ASSET PURCHASE AGREEMENT
by and among
XXXXXX TECHNICAL SERVICES, INC.
and
XXXXXX, INC.
as Sellers
and
INTEGRATED BIOPHARMA, INC.
as Buyer
Dated as of July 8, 2004
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, dated as of July 8, 2004 (hereinafter
"Agreement"), by and among XXXXXX TECHNICAL SERVICES, INC., a Delaware
corporation ("HTS"), and XXXXXX, INC., a Delaware corporation ("Xxxxxx" and
collectively with HTS, "Sellers"), and INTEGRATED BIOPHARMA, INC., a Delaware
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, through its Xxxxxx Contract Research Organization division
("CRO"), HTS specializes in providing contract process research, development,
analytical chemistry and testing services, as well as small-scale manufacturing,
to the pharmaceutical and fine chemical (dietary supplement, personal care, food
additive and specialty chemical) industries (the "Business");
WHEREAS, Buyer desires to purchase from HTS and Xxxxxx, and HTS and Xxxxxx
desire to sell to Buyer (or its assignee as permitted by Section 10.9), on the
terms and subject to the conditions of this Agreement, all of the Purchased
Assets (as defined herein) and Assumed Obligations (as defined herein) relating
to the Business, but excluding all other assets, properties and rights of HTS
and Xxxxxx, including, without limitation, those assets, properties and rights
constituting the Excluded Assets (as defined herein) (such purchase, the "Asset
Purchase"); and
WHEREAS, HTS and Xxxxxx have filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") and
their respective bankruptcy cases (the "Chapter 11 Cases") are currently pending
in the United States Bankruptcy Court for the Central District of California
(the "Bankruptcy Court").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1. Sale of Assets. Subject to the terms and conditions set forth herein,
Buyer agrees to purchase and pay for and HTS and Xxxxxx agree to sell, assign,
transfer, and convey to Buyer on the Closing Date (as defined in Section 9.1
below) all of the assets set forth in Section 1.2, as such assets exist on the
Closing Date (the "Purchased Assets"). The Purchased Assets consist of and shall
include only the items set forth in Section 1.2. As of the Closing, risk of loss
as to the Purchased Assets shall pass automatically from HTS and Xxxxxx to
Buyer.
1.2. Purchased Assets. Subject to Section 1.3 hereof, the following assets
shall be purchased by Buyer at the Closing (collectively, the "Purchased
Assets"):
(a) Accounts Receivables. All trade accounts receivables and other rights
to payment of the Business, any payments received with respect thereto after the
Closing Date, unpaid interest accrued on any such accounts receivable and any
security or collateral relating thereto, except any and all accounts receivables
or other liabilities due or owing between HTS and Xxxxxx or between HTS or
Xxxxxx and any other subsidiary or affiliate of Xxxxxx (the "Accounts
Receivable").
(b) Inventory. The inventory of the Business, wherever located, including
all finished goods and raw materials, as initially set forth on Schedule 1.2(b)
attached hereto and as updated as of the Closing Date (the "Inventory").
(c) Machinery and Equipment. All machinery, vehicles, furniture, fixtures,
lab benches, fume hoods, equipment and other items of personal property owned by
HTS, including those items, to the extent still owned by HTS, set forth on
Schedule 1.2(c) hereto (the "Machinery"), and all warranties and guarantees, if
any, express or implied, existing for the benefit of HTS in connection with the
Machinery, to the extent transferable.
(d) Intellectual Property Rights. All of HTS's right, title and interest in
(collectively the "HTS Intellectual Property"):
(1) all concepts, inventions plans, designs, research data, patents, trade
secrets and other proprietary know-how (and all applications therefor and
registrations thereof), formulae and manufacturing processes, operating manuals,
drawings and other art works, technology, methods and manuals, proprietary
knowledge, proprietary rights or information, data, records, procedures, related
technical data (including all relevant documentation and testing materials),
research and development records related to or used in the Business, including
those listed or described on Schedule 1.2(d)(1) (the "Technology");
(2) to the extent assignable, all licenses or other rights to use any
technical information and know-how of others or to use any trademarks, trade
names, patents or copyrights owned by others, in each case, as set forth on
Schedule 1.2(d)(2) (the "Intellectual Property Licenses");
(3) all domain name registrations used by HTS, including xxx.xxxxxxxxx.xxx
but excluding xxx.xxxxxx.xxx; and
(4) all rights, claims, defenses or causes of action at law or in equity
for any past, present or future infringement of any of the intellectual property
listed above, including the right to receive all proceeds and damages therefrom,
including rights under insurance policies and the right to receive insurance
proceeds, and all rights to obtain renewals, continuations, divisions or other
extensions of legal protections pertaining thereto.
(e) Xxxxxx Intellectual Property Rights. All of Xxxxxx'x right, title and
interest, if any, in (the "Xxxxxx Intellectual Property"):
(1) the HTS Intellectual Property; and
(2) subject to existing licenses between Xxxxxx and third party licensees
(the "Paclitaxel Licenses"), all concepts, inventions plans, designs, research
data, trade secrets and other proprietary know-how (and all applications
therefor and registrations thereof), formulae and manufacturing processes,
operating manuals, drawings and other art works, technology, methods and
manuals, proprietary knowledge, proprietary rights or information, data,
records, procedures, related technical data (including all relevant
documentation and testing materials), research and development records related
to or used in connection with the isolation and purification of paclitaxel and
other taxanes from biomass, including extraction, isolation, purification, and
high recovery crystallization technology (the "Paclitaxel Technology").
(f) Goodwill. All goodwill of HTS and Xxxxxx relating to the Business.
(g) Name. All of HTS's and Xxxxxx'x right, title and interest in the names
"Xxxxxx Technical Services", "Xxxxxx CRO", "Contract Research Organization" and
"Xxxxxx Contract Research Organization".
(h) Licenses and Permits. To the extent transferable, all Licenses and
Permits (as defined in Section 3.7) and certifications owned by HTS and which
relate principally to the operation of the Business.
(i) Information Systems. The information systems of the Business.
(j) Contracts and Leases. To the extent assignable, all commitments,
contracts, licenses, covenants not to compete or solicit, non-disclosure or
confidentiality agreements, leases and agreements to which HTS and Xxxxxx is a
party, or by which HTS and Xxxxxx are bound, that relate principally to the
operation of the Business as of the Closing Date, all of HTS's and Xxxxxx'x, and
HTS's and Xxxxxx'x rights under, supplier, services or vendor agreements,
purchase orders for goods issued by either one and other contracts entered into
by HTS and Xxxxxx in connection with the Business, all of HTS's and Xxxxxx'x,
and HTS's and Xxxxxx'x rights under the Assigned Purchase Orders (as defined in
Section 3.11(a)) and other agreements entered into by HTS or Xxxxxx for the
purchase, distribution, sale, consignment or other disposition of HTS's products
related to the Business, including, without limitation, those set forth on
Schedule 1.2(j) (collectively, the "Contracts and Leases"). HTS and Xxxxxx shall
use commercially reasonable efforts to assume and assign to Buyer and cure any
defaults under the Contracts and Leases as provided in Sections 5.11 and 5.12.
(k) Business Information/Books and Records. All business information,
management systems (to the extent transferable) and related books, files and
records currently used by HTS and relating to the operation of the Business,
including but not limited to advertising, marketing and sales programs, business
and strategic plans, customer lists and records, rolodexes, databases, and
financial and accounting records (the "Books and Records"), subject to any
restrictions imposed by applicable law.
(l) Real Estate Leases. All of Xxxxxx'x and HTS's right, title and interest
in the following real property leases (collectively, the "Real Property
Leases"):
(i) Lease of Space (Office/Warehouse Building) dated April 2, 2001, as
amended by First Amendment to Lease of Space dated December 19, 2001 and Second
Amendment to Lease of Space dated September 15, 2003, between Xxxxxx CRO, as
lessee, and 0000 Xxxxxxxx Xxxxxxxx Xxxxxx LLC ("6800 Broadway"), as lessor,
pursuant to which HTS leases approximately 19,415 square feet of an office
building, Units 6870-M and 6880 A-L, in Denver, Colorado;
(ii) Lease of Space (Office/Warehouse Building) dated December 19, 2001, as
amended by First Amendment to Lease of Space dated September 15, 2003, between
Xxxxxx CRO, as lessee, and 0000 Xxxxxxxx, as lessor, pursuant to which HTS
leases approximately 3,390 square feet of office and warehouse space, Units 6820
R&S, in Denver, Colorado; and
(iii) The Gunbarrel Lease (as defined in Section 10.18 below); provided
that Buyer may decide to exclude the Gunbarrel Lease from the assets being
purchased hereunder and from the Assumed Contracts (as defined in Section 1.4
below) to be assumed and assigned to Buyer at the Closing by giving written
notice to Sellers that is received at least two days prior to the date of the
Approval Hearing (as such term is defined in Section 5.01(a) below).
(m) Tisorex Agreement. Any right or interest of Xxxxxx or HTS in that
certain Equipment Purchase, License and Consulting Agreement, dated as of March
1, 2002, by and between Xxxxxx and Tisorex Inc., as amended.
1.3. Excluded Assets. Notwithstanding anything herein to the contrary, it
is expressly agreed that HTS and Xxxxxx will retain, and Buyer will not acquire,
the following assets (collectively, the "Excluded Assets"):
(a) Non-Business Assets. Any assets solely utilized by HTS or utilized by
Xxxxxx in connection with businesses other than the Business.
(b) Cash and Cash Equivalents. Cash and cash equivalents, including,
without limitation, checking accounts, bank deposits, investments in "money
market" funds, commercial paper funds, certificates of deposit, Treasury bills,
in each case including any accrued interest thereon.
(c) Causes of Action. All claims and causes of action of Sellers against
third parties, including any claims and causes of action under sections 544
through 550 of the Bankruptcy Code, inclusive, except those claims or causes of
action set forth in Section 1.2(d)(4).
(d) Tax Losses, Refunds and Credits. All losses, loss carry-forwards and
rights to receive refunds, credits and loss carry-forwards with respect to any
and all taxes of Sellers.
(e) Insurance Contracts. Any contracts of insurance in respect of the
Business; and any reimbursement for, or other benefit associated with prepaid
insurance.
(f) Intercompany Receivables. Any amounts owing between Xxxxxx and HTS and
between HTS or Xxxxxx and any other subsidiary or affiliate of Xxxxxx.
(g) Employee Benefit Assets. Any assets relating to any employee benefit
plans of Sellers, including any 401(k) plan or similar savings or retirement
plan.
(h) Transferred or Disposed Assets. Any assets transferred or otherwise
disposed of by Sellers in the ordinary course of the Business prior to the
Closing.
(i) Xxxxxx Name. The names "Xxxxxx, Inc.," "Xxxxxx," or any related or
similar trade names, trademarks, service marks, email addresses, URLs or logos
to the extent the same incorporate the names "Xxxxxx, Inc.," "Xxxxxx," or any
variations or derivations thereof, except Xxxxxx Technical Services, Xxxxxx
Contract Research Organization, and xxx.xxxxxxxxx.xxx.
(j) Hazardous Substances. Any Hazardous Substances, including all inventory
that includes Hazardous Substances unless otherwise purchased by Buyer
hereunder.
1.4. Assumed Obligations.
(a) Upon the sale, transfer, assignment, conveyance, and delivery of the
Purchased Assets to Buyer at the Closing, Buyer shall assume and thereafter pay,
perform, and discharge all (collectively the "Assumed Obligations"):
(i) accrued and unpaid current payroll relating to the employees of the
Business hired by Buyer pursuant to Section 5.9 below,
(ii) accrued and unused vacation and sick pay relating to the employees of
the Business hired by Buyer pursuant to Section 5.9 below,
(iii) unpaid accounts payable of the Business incurred after the Petition
Date outstanding as of the Closing,
(iv) accrued liabilities of Sellers related to customer or client deposits
or prepayments ("Client Prepayments") listed on Schedule 1.4(a)(iv) and as
updated as of the Closing,
(v) unpaid debts, obligations and liabilities to Sellers' suppliers
incurred after the Petition Date outstanding as of the Closing, and
(vi) debts, obligations and liabilities of Sellers to be performed or
arising after the Closing under the Contracts and Leases, the Real Property
Leases and the Intellectual Property Licenses (collectively, the "Assumed
Contracts").
(b) Other than the Assumed Obligations, Buyer shall not assume any other
obligations or liabilities of Sellers. Sellers shall, at their expense, cure any
and all defaults payable (the "Cure Payments") to the non-debtor parties to the
Assumed Contracts as described more fully in Section 5.12.
1.5. Excluded Liabilities. Notwithstanding anything herein to the contrary,
it is expressly agreed that Sellers will retain and Buyer shall not assume any
of the following liabilities (collectively, the "Excluded Liabilities"):
(a) all debts, liabilities and obligations principally arising out of or
relating to the Excluded Assets, including specifically any obligation to
dispose of Hazardous Substances except for inventory that includes or contains
Hazardous Substances that is otherwise purchased by Buyer hereunder or Hazardous
Substances that accumulate in the normal course of the CRO Business from normal
operations of the CRO Business;
(b) all debts, obligations and liabilities of Sellers resulting from,
caused by or arising out of, directly or indirectly, the conduct of the Business
or the ownership or lease of any of its properties or assets used by Sellers in
the Business at any time prior to the Petition Date;
(c) all debts, obligations and liabilities of Sellers owing to Xxxxx Fargo
Bank, N.A. whether arising prior to or after the Petition Date;
(d) any Cure Payments;
(e) all debts, liabilities or obligations of Sellers that do not arise out
of or are not principally related to the Business;
(f) all debts, liabilities, payables or other obligations due and owing
between Xxxxxx and HTS and between HTS or Xxxxxx and any other subsidiary or
affiliate of Xxxxxx in respect of any inter-company loans or similar
indebtedness;
(g) all income taxes of Sellers; and
(h) all other taxes applicable to the Business, the Purchased Assets or the
Assumed Obligations, in each case, attributable to periods (or portions thereof)
ending on or prior to the Closing Date.
SECTION 2
PURCHASE PRICE
2.1. Purchase Price. Upon the terms and conditions set forth in this
Agreement, and in reliance on the representations, warranties, covenants and
agreements of the parties contained herein, at the Closing and effective as of
the Closing, HTS and Xxxxxx shall sell, assign, transfer, convey and deliver to
Buyer, free and clear of all Claims and Liens (as defined in Section 10.18
below), except the Assumed Obligations, and Buyer shall purchase from HTS and
Xxxxxx, free and clear of all Claims and Liens, except the Assumed Obligations,
the Purchased Assets and Buyer shall assume the Assumed Obligations for an
aggregate cash purchase price (the "Purchase Price") equal to sum of (i)
$1,900,000 and (ii) the aggregate amount of the security deposits and other
Sellers prepayments listed on Schedule 2.1(ii) (the "Security Deposits"); except
if Buyer, pursuant to Section 1.2(l)(iii) above, excludes the Gunbarrel Lease
from the assets being purchased hereunder and from the Assumed Contracts (as
defined in Section 1.4 above), the security deposits to be assumed shall exclude
those associated with the Gunbarrel Lease. The Purchase Price will be subject to
adjustment as set forth in Sections 2.3 and 2.4 below. To the extent a Security
Deposit listed on Schedule 2.1(ii) is returned to Sellers at or prior to the
Closing, the portion of the Purchase Price reflected in subclause (ii) shall be
so reduced by the amount of the returned Security Deposit.
2.2. Payment of Purchase Price.
(a) Upon execution of this Agreement by Buyer, Buyer shall pay to Sellers a
deposit (the "Closing Deposit") in the form of a cashier's or certified check in
the amount of $100,000 which deposit will be returned to Buyer following the
conclusion of the Approval Hearing (as defined in Section 5.1(a) below) if Buyer
is not approved by the Bankruptcy Court as the buyer of the Purchased Assets.
Otherwise, the Closing Deposit will be applied against the Purchase Price due at
the Closing and held by Sellers to collateralize any damages it may suffer in
the event Buyer fails to consummate the Asset Purchase.
(b) On the Closing Date, Buyer shall pay to Sellers, by wire transfer of
immediately available federal funds to such bank account(s) as shall be
designated by Sellers, the amount of the Purchase Price minus the Escrow Amount
(as defined below), if any, and any Closing Deposit held by Sellers. The Escrow
Amount, if any, shall be wired by Buyer to the Escrow Account (as defined below)
on the Closing Date.
2.3. Purchase Price Working Capital Adjustment
(a) Within 20 days after the Closing Date, Sellers shall prepare and
promptly deliver to Buyer the Closing Date Working Capital Statement. The
Closing Date Working Capital Statement shall set forth the Closing Date Current
Assets and the Closing Date Current Liabilities and the net working capital
position of the Business as of the Closing Date (the "Closing Date Net Working
Capital Position"), which shall mean the difference between the Closing Date
Current Assets and the Closing Date Current Liabilities. Sellers shall also
provide summary documentation supporting the Closing Date Working Capital
Statement. The Closing Date Working Capital Statement shall be substantially in
the form of that attached hereto as Exhibit A. In any event, the Closing Date
Working Capital Statement shall be prepared in a
manner that is consistent with the historical presentation of such information
on the financial statements of the Business by Sellers.
(b) As soon as practicable after delivery of Sellers' calculation, and in
any event within 20 days after receipt, Buyer and Sellers shall confer and
attempt to reconcile any objections Buyer may have to Sellers' calculation of
the Closing Date Net Working Capital Position. Sellers shall provide Buyer
reasonable access to all financial accounting records of the Sellers required
for the purpose of reviewing the Closing Date Working Capital Statement and
verifying the accuracy of the Closing Date Current Assets, the Closing Date
Current Liabilities, and the Closing Date Working Capital Statement.
(c) If Buyer has no objection, then the Closing Date Net Working Capital
Position shall be finalized, and any payment to Buyer shall be determined in
accordance with the provisions of Section 2.3(e) below.
(d) If, at the end of the 45 day period after the Closing Date, Buyer and
Sellers fail to reach agreement with respect to the Closing Date Net Working
Capital Position, then any dispute with respect thereto shall be resolved by the
Bankruptcy Court after a noticed hearing.
(e) After the Closing Date Net Working Capital Position is finalized
pursuant to Section 2.3(c) or Section 2.3(d), then either (as the case may be)
(i) if the Closing Date Net Working Capital Position is a positive number (i.e.,
the Closing Date Current Assets are greater than the Closing Date Current
Liabilities), no payment will be necessary between the parties, or (ii) if the
Closing Date Net Working Capital Position is a negative number (i.e. the Closing
Date Current Assets are less than the Closing Date Current Liabilities), the
Purchase Price shall be decreased, dollar for dollar, by, and Sellers shall pay
to Buyer, the amount by which the Closing Date Current Liabilities exceed the
Closing Date Current Assets.
(f) For purposes of this Section 2, "Closing Date Current Assets" shall
mean all current assets of the Business purchased by Buyer on the Closing Date,
including all accounts receivable that are current or have an aging of no
greater than ninety days, net of any bad debt reserve, other receivable amounts,
all prepaid expenses net of the Security Deposits and all other items listed as
current assets. "Closing Date Current Liabilities" shall mean all current
liabilities of the Business assumed by Buyer on the Closing Date, including
client prepayments, accounts payable, accrued payroll, commissions and vacation
and other liabilities listed as current liabilities. Any accounts receivable not
included in the calculation of the Closing Date Net Working Capital Position
shall not be sold to Buyer hereunder and shall be retained by Sellers as an
Excluded Asset unless Buyer elects to include any such account receivable in
such calculation.
2.4. Purchase Price Holdback Amount.
(a) Establishment of Escrow Account. If on or prior to the Closing,
SuperGen has not issued a Purchase Order for a Campaign (as such term is used in
the Supply Agreement) consisting of at least three Batches (as such term is used
in the Supply Agreement), then the sum of $500,000 (the "Escrow Amount") shall
be deposited into an escrow account (the "Escrow
Account") established pursuant to the terms and conditions of this Agreement and
the Escrow Agreement to be entered into on the Closing Date by Buyer and
Sellers; provided that for each Batch ordered by SuperGen under the Supply
Agreement prior to the Closing, the sum of $166,667 shall be deducted from the
Escrow Amount and shall be paid to Sellers at Closing instead of being deposited
into the Escrow Account. The Escrow Agreement shall be substantially in the form
attached hereto as Exhibit B.
(b) Release of Funds in Escrow Account to Sellers. The Escrow Amount shall
be released in the amounts set forth below to Sellers upon the occurrence of the
following event, provided such event occurs on or prior to December 14, 2004:
(i) If SuperGen shall have issued a Purchase Order for a Campaign under the
Supply Agreement, then for each Batch ordered by SuperGen in connection with
such Campaign, the sum of $166,667, up to the maximum amount of $500,000, shall
be released from the Escrow Account.
(c) Release of Funds in Escrow Account to Buyer. Any funds remaining in the
Escrow Account on December 15, 2004 shall be released to Buyer if the condition
for release of such funds to Sellers set forth in Section 2.4(b) above has not
occurred on or prior to December 14, 2004.
(d) For purposes of this Section 2.4 and this Agreement, "SuperGen" shall
mean SuperGen, Inc., a Delaware corporation, and the "Supply Agreement" shall
mean that certain Pentostatin Supply Agreement, dated as of December 13, 2002,
by and between HTS and SuperGen.
2.5. Allocation of Purchase Price. Sellers and Buyer agree to allocate the
aggregate Purchase Price to be paid for the Purchased Assets in accordance with
Schedule 1060 of the Internal Revenue Code of 1986, as amended, and
corresponding regulations, and as set forth in Schedule 2.5. Sellers and Buyer
covenant and agree to file and to cause their respective affiliates to file, all
tax returns consistent with such allocation and that they further covenant and
agree not to take any position before any taxing authority or in any judicial
proceeding that is in any way inconsistent with such allocation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Buyer that, as of
the Execution Date and except as set forth on the correspondingly numbered
section of the disclosure schedule delivered to Buyer in connection herewith and
incorporated by reference herein (the "Disclosure Schedule"):
3.1. Corporate Existence. Each of Sellers is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all corporate power and authority to carry on the Business as it is
currently conducted. Each of the Sellers is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions where the
conduct of its business renders such qualification necessary.
3.2. Corporate Authority.
(a) The execution, delivery and performance by Sellers of this Agreement
and the consummation by Sellers of the transactions contemplated hereby have
been or will by the Closing Date be duly authorized by all requisite corporate
action of Sellers. This Agreement has been duly and validly executed and
delivered by Sellers and, upon entry of the Approval Order (as defined in
Section 5.1(b) below), will be the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with its terms.
(b) Neither the execution and delivery of this Agreement nor any other
agreements and documents to be executed or delivered pursuant hereto, nor the
consummation of the transactions contemplated hereby, will (i) violate, or
conflict with, any provision of either Seller's Certificate of Incorporation or
By-Laws, (ii) violate, or conflict with, or result in a breach of any provisions
of, or constitute a default under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets
being sold hereunder under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, agreement, lease or
other instrument to which either of Sellers is a party or by which it or any of
its properties is bound, (iii) violate, or conflict with, any order, writ,
injunction, arbitral award, judgment or decree of any court, governmental body
or arbitrator applicable to Sellers, or (iv) violate, or conflict with, any
contract to which either of Sellers, the Purchased Assets, the Assumed
Obligations or the Business is subject, except for any such violation, conflict,
breach or default which would not have a material adverse effect ("Material
Adverse Effect") on the Purchased Assets, the results of operations, financial
condition or business of the Business or on the ability of Sellers to consummate
the transactions contemplated hereby.
3.3. Governmental Approvals; Consents. Sellers are not subject to any
order, judgment or decree which would prevent the consummation of the
transactions contemplated hereby. No claim, legal action, suit, arbitration,
governmental investigation, action, or other legal or administrative proceeding
is pending or, to the knowledge of Sellers, threatened against Sellers which
would enjoin or delay the transactions contemplated hereby. No consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, any governmental authority or entity,
domestic or foreign, or of any third party, is or has been required on the part
of Sellers in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for entry of
the Approval Order, and such consents, approvals, orders or authorizations of,
licenses or permits, declarations, registrations, filings or notices the failure
of which to obtain or make would not have a Material Adverse Effect or which
have been obtained.
3.4. Title to Purchased Assets; Absence of Liens and Encumbrances.
(a) Except as provided in the Assumed Contracts or the Paclitaxel Licenses,
each Seller owns all right, title and interest in, and has good and marketable
title to, all the Purchased Assets to be transferred by such Seller pursuant to
this Agreement. The Purchased Assets will be transferred to Buyer at the Closing
Date free and clear of Claims and Liens, except the Assumed Obligations and the
Paclitaxel Licenses. Without limiting the foregoing, to the best of Sellers'
knowledge, the Purchased Assets are not in any manner encumbered by any Claims
and Liens arising out of unpaid state, federal, local and foreign income, sales,
or ad valorem taxes which are due and payable.
(b) The Purchased Assets constitute all of the assets necessary for the
conduct of the Business and do not constitute any assets not related to the
Business.
(c) Except as provided in the Assumed Contracts or the Paclitaxel Licenses,
no person, other than the Sellers, has any right to the use or possession of any
of the Purchased Assets.
3.5. Litigation. There is no litigation pending or, to the best of Sellers'
knowledge, threatened (a) against Sellers, the Business or the Purchased Assets,
or (b) which seeks to enjoin or obtain damages in respect of the consummation of
the transaction contemplated hereby. The Sellers have not received any opinion
or a memorandum or advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability or obligations.
3.6. Accounts Receivable; Collection. All Accounts Receivable listed on
Schedule 1.2(a), and outstanding as of the Closing Date will, represent sales
actually made in the ordinary and normal course of business. To Sellers'
knowledge, except as listed in the Disclosure Statement, there are no
counterclaims or setoffs against (or any basis therefor), or any other matter or
condition likely to interfere with full and timely collection of, any of such
outstanding Accounts Receivable. All such Accounts Receivable are valid, genuine
and subsisting, arise out of bona fide transactions, and are not subject to
defenses, deductions, set-offs, counterclaims or any allowances or credits on
account of recalls, rejection or return of product (including for spoiled,
damaged and/or outmoded goods). HTS has not accelerated or delayed collection of
Accounts Receivable in advance of or beyond their regular due dates or the dates
when the same would otherwise have been collected other than in the ordinary
course of business. Accounts Receivable with extended payment terms providing
for payments over more than 90 days are carried at no greater than present value
3.7. Compliance with Laws. Except for those failures to have, to be in full
force and effect, to file, retain and maintain or to comply, in each case, that
is reasonably likely to not have a Material Adverse Effect, (i) with respect to
the Business, HTS has all licenses, permits or franchises issued by any court,
department, body, board, bureau, administrative agency or commission or other
governmental authority or instrumentality, whether federal, state, local or
foreign (each a "Governmental Entity") and other governmental certificates,
authorizations and approvals (collectively "Licenses and Permits") required by
any Governmental Entity for the operation of the Business and the use of its
properties as presently operated or used; (ii) with respect to the Business, all
such Licenses and Permits are in full force and effect and no action, claim or
proceeding is pending, nor to the knowledge of Sellers is threatened, to
suspend, revoke, revise, limit, restrict or terminate any of such Licenses and
Permits or declare any such License and Permit invalid; (iii) with respect to
the Business, HTS has filed all necessary reports and maintained and retained
all necessary records pertaining to such Licenses and Permits; and (iv) with
respect to the Business, HTS has otherwise substantially complied with all of
the laws, ordinances, regulations and orders applicable to its existence,
financial condition, operations, properties or Business, and Sellers have not
received any notice to the contrary.
3.8. Finders; Brokers; Consultants. Sellers are not a party to any
agreement with any finder, broker or consultant, or in any way obligated to any
finder, broker or consultant for any commissions, fees or expenses in connection
with the origin, negotiation, execution or performance of this Agreement, except
Lennon Xxxxx Advisors, LLC, the fees of which will be paid by Sellers.
3.9. Environmental Matters.
(a) In respect of the Business,:
(i) to Sellers' knowledge, HTS and the Business is in compliance with all
Environmental Laws (as defined in Section 3.9(b)(i)) applicable to the nature,
scope and extent of the Business as presently conducted by HTS;
(ii) to Sellers' knowledge, HTS holds, and is in compliance with, all
Licenses and Permits required under Environmental Laws applicable to the nature,
scope and extent of the Business as presently conducted by HTS; and
(iii) prior to the Execution Date, Sellers have not received any written
notice of the institution or pendency of any lawsuit, action, proceeding,
investigation or claim by any person alleging any Environmental Liability
arising from or relating to the conduct of the Business.
(b) As used herein:
(i) "Environmental Laws" means any domestic, foreign, federal, state,
interstate or local statute, law or regulation in effect in any jurisdiction
where the Business is presently conducted by HTS, which has been properly
promulgated, is in effect and is binding upon HTS as of the Closing Date or any
order, injunction, judgment, decree, common law or other enforceable requirement
of any governmental entity, and relating to the protection of the environment,
including any of the foregoing related to: (A) Remedial Actions; (B) the
reporting, licensing, permitting, or investigating of the emission, discharge,
release or threatened release of Hazardous Substances into the air, surface
water, groundwater or land; or (C) the manufacture, release, distribution, use,
generation, treatment, storage, disposal, transport or handling of Hazardous
Substances.
(ii) "Environmental Liability" means any liability or obligation arising
under Environmental Laws in connection with the Purchased Assets or the Business
to the extent arising from any condition existing or any act or omission of HTS
at or prior to the Closing Date.
(iii) "Hazardous Substance" means any substance or material regulated under
applicable Environmental Laws.
(iv) "Remedial Action" means any response action, removal action, remedial
action, corrective action, monitoring program, sampling program, investigation
or other cleanup activity pertaining to any Hazardous Substance.
3.10. Absence of Certain Changes. As compared to the Financial Summary and
Projections dated April 30, 2004, the Business has not experienced any (a)
developments or changes which would have a Material Adverse Effect; (b) entry
into any material contract not in the ordinary course of business; (c) capital
expenditure or commitment therefore, except in the ordinary course of business
consistent with past practice and, in the aggregate, in excess of $50,000; (d)
change in accounting methods or principles, other than those arising from
changes in GAAP, any write-down, write up or revaluation of any of the Purchased
Assets or Assumed Liabilities except depreciation accounted for in the ordinary
course of business and write-downs of inventory which reflect the lower of cost
or market and which are in the ordinary course of business and in accordance
with GAAP; (e) sale, assignment, transfer, lease, license or otherwise placement
of a Claim or Lien on any of the Purchased Assets, including without limitation,
the Intellectual Property, except in the ordinary course of business consistent
with past practice, or cancellation or waiver of any material indebtedness or
claims; (f) disclosure of any confidential information to any person, except
pursuant to the terms of an executed confidentiality agreement, or abandoned or
permitted to lapse any of the Intellectual Property; or (g) damage, destruction,
loss (whether or not covered by insurance) which has had or is reasonably likely
to have a Material Adverse Effect; or (h) agreement, whether orally or in
writing, to do any of the foregoing.
3.11. Work and Purchase Orders.
(a) All customer purchase orders, including all customer order backlog and
customer agreements related thereto, for the products or services of the
Business, or work orders submitted by customers, with terms or obligations
reasonably expected to extend beyond the Closing Date shall be assumed by Buyer
as part of the Purchased Assets (the "Assigned Purchase Orders"). Each Assigned
Purchase Order is a legal, valid and binding agreement of the applicable Seller
party to such agreement, enforceable in accordance with its terms and is in full
force and effect. Sellers have delivered to Buyer, copies of which are true and
complete in all material respects, of all the Assigned Purchase Orders in their
possession (and, in the case of oral agreements, if any, written summaries
thereof).
(b) Each Seller party to an Assigned Purchase Order has performed, in all
material respects, all obligations required to be performed by it and is not in
default in any material respect under or in material breach of nor in receipt of
any claim of material default or material breach under any Assigned Purchase
Order; to the knowledge of Sellers, no event has occurred which with the passage
of time or the giving of notice or both would result in a material default,
breach or event of material non-compliance under any Assigned Purchase Order;
such Seller does not have any present expectation or intention of not fully
performing all such obligations; and such Seller is not aware of any material
breach or anticipated material breach by the other persons with respect to any
such Assigned Purchase Order.
3.12. Intellectual Property.
(a) Each Seller owns and possesses full, legally enforceable rights to use,
sell, transfer, and assign the HTS Intellectual Property and the Xxxxxx
Intellectual Property to be transferred by such Seller pursuant to this
Agreement, free and clear of conditions, adverse claims or other restrictions or
any requirement of any past, present or future royalty payments,
except as provided in the Intellectual Property Licenses or the Paclitaxel
Licenses and, with respect to payments, except to the extent it is an Assumed
Obligation.
(b) There is not pending in any forum (or, to the knowledge of any of the
Sellers, threatened) any assertion or claim: (i) challenging the validity,
enforceability, ownership, scope or effectiveness of, or contesting such
Seller's rights with respect to, any HTS Intellectual Property or Xxxxxx
Intellectual Property, (ii) challenging such Seller's rights to use any HTS
Intellectual Property or Xxxxxx Intellectual Property, or (iii) asserting that
such Seller's use or exploitation of any HTS Intellectual Property of Xxxxxx
Intellectual Property infringes upon, misappropriates, violates or conflicts in
any way with the rights (including, without limitation, rights in intellectual
property, rights of privacy, rights of publicity and rights in personal and
other data) of any person; and, in each case, to the knowledge of the Sellers,
there are no grounds for any such assertion or claims. In the last five years,
the Sellers are not and have not been a party to any suit, action or proceeding
which involves a claim of infringement, breach or misappropriation of any HTS
Intellectual Property or Xxxxxx Intellectual Property and have not brought any
action, suit or proceeding against any person for infringement or
misappropriation of, or breach of any license or agreement involving, any HTS
Intellectual Property or Xxxxxx Intellectual Property.
(c) To the knowledge of Sellers, there are no unauthorized uses,
disclosures, infringements, or misappropriations by any person of any of the HTS
Intellectual Property or the Xxxxxx Intellectual Property and Sellers, except as
may be provided in the Tisorex Agreement or the Paclitaxel Licenses, have not
entered into (i) any agreement to indemnify any other person against any charge
of infringement, breach or misappropriation of any person's rights in the HTS
Intellectual Property or the Xxxxxx Intellectual Property or (ii) any agreement
granting any person the right to bring infringement or misappropriation actions
with respect to, or otherwise to enforce rights with respect to, any HTS
Intellectual Property or Xxxxxx Intellectual Property.
3.13. Warranties. To the knowledge of Sellers, there are no material
potential claims under or pursuant to any warranty or guarantee, whether
expressed or implied, on products or services related to the Business sold prior
to the Closing Date (other than warranty or product replacement claims in the
ordinary course of business not material in amount or significance). To the
knowledge of Sellers, there is no reason to expect an increase in warranty
claims in the future based upon the Business as presently conducted. All of the
products sold and services rendered by the Business (whether directly or
indirectly through distributors, marketers, independent contractors, or the
like) have been performed in conformity, in all material respects, with all
expressed or implied warranties and with all applicable contractual commitments
and none of Sellers has any liability for replacement or for other damages
relating to or arising from any such products or services.
3.14. Products Liability. There has been no material claim against or
involving any of Sellers or concerning the Purchased Assets manufactured,
shipped, sold or delivered by or on behalf of the Business relating to or
resulting from an alleged defect in design, manufacturing, materials, process,
or workmanship or any alleged failure to warn, or any alleged breach of implied
warranties or representations (other than warranty or product replacement claims
in the ordinary course of business not material in amount or significance), and,
to the knowledge of the Sellers, none has been threatened nor is there any valid
basis for any such claims. There has not
been any recall conducted with respect to any product manufactured (or to be
manufactured), shipped, sold or delivered by or on behalf of the Business, or
any notice, whether oral or written, received by any of Sellers from any
authority of any investigation or consideration of or decision made by any
person or authority concerning whether to undertake or not undertake, any recall
(other than warranty or product replacement claims in the ordinary course of
business not material in amount or significance). No Seller has received notice,
whether oral or written, from any governmental authority to the effect that any
of the manufacturing standards applied, testing procedures used, and product
specifications and labels disclosed to customers of the Business have not
complied with all requirements established by any applicable regulation or order
of any governmental authority and which has not been corrected to the
satisfaction of such governmental authority.
3.15. Insurance. Sellers currently maintain sufficient insurance coverage
to protect the Business and the full replacement value of the Purchased Assets.
All of such policies are in full force and effect and Sellers are not in
material default of any provision thereof.
3.16. Inventories. To the knowledge of Sellers, the inventory (i) is
useable and saleable in the ordinary course of business and does not include any
items that are obsolete or discounted, except as adequately provided for in
HTS's reserve for distressed or excess inventory, (ii) is of consistent and
merchantable quality, is fit for its intended purposes and, with respect to the
finished goods inventory, has been produced or manufactured in accordance with
all applicable laws, orders and regulations, and (iii) is not being held by any
person on a consignment basis or is located off of the owned or leased
properties of the Business.
3.17. No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3, neither Sellers, any
advisor to Sellers nor any other person makes any other express or implied
representation or warranty on behalf of Sellers, including, without limitation,
as to the probable success or profitability of the ownership, use or operation
of the Business and the Purchased Assets by Buyer after the Closing, and Sellers
hereby disclaim any such representation or warranty.
3.18. Expiration of Representations and Warranties. The respective
representations and warranties of Sellers contained herein shall expire and be
terminated and extinguished on the Closing Date, and thereafter Sellers shall
not have any liability whatsoever with respect to any such representation or
warranty.
SECTION 4
REPRESENTATIONS OF BUYER
Buyer represents and warrants to Sellers that as of the Execution Date:
4.1. Corporate Existence. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and has
the requisite corporate power and authority to purchase, own, lease and operate
the properties and assets used in the Business being purchased or assigned
hereunder and to carry on the Business as the same is now being conducted. Buyer
is duly authorized, qualified or licensed to do business as a foreign
corporation and is in good standing in every jurisdiction wherein, by reason of
the nature of the
Business or the character of the Purchased Assets, the failure to be so
qualified is reasonably likely to have a material adverse effect on the ability
of Buyer to consummate the transactions contemplated hereby (a "Buyer Material
Adverse Effect").
4.2. Corporate Authority. This Agreement and the consummation of all of the
transactions provided for herein have been duly authorized by all requisite
corporate action, and Buyer has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement has been
duly executed and delivered by Buyer, and constitutes a valid and legally
binding obligation of Buyer, enforceable in accordance with its terms except as
enforceability may be (a) limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditor's rights, or (b) subject to general
principles of equity. The execution and delivery of this Agreement by Buyer or
the consummation by Buyer of the transactions contemplated hereby will not
violate or conflict with any provision of the Certificate of Incorporation or
Bylaws of Buyer, violate, or conflict with, any order, writ, injunction,
arbitral award, judgment or decree of any court, governmental body or arbitrator
applicable to Buyer, or result in any breach or constitute any default under any
contract, indenture, mortgage, lease, note or other agreement or instrument to
which Buyer is subject or is a party, except for any such violation, conflict,
breach or default which is reasonably likely to not have a Buyer Material
Adverse Effect.
4.3. Governmental Approvals; Consents. Buyer is not subject to any order,
judgment or decree which would prevent the consummation of the transactions
contemplated hereby. No claim, legal action, suit, arbitration, governmental
investigation, action, or other legal or administrative proceeding is pending
or, to the knowledge of Buyer, threatened against Buyer which would enjoin or
delay the transactions contemplated hereby. No consent, approval, order or
authorization of, license or permit from, notice to or registration, declaration
or filing with, any governmental authority or entity, domestic or foreign, or of
any third party, is or has been required on the part of Buyer in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby except for such consents, approvals, orders or
authorizations of, licenses or permits, declarations, registrations, filings or
notices the failure of which to obtain or make is reasonably likely to not have
a Buyer Material Adverse Effect.
4.4. Finders; Brokers; Consultants. Buyer is not a party to any agreement
with any finder, broker or consultant, or in any way obligated to any finder,
broker or consultant for any commissions, fees or expenses, in connection with
the origin, negotiation, execution or performance of this Agreement.
4.5. Financial Capacity. Buyer has in hand sufficient cash necessary to
consummate the transactions contemplated by this Agreement, to pay all fees and
expenses of Buyer related to the transactions contemplated hereby and to fund
all disbursements of the Business as of the Closing Date, including the payment
of all Assumed Obligations as they become due.
4.6. No Other Representations or Warranties. Except for the representations
and warranties contained in this Section 4, neither Buyer, any advisor to Buyer
nor any other person makes any other express or implied representation or
warranty on behalf of Buyer, and Buyer hereby disclaims any such representation
or warranty.
4.7. Expiration of Representations and Warranties. The respective
representations and warranties of Buyer contained herein shall expire and be
terminated and extinguished on the Closing Date, and thereafter Buyer shall have
no liability whatsoever with respect to any such representation or warranty.
SECTION 5
AGREEMENTS OF SELLERS AND BUYER
5.1. Bankruptcy Court Approval.
(a) Bankruptcy Court Approval of Sale Procedures. Promptly following the
Execution Date (and in no event later than five (5) days thereafter), Sellers
will file a motion (the "Sale Procedures Motion") with the Bankruptcy Court
requesting the entry of an order (the "Procedures Order"), in substantially the
form and substance attached hereto as Exhibit C, such Sale Procedures Motion to
be in form and content reasonably satisfactory to Buyer, setting forth the
following procedures:
(i) fixing the time, date, and location of a hearing (the "Approval
Hearing") to approve the sale of the Purchased Assets by Sellers pursuant to
this Agreement;
(ii) establishing a hearing on the Sale Procedures Motion within fifteen
(15) days after the Execution Date, and establishing a hearing on the Sale
Motion (defined below) not later than sixty (60) days after the Execution Date
(all calculated in accordance with Bankruptcy Rule 9006);
(iii) fixing the time and date of an open oral auction (the "Auction") to
be held in the Bankruptcy Court, at which qualifying higher and better offers
may be presented to Sellers;
(iv) approving the Break-Up Fee set forth in Section 10.1 and the Matching
Rights set forth in Section 10.2;
(v) providing that Sellers shall not entertain or accept any bid for the
Purchased Assets unless such bid complies strictly with all of the following
requirements that such bid shall be:
(A) delivered to counsel for Sellers, with a copy delivered to counsel
for Buyer (at the address for notices provided for in Section 10.4), at
least two (2) business days prior to the date of the Approval Hearing;
(B) accompanied by a duly executed asset acquisition agreement that is
substantially similar to this Agreement, except that (A) the bidder shall
be substituted for Buyer, and (B) the proposed purchase price for all of
the Purchased Assets shall exceed by $125,000 the consideration that is
offered by Sellers under the terms of this Agreement; without limiting the
generality of the foregoing, such agreement shall not include any financing
or due diligence contingency, shall not include any conditions to closing
other than those set forth
in this Agreement, and shall provide for a closing on the date required by
this Agreement; and
(C) made by a bidder that demonstrates that it is (A) financially able
to consummate the transaction contemplated by such bid and (B) able to
consummate the transaction on the date and on the terms no less favorable
to Sellers than as contemplated by this Agreement.
(vi) providing that after any initial overbid made pursuant to clause (v),
all further overbids must be made at the auction held pursuant to clause (iii),
with bidding in increments of at least $25,000 and that with respect to any such
further overbid submitted by Buyer, the consideration offered by Buyer shall be
deemed to include the full amount of the Break-Up Fee payable to Buyer; and
(vii) providing for an administrative expense claim for the Break-Up Fee
under section 503(b) of the Bankruptcy Code.
(b) Bankruptcy Court's Approval of Sale. Promptly following the Execution
Date, and contemporaneously with or shortly after the filing of the Sale
Procedures Motion, Sellers shall file a motion with the Bankruptcy Court (the
"Sale Motion") requesting entry of an order (the "Approval Order"), in
substantially the form and substance attached hereto as Exhibit D, pursuant to
sections 363 and 365 of the Bankruptcy Code, approving the sale of the Purchased
Assets to Buyer and the assumption and assignment to Buyer of the Assumed
Contracts as listed on Schedule 1.2 (j), as such Schedule may be revised,
modified or supplemented by Sellers prior to the Approval Hearing without any
reduction in the Purchase Price, said Sale Motion to be in form and content
reasonably satisfactory to Buyer. Said Approval Order shall (a) approve the sale
of the Purchased Assets to Buyer on the terms and conditions set forth in this
Agreement and authorize Sellers to proceed with this transaction, (b) include a
specific finding that Buyer is a good faith purchaser of the Purchased Assets
under section 363(m) of the Bankruptcy Code, (c) state that the sale of the
Purchased Assets to Buyer shall be free and clear of all Claims and Liens,
except any obligations and liabilities expressly assumed by Buyer, and (d)
provide for a waiver of the stays contemplated by Bankruptcy Rules 6004(g) and
6006(d).
5.2. Operation of the Business by Sellers.
(a) Except as otherwise contemplated by this Agreement, during the period
from the Execution Date until the Closing, Sellers will use all reasonable
efforts to continue, in a manner consistent with the past practices of the
Business, to maintain and preserve intact the Business and to maintain the
ordinary and customary relationships of the Business with its suppliers,
customers and others having business relationships with it with a view toward
preserving for Buyer, to and after the Closing Date, the Business, the Purchased
Assets and the goodwill associated therewith.
(b) During the period from the Execution Date until the Closing Date,
Sellers shall continue to operate and conduct the Business in the ordinary
course, and maintain its Books and Records in accordance with past practices and
will not, without the prior written approval of
Buyer or as otherwise contemplated by this Agreement, sell, transfer or
otherwise dispose of any of its properties or assets pertaining to the Business,
other than (i) in the ordinary course of business, (ii) any property or asset
which is not material to the results of operations, financial condition or
business of the Business taken as a whole, and (iii) any property or asset that
is an Excluded Asset.
5.3. Investigation of Business. Buyer may, prior to the Closing Date, make
or cause to be made such investigation of the business and properties of the
Business and of its financial and legal condition as Buyer deems necessary or
advisable. Sellers will permit Buyer and its authorized agents or
representatives, including its independent accountants, to have full access to
the properties, books and records of the Business at reasonable hours to review
information and documentation relative to the properties, books, contracts,
commitments and other records of the Business.
5.4. Mutual Cooperation. Subject to the terms and conditions hereof,
Sellers and Buyer agree to use their reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including all of the following: (i) obtain prior
to Closing all licenses, certificates, permits, approvals, authorizations,
qualifications and orders of governmental authorities as are necessary for the
consummation of the transactions contemplated hereby; and (ii) effect all
necessary registrations and filings.
5.5. Access to Records and Personnel.
(a) Following the Closing Date, Buyer shall retain the Books and Records
relating to the Business and the Purchased Assets for the period of time set
forth in its records retention policies in effect on the Closing Date or for
such longer period as may be required by law or any applicable court order,
including with respect to tax statues of limitations. Sellers, or any
representative of Sellers' respective bankruptcy estates, shall be allowed to
make copies of the Books and Records as required in connection with objecting to
claims filed in Sellers' bankruptcy cases and for other purposes in connection
with administering the bankruptcy cases, including filing tax returns and
commencing avoidance actions.
(b) Buyer will allow Sellers reasonable access to such Books and Records,
and to personnel having knowledge of the whereabouts and/or contents of such
Books and Records, for legitimate business reasons, such as the preparation of
Tax returns or the defense or prosecution of litigation in connection with the
bankruptcy case. Buyer shall be entitled to recover its reasonable out-of-pocket
costs (including, without limitation, copying costs) incurred in providing such
Books and Records and/or personnel to the other party.
5.6. "As Is" Condition. Except as expressly provided in Section 3 hereof,
Buyer agrees that it shall accept all Purchased Assets in an "As Is" "Where Is"
condition at the Closing Date. Except as expressly provided in Section 3 hereof,
Sellers make no representation or warranty with respect to the value, condition
or use of the Purchased Assets, whether expressed or implied, including, without
limitation, any implied warranty of merchantability or fitness for a particular
purpose.
5.7. Financing. Effective at the opening of business on the Closing Date,
Buyer shall be responsible for funding all disbursements of the Business. Any
cash, cash equivalents, similar investments, certificates of deposit, Treasury
bills and other marketable securities held by the Business or Buyer on the
Closing Date shall be treated by the parties consistent with Section 1.3 and
turned over to Sellers.
5.8. Administration of Accounts; Customer Inquiries.
(a) All payments and reimbursements made in the ordinary course of business
by any third party in the name of or to Sellers in connection with or arising
out of the Business or Purchased Assets after the Closing Date shall be held by
such person in trust for the benefit of Buyer and, promptly upon receipt by such
person of any such payment or reimbursement, such person shall pay over to Buyer
the amount of such payment or reimbursement without right of set off.
(b) All payments and reimbursements made in the ordinary course of business
by any third party in the name of or to Buyer or any affiliate thereof in
connection with or arising out of the Excluded Assets, Excluded Liabilities or
any businesses that are not the Business after the Closing Date shall be held by
such person in trust for the benefit of Sellers and, promptly upon receipt by
such person of any such payment or reimbursement, such person shall pay over to
Sellers the amount of such payment or reimbursement without right of set off.
(c) Sellers shall promptly forward to Buyer any mail (physical, electronic
or otherwise), facsimile or telephone inquiries of actual or potential clients,
customers, suppliers and vendors of or relating to the Business, including,
without limitation, customer orders.
(d) Buyer shall promptly forward to Sellers any mail (physical, electronic
or otherwise), facsimile or telephone inquires of actual or potential clients,
customers, suppliers and vendors of or relating to the Excluded Assets and any
businesses that are not the Business.
5.9. Employment.
(a) Buyer shall have the right, in its sole discretion, from the date
hereof, to interview and to offer employment, conditioned upon Buyer being the
buyer of the Purchased Assets, to any or all of HTS' employees but shall have no
obligation to do so. If Buyer elects to offer employment to any other HTS
employees, it shall be upon such terms and conditions as Buyer, in its sole
discretion, shall determine, and nothing expressed or implied by this Agreement
shall confer upon HTS employees, or any legal representative thereof, any rights
or remedies, including any right to employment, or for any specified period, of
any nature or kind whatsoever, under or by reason of this Agreement. If Buyer
determines to enter into an employment agreement with any other HTS employees,
it may be on either an at-will or a fixed duration basis. Sellers shall be
responsible for any obligations or liabilities to HTS employees under Worker
Adjustment Retaining Notification Act and any similar state or local "plant
closing" law ("WARN") with respect to all HTS employees.
(b) The terms "continuation coverage," "qualified beneficiaries" and
"qualifying event" shall have the meanings ascribed to such terms under Section
4980B of the
Code and Sections 601-608 of ERISA (collectively, "COBRA Obligations"). Sellers
shall have sole responsibility for all COBRA Obligations with respect to any and
all HTS employees.
5.10. Confidentiality Letter. Until the Closing shall actually have
occurred, Buyer acknowledges that it remains subject to the Confidentiality
Letter, including but not limited to the provisions thereof relating to the
solicitation of employees (except as expressly contemplated by Section 5.9(a)).
5.11. Assignment of Contracts. Sellers shall use commercially reasonable
efforts to obtain from the Bankruptcy Court an order authorizing Sellers,
effective on the Closing Date, to assume, cure all monetary defaults with
respect to, and assign the Assumed Contracts to Buyer. Assignment of the
contracts initially set forth on Schedule 1.2(j) shall be a condition to
Closing. The parties acknowledge that if Buyer adds contracts to the initial
list of those to be assumed and assigned the requisite notice and objection
period may not expire prior to Closing with respect to the additional contracts
and leases and obtaining the order referred to in this Section 5.11 with respect
to such added contracts and leases shall not be a condition to Closing, and the
failure to obtain such order for such added contracts shall not be the basis for
a claim by Buyer against Sellers.
5.12. Cure of Defaults. Subject to receipt of the order referred to in
Section 5.11 and the occurrence of the Closing, Sellers shall (a) at their
expense cure any and all monetary defaults or segregate cash in an amount equal
to disputed Cure Payments or as may be ordered by the Bankruptcy Court and (b)
use commercially reasonable efforts to cure any other defaults, each with
respect to the Assumed Contracts as required by Section 365 of the Bankruptcy
Code, so that such Assumed Contracts may be assigned to Buyer in accordance with
the provisions of Section 365 of the Bankruptcy Code, provided, however, that
Sellers shall not be responsible for paying Cure Payments with respect to
Assumed Contracts Buyer adds to Schedule 1.2(j) after the Closing Date.
5.13. Gunbarrel Facility.
(a) At the Closing, and provided the Gunbarrel Lease is not assumed and
assigned to Buyer at the Closing, Sellers and Buyer shall enter into a sublease
(the "Gunbarrel Sublease") with respect to the Gunbarrel Facility for the period
from the Closing Date to until December 14, 2004, subject to termination by
Buyer upon thirty (30) days prior written notice to Sellers. Under the terms of
the Gunbarrel Sublease, the form of which is attached hereto as Exhibit G, Buyer
shall be entitled to the use and occupancy of the Gunbarrel Facility and Buyer
shall pay to Sellers all Basic Rent and Additional Rent (collectively, the
"Sublease Rent") due by Sellers to the lessor of the Gunbarrel Facility pursuant
to the Gunbarrel Lease for each month and/or partial month that the Sublease is
in effect, provided that the maximum amount Buyer shall be obligated to pay to
Sellers as Sublease Rent during the time the Sublease is in effect is $30,000
and Sellers will be responsible for any remaining amount of Basic Rent and
Additional Rent due during the period the Gunbarrel Sublease is in effect. Buyer
will be responsible for all other costs and expenses associated with operating
the Gunbarrel Facility during the term of the Sublease.
(b) Buyer shall have, except to the extent not previously provided in the
Sale Order, at its sole option exercised anytime up until December 14, 2004, the
right to compel Sellers to file a motion, to be heard on shortened time (the
"Gunbarrel Motion"), seeking to assume and assign the Gunbarrel Lease to Buyer.
If the Gunbarrel Lease is assigned to Buyer, Buyer shall assume the security
deposits and other prepayments of Sellers associated with the Gunbarrel Lease.
Buyer, on assumption of the security deposits, shall immediately pay the sum of
such security deposits and other prepayments to Sellers, by wire transfer of
immediately available federal funds to such bank account(s) as shall be
designated by Sellers. During the period the Gunbarrel Motion is pending before
the Bankruptcy Court, the term of the Sublease, to the extent necessary, shall
be automatically extended to the day (the "Extended Date") after the day of the
hearing in Bankruptcy Court on the Gunbarrel Motion; provided, however, that the
limitation on the payment of Sublease Rent contained in clause (a) above and in
the Sublease shall not apply to the period from December 15, 2004 to the
Extended Date (the "Extended Period") and Buyer shall pay to Sellers, on a
weekly basis, all Sublease Rent due by Sellers to the lessor of the Gunbarrel
Facility pursuant to the Gunbarrel Lease for each day in the Extended Period.
(c) Buyer agrees that to the extent Buyer terminates the Gunbarrel Sublease
prior to December 14, 2004, Buyer will, as long as Sellers are paying all Basic
Rent and Additional Rent due under the Gunbarrel Lease and the Gunbarrel Lease
has not been terminated by landlord or Sellers, leave in place all of the
Machinery and equipment located at the Gunbarrel Facility at Closing until the
later of (i) December 14, 2004 or (ii) all amounts on deposit in the Escrow
Account have been disbursed.
5.14. Supply Agreement.
(a) Pursuant to the terms and conditions of this Agreement and the Sale
Motion, Sellers will assume and assign to Buyer the Supply Agreement at the
Closing. At the Closing, and provided the Escrow Amount is required to be
deposited into the Escrow Account, Buyer shall execute an assignment, in
substantially the form of Exhibit "H" attached hereto (the "Supply Agreement
Assignment") of all of Buyer's rights to receive, or to bring or prosecute a
cause of action or other remedy to recover or collect, any termination fee, any
other costs of termination, any Shortfall Payment (as such term is defined in
the Supply Agreement) and/or any other damages resulting from breach that are or
may come due from SuperGen under the terms of the Supply Agreement. The Supply
Agreement Assignment shall be deposited into escrow with the Escrow Amount. The
Supply Agreement Assignment shall be delivered out of escrow to Sellers in the
event any portion of the Escrow Amount is released to Buyer at such time as any
portion of the Escrow Amount is released to Buyer. The Supply Agreement
Assignment shall be delivered out of escrow to Buyer only in the event the
entire amount of the Escrow Amount deposited into the Escrow Account at the
Closing is released to Sellers at such time as the entire amount of the Escrow
Amount deposited into the Escrow Account at the Closing has been released to
Sellers.
(b) Until the later of (i) December 15, 2004 or (ii) all amounts on deposit
in the Escrow Account have been disbursed, Buyer shall not, without the prior
written agreement of Sellers, (x) terminate the Supply Agreement, (y) agree to
extend or renew, or extend or renew,
the Supply Agreement beyond its current term or (z) agree to amend or waive, or
amend or waive, any provision of the Supply Agreement.
SECTION 6
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to purchase the Purchased Assets shall be subject
to the satisfaction on or prior to Closing of all of the following conditions,
unless waived in writing by Buyer:
6.1. Covenants. Sellers shall have complied in all material respects with
all of its agreements and covenants contained herein to be performed at or prior
to Closing.
6.2. Representations and Warranties True. All representations and
warranties of Sellers in this Agreement or in any exhibit, schedule or document
delivered pursuant to this Agreement shall be true and complete in all respects
as of the Execution Date and as of the Closing; provided however, the parties
agree that there will be no failure of this condition based upon the falsity or
incompleteness of any representation or warranty if, as of the Execution Date,
Buyer has knowledge of the falsity or incompleteness of such representation or
warranty.
6.3. Delivery of Certificates. Buyer shall have received a certificate or
certificates, dated as of the Closing Date, executed by a duly authorized
officer of each Seller certifying in such detail as Buyer may reasonably request
that the conditions specified in Sections 6.1 and 6.2 hereof have been
fulfilled.
6.4. Instruments of Transfer. Buyer shall have received a xxxx of sale, in
substantially the form attached hereto as Exhibit E, and such other duly
executed instruments of transfer, conveyance, and assignment, executed by a duly
authorized officer of each Sellers, as is necessary or desirable to effect the
transfers, conveyances, and assignments to Buyer of the Purchased Assets as
contemplated by this Agreement.
6.5. Other Agreements. Buyer shall have received the Sublease, if
necessary, executed by HTS and the Escrow Agreement, if necessary, executed by
Sellers.
6.6. Approval Order. The Approval Order and any other orders of the
Bankruptcy Court with respect to this Agreement and the Purchased Assets shall
have been entered and the Approval Order shall have become a Final Order.
6.7. No Action. No action, suit or proceeding (including any proceeding
over which the Bankruptcy Court has jurisdiction under 28 U.S.C. ss. 157(b) and
(c)) shall be pending or overtly threatened by or before any governmental
authority or pending or overtly threatened by any other party to enjoin,
restrain, prohibit or obtain substantial damages or significant equitable relief
in respect of or related to any of the transactions contemplated by this
Agreement, or that would be reasonably likely to prevent or make illegal the
consummation of any transactions contemplated by this Agreement or that, if
adversely determined, could have a Material Adverse Effect, and any such
actions, suits or proceedings that have theretofore been brought and determined
shall have become Final Orders.
6.8. No Material Adverse Change. Since the Execution Date, there has been
no event, change or effect that is materially adverse to the condition
(financial or otherwise) of the Purchased Assets or the Business.
SECTION 7
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers to sell the Purchased Assets shall be subject to
the satisfaction on or prior to Closing of all of the following conditions,
unless waived in writing by Sellers:
7.1. Covenants of Buyer. Buyer shall have complied in all material respects
with all of its agreements and covenants contained herein to be performed at or
prior to Closing.
7.2. Representations and Warranties True. All representations and
warranties of Buyer in this Agreement shall be true and complete in all respects
as of the Execution Date and as of the Closing.
7.3. Delivery of Certificates. Sellers shall have received a certificate or
certificates, dated as of the Closing Date, executed by a duly authorized
executive of the Buyer certifying in such detail as Sellers may reasonably
request that the conditions specified in Sections 7.1 and 7.2 hereof have been
fulfilled.
7.4. Tender of Purchase Price. Buyer shall have paid the Purchase Price.
7.5. Assumption. Sellers shall have received an assignment and assumption
agreement, in substantially the form attached hereto as Exhibit F, executed by
Buyer assuming the Assumed Obligations.
7.6. Other Agreements. Sellers shall have received the Sublease, Escrow
Agreement and Supply Contract Assignment, each if necessary, executed by Buyer.
7.7. Approval Order. The Approval Order and any other orders of the
Bankruptcy Court with respect to this Agreement and the Purchased Assets shall
have been entered in a form and substance satisfactory to Sellers and the
Approval Order shall have become a Final Order.
7.8. No Action. No action, suit or proceeding (including any proceeding
over which the Bankruptcy Court has jurisdiction under 28 U.S.C. ss. 157(b) and
(c)) shall be pending or overtly threatened by or before any governmental
authority or pending or overtly threatened by any other party to enjoin,
restrain, prohibit or obtain substantial damages or significant equitable relief
in respect of or related to any of the transactions contemplated by this
Agreement, or that would be reasonably likely to prevent or make illegal the
consummation of any transactions contemplated by this Agreement or that, if
adversely determined, could have a Material Adverse Effect, and any such
actions, suits or proceedings that have theretofore been brought and determined
shall have become Final Orders.
SECTION 8
TERMINATION PRIOR TO CLOSING
8.1. Termination. This Agreement may be terminated:
(a) By the mutual written consent of Buyer and Sellers;
(b) By either Buyer or Sellers in writing, if the Closing does not occur by
September 15, 2004, provided such terminating party is not in default or breach
of this Agreement, and further provided that such terminating party has not
taken such action or failed to take such action required under this Agreement,
which has been the cause or result in the failure of the Closing to occur on or
before such date;
(c) After the entry of the Approval Order by the Bankruptcy Court, by
either Buyer or Sellers in writing, without liability to the terminating party
(provided the terminating party is not otherwise in default or in breach of this
Agreement) if there has been a material breach of this Agreement by the other
party which is not cured within five (5) days after such party has been notified
in writing of such breach and the intent to terminate this Agreement pursuant to
this Section 8.1(c) if such breach is not cured;
(d) By Buyer in the event of any non-compliance with the requirements set
forth in Section 5.1 hereof;
(e) By Buyer if as of the Closing Date any of the conditions specified in
Section 6 hereof have not been satisfied or if Sellers are otherwise in material
default under this Agreement;
(f) By Sellers if as of the Closing Date any of the conditions specified in
Section 7 hereof have not been satisfied or if Buyer is otherwise in material
default under this Agreement;
(g) By Buyer or Sellers if Sellers enter into an Alternative Transaction
(as such term is defined in Section 10.1 below);
(h) By Buyer prior to the Closing if a motion to dismiss the Chapter 11
Cases or a motion to convert the Chapter 11 Cases or appoint a trustee or
examiner has been granted in the Chapter 11 Cases; or
(i) By Buyer if the Approval Order is not entered by the Bankruptcy Court
on or before sixty (60) days after the Execution Date.
8.2. Procedure Upon Termination. If this Agreement is terminated under
Section 8.1, written notice thereof will forthwith be given by the terminating
party to the other party to this Agreement, and this Agreement will thereafter
become void and have no further force and effect and, except for those
provisions that expressly survive the termination of this Agreement, all further
obligations of Sellers and Buyer to one another under this Agreement will
terminate without further obligation or liability of Sellers or Buyer to the
other (except as provided in Section 8.3). If this Agreement is terminated as
provided herein:
(a) each party shall either destroy or redeliver all documents and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
(b) all information received by any party hereto with respect to the
business of any other party (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information; and
(c) other than as provided in Section 8.3, no party hereto shall have any
liability or further obligation to any other party to this Agreement, except
Buyer shall still be bound by the terms of the Confidentiality Letter.
8.3. Effect of Termination.
(a) If this Agreement is terminated by reason of Sellers entering into an
Alternative Transaction, Sellers shall pay to Buyer the Break-Up Fee upon the
closing of such Alternative Transaction.
(b) In the event of a default by Sellers under this Agreement after entry
of the Approval Order by the Bankruptcy Court, Buyer shall be entitled to all of
its remedies at law and in equity.
(c) In the event of a default by Buyer under this Agreement after entry of
the Approval Order by the Bankruptcy Court, Sellers shall be entitled to all of
its remedies at law and in equity and shall be entitled to retain the Deposit.
SECTION 9
CLOSING
9.1. Closing Date. Unless this Agreement shall have been terminated and the
transactions herein shall have been abandoned pursuant to Section 8 hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of counsel for Sellers, at 10:00 a.m. on the later to
occur of (a) the second business day after the date of entry of the Approval
Order, unless an objection has been filed to the good faith of the Purchaser
under Section 363(m) of the Bankruptcy Code, in which event, the eleventh day
after the date of entry of the Approval Order, and (b) the satisfaction of all
conditions to Closing or waiver thereof by the applicable party, or such later
date, time and place as shall be agreed upon by Sellers and Buyer (the actual
date on which the Closing takes place being herein called the "Closing Date").
9.2. Buyer Deliveries. At the Closing, Buyer shall deliver to Sellers:
(a) the Purchase Price as required by Section 2.2 hereof;
(b) the documents described in Sections 7.3, 7.5 and 7.6 hereof; and
(c) such other documents and instruments as counsel for Buyer and Sellers
mutually agree to be reasonably necessary to consummate the transactions
described herein.
9.3. Sellers Deliveries. At the Closing, Sellers shall deliver to Buyer:
(a) the documents described in Sections 6.3, 6.4 and 6.5 hereof; and
(b) such other documents and instruments as counsel for Buyer and the
Sellers mutually agree to be reasonably necessary to consummate the transactions
described herein.
SECTION 10
MISCELLANEOUS
10.1. Sale to a Third Party; Break-Up Fee. Sellers and Buyer agree that
Buyer has expended substantial funds and other resources in connection with the
transaction contemplated hereby, including costs in connection with legal and
business due diligence, that Buyer will suffer harm if such transaction is not
consummated and that it would be unfair for Buyer to bear such harm in view of
the fact that both Buyer, on the one hand, and Sellers, on the other hand, hope
to benefit from such transaction. Accordingly, in the event that Sellers
consummate a sale (an "Alternative Transaction") of the Purchased Assets to a
bidder, other than Buyer, who submits the highest and otherwise best offer for
the Purchased Assets at the Approval Hearing, Sellers shall pay Buyer a break-up
fee equal to 5% of the total winning Court approved bid, but in no event shall
the break-up fee be less than $100,000 or greater than $200,000 (the "Break-Up
Fee"). The amount of the Break-Up Fee payable by Sellers to Buyer hereunder
shall be an allowed administrative expense of the bankruptcy estates pursuant to
section 503(b) of the Bankruptcy Code and shall be paid upon the closing of the
Alternative Transaction.
10.2. Matching Rights. In the event Sellers receive, under the terms of the
Procedures Order, a qualifying initial overbid or qualifying further overbid
during the Auction that is higher than Buyer's then current bid for the
Purchased Assets, Buyer shall be entitled to match such qualifying initial
overbid or qualifying further overbid on the same terms and conditions at the
Auction and in so doing Buyer will be considered the winning bidder at the
Auction unless another qualifying further overbid is then made and for which
Buyer shall then have the right to match pursuant to this Section 10.2.
10.3. Survival. All of the representations, warranties, agreements and
covenants of the parties set forth in this Agreement shall not survive the
Closing; provided, however, that the agreements and covenants which by their
terms apply to period following the Closing Date shall survive in accordance
with their terms.
10.4. Notices. All communications provided for hereunder shall be in
writing and shall be deemed to be given when delivered in person or by private
courier with receipt, when telefaxed and received, or three (3) days after being
deposited in the United States mail, first-class, registered or certified,
return receipt requested, with postage paid to the appropriate address below, or
to such other address as any such party shall designate by written notice to the
other party hereto.
If to Buyer:
Integrated BioPharma, Inc.
c/o Paxis Pharmaceuticals
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
With a copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Xxxxxxxxxxx X. Xxxxxxx
If to Sellers:
Xxxxxx, Inc.
x/x Xxxxxxx, Xxxxxxxx & Xxxxx
Professional Corporation
1901 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
With a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxx
Professional Corporation
1901 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
10.5. Bulk Transfers. Buyer waives compliance with the provisions of all
applicable laws relating to bulk transfers in connection with the transactions
contemplated by this Agreement.
10.6. Transfer Taxes. All transfer, documentary, sales, use, registration,
value-added and other similar taxes and related fees (including any penalties,
interest and additions to taxes) (collectively, "Transfer Taxes") incurred in
connection with this Agreement and the transactions contemplated hereby, to the
extent not exempt under section 1146(c) of the Bankruptcy Code, shall be paid by
Buyer. Sellers and Buyer shall cooperate in timely making all filings, returns,
reports and forms as may be required to comply with the provisions of such
Transfer Tax laws and to the extent any exemptions from such taxes are available
Buyer and Sellers shall cooperate to prepare any certificates or other documents
necessary to claim such exemptions.
10.7. Further Assurances; Asset Returns. Upon request from time to time,
Sellers shall execute and deliver all documents, and do all other acts that may
be reasonably necessary or desirable, in the reasonable opinion of counsel for
Buyer, to perfect or record the title of Buyer, or any successor of Buyer, to
the Purchased Assets transferred or to be transferred under this Agreement, or
to aid in the prosecution, defense, or other litigation of any rights arising
from said transfer (provided that Buyer shall reimburse Sellers for all
out-of-pocket costs and expenses resulting from any such request). In the event
that Buyer receives any assets of Sellers that are not intended to be
transferred pursuant to the terms of this Agreement, whether or not related to
the Business, Buyer agrees to promptly return such assets to Sellers.
10.8. Expenses. Sellers and Buyer shall each pay their respective expenses
(such as legal, investment banking and accounting fees) incurred in connection
with the origination, negotiation, execution and performance of this Agreement.
10.9. Non-Assignability. This Agreement shall inure to the benefit of and
be binding on the parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by any party hereto without the
express prior written consent of the other parties, and any attempted
assignment, without such consents, shall be null and void; provided, however,
that Buyer may assign its rights, but not its obligations, under this Agreement
to any direct or indirect wholly owned subsidiary of Buyer, and Sellers may
assign its rights to receive payments hereunder to any successor, assignee or
representative of Sellers' bankruptcy estates.
10.10. Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by each of Buyer and
Sellers. No waiver by Sellers or Buyer of any of the provisions hereof shall be
effective unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
10.11. Construction. In the interpretation and construction of this
Agreement, the parties acknowledge that the terms hereof reflect extensive
negotiations between the parties and that this Agreement shall not be deemed,
for the purpose of construction and interpretation, drafted by either party
hereto.
10.12. Counterparts. This Agreement may be signed in counterparts, each of
which shall be deemed an original and all of which shall constitute the same
instrument. The parties further agree that this Agreement may be executed by the
exchange of facsimile signature pages.
10.13. Time is of the Essence. Time is of the essence in this Agreement,
and all of the terms, covenants and conditions hereof.
10.14. No Third Party Beneficiaries. Nothing in this Agreement is intended
or shall be construed to give any person or entity, other than the parties
hereto and their permitted assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement, the Procedures Order or any
provision contained herein or in any exhibit attached hereto.
10.15. Applicable Law. This Agreement, and all claims arising under or in
connection herewith, shall be governed by and construed in accordance with the
substantive laws of the State of California, without regard to the conflicts of
laws principles thereof.
10.16. Bankruptcy Court Jurisdiction. BUYER AND SELLERS AGREE THAT THE
BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION DURING THE BANKRUPTCY CASE
OVER ANY DISPUTE BETWEEN BUYER AND SELLERS, AND SHALL OTHERWISE HAVE
NON-EXCLUSIVE JURISDICTION OVER ALL DISPUTES AND MATTERS, IN EACH EVENT RELATING
TO ANY OF (i) THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT OR ANY
ANCILLARY DOCUMENT EXECUTED PURSUANT HERETO AND/OR (ii) THE PURCHASED ASSETS,
AND BUYER AND SELLERS EACH EXPRESSLY CONSENTS TO SUCH JURISDICTION.
10.17. Representations and Warranties; Schedules and Exhibits.
(a) Buyer acknowledges and agrees that Sellers are not making any
representation or warranty whatsoever, express or implied, including, without
limitation, in respect of Sellers, the Business or the Purchased Assets, except
those representations and warranties of Sellers explicitly set forth in Section
3 of this Agreement. Buyer and Sellers agree neither Sellers nor any of its
officers, directors, stockholders, employees, affiliates, representatives or
agents shall have any liability or responsibility arising out of, or relating
to, any information (whether written or oral), documents or materials furnished
by Sellers or any of their respective officers, directors, stockholders,
employees, affiliates, representatives or agents, and any information, documents
or materials made available to Buyer, management presentations or any other form
in expectation of the transactions contemplated by this Agreement.
(b) All exhibits and schedules hereto are hereby incorporated by reference
and made a part of this Agreement. All references to schedules are deemed to be
references to the specific schedule of the Disclosure Schedules. Any fact or
item which is clearly disclosed on any schedule or exhibit to this Agreement in
such a way as to make its relevance to a representation or representations made
elsewhere in this Agreement or to the information called for by another schedule
or other schedules (or exhibit or other exhibits) to this Agreement readily
apparent shall be deemed to be an exception to such representation or
representations or to be disclosed on such other schedule or schedules (or
exhibit or exhibits), as the case may be, notwithstanding the omission of a
reference or cross-reference thereto. Any fact or item disclosed on any schedule
or exhibit hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining any
standard of materiality under this Agreement.
10.18. Certain Definitions.
(a) For purposes of this Agreement, the terms below shall have the
following meanings:
(i) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(ii) "Claims and Liens" means all interests, claims (as such term is
defined in section 101(5) of the Bankruptcy Code), title defects or objections,
mortgages, deeds of trust, liens, charges, pledges, hypothecations, security
interests, or other encumbrances of any nature whatsoever, whether domestic or
foreign, including licenses, leases, chattel or other mortgages, possessory
interests, collateral security arrangements, conditional and installment sales
agreements, charges, easements, encroachments, options, rights of first refusal,
rights of first offer, rights of use or occupancy, restrictions on transfer
(voting or otherwise), royalty obligations, attachments or provisional
attachments of any kind and other title or interest retention arrangements,
reservations or limitations of any nature, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
authority, or any subordination agreement in favor of another person, whether
created by contract, order, operation of law or otherwise;
(iii) "Confidentiality Letter" means the Confidentiality Letter executed on
September 24, 2003 by Paxis Pharmaceuticals, a wholly owned subsidiary of Buyer,
in connection with undertaking due diligence with respect to the Purchased
Assets and the Business and any similar letter or agreement executed by Buyer in
favor of HTS and/or Xxxxxx;
(iv) "Final Order" means an order or a judgment entered by the Bankruptcy
Court (x) that has not been reversed, stayed, modified or amended, (y) as to
which no appeal or petition for review or motion for rehearing or reargument has
been taken or has been made, and (z) as to which the time for filing a notice of
appeal, a petition for review or a motion for reargument or rehearing has
expired;
(v) "Gunbarrel Facility" means the facility that HTS's leases pursuant to
the Gunbarrel Lease which is located at 4750 Nautilus Court South in Boulder,
Colorado.
(vi) "Gunbarrel Lease" means that Lease of Space (Office/Warehouse
Building) dated October 2, 2002, between HTS, as lessee, and 4750 Nautilus Court
South, LLC, as lessor, pursuant to which HTS leases approximately 14,230 square
feet of manufacturing, office and warehouse space in Boulder, Colorado.
(vii) "knowledge" of a party hereto when modifying any representation and
warranty shall mean that such party has no actual knowledge that such
representation and warranty is not true and correct to the same extent as
provided in the applicable representation and warranty;
(viii) "person" means an individual, corporation, partnership, association,
trust, limited liability company, limited partnership, limited liability
partnership,
partnership, incorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended);
(ix) "Petition Date" means April 1, 2003; and
(x) "subsidiary" or "subsidiaries" of Xxxxxx means Zetapharm, Inc.,
Botanicals International Extracts, Inc. or any other entity of which Xxxxxx
owns, directly or indirectly, 50% or more of the stock or other equity interests
the holder of which is generally entitled to vote for the election of the board
of directors or other governing body of such person.
10.19. Entire Agreement. This Agreement, and the Schedules and Exhibits
hereto set forth the entire understanding of the parties hereto with respect to
the transactions contemplated hereby, and supersedes all prior discussions,
communications or writings.
10.20. Section Headings; Table of Contents. The section headings contained
in this Agreement and the Table of Contents to this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
10.21. Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
XXXXXX TECHNICAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
XXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
INTEGRATED BIOPHARMA, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
TABLE OF CONTENTS
Page
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SECTION 1 SALE OF ASSETS AND ASSUMPTION OF LIABILITIES....................1
1.1. Sale of Assets..................................................1
1.2. Purchased Assets................................................1
1.3. Excluded Assets.................................................4
1.4. Assumed Obligations.............................................5
1.5. Excluded Liabilities............................................6
SECTION 2 PURCHASE PRICE..................................................7
2.1. Purchase Price..................................................7
2.2. Payment of Purchase Price.......................................7
2.3. Purchase Price Working Capital Adjustment.......................7
2.4. Purchase Price Holdback Amount..................................8
2.5. Allocation of Purchase Price....................................9
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS.......................9
3.1. Corporate Existence.............................................9
3.2. Corporate Authority............................................10
3.3. Governmental Approvals; Consents...............................10
3.4. Title to Purchased Assets; Absence of Liens and Encumbrances...10
3.5. Litigation.....................................................11
3.6. Accounts Receivable; Collection................................11
3.7. Compliance with Laws...........................................11
3.8. Finders; Brokers; Consultants..................................12
3.9. Environmental Matters..........................................12
3.10. Absence of Certain Changes.....................................13
3.11. Work and Purchase Orders.......................................13
3.12. Intellectual Property..........................................13
3.13. Warranties.....................................................14
3.14. Products Liability.............................................14
3.15. Insurance......................................................15
3.16. Inventories....................................................15
3.17. No Other Representations or Warranties.........................15
3.18. Expiration of Representations and Warranties...................15
SECTION 4 REPRESENTATIONS OF BUYER.......................................15
4.1. Corporate Existence............................................15
4.2. Corporate Authority............................................16
4.3. Governmental Approvals; Consents...............................16
4.4. Finders; Brokers; Consultants..................................16
4.5. Financial Capacity.............................................16
4.6. No Other Representations or Warranties.........................16
4.7. Expiration of Representations and Warranties...................17
SECTION 5 AGREEMENTS OF SELLERS AND BUYER................................17
5.1. Bankruptcy Court Approval......................................17
5.2. Operation of the Business by Sellers...........................18
5.3. Investigation of Business......................................19
5.4. Mutual Cooperation.............................................19
5.5. Access to Records and Personnel................................19
5.6. "As Is" Condition..............................................19
5.7. Financing......................................................20
5.8. Administration of Accounts; Customer Inquiries.................20
5.9. Employment.....................................................20
5.10. Confidentiality Letter.........................................21
5.11. Assignment of Contracts........................................21
5.12. Cure of Defaults...............................................21
5.13. Gunbarrel Facility.............................................21
5.14. Supply Agreement...............................................22
SECTION 6 CONDITIONS TO BUYER'S OBLIGATIONS..............................23
6.1. Covenants......................................................23
6.2. Representations and Warranties True............................23
6.3. Delivery of Certificates.......................................23
6.4. Instruments of Transfer........................................23
6.5. Other Agreements...............................................23
6.6. Approval Order.................................................23
6.7. No Action......................................................23
6.8. No Material Adverse Change.....................................24
SECTION 7 CONDITIONS TO SELLERS' OBLIGATIONS.............................24
7.1. Covenants of Buyer.............................................24
7.2. Representations and Warranties True............................24
7.3. Delivery of Certificates.......................................24
7.4. Tender of Purchase Price.......................................24
7.5. Assumption.....................................................24
7.6. Other Agreements...............................................24
7.7. Approval Order.................................................24
7.8. No Action......................................................24
SECTION 8 TERMINATION PRIOR TO CLOSING...................................25
8.1. Termination....................................................25
8.2. Procedure Upon Termination.....................................25
8.3. Effect of Termination..........................................26
SECTION 9 CLOSING........................................................26
9.1. Closing Date...................................................26
9.2. Buyer Deliveries...............................................26
9.3. Sellers Deliveries.............................................27
SECTION 10 MISCELLANEOUS..................................................27
10.1. Sale to a Third Party; Break-Up Fee............................27
10.2. Matching Rights................................................27
10.3. Survival.......................................................27
10.4. Notices........................................................27
10.5. Bulk Transfers.................................................28
10.6. Transfer Taxes.................................................28
10.7. Further Assurances; Asset Returns..............................29
10.8. Expenses.......................................................29
10.9. Non-Assignability..............................................29
10.10. Amendment; Waiver..............................................29
10.11. Construction...................................................29
10.12. Counterparts...................................................29
10.13. Time is of the Essence.........................................30
10.14. No Third Party Beneficiaries...................................30
10.15. Applicable Law.................................................30
10.16. Bankruptcy Court Jurisdiction..................................30
10.17. Representations and Warranties; Schedules and Exhibits.........30
10.18. Certain Definitions............................................31
10.19. Entire Agreement...............................................32
10.20. Section Headings; Table of Contents............................32
10.21. Severability...................................................32
