice to the Indemnified Party in writing to satisfy such claim within
twenty (20) days of receipt of notice of such claim from the Indemnified
Party.
If the Indemnifying Party shall dispute such claim, the Indemnifying Party
shall
provide written notice of such dispute to the Indemnified Party within such
20-day period, setting forth in reasonable detail the basis of such dispute.
Upon receipt of notice of any such dispute, the Indemnified Party and the
Indemnifying Party shall use reasonable efforts to resolve such dispute within
thirty (30) days of the date such notice of dispute is received. If the
Indemnifying Party shall fail to provide written notice to the Indemnified
Party
within twenty (20) days of receipt of notice from the Indemnified Party that
the
Indemnifying Party either acknowledges and agrees to pay such claim or disputes
such claim, the Indemnifying Party shall be deemed to have acknowledged and
agreed to pay such claim in full and to have waived any right to dispute
such
claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
any
claim pursuant to this Section 8.3, (b) any dispute under this Section 8.3
has
been resolved in favor of indemnification by mutual agreement of the
Indemnifying Party and the Indemnified Party, or (c) any dispute under this
Section 8.3 has been finally resolved in favor of indemnification by order
of a
court of competent jurisdiction or other tribunal (including an arbitrator
contemplated by this agreement) having jurisdiction over such dispute, then
the
Indemnifying Party shall pay the amount of such claim to the Indemnified
Party
within twenty (20) days of the date of acknowledgement by the Indemnifying
Party
or final resolution in favor of indemnification, as the case may be, to such
account and in such manner as is designated in writing by the Indemnified
Party.
34
Section
8.4 Expiration
of Representations and Warranties.
All
representations and warranties contained in this Agreement shall survive
the
Closing until March 31, 2007; provided,
however,
that
the representations and warranties stated in Sections 3.9, 3.11(c),
3.12,
3.14, 3.18 and 3.24 shall survive indefinitely.
Section
8.5 Exclusive
Remedy.
Absent
fraud or criminal activity and except as provided under Sections 7.3
and
7.4, the indemnifications provided for in this Article VIII shall
be the
sole and exclusive post-Closing remedies available to either party against
the
other party for any claims under or based upon this Agreement. Each party
acknowledges that the representations and warranties made by such party in
the
Transaction Documents shall not be deemed waived or otherwise affected by
any
investigation by or on behalf of another party.
Section
8.6 Set
Off.
If
Seller shall have any Liability to Purchaser or any other Purchaser Indemnitee
pursuant to the Transaction Documents, Purchaser shall be entitled, in addition
to any other right or remedy Purchaser or any other Purchaser Indemnitee
may
have, to exercise rights of set-off against any payments or securities payable
or deliverable to Seller in connection with the Transaction Documents or
otherwise.
Section
8.7 Treatment
of Indemnification Payments.
All
indemnification payments made under this Agreement shall be treated by the
parties as an adjustment to the Purchase Price, to the extent permitted by
applicable Law.
ARTICLE
IX
PRE-CLOSING
CONDUCT; TERMINATION
Section
9.1 Pre-Closing
Conduct.
Except
as otherwise expressly permitted by this Agreement or as otherwise consented
to
by Purchaser in writing, Seller shall refrain from taking or omitting any
action
which, if taken or omitted prior to the date hereof, would cause the
representations in Section 3.8 to be untrue. In addition, during the period
form
the date hereof until the effectiveness of the Closing, Seller shall not
incur
any material indebtedness (other than ordinary course accruals for rent and
compensation expense) without the prior written consent of
Purchaser.
Section
9.2 Information.
Seller
shall (and shall cause its accountants, counsel, consultants, employees and
agents to) give Purchaser and its respective accountants, counsel, consultants,
employees and agents, reasonable access during normal business hours to,
and
furnish them with all documents, records, work papers and information with
respect to, all properties, assets, books, contracts, commitments, reports
and
records of, Seller, as Purchaser shall from time to time reasonably request.
In
addition, Seller shall permit Purchaser, and its accountants, counsel,
consultants, employees and agents, reasonable access to such personnel of
Seller
during normal business hours as may be necessary to Purchaser in connection
with
its review of the properties, assets and business affairs of Seller and the
above-mentioned documents, records and information. Purchaser shall have
the
right, upon giving reasonable advance notice, to enter upon and inspect the
Company Properties. Purchaser’s exercise of its rights granted pursuant to the
two preceding sentences shall not unreasonably interfere with Sellers’ operation
of the Business.
35
Section
9.3 No
Solicitation.
During
the period from the date of this Agreement through the Closing Date, Seller
shall, and shall cause its employees, directors, agents and Affiliates to,
immediately suspend any existing negotiations or discussions relating to
any
sale, joint venture or other transfer of actual or beneficial ownership of
any
securities of Seller or any of its operations or any assets associated therewith
(other than goods and services of Seller sold in the ordinary course of
business) (collectively, an “Acquisition
Transaction”),
and
Seller shall not, and shall cause its employees, directors, agents and
Affiliates not to, (i) solicit any proposals or offers relating to
an
Acquisition Transaction, or (ii) negotiate or engage in discussions
with
any third party concerning any proposal or offer for an Acquisition
Transaction.
Section
9.4 Termination.
This
Agreement may be terminated at any time prior to the Closing Date:
(i) by
mutual
written agreement of Purchaser and Seller;
(ii) by
either
Purchaser or Seller (provided that neither the terminating party nor any
of its
Affiliates is then in material breach of any representation, warranty, covenant,
or other agreement contained in the Transaction Documents) by written notice
to
the other in the event of a material breach by the other or a party Affiliated
with the other of any representation or warranty contained in the Transaction
Documentswhich cannot be or has not been cured within ten (10) days after
the
giving of written notice to other of such breach and which breach is reasonably
likely, in the opinion of the terminating party, to permit such party to
refuse
to consummate the transactions contemplated by this Agreement in accordance
with
the terms hereof;
(iii) by
either
Purchaser or Seller (provided that neither the terminating party nor any
of its
Affiliates is then in material breach of any representation, warranty, covenant,
or other agreement contained in the Transaction Documents) by written notice
to
the other in the event of a material breach by the other or a party Affiliated
with the other of any covenant or agreement contained in the Transaction
Documentswhich cannot be or has not been cured within ten (10) days the giving
of written notice to other of such breach and which breach is reasonably
likely,
in the opinion of the terminating party, to permit such party to refuse to
consummate the transactions contemplated by this Agreement in accordance
with
the terms hereof;
36
(iv) by
either
Purchaser or Seller by written notice to the other in the event the consummation
of such transactions shall have been temporarily or permanently and restrained,
enjoined or otherwise prohibited by force of Law or any Person has threatened
to
seek such a restraint, injunction or prohibition;
(v) by
either
Purchaser or Seller by written notice to the other in the event that the
Closing
shall not have been consummated by the time provided for in Section 2.2 if
the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the party electing
to
terminate pursuant to this Section 9.4(v) or an Affiliate of such party;
(vi) by
Purchaser by written notice to Seller in the event of a Seller Material Adverse
Change;
(vii) by
Purchaser in the event any third party shall assert or allege, whether or
not in
writing, that the execution of this Agreement and/or the License Agreement
or
the consummation of any transaction contemplated hereby or thereby constitutes
a
breach of an agreement between Seller or any of its Affiliates and such third
party; or
(viii) as
provided in the letter agreement of even date herewith between the parties
hereto
Section
9.5 Effect
of Termination.
In the
event of the termination and abandonment of this Agreement pursuant to Section
9.4, this Agreement shall become void and have no effect, except that no
such
termination shall relieve a breaching party from Liability resulting from
any
breach by that party of this Agreement.
ARTICLE
X
MISCELLANEOUS
Section
10.1 Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section 10.1:
“Affiliate”
means,
with respect to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person, and in the case of
any
natural Person shall include all relatives and family members of such Person.
For purposes of this definition, a Person shall be deemed to control another
Person if such first Person directly or indirectly owns or holds five percent
(5%) or more of the ownership interests in such other Person.
37
“Books
and Records”
means
all books and records of Seller, including manuals, price lists, mailing
lists,
lists of customers, sales and promotional materials, purchasing materials,
documents evidencing intangible rights or obligations, personnel records,
accounting records and litigation files (regardless of the media in which
stored), in each case relating to or used in the Business, excluding only
Seller’s corporate seal, corporate minute book and stock record
books.
“Business”
means
the business of Seller as conducted or proposed to be conducted on the date
hereof and as of the Closing Date.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Contract”
means
any contract, indenture, note, bond, loan, mortgage, license, instrument,
lease
or agreement.
“Environmental
Law”
means
any foreign, federal, state or local statute, regulation, ordinance, or rule
of
common law as now or hereafter in effect in any way or any other legally
binding
requirement relating to the environment, natural resources or protection
of
human health and safety including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601
et seq.),
the
Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.),
the
Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the
Clean Water Act (33 U.S.C. § 1251 et seq.),
the
Clean Air Act (42 U.S.C. § 7401 et seq.)
the
Toxic Substances Control Act (15 U.S.C. § 2601 et seq.),
the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.),
and
the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
and
the regulations promulgated pursuant thereto.
“Fair
Market Value”
means,
as to the Parent Ordinary Shares, (i) the average closing bid price of the
Parent Ordinary Shares on quoted on the London Stock Exchange (or, if the
Parent
Ordinary Shares are not traded on the London Stock Exchange at the time of
determination, the principal exchange or inter-dealer quotation system on
which
the Parent Ordinary Shares are then traded) over a period of 20 consecutive
trading days the latest of which shall be the trading day immediately preceding
the date as of which "Fair Market Value" is being determined or, if the Parent
Ordinary Shares are not then traded on an exchange or through an inter-dealer
quotation system, the fair value of the Parent Ordinary Shares as reasonably
determined by the Board of Directors of Parent.
“GAAP”
means
United States generally accepted accounting principles as in effect from
time to
time.
“Governmental
Approval”
means
any Consent of, with or to any Governmental Body.
“Governmental
Body”
means
any government or governmental or regulatory authority or body thereof, or
political subdivision thereof, whether federal, state, local or foreign,
or any
agency, instrumentality or authority thereof, or any court or arbitrator
(public
or private).
38
“Hazardous
Material”
means
any substance, material or waste which is regulated by the United States,
the
foreign jurisdictions in which Seller conducts business, or any state, local
or
foreign governmental authority including, without limitation, petroleum and
its
by-products, asbestos, and any material or substance which is defined as
a
“hazardous waste,”“hazardous substance,”“hazardous material,”“restricted
hazardous waste,”“industrial waste,”“solid
waste,”“contaminant,”“pollutant,”“toxic waste” or “toxic substance” under any
provision of Environmental Law.
“Intellectual
Property”
means
(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, trade names,
and
corporate names, 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 mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets
and
confidential information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g)
all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
“IRS”
means
the United States Internal Revenue Service.
“Knowledge”
or
words of similar effect means, means (regardless of case) any fact,
circumstance, event or other matter in question, of which (i) with respect
to
VivoQuest, any member of senior management of VivoQuest has actual knowledge
or
should have had actual knowledge after reasonable due inquiry and (ii) with
respect to Purchaser, any member of senior management of Purchaser has actual
knowledge or should have had actual knowledge after reasonable due
inquiry.
“Law”
means
any federal, state, local or foreign law (including common law), statute,
code,
ordinance, rule, regulation or other requirement.
“Legal
Proceeding”
means
any judicial, administrative or arbitral actions, suits, proceedings (public
or
private), claims or governmental proceedings.
“Liability”
means
any liability (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 any liability
for
Taxes.
39
“Lien”
means
any lien, pledge, mortgage, deed of trust, security interest, claim, lease,
charge, option, right of first refusal, easement, servitude, transfer
restriction under any shareholder or similar agreement, encumbrance or any
other
restriction or limitation whatsoever.
“Non-Competition
Period”
means
the period from the Closing Date through the fifth anniversary thereof.
“Order”
means
any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award.
“Permitted
Exceptions”
means
(i) statutory liens for current taxes, assessments or other governmental
charges
not yet delinquent or the amount or validity of which is being contested
in good
faith by appropriate proceedings, provided an appropriate reserve is established
therefor; (ii) mechanics’, carriers’, workers’, repairers’ and similar Liens
arising or incurred in the ordinary course of business that are not material
to
the business, operations and financial condition of the property so encumbered
or Seller; (iii) zoning, entitlement and other land use and environmental
regulations by any Governmental Body, provided that such regulations have
not
been violated; and (iv) such other imperfections in title, charges, easements,
restrictions and encumbrances which do not materially detract from the value
of
or materially interfere with the present use of the Assets subject thereto
or
affected thereby.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Body
or
other entity.
“Release”
means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, migration or leaching into the indoor or outdoor
environment, or into or out of any property.
“Remedial
Action”
means
all actions to (x) clean up, remove, treat or in any other way address any
Hazardous Material; (y) prevent the Release of any Hazardous Material so
it does
not endanger or threaten to endanger public health or welfare or the indoor
or
outdoor environment; or (z) perform pre-remedial studies and investigations
or
post-remedial monitoring and care.
“Seller
Material Adverse Change”
or
“Seller
Material Adverse Effect”
means
the occurrence of any of the following events: the commencement or threat
of any
litigation, arbitration, investigation or other proceeding before or by any
Governmental Body with respect to Seller or any of the Assets or, insofar
as
Seller, the Assets or the Transaction Documents are concerned, Purchaser
or any
Affiliate of Purchaser, except for the potential claim in the amount of
approximately $25,000 by Hong Kong University Science and Technology Center
disclosed in the Seller Disclosure Schedule; the assertion by a third party
(including an employer of or consultant to Seller) that any of the Licensed
IP
(as defined in the License Agreement) infringes the rights of such third
party
or that Seller does not have the right to enter into the License Agreement
with
respect to all or any portion of the Licensed IP; or any of Xxxx Xxxxx, Xxxx
Xxxx or Xxxxxxx Xxxxxxxxxxx ceases to be employer by Seller.
40
“Subsidiary”
means,
as to any Person, any other Person of which a 50% or more of the outstanding
voting securities or other equity interests are owned, directly or indirectly,
by such Person.
“Tax”
or
“Taxes”
shall
mean means any federal, state, provincial, local or foreign income, alternative
minimum, accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, windfall profits, gross receipts, value
added, sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental (including taxes under Section 59A of the
Code or
any analogous or similar provision of any state, local or foreign law or
regulation), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers’ compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiencies thereof, and including any interest, penalties or additions
to
tax attributable to the foregoing.
“Tax
Return”
means
any return, report, declaration, form, claim for refund or information return
or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Transaction
Documents”
means,
collectively, this Agreement, the License Agreement and all other agreements,
documents, instruments and certificates executed pursuant hereto or thereto
in
connection herewith or therewith.
Section
10.2 Publicity .
No
party shall issue any press release or make any other public announcement
relating to the subject matter of this Agreement without the prior written
consent of Purchaser.
Section
10.3 Payment
of Sales, Use or Similar Taxes; Transfer Taxes.
Seller
shall be responsible for and pay in a timely manner all sales, use, value
added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees (“Transfer
Taxes”),
arising out of or in connection with or attributable to the transactions
effected pursuant to the Transaction Documents. Each party hereto shall prepare
and timely file all Tax Returns required to be filed in respect of Transfer
Taxes that are the primary responsibility of such party under applicable
Law;
provided,
however,
that
such party’s preparation of any such Tax Returns shall be subject to the other
party’s approval, which approval shall not be unreasonably withheld or
delayed.
41
Section
10.4 Expenses.
On the
Closing Date, or upon any valid termination of this Agreement by Seller prior
to
the Closing Date pursuant to Section 9.4, subject to receipt of substantiating
documentation, Purchaser shall reimburse Seller for up to $50,000 of its
reasonable and customary legal fees incurred in connection with the negotiation
and execution of the Transaction Documents. Except as provided in the preceding
sentence, each party shall bear all costs and expenses incurred by such party
in
connection with the negotiation and execution of this Agreement and each
other
Transaction Document, whether or not the transactions contemplated hereby
and
thereby are consummated.
Section
10.5 Specific
Performance.
Seller
acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to Purchaser and that Purchaser will not have an adequate
remedy at law. Therefore, the obligations of Seller under this Agreement,
including, without limitation, Seller’s obligation to sell the Assets to
Purchaser, shall be enforceable by a decree of specific performance issued
by
any court of competent jurisdiction, and appropriate injunctive relief may
be
applied for and granted in connection therewith (without the requirement
of the
posting of a bond or other surety). Such remedies shall, however, be cumulative
and not exclusive and shall be in addition to any other remedies which any
party
may have under this Agreement or otherwise.
Section
10.6 Submission
to Jurisdiction; Consent to Service of Process.
The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
of
any federal or state court located in New York, New York over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims
in
respect of such dispute or any suit, action proceeding related thereto may
be
heard and determined in such courts. The parties hereby irrevocably waive,
to
the fullest extent permitted by applicable Law, any objection which they
may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may
be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Section
10.7 Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by Purchaser, in the case of an amendment,
supplement, modification or waiver sought to be enforced against Purchaser,
or
Seller, in the case of an amendment, supplement, modification or waiver sought
to be enforced against Seller. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver
of
such breach or as a waiver of any other or subsequent breach. No failure
on the
part of any party to exercise, and no delay in exercising, any right, power
or
remedy hereunder shall operate as a waiver thereof, nor shall any single
or
partial exercise of such right, power or remedy by such party preclude any
other
or further exercise thereof or the exercise of any other right, power or
remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
42
Section
10.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York without regard to conflicts of law principles
thereof.
Section
10.9 Table
of Contents and Headings.
The
table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
Section
10.10 Notices.
All
notices and other communications under this Agreement shall be in writing
and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to
the
other party pursuant to this provision):
If
to
Seller, to:
VivoQuest,
Inc.
000
Xxxxxxxxx Xxxxxxxxx
Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn:
Xxxxx Xxxxxxx
Telecopier:
000-000-0000
With
a
copy to:
Xxxxx
Xxxx LLP
Seaport
World Trade Center West
000
Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
Attention:
Xxxxx Xxxx, Esq.
Telecopier:
000-000-0000
43
If
to
Purchaser:
XTL
Biopharmaceuticals Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0-000
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telecopier:
000-000-0000
With
a
copy to:
Law
Office of Xxxxxxx X. Xxxxxxxxxx PLLC
000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Telecopier:
(000) 000-0000
Any
such
notice or communication shall be deemed to have been received (i) when
delivered, if personally delivered or transmitted by electronic mail, with
receipt acknowledgment by the recipient by return electronic mail, (ii) when
sent, if sent by facsimile on a business day during normal business hours
(or,
if not sent on a business day during normal business hours, on the next business
day after the date sent by facsimile), (iii) on the next business day after
dispatch, if sent by nationally recognized, overnight courier guaranteeing
next
business day delivery, and (iv) on the 5th
business
day following the date on which the piece of mail containing such communication
is posted, if sent by mail.
Section
10.11 Bulk
Sales.
Purchaser and Seller hereby waive compliance by the other with the provisions
of
the bulk sales laws of any jurisdiction, to the extent applicable to the
transactions contemplated by this Agreement. Seller shall indemnify and hold
harmless Purchaser and the other Purchaser Indemnitees from and against any
and
all Losses resulting from or arising out of any noncompliance or alleged
noncompliance by Purchaser or Seller with such bulk sales laws.
Section
10.12 Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
Section
10.13 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Except as provided in
Article
VIII, nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement.
No assignment of this Agreement or of any rights or obligations hereunder
may be
made by any party hereto (by operation of law or otherwise) without the prior
written consent of the other party hereto and any attempted assignment without
the required consents shall be void, provided that no such consent shall
be
required (i) for any such assignment of Purchaser’s rights and obligations
hereunder (a) in connection with a sale or other transfer (whether directly
or
indirectly, including by merger or consolidation) of the Business, (b) to
an
Affiliate of Purchaser or (c) as security for the obligations of Purchaser
or
any Affiliate of Purchaser under a credit agreement entered into with a bank
or
other financial institution or (ii) for any such assignment of Seller’s rights
and obligations hereunder in connection with the assignment of this Agreement
(together with its remaining transferable assets, if any) by Seller to a
liquidating trust in accordance with applicable Law.
44
Section
10.14 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the
same
instrument.
Section
10.15 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.
45
IN
WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement
effective as of the date and year first above written.
| VIVOQUEST, INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
| XTL BIOPHARMACEUTICALS INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
46
SCHEDULE
I
Included
Contracts
Industrial
Real Estate Lease dated November 15, 2004 between Suga Development, L.L.C.
and
Seller
Agreement
effective May 12, 2003 between ReBLikon GmbH and Seller
CAS
Scifinder License Agreement between Seller and the American Chemical Society,
through its Chemical Abstracts Services division
47
