Exhibit 10.1
ASSET PURCHASE AGREEMENT
AMONG
SABRATEK CORPORATION,
XXXXX, INC.
AND
XXXXXXX X. XXXXXXX
February 19, 1997
TABLE OF CONTENTS
Page
1. Definitions.......................................................... 3
2. Basic Transaction.................................................... 8
(a) Purchase and Sale of Assets................................... 8
(b) Assumption of Liabilities..................................... 8
(c) Repayment and Cancellation of Certain Liabilities............. 8
(d) Purchase Price................................................ 9
(e) The Closing................................................... 9
(f) Deliveries at the Closing..................................... 9
3. Representations and Warranties of the Seller and Xxxxxxx............. 10
(a) Organization of the Seller.................................... 10
(b) Authorization of Transaction.................................. 10
(c) Noncontravention.............................................. 10
(d) Capitalization................................................ 10
(e) Brokers' Fees................................................. 10
(f) Title to Assets............................................... 10
(g) Subsidiaries.................................................. 11
(h) Financial Statements.......................................... 11
(i) Events Subsequent to Most Recent Fiscal Month End............. 11
(j) Undisclosed Liabilities....................................... 12
(k) Legal Compliance.............................................. 12
(l) Tax Matters................................................... 13
(m) Real Property................................................. 13
(n) Related Party Transactions.................................... 14
(o) Intellectual Property......................................... 14
(p) Regulatory Matters............................................ 16
(r) Tangible Assets............................................... 17
(s) Inventory..................................................... 17
(t) Contracts..................................................... 17
(u) Notes and Accounts Receivable................................. 19
(v) Powers of Attorney............................................ 19
(w) Insurance..................................................... 19
(x) Litigation.................................................... 19
(y) Product Warranty.............................................. 19
(z) Product Liability............................................. 20
(aa) Employees..................................................... 20
(bb) Employee Benefits............................................. 20
(cc) Guaranties.................................................... 21
(dd) Environment, Health, and Safety............................... 21
(ee) Payment in Full of Seller Debt and other Obligations.......... 21
(ff) Investment.................................................... 22
4. Representations and Warranties of the Buyer.......................... 22
(a) Organization of the Buyer..................................... 22
(b) Authorization of Transaction.................................. 22
(c) Noncontravention.............................................. 23
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Page
(d) SEC Filings................................................... 23
5. Pre-Closing Covenants................................................ 23
(a) General....................................................... 23
(b) Notices and Consents.......................................... 23
(c) Operation of Business......................................... 23
(d) Preservation of Business...................................... 23
(e) Full Access................................................... 24
(f) Notice of Developments........................................ 24
(g) Exclusivity................................................... 24
(h) Massachusetts Corporation Law................................. 24
(i) Employment Agreement.......................................... 24
6. Conditions to Obligation to Close.................................... 24
(a) Conditions to Obligation of the Buyer......................... 24
(b) Conditions to Obligation of the Seller........................ 26
7. Post-Closing Covenants............................................... 26
(a) Restrictions on Transfer...................................... 26
(b) Shortfall Payment............................................. 27
(c) No Right to Offset or Claim Against Escrow.................... 27
(d) Non-Compete and Nonsolicitation............................... 27
(e) Use of Business Name.......................................... 28
(f) Repayment of Seller Debt...................................... 28
(g) Assumption of Seller Employees................................ 28
(h) Sunset Repurchase Option...................................... 28
(i) Excise Lien................................................... 29
8. Termination.......................................................... 29
(a) Termination of Agreement...................................... 29
(b) Effect of Termination......................................... 30
9. Miscellaneous........................................................ 30
(a) Press Releases and Public Announcements....................... 30
(b) No Third Party Beneficiaries.................................. 30
(c) Entire Agreement.............................................. 30
(d) Succession and Assignment..................................... 30
(e) Counterparts.................................................. 30
(f) Headings...................................................... 30
(g) Notices....................................................... 30
(h) Governing Law................................................. 31
(i) Amendments and Waivers........................................ 31
(j) Severability.................................................. 32
(k) Expenses...................................................... 32
(l) Construction.................................................. 32
(m) Incorporation of Exhibits..................................... 32
(n) Specific Performance.......................................... 32
ASSET PURCHASE AGREEMENT
Agreement entered into on February 19,1997, by and among Sabratek
Corporation, a Delaware corporation (the "Buyer"), Xxxxx, Inc., a Massachusetts
corporation (the "Seller"), and Xxxxxxx X. Xxxxxxx ("Xxxxxxx"). The Buyer, the
Seller and Xxxxxxx are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
all of the assets of the Seller and assume or repay certain of the liabilities
of the Seller in exchange for capital stock or cash of the Buyer.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.
"Acquired Assets" means all right, title, and interest in and to all of the
assets of the Seller, including all of its (a) real property, leaseholds and
subleaseholds therein, improvements, fixtures, and fittings thereon, and
easements, rights-of-way, and other appurtenants thereto, (b) tangible personal
property (such as machinery, equipment, inventories of raw materials and
supplies, goods in process and finished goods, furniture, automobiles, trucks,
tractors, trailers and tools), (c) Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions, (d) leases,
subleases, and rights thereunder, (e) agreements, contracts, indentures,
mortgages, instruments, Security Interests, guaranties, other similar
arrangements, and rights thereunder, (f) accounts, notes, and other receivables,
(g) securities, (h) claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment (including any such item relating to the payment of Taxes), (i)
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies, (j) books, records, ledgers, files, documents, correspondence, lists,
plats, architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials, and (k) Cash; provided, however, that the Acquired Assets
shall not include (i) the corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and other documents
relating to the organization, maintenance, and existence of the Seller as a
corporation or (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyer on the
other hand entered into on or after the date of this Agreement).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
(S)1504(a).
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"Assumed Employees" has the meaning set forth in (S) 7(g) below.
"Assumed Liabilities" means (a) all Liabilities of the Seller set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto),
(b) all Liabilities of the Seller which have arisen after the Most Recent Fiscal
Month End in the Ordinary Course of Business, (c) all Liabilities of the Seller
for unpaid Taxes with respect to periods prior to the Closing for which the
return is due after the Closing up to an amount computed in accordance with the
past custom and practice of the Seller in filing its Tax Returns and as and to
the extent reflected on the Most Recent Balance Sheet for unpaid Taxes with
respect to periods before the date of the Most Recent Balance Sheet, and (d) all
obligations of the Seller under the agreements, contracts, leases, licenses, and
other arrangements specifically referred to in the definition of Acquired Assets
either (i) to furnish goods, services, and other non-Cash benefits to another
party after the Closing or (ii) to pay for goods, services, and other non-Cash
benefits that another party will furnish to it after the Closing; provided,
however, that the Assumed Liabilities shall not include (i) any Liability of the
Seller for income, transfer, sales, use, and other Taxes arising in connection
with the consummation of the transactions contemplated hereby (including any
income Taxes arising because the Seller is transferring the Acquired Assets,
(ii) any Liability of the Seller for the unpaid Taxes of any Person (other than
any of the Seller) under Treas. Reg. (S)1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise, (iii) any obligation of the Seller to indemnify any Person by reason
of the fact that such Person was a director, officer, employee, or agent of any
of the Seller or was serving at the request of any such entity as a partner,
trustee, director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or otherwise),
(iv) any Liability of the Seller for costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, including without
limitation any and all prepayment penalties resulting from the repayment of the
Seller Debt by the Buyer, (v) any Liability or obligation of the Seller under
this Agreement (or under any side agreement between the Seller on the one hand
and the Buyer on the other hand entered into on or after the date of this
Agreement) or (vi) any Liability resulting from, arising out of, relating to, in
the nature of, or caused by any breach of contract, breach of warranty, tort,
product liability, infringement, or violation of law which relates to the
operation of the business of the Seller at any time prior to the Closing.
"Average Market Price of a Buyer Share" means the average of the Market
Prices of share of Buyer Common Stock on each of the 10 trading days immediately
preceding the Closing Date; provided, that if such average is less than $16.00,
the "Average Market Price of a Buyer Share" shall be $16.00.
"Xxxxx" means X. Xxxxx Medical Inc.
"Xxxxx Note" means the term note made by the Seller for the benefit of
Xxxxx, dated December 1, 1996, in the principal amount of $200,000.
"Bridge Loan" has the meaning set forth in (S) 2(c) below.
"Buyer" has the meaning set forth in the preface above.
"Buyer Common Stock" means the Common Stock, par value $.01 per share, of
the Buyer.
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"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in (S)2(e) below.
"Closing Date" has the meaning set forth in (S)2(e) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedule" has the meaning set forth in (S)3 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in (S)302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FDA" has the meaning set forth in (S) 3(q) below.
"FDCA" means the Federal Food, Drug and Cosmetic Act of 1938, as amended
from time to time.
"Escrow Agent" shall have the meaning set forth in the Escrow Agreement.
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"Escrow Agreement" means an Escrow Agreement substantially in the form of
Exhibit I attached hereto.
"Fiduciary" has the meaning set forth in ERISA (S)3(21).
"Financial Statement" has the meaning set forth in (S)3(h) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"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 business 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 other proprietary rights, and (g) all
copies and tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"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.
"Market Price" of a share of Buyer Common Stock on any day means the
closing price of a share of Buyer Common Stock on such day on the Nasdaq
National Market (or such other trading market upon which the shares of Buyer
Common Stock then trade) as reported by The Wall Street Journal (or, if not
reported thereby, as reported by another authoritative source).
"MDR" has the meaning set forth in (S) 7(i) below.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in (S)3(h)
below.
"Most Recent Fiscal Month End" has the meaning set forth in (S)3(h) below.
"Most Recent Fiscal Year End" has the meaning set forth in (S)3(h) below.
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"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
"Non-Compete Period" has the meaning set forth in (S) 7(d)(i) below.
"Non-Solicitation Period" has the meaning set forth in (S) 7(d)(ii) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA (S)406 and Code
(S)4975.
"Purchase Price" has the meaning set forth in (S)2(d) below.
"Put Closing" has the meaning set forth in (S) 7(h)(iii) below.
"Put Closing Date" has the meaning set forth in (S) 7(h)(i) below.
"Put Notice" has the meaning set forth in (S) 7(h)(i) below.
"Put Option" has the meaning set forth in (S) 7(h)(i) below.
"Reportable Event" has the meaning set forth in ERISA (S)4043.
"Xxxxxxx" means Xxxxxx Xxxxxxx.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" has the meaning set forth in Section 4(d) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
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"Seller" has the meaning set forth in the preface above.
"Seller Debt" means the indebtedness of the Seller specifically set forth
on Exhibit A attached hereto (including principal, accrued interest, and any
prepayment penalties that arise with respect thereto) and shall not include any
other indebtedness of the Seller.
"Seller Share" means any share of the Common Stock, no par value per share,
of the Seller.
"Seller Stockholders" means the stockholders of the Seller.
"Special Seller Meeting" has the meaning set forth in (S) 5(h) below.
"Subsidiary" means any corporation (or other entity) with respect to which
a specified Person (or a Subsidiary thereof) owns a majority of the common stock
(or other equity ownership interest) or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors (or other
managing body).
"Sunset Purchase Price" has the meaning set forth in (S) 7(h)(ii) below.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code (S)59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Unanimous Written Consent" has the meaning set forth in (S) 5(h) below.
"Valuation Date" has the meaning set forth in (S) 7(b) below.
"Valuation Date Buyer Stock Price" means the per share price equal to the
average of the Market Prices of a share of Buyer Common Stock on each of the 10
trading days immediately preceding the Valuation Date.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
(S)2.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement,
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the Buyer agrees to assume and become responsible for all of the Assumed
Liabilities at the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Seller not included within the definition of Assumed Liabilities. The Buyer
agrees to pay in the ordinary course, and in any event no later than the
Valuation Date, (i) the ordinary course trade obligations and accrued expenses
assumed pursuant to the first sentence of this (S) 2(b), except to the extent
the Buyer is contesting such obligations in good faith and has established such
reserves therefor as are sufficient and adequate in the reasonable opinion of
the Seller to allow the Seller to liquidate and distribute its assets to the
stockholders of the Seller on the Valuation Date without further reserve or
reservation for such obligations, and (ii) the indebtedness of the Seller to
Xxxxx represented by the Xxxxx Note, together with accrued but unpaid interest
thereon, and the Buyer shall make the quarterly payment of $50,000 payable
thereunder on March 1, 1997 and any payment due or required to be made
thereunder prior to the Valuation Date as a result of the transactions
contemplated by this Agreement.
(c) Repayment and Cancellation of Certain Liabilities. On and subject to
the terms and conditions of this Agreement, the Buyer agrees to repay the Seller
Debt at the Closing including all accrued interest thereon to the Closing Date.
Said payment shall not include any payment with respect to prepayment penalties
arising under the Seller Debt. The Buyer will not have any responsibility to
repay any indebtedness of the Seller at the Closing other than the Seller Debt.
The Buyer also agrees (i) to forgive and release the Seller at the Closing from
any and all repayment obligations under that certain Bridge Loan Agreement,
dated January 1997, between the Buyer and the Seller (the "Bridge Loan"), and
(ii) to pay to Xxxxxxx at the Closing the deferred salary for 1996 and other
amounts due and owing to Xxxxxxx by the Seller as such amounts are set forth on
Exhibit A attached hereto.
(d) Purchase Price. The Buyer agrees to pay to the Seller at the Closing
an amount equal to $3,000,000 (the "Purchase Price"). The Purchase Price may be
paid in either (i) cash or (ii) in cash and Buyer Common Stock (valued at the
Average Market Price of a Buyer Share) at the sole and complete discretion of
the Buyer; provided, that no fractional share of Buyer Common Stock shall be
issued by the Buyer and that the Buyer shall pay at least $100,000 of the
Purchase Price in cash.
(e) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx in
Chicago, Illinois, commencing at 9:00 a.m. local time on the business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the
"Closing Date"). All cash payments required to be made by the Buyer under this
Agreement shall be made at the discretion of the Buyer by wire transfers to such
accounts as designated in writing prior to the Closing by the Seller.
(f) Deliveries at the Closing. At the Closing (i) the Seller will deliver
to the Buyer the various certificates, instruments, and documents referred to in
(S)6(a) below; (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in (S)6(b) below; (iii) the
Seller will execute, acknowledge (if appropriate), and deliver to the Buyer (A)
customary assignment documents (including Intellectual Property transfer
documents) and (B) such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel reasonably may request; and (iv) the
Buyer will execute, acknowledge (if appropriate), and deliver to the Seller (A)
a customary assumption agreement with respect
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to the Assumed Liabilities and (B) such other instruments of assumption as the
Seller and its counsel reasonably may request. The Buyer will deliver to the
Escrow Agent any shares of Buyer Common Stock included in the Purchase Price at
the Closing and to the Seller any cash included in the Purchase Price at the
Closing. All shares of Buyer Common Stock furnished to the Escrow Agent shall be
dealt with by the Buyer and the Seller in accordance with the terms of the
Escrow Agreement and distributed by the Escrow Agent in accordance with the
terms of the Escrow Agreement. The Buyer will also deliver to the Seller cash in
an amount equal to the aggregate Seller Debt and other amounts to be repaid by
the Buyer at the Closing in accordance with (S) 2(c) and Seller will immediately
distribute such cash to the holders of Seller Debt or other persons entitled to
any such other amounts.
3. Representations and Warranties of the Seller and Xxxxxxx. The Seller
and Xxxxxxx jointly and severally represent and warrant to the Buyer that the
statements contained in this (S)3 are correct and complete as of the date of
this Agreement except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this (S)3.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. The Seller has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of the Seller and the Seller
Stockholders have duly authorized the execution, delivery, and performance of
this Agreement by the Seller. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in (S)2 above), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
the charter or bylaws of the Seller or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). The Seller does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in (S)2 above).
(d) Capitalization. The entire authorized capital stock of the Seller
consists of (i) 100,000 shares of Common Stock, of which 58,676.535 shares are
issued and outstanding and no shares are held in treasury. All of the issued and
outstanding shares of capital stock of the Seller have been duly authorized and
are validly issued, fully paid and nonassessable. The Seller has 25 holders of
record of its Common Stock as of the date of this Agreement. Except as set forth
on (S) 3(d) of the Disclosure Schedule, there are no outstanding options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or
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other contracts or commitments that could require the Seller to issue, sell or
otherwise cause to become outstanding any additional capital stock of the
Seller. There are no outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to the Seller.
(e) Brokers' Fees. The 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 for which the Buyer could become
liable or obligated.
(f) Title to Assets. The Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet. Without limiting the generality of the foregoing, the
Seller has good and marketable title to all of the Acquired Assets, free and
clear of any Security Interest or restriction on transfer.
(g) Subsidiaries. The Seller has no Subsidiaries.
(h) Financial Statements. Attached hereto as Exhibit B are the following
financial statements (collectively, the "Financial Statements"): (i) audited
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for each of the fiscal years ended 1995 and 1996 (the "Most
Recent Fiscal Year End"); and (ii) the unaudited balance sheets and statements
of income, changes in stockholders' equity and cash flows as of and for the
month ended January 31, 1997 (the "Most Recent Fiscal Month End" and the "Most
Recent Financial Statements") for the Seller. The Financial Statements
(including the Notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Seller as of such dates and the results of operations
of the Seller for such periods, are correct and complete, and are consistent
with the books and records of the Seller (which books and records are correct
and complete).
(i) Events Subsequent to Most Recent Fiscal Month End. Since the Most
Recent Fiscal Month End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Seller. Without limiting the generality of the foregoing, since
that date:
(i) the Seller has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for fair consideration in
the Ordin ary Course of Business;
(ii) the Seller has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses);
(iii) the Seller has not accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses);
(iv) the Seller has not imposed any Security Interest upon any of its
assets, tangible or intangible;
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(v) the Seller has not made any capital expenditure (or series of
related capital expenditures);
(vi) the Seller has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $10,000 or outside the Ordinary Course of Business;
(vii) the Seller has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed
money (other than the Bridge Loan) or capitalized lease obligation;
(viii) the Seller has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(ix) the Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims);
(x) the Seller has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(xi) the Seller has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
(xii) the Seller has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiii) the Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees and
stockholders of the Seller outside the Ordinary Course of Business;
(xiv) the Seller has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(xv) the Seller has not made any other change in employment terms for
any of its directors, officers, and employees outside the Ordinary Course
of Business;
(xvi) the Seller has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xvii) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of the Seller and its Subsidiaries; and
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(xviii) the Seller has not committed to any of the foregoing.
(j) Undisclosed Liabilities. To the Knowledge of the Seller, it does not
have any Liability except for (i) Liabilities set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(k) Legal Compliance. To the Knowledge of the Seller, it (and its
respective predecessors and Affiliates) has complied with all applicable laws
(including rules, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(l) Tax Matters.
-----------
(i) The Seller has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all respects. All Taxes
owed by the Seller (whether or not shown on any Tax Return) have been paid.
The Seller currently is not the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by any authority
in a jurisdiction where the Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Seller that arose in connection with
any failure (or alleged failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(iii) The Seller has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Seller
since inception of the Seller.
(iv) The Seller has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(v) The unpaid Taxes of the Seller (A) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Seller in filing its
Tax Returns.
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(m) Real Property.
-------------
(i) The Seller neither owns nor has any right or obligation to acquire
any real property.
(ii) (S)3(m)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to the Seller. The Seller has
delivered to the Buyer correct and complete copies of the leases and
subleases listed in (S)3(m)(ii) of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in (S)3(m)(ii) of the
Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in (S)2 above);
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (E) above are true and
correct with respect to the underlying lease;
(G) the Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws,
rules, and regulations; and
(I) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities.
(n) Related Party Transactions. Since the initial incorporation of the
Company, the Seller has not been a party to any transaction (other than employee
compensation and other ordinary incidents of employment) with a Person who was
at the time a Related Party. "Related Party" means any present or
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former officer, director or affiliate of the Seller, any present or former
holder of the Common Stock of the Seller or any other Person who, to the
Knowledge of the Seller, at the time relevant to the determination, is or was a
spouse, child, parent or sibling of any of the aforementioned persons or is or
was a trust or other similar entity for the benefit of any of the foregoing
persons. No property or interest in any property (including, without limitation,
designs and drawings concerning machinery) which relates to and is or will be
necessary or useful in the present or currently contemplated future operation of
the business of the Seller, is presently owned by or leased or licensed by or to
any Related Party.
(o) Intellectual Property.
---------------------
(i) The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary or
desirable for the operation of the businesses of the Seller as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the
Closing hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the Closing
hereunder. The Seller has taken all necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(ii) To the Knowledge of the Seller, it has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties. The Seller has never
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Seller must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Seller, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of the
Seller.
(iii) (S)3(o)(iii) of the Disclosure Schedule identifies each patent
or registration which has been issued to the Seller with respect to any of
its Intellectual Property, identifies each pending patent application or
application for registration which the Seller has made with respect to any
of its Intellectual Property, and identifies each license, agreement, or
other permission which the Seller has granted to any third party with
respect to any of its Intellectual Property (together with any exceptions).
The Seller has delivered to the Buyer correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. (S)3(o)(iii)
of the Disclosure Schedule also identifies each trade name or unregistered
trademark used by the Seller in connection with any of its businesses. With
respect to each item of Intellectual Property required to be identified in
(S)3(o)(iii) of the Disclosure Schedule:
(A) the Seller possesses all right, title, and interest in and to
the item, free and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
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(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, enforceability, use, or ownership
of the item; and
(D) the Seller has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iv) (S)3(o)(iv) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that the Seller uses
pursuant to license, sublicense, agreement, or permission. The Seller has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect
to each item of Intellectual Property required to be identified in
(S)3(o)(iv) of the disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in (S)2 above);
(C) no party to the license, sublicense, agreement, or permission
is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) the Seller has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(p) Regulatory Matters. The Seller has made available to the Buyer true and
correct copies of the material regulatory (including FDA) permits, licenses and
other governmental authorizations and approvals of the Seller, all of which has
been duly obtained and are in full force and effect; the Seller is in
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compliance with the terms and conditions thereof, and there are no proceedings
pending or, to the Knowledge of the Seller, threatened seeking to revoke, cancel
or suspend, or to adversely modify, any thereof. The consummation of the
transactions contemplated hereby will not result in the revocation,
cancellation, suspension or adverse modification of any thereof.
(q) FDA Matters.
(i) Seller is registered with the United States Food and Drug
Administration (the "FDA") as a drug manufacturer and repackager (labeler
code number 62338). The Seller is in substantial compliance with all
applicable registration and listing requirements set forth in 21 U.S.C.
(S)360 and 21 C.F.R. Part 207.
(ii) To the Knowledge of the Seller, all manufacturing operations
conducted by or on behalf of the Seller have been and are being conducted
in substantial compliance with the good manufacturing practice regulations
set forth in 21 C.F.R. Parts 210 and 211. All manufacturing facilities of
the Seller are registered with the FDA (registration number 1224788) and
have been observed and examined (including the manufacturing practices and
products of the Seller conducted or produced at such facilities) through
official inspection by compliance and consumer safety officers of the FDA.
The Seller has voluntarily corrected all previous requests of actions for
improvement by the FDA.
(iii) The Seller has made available to the Buyer copies of any and all
reports of inspection observations, establishment inspection reports,
warning letters and any other documents received by the Seller from the FDA
since the initial incorporation of the Seller that indicate or suggest any
lack of compliance with the FDA regulatory requirements by the Seller or
any Person otherwise performing manufacturing operations for the benefit of
Seller.
(iv) To the Knowledge of the Seller, there are no FDA or commercial
regulations which would prevent expansion of the business and operations of
the Seller as conducted before the Closing to proposed locations in a
reasonably similar manner.
(v) Neither the Seller nor its officers, employees or agents have made
an untrue statement of a material fact or fraudulent statement to the FDA,
failed to disclose a material fact required to be disclosed to the FDA, or
committed an act, made a statement or failed to make a statement that could
reasonably be expected to provide a basis for the FDA to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities" as set forth in 56 Fed. Reg. 46191 (September 10,
1991).
(vi) Neither the Seller nor, to the Knowledge of the Seller, any third
party manufacturer, has received any written notice that the FDA has
commenced, or threatened to initiate any action to withdraw its approval or
request the recall of any product of the Seller, or commenced or threatened
to initiate any action to enjoin production at any facility of the Seller
or any facility at which a third party manufacturer conducts manufacturing
operations on behalf of the Seller.
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(vii) As to each product manufactured and/or distributed by the Seller
such article is not adulterated or misbranded within the meaning of the
FDCA, 21 U.S.C. (S)(S) 301c et. seq. in any manner that gives rise to any
liability on the part of the Seller.
(viii) The Seller has delivered to the Buyer any and all information
and documents which the Seller has received or collected or is otherwise in
its possession regarding any changes proposed or contemplated by the FDA to
the 510(k) clearance or approval requirements for medical device products.
The Seller has no Knowledge that the FDA has proposed or is considering any
change in its withdrawal and recall policies regarding medical devices.
(r) Tangible Assets. The Seller owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as presently conducted and as presently proposed to be conducted. Each such
tangible asset has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used. To the Knowledge of
Seller, each such tangible asset is free from any material defects (patent or
latent).
(s) Inventory. The inventory of the Seller consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective, subject only to the reserve for inventory writedown set forth on
the face of the Most Recent Balance Sheet (rather than in any Notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Seller.
(t) Contracts. (S)3(t) of the Disclosure Schedule lists the following
contracts and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation;
(v) any agreement to which the Seller is a party relating to any
completed or proposed business acquisitions, mergers, sales or purchases of
substantial assets, equity or debt financings, reorganizations and other
material transactions outside of the ordinary course of business since the
initial inception of the Seller (including copies of all offering and
placement memoranda and all other documents prepared by or on behalf of the
Seller with respect thereto);
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(vi) any agreements or arrangements with any director, officer or any
stockholder (including their affiliates and relatives) of the Seller;
(vii) any agreement concerning confidentiality or noncompetition;
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(ix) management, consulting or advisory agreements (including but not
limited to accounting, legal and other advisory services);
(x) any agreement or group of related agreements with the same party
for the sale or purchase of products or services;
(xi) any sales distribution agreements, franchise agreements and
advertising agreements;
(xii) any collective bargaining agreement;
(xiii) any agreement for the employment of any individual (including
any severance agreement) on a full-time, part-time, consulting, or other
basis;
(xiv) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, employees and stockholders;
(xv) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Seller (other than any lease or sublease covered by (S)3(m)(ii)); or
(xvi) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000 (other
than any lease or sublease covered by (S)3(m)(ii)).
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement (as amended to date) listed in (S)3(t) of the Disclosure
Schedule and a written summary setting forth the terms and conditions of each
oral agreement referred to in (S)3(t) of the Disclosure Schedule. With respect
to each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby (including
the assignments and assumptions referred to in (S)2 above); (C) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(u) Notes and Accounts Receivable. All notes and accounts receivable of
the Seller are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only
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to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Seller.
(v) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Seller.
(w) Insurance. (S)3(w) of the Disclosure Schedule sets forth the following
information with respect to each material insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) with respect to which the Seller is a party, a
named insured, or otherwise the beneficiary of coverage: (i) the name, address,
and telephone number of the agent; (ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured; (iii) the policy number and
the period of coverage; and (iv) the scope of coverage (including an indication
of whether the coverage is on a claims made, occurrence, or other basis) and
amount. With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect in all material
respects; (B) neither the Seller nor any other party to the policy is in
material breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any material provision thereof. (S)3(w) of the
Disclosure Schedule describes any material self-insurance arrangements affecting
the Seller.
(x) Litigation. (S)3(x) of the Disclosure Schedule sets forth each
instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator; the
Seller has delivered to the Buyer all correspondence and other documents
relating to the aforementioned. None of the actions, suits, proceedings,
hearings, and investigations set forth in (S)3(x) of the Disclosure Schedule
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the Seller.
The Seller has no reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the Seller.
(y) Product Warranty. Each product manufactured, sold, leased, or
delivered by the Seller has been in conformity with all applicable contractual
commitments and all express and implied warranties, and to the Knowledge of the
Seller, it has no Liability for replacement or repair thereof or other damages
in connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Seller. No product
manufactured, sold, leased, or delivered by the Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. (S)3(y) of the Disclosure Schedule includes copies
of the standard terms and conditions of sale or lease for the Seller (containing
applicable guaranty, warranty, and indemnity provisions).
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(z) Product Liability. To the Knowledge of the Seller, it has no Liability
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Seller.
(aa) Employees. To the Knowledge of the Seller, no executive, key
employee, or group of employees has any plans to terminate employment with the
Seller. The Seller is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. The Seller has not
committed any unfair labor practice.
(bb) Employee Benefits.
(i) The Seller has no Employee Benefit Plans which are qualified or
required to be qualified under ERISA or the Code. (S)3(bb) of the
Disclosure Schedule lists each Employee Benefit Plan that the Seller
maintains or to which the Seller contributes which is not so qualified and
descriptions thereof are contained in or attached to such section of the
Disclosure Schedule.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, administered and
funded in all respects in accordance with the applicable requirements
of ERISA, the Code, and other applicable laws.
(B) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of the Seller. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(C) The Seller has delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Seller
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute, there have been
no Prohibited Transactions with respect to any such Employee Benefit Plan.
No Fiduciary has any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action,
suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit
Plan (other than routine claims for benefits) is pending or threatened.
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(iii) The Seller (i) does not maintain, contribute to or have any
liability with respect to any Employee Pension Benefit Plan (whether or not
qualified), (ii) has not contributed to, ever has contributed to, or ever
has been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer Plan or
(iii) does not maintain or ever has maintained or contributes, ever has
contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance
with Code (S)4980B).
(cc) Guaranties. The Seller is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
(dd) Environment, Health, and Safety.
(i) Each of the Seller and its predecessors and Affiliates has
complied with all Environmental, Health, and Safety Laws, and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has ever been filed or commenced or has ever been threatened to
be commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, each of the Seller and
its predecessors and Affiliates has obtained and been in compliance with
all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all Environmental, Health, and Safety Laws.
(ii) The Seller has no Liability for damage to any site, location, or
body of water (surface or subsurface), for any illness of or personal
injury to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of the Seller
and its predecessors and Affiliates have been free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(iv) There has never been a recall, withdrawal, correction or removal
(or any threat thereof) with respect to any past or present products of the
Seller (either by the FDA or otherwise).
(ee) Payment in Full of Seller Debt and other Obligations. Payment by the
Buyer of the Seller Debt as and in the amounts set forth in Exhibit A attached
hereto will fully satisfy and discharge the Seller Debt and the holders of the
Seller Debt following such payment will have no further rights thereunder. The
payment of the deferred salary and other amounts owed to Xxxxxxx set forth in
Exhibit A will fully satisfy and discharge all amounts owing to Xxxxxxx from the
Seller and Xxxxxxx with have no further rights following such payment against
the Seller with respect to any indebtedness or deferred salary. The payment of
$204,813.33 to Xxxxx by the Buyer on February 17, 1997 would satisfy and
discharge all obligations of the Seller to Xxxxx under the Xxxxx Note.
(ff) Investment.
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(i) The Seller (i) understands that the issuance of the Buyer Common
Stock to the Seller has not been, and will not be, registered under the
Securities Act, or under any state securities laws, and is being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (ii) is acquiring the Buyer Common Stock
solely for its own account for investment purposes, and not with a view to
the distribution thereof (except to the Seller Stockholders), (iii) is a
sophisticated investor with knowledge and experience in business and
financial matters and is able to evaluate the risks of an investment in the
Buyer Common Stock, (iv) has received certain information concerning the
Buyer and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding
the Buyer Common Stock, (v) is able to bear the economic risk and lack of
liquidity inherent in holding the Buyer Common Stock, and (vi) is an
Accredited Investor.
(ii) The Seller has been or will be (at or before the Closing)
informed in writing by each Seller Stockholder that such Seller Stockholder
(i) understands that the issuance of the Buyer Common Stock to the Seller
has not been, and will not be, registered under the Securities Act, or
under any state securities laws, and is being offered and sold in reliance
upon federal and state exemptions for transactions not involving any public
offering, (ii) is acquiring the Buyer Common Stock solely for its own
account for investment purposes, and not with a view to the distribution
thereof, (iii) is a sophisticated investor with knowledge and experience in
business and financial matters and is able to evaluate the risks of an
investment in the Buyer Common Stock, (iv) has received certain information
concerning the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in holding the Buyer Common Stock, (v) is able to bear the
economic risk and lack of liquidity inherent in holding the Buyer Common
Stock, and (vi) is an Accredited Investor.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this (S)4 are correct
and complete as of the date of this Agreement except as set forth in the
Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this (S)4.
(a) Organization of the Buyer. The Buyer is a corporation validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. The Buyer has full corporate power and
authority to execute and deliver this Agreement and all other documents
contemplated hereby to which the Buyer is a party and to consummate the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the board of directors of the Buyer has duly approved this Agreement
and all other documents contemplated hereby to which the Buyer is a party, and
has duly authorized the execution and delivery of this Agreement and all such
other documents and the consummation of the transactions contemplated hereby,
including the issuance and delivery of Buyer Common Stock (comprising all or
part of the Purchase Price) to the Seller. This Agreement and all such other
documents contemplated hereby constitute the valid and legally binding
obligations of the Buyer, enforceable in accordance with their terms and
conditions, except as enforceability may be limited by bankruptcy or other laws
affecting creditor's rights generally and limitations on the availability of
equitable remedies. The shares of Buyer Common Stock issued at the Closing (if
any) will be validly issued, fully paid and nonassessable.
-23-
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in (S)2 above), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject. The Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in (S)2
above).
(d) SEC Filings. The Buyer has heretofore delivered to the Seller true,
correct and complete copies of the Buyer's (i) Registration Statement on Form S-
1 filed in connection with the June 1996 initial public offering of Buyer Common
Stock, (ii) Quarterly Reports on Form 10-Q for the quarters ended June 30, 1996
and September 30, 1996, respectively and (iii) all other reports, registration
statements and other documents filed by the Buyer with the SEC since September
30, 1996 (collectively, the "SEC Filings").
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
(S)6 below).
(b) Notices and Consents. The Seller will give any notices to third
parties, and the Seller will use its best efforts to obtain any third party
consents, that the Buyer reasonably may request in connection with the matters
referred to in (S)3(c) above. Each of the Parties will give any notices to, make
any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in (S)3(c) and (S)4(c) above.
(c) Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Seller will not
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock, (ii) pay any amount to any third party with respect to any
Liability or obligation (including any costs and expenses the Seller has
incurred or may incur in connection with this Agreement and the transactions
contemplated hereby) which would not constitute an Assumed Liability if in
existence as of the Closing, (iii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in (S)3(i) above.
(d) Preservation of Business. The Seller will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
-24-
(e) Full Access. The Seller will permit representatives of the Buyer to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Seller to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Seller. The Seller acknowledges that the Buyer will conduct
additional due diligence following the date of this Agreement and, without
limiting the foregoing, agrees to cooperate with the Buyer in this regard.
(f) Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of any of
its own representations and warranties in (S)3 and (S)4 above. No disclosure by
any Party pursuant to this (S)5(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(g) Exclusivity. The Seller will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets, of the Seller (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
(h) Massachusetts Corporation Law. As soon as reasonably practicable
following the date of this Agreement the Seller shall seek to obtain the
unanimous written consent of its stockholders with respect to the approval of
this Agreement in accordance with Massachusetts corporation law (the "Unanimous
Written Consent") or, if the Seller cannot or is not able to promptly obtain
such Unanimous Written Consent, the Seller shall call a special meeting of its
stockholders (the "Special Seller Meeting") in order that the stockholders may
vote upon the approval of this Agreement in accordance with Massachusetts
corporation law.
(i) Employment Agreement. The Buyer and Xxxxxxx shall enter into an
Employment Agreement in form and substance as set forth in Exhibit G attached
hereto at or immediately prior to the Closing. The Buyer agrees to offer to
Xxxxxxx at or immediately prior to the Closing employment on substantially the
terms and conditions set forth in the Employment Agreement attached hereto as
Exhibit H.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement shall have been approved by the vote of the
requisite number of stockholders of the Seller as required by Massachusetts
law;
(ii) the representations and warranties set forth in (S)3 above shall
be true and correct in all material respects at and as of the Closing Date
as though made at the Closing Date;
-25-
(iii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) the Seller shall have procured all third party consents and
regulatory approvals specified above;
(v) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own the
Acquired Assets, to operate the former businesses of the Seller;
(vi) the Seller shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in (S)6(a)(i)-(v) is
satisfied in all respects;
(vii) the Buyer and Xxxxxxx shall have entered into an Employment
Agreement and the same shall be in full force and effect;
(viii) the Buyer and Xxxxxxx shall have entered into an Employment
Agreement and the same shall be in full force and effect;
(ix) the Buyer shall have received from counsel to the Seller an
opinion in form and substance as set forth in Exhibit C attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(x) satisfactory completion of due diligence by the Buyer;
(xi) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to the Buyer;
(xii) the Buyer is satisfied that any deemed offer of Buyer Common
Stock to the Seller Shareholders pursuant to stockholder vote with respect
to approval of this Agreement is exempt from registration under the
Securities Act; and
(xiii) the Buyer shall have received evidence satisfactory to it of
(i) the waiver of all prepayment penalties with respect to the repayment of
the Seller Debt by the Buyer pursuant to (S) 2(c) and (ii) the cancellation
of all Seller Debt and the termination of all security interests granted in
connection with the Seller Debt.
The Buyer may waive any condition specified in this (S)6(a) if it executes a
writing so stating at or prior to the Closing.
-26-
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S)4 above shall
be true and correct in all material respects at and as of the Closing Date
as though made at the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a certificate to the
effect that each of the conditions specified above in (S)6(b)(i)-(iii) is
satisfied in all respects;
(v) if the Buyer has elected to issue any Buyer Common Stock to the
Seller at the Closing, the Buyer and the Seller shall have entered into a
Registration Rights Agreement in form and substance as set forth in Exhibit
D and the same shall be in full force and effect;
(vi) the Buyer and Xxxxxxx shall have entered into an Employment
Agreement and the same shall be in full force and effect;
(vii) the Seller shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit E attached hereto,
addressed to the Seller, and dated as of the Closing Date; and
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to the Seller.
The Seller may waive any condition specified in this (S)6(b) if it executes a
writing so stating at or prior to the Closing.
7. Post-Closing Covenants.
(a) Restrictions on Transfer. Shares of Buyer Common Stock issued at the
Closing (if any) to the Seller shall not be transferred, sold, assigned,
pledged, encumbered or otherwise disposed of in any manner by the Seller until
the resale of such shares is registered under the Securities Act and such shares
shall be so legended. The shares of Buyer Common Stock so held by the Seller
will also be legended to state
-27-
that such shares are subject to repurchase at the discretion of the Buyer as and
on the conditions set forth in (S) 7(b) below if an Additional Payment is
required.
(b) Shortfall Payment. If the Buyer elects to issue any Buyer Common Stock
to the Seller at the Closing and if on July 1, 1997 (the "Valuation Date") the
aggregate value of the Buyer Common Stock (valued at the Valuation Date Buyer
Stock Price) together with the amount of cash paid by the Buyer at the Closing
as part of the Purchase Price (if any) is less than the Purchase Price, then the
Buyer shall pay to the Seller promptly following the Valuation Date an amount
equal to such shortfall (the "Adjustment Payment"). The Adjustment Payment may
be paid in cash or in Buyer Common Stock (valued at the Valuation Date Buyer
Stock Price) or any combination thereof in the sole and complete discretion of
the Buyer. In addition, if an Adjustment Payment is required by this paragraph,
then the Buyer shall have the right to substitute cash for any and all shares of
Buyer Common Stock (valued at the Valuation Date Buyer Stock Price).
(c) No Right to Offset or Claim Against Escrow. The Buyer agrees (i) that
it will have no right of offset against any Adjustment Payment required by (S)
7(b) and (ii) that it will not make any claim against the shares of Buyer Common
Stock held by the Escrow Agent while such shares are held by the Escrow Agent,
in either case in respect of any amounts owed to the Buyer (or alleged to be
owed to the Buyer) as a result of the breach (or the alleged breach) by the
Seller of any representation or warranty made by the Seller in this Agreement.
(d) Non-Compete and Nonsolicitation.
(i) Each of the Seller and Xxxxxxx agree to not, for a period of three
years following the Closing (the "Non-Compete Period"), directly or
indirectly own any interest in, manage, control, participate in, consult
with, render services for, or in any manner engage in any business
competing with the businesses of the Buyer or its Subsidiaries, as the
businesses of the Buyer and its Subsidiaries are now conducted or as they
are conducted during the Non-Compete Period within any geographical area in
which the Buyer or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Xxxxxxx from (i) employment as a
pharmacist in a retail pharmacy business or in a pharmacy business
maintained as part of a hospital, health maintenance organization or other
similar entity providing health services to the public where such pharmacy
business is only serving such entity providing health services or (ii)
being a passive owner of not more than 2% of the outstanding stock of any
class of a corporation which is publicly traded, so long as Xxxxxxx has no
active participation in the business of such corporation.
(ii) For a period of three years following the Closing (the "Non-
Solicitation Period") the Seller and Xxxxxxx shall not directly or
indirectly through another entity (i) induce or attempt to induce any
employee of the Buyer or any of its Subsidiaries (including the business of
the Seller purchased by the Buyer hereunder) to leave the employ of the
Buyer or such Subsidiary, or in any way interfere with the relationship
between the Buyer or any such Subsidiary and any employee thereof or (ii)
induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Buyer or any such Subsidiary
to cease doing business with the Buyer or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier,
licensee or business relation and the Buyer or any such Subsidiary
(including, without limitation, making any negative statements or
communications about the Buyer or its Subsidiaries).
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(iii) If, at the time of enforcement of this (S) 7(d), a court holds
that the restrictions stated herein are unreasonable under circumstances
then existing, the Buyer, the Seller and Xxxxxxx agree that the maximum
period, scope or geographical area reasonable under such circumstances
shall be substituted for the stated period, scope or area. Because the
services of Xxxxxxx are unique and because the Seller and Xxxxxxx have
access to confidential information and work product of the Buyer, the
Buyer, the Seller and Xxxxxxx agree that money damages would not be an
adequate remedy for any breach of this (S) 7(d). Therefore, in the event a
breach or threatened breach of this (S) 7(d), the Buyer or its successors
or assigns may, in addition to other rights and remedies existing in their
favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or
prevent any violations of, the provisions hereof (without posting a bond or
other security). In the event of an alleged breach or violation by Xxxxxxx
of paragraphs (i) or (ii) of this (S) 7(d), the Non-Compete Period and/or
Non-Solicitation Period, as applicable, shall be tolled with respect to
Xxxxxxx until such breach or violation has been duly cured. In the event of
an alleged breach or violation by the Seller of paragraphs (i) or (ii) of
this (S) 7(d), the Non-Compete Period and/or Non-Solicitation Period, as
applicable, shall be tolled with respect to the Seller until such breach or
violation has been duly cured. The Seller and Xxxxxxx agree that the
restrictions contained in this (S) 7(d) are reasonable.
(iv) The Buyer and the Seller agree that the obligations of Xxxxxxx
under this (S) 7(d) are personal to Xxxxxxx and that the breach of any such
obligations by Xxxxxxx shall not give rise to any liability of the Seller
to the Buyer.
(e) Use of Business Name. The Seller agrees that, after the Closing, it
will not, directly or indirectly, do business under the name "Xxxxx" (or any
other name similar to such name). The Seller further agrees that, promptly after
the Closing, the Seller will change its corporate name, and that the new
corporate name of the Seller will not be similar to the name "Xxxxx."
(f) Repayment of Seller Debt. The Seller agrees to distribute the cash paid
by the Buyer to the Seller as contemplated by (S) 2 above to the appropriate
holders of the Seller Debt and others immediately following the Closing.
(g) Assumption of Seller Employees. The Buyer agrees to initially offer
employment at will to all of the assumed employees (which term shall not include
any temporary workers or independent contractors) of the Seller set forth on
Exhibit F attached hereto (the "Assumed Employees") initially at the same salary
or wage level as the Seller paid to each such Assumed Employee immediately prior
to the Closing (and such salary or wage levels are reflected on Exhibit F). The
Buyer also agrees to provide the Assumed Employees with benefits initially
substantially similar to those set forth in the employee manual of the Seller
attached as an annex to Exhibit F. The Buyer hereby authorizes the Seller to
communicate the offer of employment (and the terms thereof) described in this
(S) 7(g) on behalf of the Buyer to the Assumed Employees.
(h) Sunset Repurchase Option.
(i) The Buyer hereby grants to the Seller an option (the "Put Option")
to sell to the Buyer at the Sunset Purchase Price (as defined below) all
(but not less than all) of the shares of
-29-
Buyer Common Stock issued at the Closing on the Put Closing Date (as
defined below). The Put Option shall be exercisable only from September 2,
1997 to September 15, 1997 and only if a registration statement with
respect to the resale of the Buyer Common Stock issued at the Closing has
not been declared effective under the Securities Act on or before September
1, 1997. The Seller shall exercise the Put Option by delivering to the
Buyer a written notice setting forth its intention to exercise the Put
Option (the "Put Notice"). If the Seller fails to exercise the Put Option
within the time period and in the manner set forth above, the Put Option
shall lapse and no longer be exercisable. The closing of the purchase of
shares of Buyer Common Stock upon such exercise of the Put Option shall
occur on a date specified by the Seller; provided that such date shall be
not less than 10 or more than 30 days after the delivery of the Put Notice
to the Buyer (the "Put Closing Date").
(ii) Sunset Purchase Price. The aggregate purchase price to be paid by
the Buyer to the Seller on the Put Closing Date shall equal the greater of
(i) the number of shares of Buyer Common Stock issued at the Closing
multiplied by the Valuation Date Buyer Stock Price and (ii) the difference
between (A) the greater of (1) the number of shares of Buyer Common Stock
issued at the Closing multiplied by the Valuation Date Buyer Stock Price
plus the amount of cash delivered as part of the Purchase Price at the
Closing or (2) $3,000,000 and (B) the amount of cash delivered as part of
the Purchase Price at the Closing (the "Sunset Purchase Price"). The Sunset
Purchase Price shall be paid in cash.
(iii) Closing of Sunset Purchase. The closing of the purchase and sale
of Buyer Common Stock upon the exercise of the Put Option (the "Put
Closing") will take place at the offices of Xxxxxxxx & Xxxxx at 10:00 a.m.
on the Put Closing Date or on such other date and at such other place as
the Seller and the Buyer may agree. At the Put Closing, (i) the Buyer shall
deliver to the Seller by wire transfer an amount equal to the Sunset
Purchase Price and (ii) the Seller (or the Escrow Agent) shall deliver or
cause to be delivered to the Buyer the stock certificate representing the
aggregate number of shares of Buyer Common Stock to be sold by the Seller
to the Buyer pursuant to the Put Option.
(i) Excise Lien. The Buyer and the Seller acknowledge that the transfer of
the Acquired Assets from the Seller to the Buyer will subject such assets to an
excise lien in favor of the Massachusetts Department of Revenue (the "MDR")
pursuant to M.G.L. Chapter 52C, Section 51. The Seller hereby agrees to file
with the MDR promptly following the Closing an appropriate application for
release of such lien.
8. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (A) in the event the Seller
has breached any material representation,
-30-
warranty, or covenant contained in this Agreement in any material respect,
the Buyer has notified the Seller of the breach, and the breach has
continued without cure for a period of 15 days after the notice of breach
or (B) if the Closing shall not have occurred on or before March 31, 1997,
by reason of the failure of any condition precedent under (S)6(a) hereof
(unless the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller has notified the
Buyer of the breach, and the breach has continued without cure for a period
of 15 days after the notice of breach or (B) if the Closing shall not have
occurred on or before March 31, 1997, by reason of the failure of any
condition precedent under (S)6(b) hereof (unless the failure results
primarily from the Seller itself breaching any representation, warranty, or
covenant contained in this Agreement).
(iv) any Party may terminate this Agreement by giving written notice
to the other Parties in the event this Agreement is not approved by the
stockholders of the Seller at the Special Seller Meeting if such meeting is
so held by the Seller.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to (S)8(a) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
9. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that the Buyer may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities or is consistent with the disclosure practices of
publicly traded companies (in which case the Buyer will use its reasonable
efforts to advise the other Party prior to making the disclosure, including
disclosure with respect to the financial statements of the Seller).
(b) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that the Buyer may (i) assign any or all
of its rights and interests
-31-
hereunder to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
the Buyer nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(e) 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.
(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller or Xxxxxxx:
Xxxxx, Inc.
0 Xxxxxxxxxxxx Xxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with copies to: Xxxxxxx X. Xxxxxxxxxx, Esq.
Cossingham Law Office, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
and to: Xxxxxx Xxxxxxxxx
Xxxxxxxxx & Xxxxxxx, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to the Buyer:
Sabratek Corporation
0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Berkshire
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier,
-32-
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
(i) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer, the
Seller and Xxxxxxx. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Buyer, the Seller and Xxxxxxx will bear his or
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
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(m) Incorporation of Exhibits. The Exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Asset Purchase
Agreement on the date first above written.
SABRATEK CORPORATION Attest:
By: /s/ K. Xxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------- --------------------------------
Title: Chairman and CEO Title: Senior Vice President and CFO
------------------- -----------------------------
XXXXX, INC. Attest:
By: /s/ Xxxxxxx X. Xxxxxxx By:
---------------------- -------------------------
Title: President Title:
------------------- ----------------------
/s/ Xxxxxxx X. Xxxxxxx Attest:
-------------------------- ---------------------
Xxxxxxx X. Xxxxxxx
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Exhibits to Asset Purchase Agreement
------------------------------------
Exhibit A Seller Debt
Exhibit B Financial Statements
Exhibit C Opinion of Counsel to the Seller
Exhibit D Registration Rights Agreement
Exhibit E Opinion of Counsel to the Buyer
Exhibit F Assumed Employees
Exhibit G Employment Agreement of Xxxxxxx
Exhibit H Employment Agreement of Xxxxxxx
Exhibit I Escrow Agreement
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