EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
Albany Molecular research, Inc.
(a Delaware corporation),
Organichem Corporation
(a Delaware Corporation),
AND
The Stockholders named herein
DATED AS OF DECEMBER 21, 1999
INDEX
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PAGE
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SECTION 1. PURCHASE AND SALE OF SECURITIES......................... 2
1.1 Acquisition of Acquired Shares.......................... 2
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1.2 Closing................................................. 2
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1.3 Further Assurances...................................... 2
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1.4 Transfer Taxes.......................................... 2
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........... 2
2.1 Organization and Corporate Power........................ 2
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2.2 Authorization and Non-Contravention..................... 3
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2.3 Company Records......................................... 3
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2.4 Capitalization.......................................... 4
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2.5 Subsidiaries; Investments............................... 5
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2.6 Financial Statements; Projections....................... 5
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2.7 Absence of Undisclosed Liabilities..................... 5
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2.8 Absence of Certain Developments........................ 5
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2.9 Transactions with Affiliates........................... 7
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2.10 Real and Personal Property............................. 7
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2.11 Tax Matters............................................ 8
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2.12 Certain Contracts and Arrangements..................... 9
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2.13 Intellectual Property Rights; Employee Restrictions.... 11
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2.14 Litigation............................................. 13
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2.15 Labor Matters.......................................... 13
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2.16 List of Certain Employees and Suppliers................ 13
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2.17 Permits; Compliance with Laws.......................... 14
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2.18 Employee Benefit Programs.............................. 14
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2.19 Environmental Matters.................................. 15
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2.20 Insurance.............................................. 17
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2.21 Investment Banking; Brokerage......................... 18
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2.22 Customers, Distributors and Partners.................. 18
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2.23 Suppliers............................................. 18
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2.24 Warranty and Related Matters.......................... 18
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2.25 Illegal Payments...................................... 19
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2.26 Disclosure............................................ 19
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2.27 Acquisition Agreement................................. 19
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.... 19
3.1 Authority & Non-Contravention......................... 19
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3.2 Capitalization........................................ 20
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(i)
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR........ 20
4.1 Authority and Non-Contravention....................... 20
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4.2 Investment Banking; Brokerage Fees.................... 21
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4.3 Organization and Corporate Power...................... 21
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4.4 SEC Reports........................................... 21
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4.5 Investment............................................ 22
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SECTION 5. CLOSING CONDITIONS AND DELIVERIES..................... 22
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
TRANSACTION RELATED INDEMNIFICATION................... 25
6.1 Survival of Representations, Warranties and Covenants.. 25
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6.2 Transaction Related Indemnification.................... 26
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6.3 Limitations on Indemnification......................... 26
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6.4 Notice; Payment of Losses; Defense of Claims........... 27
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6.5 Limitation on Contribution and Certain Other Rights.... 28
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SECTION 7. COVENANTS OF THE COMPANY............................. 28
7.1 Financial Statements................................... 28
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7.2 Budget and Operating Forecast; Inspection.............. 29
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7.3 Directors; Meetings; Indemnification................... 29
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7.4 Conduct of Business.................................... 30
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7.5 Payment of Taxes, Compliance with Laws, etc............ 30
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7.6 Insurance.............................................. 30
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7.7 Key Person Insurance................................... 31
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7.8 Maintenance of Properties.............................. 31
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7.9 Material Adverse Changes............................... 31
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7.10 Management Compensation............................... 31
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7.11 Affiliate Transactions................................ 31
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7.12 Non-Competition and Related Agreements................ 32
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7.13 Enforcement of Rights................................. 32
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7.14 Significant Transactions.............................. 32
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7.15 Election of Directors................................. 33
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7.16 Company Indemnification............................... 34
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SECTION 8. TERMINATION OF AGREEMENT.............................. 35
8.1 Termination............................................ 35
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8.2 Effect of Termination.................................. 35
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8.3 Right to Proceed....................................... 35
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SECTION 9. GENERAL............................................... 36
9.1 Waivers and Consents; Amendments....................... 36
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(ii)
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9.2 Governing Law.......................................... 36
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9.3 Section Headings and Gender; Construction.............. 36
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9.4 Counterparts........................................... 36
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9.5 Notices and Demands.................................... 37
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9.6 Dispute Resolution..................................... 37
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9.7 Consent to Jurisdiction................................ 38
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9.8 Remedies; Severability................................. 38
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9.9 Integration............................................ 39
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9.10 Assignability; Binding Agreement....................... 39
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9.11 Certain Definitions.................................... 39
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(iii)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
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of December 21, 1999, by and among Organichem Corporation, a Delaware
corporation (the "Company"), Albany Molecular Research, Inc., a Delaware
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corporation (the "Investor"), and each stockholder of the Company identified on
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the signature pages hereto (each, a "Stockholder," and, collectively, the
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"Stockholders").
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W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the date hereof, the Stockholders own beneficially and of
record 1,000 shares of common stock, $.001 par value per share, of the Company
(the "Common Stock"), representing 100% of the outstanding capital stock of the
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Company;
WHEREAS, the Investor wishes to acquire (the "Stock Acquisition") from the
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Company 600 shares of Common Stock (the "Acquired Shares"), which immediately
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following consummation of such acquisition shall represent 37.5% of the
outstanding Common Stock of the Company, for an aggregate purchase price of
$15,000,000;
WHEREAS, the Investor wishes to acquire from the Company Convertible
Subordinated Debentures which may be converted to 37.5% of the Common Stock of
the Company, on a fully diluted basis, for an aggregate purchase price of
$15,000,000 pursuant to the terms of a Debenture Purchase Agreement (the
"Debenture Purchase Agreement");
WHEREAS, the Company (i) wishes to sell the Acquired Shares as partial
financing for its acquisition (the "Nycomed Acquisition") of certain assets and
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other property of Nycomed, Inc. ("Nycomed"), a wholly owned subsidiary of
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Nycomed Amersham Plc., to occur simultaneous with, and as a condition to, the
Stock Acquisition and (ii) will provide all additional financing for the Nycomed
Acquisition; and
WHEREAS, the parties hereto desire to set forth certain terms of their
ongoing relationship with the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Stockholders' Agreement, the Put/Call
Agreement (as hereinafter defined), the Debenture Purchase Agreement and the
Employment Agreements (as hereinafter defined), and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
1.1 Acquisition of Acquired Shares. Upon the terms and subject to the
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conditions hereof, and in reliance on the representations and warranties set
forth in Section 2 of this Agreement, at the Closing (as defined below), the
Investor shall deliver to the Company an aggregate of $15 million (the "Purchase
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Price"), and in exchange therefor the Company shall issue to the Investor the
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Acquired Shares, free and clear of any and all liens, claims, options, charges,
encumbrances, rights or restrictions of any nature ("Claims"). The Purchase
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Price shall be paid by wire transfer in immediately available funds to an
account designated by the Company unless otherwise agreed upon by the Investor
and the Company.
1.2 Closing. The closing of the Stock Acquisition (the "Closing") shall
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take place at 10:00 a.m, local time at the offices of Xxxxxxxx Xxxxxxxx and
Xxxxx, One Commerce Plaza, Albany, New York on December 21, 1999 or such other
date, place and time as shall be agreed upon by the parties hereto (the "Closing
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Date").
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1.3 Further Assurances. The Company and the Stockholders from time to
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time after the Closing at the request of the Investor and without further
consideration shall execute and deliver further instruments and take such other
action as the Investor may reasonably require to more effectively vest in the
Investor the Acquired Shares and all rights thereto, and to fully implement the
provisions of this Agreement.
1.4 Transfer Taxes. All transfer taxes, fees and duties under applicable
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law incurred in connection with the issuance of the Acquired Shares under this
Agreement will be borne and paid by the Company and it shall promptly reimburse
the Investor for any such tax, fee or duty which is required under applicable
law.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Investor to enter into this Agreement and consummate
the transactions contemplated hereby, the Company makes to the Investor the
representations and warranties contained in this Section 2. Such
representations and warranties are subject to the qualifications and exceptions
set forth in the disclosure schedule delivered to the Investor pursuant to this
Agreement (the "Disclosure Schedule") and unless otherwise specifically stated
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are made after giving effect to the Nycomed Acquisition (i.e. as if the Nycomed
Acquisition had occurred prior to the making of such representations and
warranties). As hereinafter used, the term "Acquired Business" shall refer to
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the portion of the business currently conducted by Nycomed, Inc. a wholly owned
subsidiary of Nycomed Amersham Plc. at their facility in Rensselaer, New York
which the Company contemplates purchasing in the Nycomed Acquisition.
2.1 Organization and Corporate Power. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified
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or registered to do business as a foreign corporation (a) in each jurisdiction
listed in Section 2.1 of the Disclosure Schedule and (b) in each jurisdiction in
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which the failure to be so duly qualified or registered has had, or would be
reasonably likely to have, a material adverse effect on the assets, liabilities,
condition (financial or other), business, results of operations or prospects of
the Company (a "Material Adverse Effect"). The Company has all requisite power
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and authority to carry on its business as presently conducted, to enter into and
perform this Agreement and the agreements contemplated hereby to which it is a
party and to carry out the transactions contemplated hereby and thereby,
including the issuance of the Acquired Shares. A copy of the Company's
Certificate of Incorporation and By-laws, each as amended and supplemented to
date, and which have been furnished to the Investor by the Company, are correct
and complete as of the date hereof, and the Company is not in violation of any
term thereof. The Company is not in violation of any term or provision of any
agreement, instrument, judgment, decree, order, statute, rule or government
regulation applicable to it or to which it is a party, except for violations
which, individually or in the aggregate, would not have a Material Adverse
Effect.
2.2 Authorization and Non-Contravention. This Agreement and all documents
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executed pursuant hereto are valid and binding obligations of the Company and,
as to any document to which a Stockholder is a party with the Investor, each
Stockholder, enforceable in accordance with their respective terms. The
execution, delivery and performance of this Agreement and all agreements,
documents and instruments contemplated hereby, the issuance and delivery of the
Acquired Shares have been duly authorized by all necessary action of the Company
and the Stockholders. The execution and delivery of this Agreement and all
agreements, documents and instruments contemplated hereby, the issuance and
delivery of the Acquired Shares and the performance of the transactions
contemplated by this Agreement and such other agreements, documents and
instruments do not and will not (a) violate, conflict with or result in a
default (whether after the giving of notice, lapse of time or both) under any
contract or obligation to which the Company is a party or by which it or its
respective assets are bound, or any provision of the Company's Certificate of
Incorporation or By-laws, or cause the creation of any Claim upon any of the
assets of the Company; (b) violate or result in a violation of, or constitute a
default (whether after the giving of notice, lapse of time or both) under, any
provision of any law, regulation or rule, or any order of, or any restriction
imposed by, any court or other governmental agency applicable to the Company or,
to the best knowledge of the Company, any Stockholder; (c) require from the
Company or, to the best knowledge of the Company, any Stockholder any notice to,
declaration or filing with, or consent or approval of any governmental authority
or other third party; or (d) violate or result in a violation of, or constitute
a default (whether after the giving of notice, lapse of time or both) under,
accelerate any obligation under, or give rise to a right of termination of, any
agreement, permit, license or authorization to which the Company or any
Stockholder is a party or by which the Company or any Stockholder is bound.
2.3 Company Records. The record books of the Company accurately reflect
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all action taken by its stockholders, directors and committees. The copies of
the records of the Company, as made available to the Investor for review, are
true and complete copies of the originals of such documents.
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2.4 Capitalization.
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(a) Immediately prior to giving effect to the transactions
contemplated hereby, the capital structure of the Company consists only of
Common Stock. Section 2.4(a)(i) of the Disclosure Schedule sets forth (i) the
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names of each Stockholder of the Company and the number of such shares of Common
Stock owned of record and beneficially by such Stockholder, (ii) the names and
positions of each director and officer of the Company and (iii) the name of each
holder of an option or other right to buy Common Stock, number of shares of
Common Stock for which each such option or other right is exercisable with
respect to each holder, along with the applicable vesting schedule, if any, and
the applicable exercise price. None of the options or rights outstanding prior
to giving effect to the transactions contemplated hereby is subject to
accelerated vesting by reason of the transactions contemplated hereby or any
subsequent sale of securities by the Company. Except as disclosed in Section
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2.4(a)(ii) of the Disclosure Schedule, there are no outstanding subscriptions,
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options, warrants, commitments, preemptive rights, agreements, arrangements or
commitments of any kind for or relating to the issuance, or sale of, or
outstanding securities convertible into or exercisable or exchangeable for any
capital stock or other equity interests of the Company. The Company has no
obligation to purchase, redeem or otherwise acquire any of its capital stock or
any interests therein, and has never redeemed any capital stock. As of the
Closing and after giving effect to the transactions contemplated hereby, the
capital structure of the Company will consist of 10,000 shares of Common Stock,
of which 1,600 will be issued and outstanding. As of the Closing, and after
giving effect to the transactions contemplated hereby, all of the outstanding
shares of capital stock of the Company will have been duly and validly
authorized and issued and will be fully paid and non-assessable and will have
been offered, issued, sold and delivered in compliance with all applicable
federal and state securities laws and not subject to any preemptive rights which
have not been otherwise expressly waived. As of the Closing, and after giving
effect to the transactions contemplated hereby, other than rights set forth
herein or in the agreements listed on Section 2.4(a)(iii) of the Disclosure
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Schedule, there are (A) no outstanding subscriptions, options, warrants,
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commitments, preemptive rights, rights of first refusal, put or call rights or
other agreements, arrangements or obligations of any kind for or relating to, or
anti-dilution rights with respect to, the issuance, sale or redemption of any
securities of the Company or any interests therein, (B) no rights to have any
securities of the Company registered for sale to the public in connection with
the laws of any jurisdiction, and (C) no documents, instruments or agreements
relating to the voting of the Company's voting securities or restrictions on the
transfer of any securities of the Company.
(b) Prior to giving effect to the other transactions contemplated
hereby, the Stockholders are the sole record and beneficial owners of all of the
equity securities of the Company and, immediately following the Closing, will be
the sole record and beneficial owner of 1,000 shares of Common Stock,
representing 62.5% of the issued and outstanding Common Stock, in each case free
and clear of any Claims including Claims of spouses, former spouses and other
family members. Upon endorsement by the Company's authorized officers of the
certificates representing the Acquired Shares and delivery of such certificates
by the Company to the Investor at the Closing, the Acquired Shares will be duly
issued to the Investor free and clear of any Claims (other than restrictions
imposed by securities laws applicable to unregistered securities generally).
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2.5 Subsidiaries; Investments. The Company does not have and has not had
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any direct or indirect Subsidiaries (as defined in Section 9.11 below). Except
as disclosed in Section 2.5 of the Disclosure Schedule, neither the Company nor
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any Stockholder has a strategic partnership or similar relationship with or owns
or has any direct or indirect interest in or control (as defined in Section 8.11
below) over any corporation, partnership, joint venture or other entity of any
kind, except in the case of any Stockholder for passive investments of less than
1% in publicly-traded companies.
2.6 Financial Statements; Projections.
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(a) The Company has previously furnished to the Investor copies of the
Nycomed, Inc. Rensselaer Facility Income Statements, Balance Sheets and Cash
Flow Statements, as of December 31, 1997 and 1998 and August 31, 1999 (the
"Financial Information Sheets"). Such Financial Information Sheets have been
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prepared in conformity with generally accepted accounting principles applied on
a consistent basis except as disclosed in Section 2.6(a) of the Disclosure
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Schedule, are consistent in all material respects with the books and records of
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the Company and fairly and accurately present the financial position of the
Company as of the dates thereof (subject to the absence of footnotes and normal
year-end adjustments).
(b) The projections attached hereto as Schedule 2.6(b) of the
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Disclosure Schedule which reflect the Nycomed Acquisition represent good faith
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estimates of the performance of the Company for 2000 and future years based upon
assumptions which are set forth therein and which were in good faith believed to
be reasonable when made and continue to be reasonable as of the date hereof.
2.7 Absence of Undisclosed Liabilities. The Company does not have any
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material liabilities or obligations of any nature, including as a result of the
Nycomed Acquisition, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown, except the Company's liabilities
and/or obligations set forth in Section 2.18 and Section 2.19 of the Disclosure
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Schedule and (ii) incurred as a result of or arising out of the transactions
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contemplated under this Agreement and pursuant to the Nycomed Acquisition.
2.8 Absence of Certain Developments. Since January 1, 1997, the business
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of the Acquired Business has been conducted only in the ordinary course
consistent with past practice, and except as (i) specifically contemplated by
this Agreement or (ii) set forth on Schedule 2.8 of the Disclosure Schedule,
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there has not been nor is there any reasonable basis for anticipating any:
(a) change in the assets, liabilities, condition (financial or other),
properties, business, operations or prospects of the Acquired Business, which
change by itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, has had or would be reasonably
likely to have a Material Adverse Effect;
(b) mortgage, encumbrance or lien placed on any property of the
Acquired Business;
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(c) purchase, sale or other disposition, or agreement or other
arrangement for the purchase, sale or other disposition, of any properties or
assets by the Acquired Business, including any of its Intellectual Property
Rights (as defined below), other than in the ordinary course of business;
(d) damage, destruction or loss, whether or not covered by insurance,
which has had or would be reasonably likely to have a Material Adverse Effect;
(e) labor trouble or claim of unfair labor practices involving the
Acquired Business, change in the compensation payable or to become payable by
the Acquired Business to any of its directors, officers or employees other than
ordinary course merit increases to employees in accordance with its usual
practices, or any bonus payment or arrangement made to or with any of such
directors, officers or employees or any establishment or creation of any
employment, deferred compensation or severance arrangement or employee benefit
plan with respect to such persons or the amendment of any of the foregoing;
(f) obligation or liability of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, regardless of whether claims in
respect thereof have been asserted, incurred by the Acquired Business other than
as contemplated by Section 2.7 hereof;
(g) material loss of personnel of the Acquired Business or change in
the terms and conditions of the employment of the Stockholders with the Acquired
Business (other than ordinary course compensation increases and temporary or
insubstantial changes in responsibilities);
(h) payment or discharge of a lien or liability of the Acquired
Business which was not shown on the Financial Information Sheets or incurred in
the ordinary course of business thereafter;
(i) contingent liability incurred by the Acquired Business as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any material debt or claim owing to, or waiver of any material
right of, the Acquired Business, including any write-off or compromise of any
accounts receivable;
(j) obligation or liability incurred by the Acquired Business to any
of its directors, officers, Stockholders or employees, or any loans or advances
made by the Acquired Business to any of its directors, officers, Stockholders or
employees, except normal compensation and expense allowances payable to
directors, officers or employees;
(k) actual or anticipated change in accounting methods or practices,
collection policies, pricing policies or payment policies of the Acquired
Business;
(l) loss, or any development that could result in a loss, of any
significant supplier, customer, distributor or account of the Acquired Business;
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(m) material amendment or termination of any material contract or
agreement to which the Acquired Business is a party or by which it is bound;
(n) arrangements relating to any royalty, dividend or similar payment
based on the revenues, profits or sales volume of the Acquired Business, whether
as part of the terms of any securities of the Acquired Business or by any
separate agreement;
(o) agreement with respect to the endorsement of the products or
services of the Acquired Company;
(p) transaction or agreement in excess of $50,000 involving fixed
price terms or fixed volume arrangements, except as set forth in Section 2.12 of
the Disclosure Schedule;
(q) other material transaction entered into by the Acquired Business
other than transactions in the ordinary course of business; or
(r) agreement or understanding whether in writing or otherwise, for
the Acquired Business to take any of the actions specified in paragraphs (a)
through (q) above.
2.9 Transactions with Affiliates. Except as set forth in Section 2.9 of
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the Disclosure Schedule, there are no loans, leases, or other continuing
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transactions between the Company, any Stockholder or any present or former
equity holder, director, officer or employee of the Company or Nycomed, or any
member of any Stockholder's, equity holder's, director's, officer's, or
employee's immediate family, or any Person controlled by any Stockholder, equity
holder, officer, director or employee or his immediate family. Except as set
forth in Section 2.9 of the Disclosure Schedule, no equity holder, officer,
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director or employee of the Company, or any of their respective spouses or
family members, owns directly or indirectly, on an individual or joint basis,
any interest in, or serves as an officer or director or in another similar
capacity of, any competitor, customer or supplier of the Company, or any
organization which has a material contract or arrangement with the Company. Any
such arrangement set forth in Section 2.9 of the Disclosure Schedule has been
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conducted on an arm's length basis and the terms of any such arrangement are not
materially different than those the Company could obtain from an unrelated third
party.
2.10 Real and Personal Property. Section 2.10(i) of the Disclosure Schedule
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sets forth the addresses and uses of all real property that the Company owns,
leases or subleases, or will own, lease or sublease immediately after giving
effect to the Nycomed Acquisition. Except as set forth in Section 2.10(ii) of
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the Disclosure Schedule, the Company has, or will have after giving effect to
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the Nycomed Acquisition, good, valid and (if applicable) marketable title to
those assets reflected on a balance sheet of the Company prepared as of the
Closing and delivered to Investor prior thereto (the "Closing Balance Sheet")
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free and clear of all liens, claims or encumbrances of any nature, other than
liens for Taxes (as hereinafter defined) not yet due and payable, minor liens
and encumbrances that do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and liens
that have otherwise arisen in the ordinary course of business. All equipment
included in such properties which is necessary to the
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business to be conducted by the Company is in good condition and repair
(ordinary wear and tear excepted) and all leases of real or personal property to
which the Company is a party, or will be a party after giving effect to the
Nycomed Acquisition, are fully effective and afford, or will afford after giving
effect to the Nycomed Acquisition, the Company peaceful and undisturbed
possession of the subject matter of the lease. After giving effect to the
Nycomed Acquisition, the property and assets of the Company will be sufficient
for the conduct of the business to be conducted by the Company. The Company is
not, and after giving effect to the Nycomed Acquisition will not be, in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of the properties owned
or leased or to be owned or leased by it, which violation would have a Material
Adverse Effect, nor do circumstances (other than the environmental conditions
described in Schedule 2.10(iii) of the Disclosure Schedule) exist which to the
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best knowledge of the Company would give rise to any such violation. There are
no defaults by the Company or to the best knowledge of the Company, by any other
party (including Nycomed), which might curtail in any material respect the
present use of the Company's property after giving effect to the Nycomed
Acquisition. The performance by the Company of this Agreement and the
consummation of the Nycomed Acquisition will not result in the termination of,
or in any increase of any amounts payable under, any of such leases.
2.11 Tax Matters.
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(a) The Company has timely and properly filed all federal, state,
local and foreign Tax Returns (as hereinafter defined) required to be filed by
it through the date hereof, and all such Tax Returns were correct and complete
in all material respects. The Company has paid or caused to be paid all
federal, state, local, foreign and other taxes, including without limitation,
income taxes, estimated taxes, alternative minimum taxes, excise taxes, sales
taxes, franchise taxes, employment and payroll related taxes, withholding taxes,
transfer taxes, and all deficiencies, or other additions to tax, interest, fines
and penalties (collectively, "Taxes"), owed by it (whether or not shown on any
Tax Return) through the date hereof whether disputed or not, except Taxes which
have not yet accrued or otherwise become due. All Taxes and other assessments
and levies which the Company was or is required to withhold or collect,
including as a result of the Nycomed Acquisition, have been, and as of the
Closing will be, withheld and collected and have been paid over to the proper
governmental authorities to the extent required. The Company is not currently
the beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no liens, encumbrances or other security interests on
any of the assets of the Company that arose in connection with any failure or
alleged failure to pay any Tax. The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to any Tax payment, assessment, deficiency or collection. Except as set forth
in Section 2.11 of the Disclosure Schedule, (i) the Company has never received
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notice of any audit or of any proposed deficiencies from the Internal Revenue
Service (the "IRS") or any other taxing authority (other than routine audits
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undertaken in the ordinary course and which have been resolved on or prior to
the date hereof); (ii) neither the IRS nor any other taxing authority is now
asserting or, to the best knowledge of the Company and each Stockholder, is
threatening to assert against the
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Company any deficiency or claim for additional Taxes in respect of the income or
sales of the Company; (iii) the Company has never been a member of an affiliated
group of corporations filing a combined federal income Tax Return nor does the
Company have any liability for Taxes of any other Person under Treasury
Regulations (S)1.1502-6 (or any similar provision of foreign, state or local
law), as a transferee or successor, by contract or otherwise; and (iv) the
Company has not filed a consent under Section 341(f) of the Internal Revenue
Code of 1986, as amended (the "Code"), concerning collapsible corporations. The
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Company has never been a United States real property holding corporation within
the meaning of Section 897(c)(1)(A)(ii) of the Code. The Company is not a party
to any Tax allocation or sharing arrangement. The Company is not a party to any
contract, agreement, plan or arrangement covering any employee or former
employee thereof, that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Section 280G or
Section 162 of the Code. The Company is not a "foreign person" within the
meaning of Section 145 of the Code and Treasury Regulations Section 1.1445-2.
(b) The taxable year of the Company for federal and state income tax
purposes is the calendar year.
(c) The Company has never been (i) a passive foreign investment
company, (ii) a foreign personal holding company, (iii) a foreign sales
corporation, (iv) a foreign investment company or (v) a person other than a
United States person, each within the meaning of the Code.
(d) The unpaid Taxes of the Company (a) do not as of the date hereof
exceed the amount set forth in Section 2.11 of the Disclosure Schedule, and (b)
---------------------------------------
will not exceed that amount as adjusted for operations and transaction in the
ordinary course of business through the Closing Date in accordance with
commercially reasonable practices.
(e) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2.12 Certain Contracts and Arrangements. Except as either specifically
----------------------------------
contemplated by this Agreement or set forth in Section 2.12 of the Disclosure
------------------------------
Schedule (with true, complete and correct copies provided to the Investor), the
--------
Company is not and after giving effect to the Nycomed Acquisition will not be, a
party or subject to or bound by:
(a) any contract or agreement (i) involving a potential commitment or
payment by the Company in excess of $50,000 or (ii) which is otherwise material
and not entered into in the ordinary course of business;
(b) any contract, lease or agreement in excess of $10,000 which is not
cancelable by the Company without penalty on not less than 60 days notice;
9
(c) any contract containing covenants directly or explicitly limiting
in any material respect the freedom of the Company to compete in any line of
business or with any Person;
(d) any contract or agreement relating to the licensing, distribution,
development, purchase, sale or servicing of any software or hardware products;
(e) any indenture, mortgage, promissory note, loan agreement, guaranty
or other agreement or commitment for borrowing or any pledge or security
arrangement;
(f) any employment contracts, non-competition agreements or other
agreements with present or former officers, directors, employees or stockholders
of the Company or Persons related to or affiliated with such Persons;
(g) any stock redemption or purchase agreements or other agreements
affecting or relating to the capital stock of the Company, including, without
limitation, any agreement with any stockholder of the Company which includes,
without limitation, anti-dilution rights, registration rights, voting
arrangements, operating covenants or similar provisions;
(h) any pension, profit sharing, retirement or equity participation
plans;
(i) any royalty, dividend or similar arrangement based on the revenues
or profits of the Company or any contract or agreement involving fixed price or
fixed volume arrangements;
(j) any joint venture, partnership, manufacturer, development or
supply agreement;
(k) any acquisition, merger or similar agreement;
(l) any contract with any governmental entity; or
(m) any other material contract not executed in the ordinary course of
business.
All such contracts, agreements, leases and instruments are, and after
giving effect to the Nycomed Acquisition will be, valid and in full force and
effect and constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms. The Company has no
knowledge of any notice or threat of or circumstances, including as a result of
this Agreement and the transactions contemplated hereby, which would give rise
to a termination of any such contracts, agreements, leases or instruments, which
termination would have a Material Adverse Effect. The Company is not and, after
giving effect to the transactions contemplated hereby will not be, in default in
complying with any provisions of any such contract, agreement, lease or
instrument, and no condition or event or fact exists which, with notice, lapse
of time or both, would constitute a default thereunder on the part of the
Company, except for any such default, condition, event or fact that,
individually or in the aggregate, would not have a Material Adverse Effect.
10
2.13 Intellectual Property Rights; Employee Restrictions. Section 2.13 of
--------------------------------------------------- ---------------
the Disclosure Schedule sets forth a complete list and brief description of all
-----------------------
intellectual property rights, including all patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
xxxx applications, copyrights and copyright applications (collectively,
"Intellectual Property Rights"), which are, or after giving effect to the
----------------------------
Nycomed Acquisition, will be, owned by or registered in the name of the Company
or of which the Company is, or after giving effect to the Nycomed Acquisition
will be, the licensor or licensee or in which the Company has, or after giving
effect to the Nycomed Acquisition will have, any material right (other than with
respect to "off-the-shelf"which is generally commercially available) or which is
otherwise material to the conduct of the Company's business as proposed to be
conducted (including all Intellectual Property Rights to be acquired in the
Nycomed Acquisition).
(a) The Company has, or after giving effect to the Nycomed
Acquisition, will have exclusive ownership of, free and clear of claims or
rights of any other Person, with full right to use, sell, license, sublicense,
dispose of, and bring actions for infringement of, or possesses exclusive
licenses or other rights to use, all Intellectual Property Rights listed in
Section 2.13 of the Disclosure Schedule, which rights are sufficient for the
---------------------------------------
conduct of its business as proposed to be conducted. Except as set forth in
Section 2.13(a) of the Disclosure Schedule no material Intellectual Property
------------------------------------------
Rights are, or after giving effect to the Nycomed Acquisition, will be used or
incorporated into the Company's products or products actively under development.
(b) The contemplated business of the Company and the contemplated
production, marketing, licensing, use and servicing of any products or services
of the Company do not infringe or conflict with any patent, trademark,
copyright, trade secret or any other Intellectual Property Rights of any third
party and neither the Company nor to the knowledge of the Company or any
Stockholder, Nycomed has received notice from any third party asserting that any
Intellectual Property Rights owned or licensed by the Company, or which the
Company otherwise has the right to use, are invalid or unenforceable by the
Company and, to the best knowledge of the Company, there is no basis for any
such claim (whether or not pending or threatened).
(c) Except as set forth in Section 2.13(c) of the Disclosure Schedule,
------------------------------------------
no claim is pending or, to the best knowledge of the Company, threatened against
the Company, Nycomed or any Stockholder nor has the Company, Nycomed or, to the
Company's best knowledge, any Stockholder received any written notice or other
written claim from any Person asserting that any of the Company's contemplated
activities infringe or may infringe any Intellectual Property Rights of such
Person nor, to the best knowledge of the Company, is there a basis for any such
claim (whether or not pending or threatened), and the Company is not aware of
any infringement by any other Person of any rights of the Company under any
Intellectual Property Rights.
11
(d) All licenses or other agreements under which the Company is, or
after giving effect to the Nycomed Acquisition will be, granted Intellectual
Property Rights are listed in Section 2.13(d)(i) of the Disclosure Schedule.
---------------------------------------------
All of such licenses or other agreements are in full force and effect, there is
no material default by any party thereto and, except as set forth in Section
-------
2.13(d)(ii) of the Disclosure Schedule, all of the rights of the Company
--------------------------------------
thereunder are, or after giving effect to the Nycomed Acquisition will be,
freely assignable. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been, if requested, provided to the
Investor and the Company has no reason to believe that the licensors under such
licenses and other agreements do not have and did not have all requisite power
and authority to grant the Intellectual Property Rights purported to be
conferred thereby.
(e) There are no licenses or other agreements under which the Company
or the Acquired Business has granted Intellectual Property Rights to others.
(f) With the exception of certain license agreements relating to the
Company's use of software applications ("Software Agreements"), except as set
forth in Section 2.13(f)(i) of the Disclosure Schedule, to the best knowledge of
---------------------------------------------
the Company, the Company is not making, and after giving effect to the Nycomed
Acquisition will not be making, unlawful use of any Intellectual Property Rights
of any other Person. Except as disclosed in Section 2.13(f)(ii) of the
--------------------------
Disclosure Schedule, to the best knowledge of the Company and the Stockholders,
-------------------
neither the Company nor the Acquired Business nor any of the employees,
consultants or independent contractors of the Company or the Acquired Business
has any agreements or arrangements with any third party relating to any
Intellectual Property Rights. The Company will, as of the Closing, have taken
all security measures required in accordance with sound business practices to
guard against unauthorized disclosure or use of any of its Intellectual Property
Rights.
The Company agrees that, notwithstanding anything herein to the
contrary, as between Investor and the Company, the Company shall be solely
financially responsible for and shall promptly indemnify, defend and hold
harmless the Investor against all costs, claims or damages of any nature
including, without limitation, reasonable fees of counsel and consultants,
alleging or relating to any unlawful use of Intellectual Property Rights of any
other Person under the Software Agreements.
(g) Except as set forth in Section 2.13(g) of the Disclosure Schedule,
------------------------------------------
all computer software products that are, or after giving effect to the Nycomed
Acquisition will be, owned by the Company, exclusively licensed to the Company,
licensed, sold or otherwise distributed to others by the Company or are
otherwise required for the conduct of its contemplated business after giving
effect to the Nycomed Acquisition, including microprocessors (but excluding "off
the shelf" which is generally commercially available) ("Software"), are Year
--------
2000 Compliant. As used herein, "Year 2000 Compliant" shall mean with respect
-------------------
to any such Software, the ability of such Software to perform the following
date-related functions: (i) consistently and properly interpret date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on dates
or portions of dates; (ii) function accurately in accordance with the
12
documentation relating to the applicable software and without interruption
before, during and after January 1, 2000, without any change in operations
associated with the advent of the new century; (iii) respond to two-digit date
input in a way that resolves any ambiguity as to the century; and (iv) store and
provide output of date information in ways that are unambiguous as to century.
2.14 Litigation. Except as set forth in Section 2.14(i) of the Disclosure
---------- ---------------------------------
Schedule, there is no litigation or governmental or administrative proceeding or
--------
investigation pending or, to the best knowledge of the Company, threatened
against the Company or the Acquired Business or affecting the properties or
assets of the Company or the Acquired Business, or, as to matters related to the
Company or the Acquired Business, against any officer, director, stockholder or
key employee of the Company or the Acquired Business, nor, to the best knowledge
of the Company, has there occurred any event nor does there exist any condition
on the basis of which any such claim may be asserted; except in each case for
litigation, proceedings, investigations or claims which individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect or
which do not call into question the validity or hinder the enforceability of
this Agreement or any other agreements or transactions contemplated hereby.
Except as set forth in Section 2.14(ii) of the Disclosure Schedule, no claim has
-------------------------------------------
been asserted against the Company or the Acquired Business for renegotiation or
price redetermination of any business transaction. Section 2.14(iii) of the
------------------------
Disclosure Schedule includes a description of all litigation, claims,
-------------------
proceedings or investigations involving the Company or the Acquired Business or
any of their officers, directors, stockholders or key employees in connection
with the business of the Company or the Acquired Business occurring, arising or
existing during the past five (5) years.
2.15 Labor Matters. Upon Closing, the Company intends to employ all
-------------
persons currently employed at the Rensselaer, New York site of the Acquired
Business which are approximately one-hundred seventy-five (175) employees. The
Acquired Business is not delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it as of the date hereof or amounts required to be
reimbursed to such employees. The Company and the Acquired Business are and
have heretofore been in compliance in all material respects with all applicable
laws and regulations respecting labor, employment, immigration, fair employment
practices, terms and conditions of employment and wages and hours. There are no
charges of employment discrimination or unfair labor practices or strikes,
slowdowns, stoppages of work or any other concerted interference with normal
operations existing, pending or, to the best knowledge of the Company,
threatened against or involving the Company or the Acquired Business. Except as
set forth in Section 2.15 of the Disclosure Schedule, to the best knowledge of
---------------------------------------
the Company, no key employee of the Company or the Acquired Business has any
plan or intention to terminate his employment with the Company or the Acquired
Business, including, without limitation, in connection with the Nycomed
Acquisition.
2.16 List of Certain Employees and Suppliers. No material supplier or
---------------------------------------
vendor has canceled or otherwise terminated or reduced its business with the
Company or the Acquired Business or materially and adversely modified its
relationship with the Company or the Acquired Business nor, to the best
knowledge of the Company and the Stockholders, does any such supplier or vendor
have any plan or intention to do so, including, without limitation, in
connection with the Nycomed Acquisition.
13
2.17 Permits; Compliance with Laws. After giving effect to the Nycomed
-----------------------------
Acquisition, the Company will have or will be in the process of having
transferred to it all franchises, authorizations, approvals, orders, consents,
licenses, certificates, permits, registrations, qualifications or other rights
and privileges (collectively "Permits") necessary to permit it to own its
-------
property and to conduct its business as proposed to be conducted and all such
Permits will be valid and in full force and effect. Except as disclosed in
Section 2.17(i) of the Disclosure Schedule, no Permit is subject to termination
------------------------------------------
as a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby including the Nycomed Acquisition. Except as
disclosed in Section 2.17(ii) of the Disclosure Schedule, the Company and the
-------------------------------------------
Acquired Business are now and have heretofore been materially in compliance with
all applicable statutes, ordinances, orders, rules and regulations promulgated
by any federal, state, municipal or other governmental authority, which apply to
the conduct of their businesses. Except as disclosed in Section 2.17(iii) of the
------------------------
Disclosure Schedule, neither the Company nor the Acquired Business has ever
-------------------
entered into or been subject to any judgment, consent decree, compliance order
or administrative order with respect to any aspect of the business, affairs,
properties or assets of the Company or the Acquired Business or received any
request for information, notice, demand letter, administrative inquiry or formal
or informal complaint or claim from any regulatory agency with respect to any
aspect of such business, affairs, properties or assets.
2.18 Employee Benefit Programs.
-------------------------
(a) Neither the Company nor the Acquired Business maintains or
contributes to and for the past five (5) years has not maintained or contributed
to, any employee benefit, fringe benefit, stock option, equity-based
compensation, phantom stock, bonus or incentive plan, severance pay policy or
agreement, retirement, pension, profit sharing or deferred compensation plan or
agreement, or any similar plan or agreement (an "Employee Benefit Plan") other
---------------------
than the Employee Benefit Plans identified and described in Section 2.18(a)(i)
------------------
of the Disclosure Schedule attached hereto, copies of which have been provided
--------------------------
to the Investor. Following the Closing, the Company will implement only the
Employee Benefit Plans identified and described in Section 2.18)a)(ii) of the
--------------------------
Disclosure Schedule. The terms and operation of each such Employee Benefit Plan
-------------------
comply and have heretofore complied in all material respects with all applicable
laws and regulations relating to each such Employee Benefit Plan. Except as
described in Section 2.18(a)(iii) of the Disclosure Schedule, there are no
-----------------------------------------------
unfunded obligations of the Company or the Acquired Business under any
retirement, pension, profit-sharing, deferred compensation plan or similar
program. Except as described in Section 2.18(a)(iv) of the Disclosure Schedule,
----------------------------------------------
neither the Company nor the Acquired Business is required to make any payments
or contributions to any Employee Benefit Plan pursuant to any collective
bargaining agreement or, to the best knowledge of the Company and the
Stockholders, any applicable labor relations law, and except as described in
Section 2.18(a)(v) of the Disclosure Schedule, all Employee Benefit Plans are
---------------------------------------------
terminable at the discretion of the Company or the Acquired Business without
liability to the Company or the Acquired Business upon or following such
termination. Except as described in Section 2.18(a)(vi)
-------------------
14
of the Disclosure Schedule, neither the Company nor the Acquired Business has
--------------------------
ever maintained or contributed to any Employee Benefit Plan providing or
promising any health or other nonpension benefits to terminated employees other
than as required by part 6 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). With respect to any Employee
-----
Benefit Plan, there has occurred no "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the Code, or breach of any duty under
ERISA or other applicable law which could result, directly or indirectly, in any
Taxes, penalties or other liability to the Company or the Acquired Business. No
litigation, arbitration or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to routine claims
for benefits) is pending or, to the best knowledge of the Company and the
Stockholders, threatened with respect to any such Employee Benefit Plan. Except
as described in Section 2.18(a)(vii) of the Disclosure Schedule, the Company
-----------------------------------------------
will not have any obligations under any Employee Benefit Plan maintained or
contributed to by the Acquired Business.
(b) Each Employee Benefit Plan which has ever been maintained by the
Company or the Acquired Business and which has been intended to qualify under
Section 401(a) or 501(c)(9) of the Code has received a favorable determination
or approval letter from the IRS regarding its qualification under such section
and has, in fact, been qualified under the applicable section of the Code from
the effective date of such Employee Benefit Plan through and including the
Closing Date (or, if earlier, the date that all of such Employee Benefit Plan's
assets were distributed). No event or omission has occurred which would cause
any such Employee Benefit Plan to lose its qualification under the applicable
Code section and each asset held under any such Employee Benefit Plan may be
liquidated or terminated without the imposition of any redemption for surrender
charge or comparable liability. Except as set forth in Section 2.18(b) of the
----------------------
Disclosure Schedule, neither the Company nor the Acquired Business has ever
-------------------
maintained any Employee Benefit Plan which has been subject to title IV of ERISA
or Code Section 412, including, but not limited to, any "multiemployer plan" (as
defined in Section 3(37) or Section 4001(a)(3) of ERISA). Each reference to
"Company" and the "Acquired Business" in this Section 2.19 also refers to any
other entity which would have ever been considered a single employer with the
Company or the Acquired Business, as applicable, under ERISA Section 4001(b) or
part of the same "controlled group" as the Company or the Acquired Business, as
applicable, for purposes of ERISA Section 302(d)(8)(C).
2.19 Environmental Matters.
---------------------
(a) Definitions. As used in this Agreement, the following terms shall have
-----------
the following meanings:
"Environmental Condition" means any condition with respect to the
environment, including without limitation the release or presence of Hazardous
Material on, beneath or off the real property to be acquired by the Company in
the Nycomed Acquisition, whether or not yet discovered, arising from or related
to any activity conducted by the Company at or on that real property or by the
Company's predecessors in title (or their lessees, sub-lessees, or occupants).
15
"Environmental Laws" means, without limitation, any and all federal,
state and local laws and requirements relating to health, safety, pollution or
protection of the environment, including, without limitation, laws and
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, petroleum products or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, groundwater or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals,
petroleum products or industrial, toxic or hazardous substances or wastes.
"Hazardous Materials" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined in or
governed by any federal, state or local law, statute, code, ordinance,
regulation, rule or other requirement relating to such substance or otherwise
relating to the environment or human health or safety, including, without
limitation, all waste, material, substance, pollutant or contaminant that might
cause any injury to human health or safety or to the environment or might
subject the Company to any imposition of costs or liability under any
Environmental Law, federal, state, local laws, rules, regulations, codes,
ordinances, orders, decrees, directives, permits, licenses and judgments
relating to Hazardous Materials in effect as of the date of this Agreement.
"Release" or "Releasing" means current or historical, actual or
threatened spilling, leaking, disposing, discharging, emitting, seeping,
depositing, ejecting, leaching, escaping or any other release or threatened
release, however defined, whether intentional or unintentional, of any Hazardous
Material.
"Environmental Claim" means any and all claims alleging or relating to
a violation of applicable Environmental Laws or resulting from or arising out of
the Release of any Hazardous Material and shall include claims relating to any
breach or failure to fulfill any of the representations, warranties, covenants
or agreements of the Company relating to this Section 2.19.
(b) Existing Conditions.
-------------------
(i) Except as described in Section 2.19(b)(i) of the Disclosure
------------------------------------
Schedule, the Company does not have knowledge of any Environmental Condition at
--------
the Real Property that is not referred to in Section 2.2 (a) of the Nycomed
Asset Purchase Agreement, a copy of which has been provided to the Investor.
(ii) Except as described in Section 2.19(b)(ii) of the Disclosure
-------------------------------------
Schedule, to the knowledge of the Company, after giving effect to the Nycomed
--------
Acquisition, the Company has obtained all material permits, licenses, approvals
and other authorizations required under applicable Environmental Laws to conduct
its business as currently conducted and to operate the facility acquired in the
Nycomed Acquisition following the consummation thereof.
16
(iii) To the knowledge of the Company, after giving effect to the
Nycomed Acquisition, no lien has been attached or filed against the real
property, the business or the assets of the Company in favor of any governmental
or private entity for (i) any liability or imposition of costs under or arising
out of the violation of any applicable Environmental Law; or (ii) any Release of
Hazardous Materials.
(iv) To the knowledge of the Company, there are no conditions or
circumstances (or anticipated conditions or circumstances) that may now or in
the future interfere with or prevent compliance with applicable Environmental
Laws at the facility acquired in the Nycomed Acquisition.
(v) Except as set forth on Section 2.19(b)(v) of the Disclosure
------------------------------------
Schedule and as described in Section 2.6 (b) of the Nycomed Asset Purchase
--------
Agreement, to the knowledge of the Company, after giving effect to the Nycomed
Acquisition, there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, notices or demand letters, notices of violation,
potential liabilities, investigations, or proceedings pending or threatened
against the real property, business or assets of the Company relating in any way
to any applicable Environmental Law.
(c) The Company agrees that as between Investor and the Company, the
Company shall be solely financially responsible for and shall promptly
indemnify, defend and hold harmless the Investor against all costs, claims or
damages of any nature including, without limitation, reasonable fees of counsel
and consultants, alleging or relating to any Environmental Condition (known or
unknown), including the cost of investigation and remediation, affecting the
real property acquired in the Nyocomed Acquisition or any Environmental Claim
(known or unknown) arising out of or relating to the real property to be
acquired by the Company in the Nycomed Acquisition.
2.20 Insurance. The physical properties, assets, business, operations,
---------
employees, officers and directors of the Company (including those to be acquired
in the Nycomed Acquisition) are insured to the extent disclosed in Section
-------
2.20(i) of the Disclosure Schedule, with copies of such policies having been
----------------------------------
provided to the Investor. Except as set forth in Section 2.20(ii) of the
-----------------------
Disclosure Schedule and claims for health care benefits in the ordinary course
-------------------
of business, there is no material claim by the Company or the Acquired Business
pending under any such policies. Said insurance policies and arrangements are in
full force and effect, all premiums with respect thereto are currently paid, and
the Company is, or after giving effect to the Nycomed Acquisition will be, in
compliance in all material respects with the terms thereof. Said insurance is
sufficient for compliance by the Company with all requirements of applicable law
and all agreements and leases to which it is, or after giving effect to the
Nycomed Acquisition will be, a party and otherwise is of the type and in amounts
customarily carried by Persons conducting businesses similar to that to be
conducted by the Company. Each such insurance policy shall continue to be in
full force and effect immediately following consummation of the transactions
contemplated by this Agreement, including the Nycomed Acquisition. To the best
knowledge of the Company, there is no threatened termination of any such
policies or arrangements or circumstances which would give rise thereto.
17
2.21 Investment Banking; Brokerage. Except as set forth in Section 2.21 of
----------------------------- ---------------
the Disclosure Schedule, there are no claims for investment banking fees,
-----------------------
brokerage commissions, broker's or finder's fees or similar compensation
(exclusive of professional fees to lawyers and accountants) in connection with
the transactions contemplated by this Agreement payable by the Company or based
on any arrangement or agreement made by or on behalf of the Company or any
Stockholder.
2.22 Customers, Distributors and Partners. Section 2.22 of the Disclosure
------------------------------------ ------------------------------
Schedule sets forth the name of each customer and distributor of the Company or
--------
the Acquired Business who accounted for more than ten percent (10%) of the
revenues of the Company or the Acquired Business for each of the fiscal years
ended December 31, 1998 and 1997 or the eight months ended August 31, 1999 (the
"Customers" and "Distributors", respectively) together with the names of any
--------- ------------
Persons with which the Company has a material strategic partnership or similar
relationship ("Partners"). The relationships of the Company and the Acquired
--------
Business with their Customers, Distributors and Partners are good commercial
working relationships. No Customer, Distributor or Partner of the Company or
the Acquired Business has canceled or otherwise terminated its relationship with
the Company or the Acquired Business, or has decreased materially its usage or
purchases of the services or products of the Company or the Acquired Business.
No Customer, Distributor or Partner has, to the best knowledge of the Company,
any plan or intention to terminate, to cancel or otherwise materially and
adversely modify its relationship with the Company or the Acquired Business or
to decrease materially or limit its usage, purchase or distribution of the
services or products of the Company or the Acquired Business.
2.23 Suppliers. The relationships of the Company and the Acquired
---------
Business with their major suppliers are good commercial working relationships,
and, except as set forth in Section 2.23 of the Disclosure Schedule, within the
---------------------------------------
last twelve months, no supplier that the Company or the Acquired Business has
paid or is under contract to pay $100,000 or more has canceled, materially
modified, or otherwise terminated its relationship with the Company or the
Acquired Business, as applicable, or materially decreased its services, supplies
or materials to the Company or the Acquired Business, as applicable, nor to the
best knowledge of the Company and the Stockholders, does any supplier have any
plan or intention to do any of the foregoing in a manner which would be
reasonably likely to have a Material Adverse Effect.
2.24 Warranty and Related Matters. Except as set forth in Section 2.24 of
---------------------------- ---------------
the Disclosure Schedule, there are no existing or, to the best knowledge of the
-----------------------
Company, threatened or anticipated, product liability, warranty or other similar
claims against the Company or the Acquired Business alleging that any products
or services that the Company or the Acquired Business distributes, services,
markets, sells or produces for itself, a customer or a third party (each such
product or service shall be referred to herein as a "Product") is defective or
-------
fails to meet any product or service warranties or any circumstances which exist
that the Company or any Stockholder reasonably expects to give rise to such
claims. There are (a) no material inherent
18
design defects or systemic or chronic problems in any Product and (b) no
liabilities for warranty or other claims or returns with respect to any Product
relating to any such defects or problems.
2.25 Illegal Payments. Neither the Company nor any Stockholder has ever
----------------
made any illegal payment or contribution of any kind, directly or indirectly, in
connection with the Acquired Business, including, without limitation, payments,
gifts or gratuities, to United States, foreign, state or local government
officials, employees or agents or candidates therefor.
2.26 Disclosure. The representations and warranties made or contained in
----------
this Agreement, the Disclosure Schedule and exhibits hereto and the certificates
and statements executed or delivered in connection herewith, when taken
together, do not and shall not contain any untrue statement of a material fact
and do not and shall not omit to state a material fact required to be stated
therein or necessary in order to make such representations, warranties or other
material not misleading in the light of the circumstances in which they were
made or delivered. There have been no events or transactions, or information
which has come to the attention of the management of the Company or any
Stockholders, having a direct impact on the Company or the Acquired Business or
any of their assets, liabilities, financial condition, business, results of
operations or prospects which, in the reasonable judgment of the Company or
Stockholder, could be expected to have a Material Adverse Effect.
2.27 Acquisition Agreement. The Company has, or as of the Closing will
---------------------
have, entered into, executed and delivered definitive agreements for the
acquisition and financing thereof of all of the assets of the Acquired Business,
true, correct and complete copies of which have been provided to the Investor.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
In order to induce the Investor to enter into this Agreement and consummate
the transactions contemplated hereby, the Stockholders make to the Investors the
representations and warranties contained in this Section 3. Such
representations are subject to the qualifications and exceptions set forth in
the Disclosure Schedule and unless otherwise specifically stated are made after
giving effect to the Nycomed Acquisition.
3.1 Authority & Non-Contravention
-----------------------------
This Agreement and all agreements, documents and instruments executed by
each Stockholder pursuant hereto are valid and binding obligations of such
Stockholder enforceable in accordance with their respective terms. Each
Stockholder has full authority, power and capacity to enter into and perform
this Agreement and all agreements, documents and instruments contemplated hereby
which are to be executed by such Stockholder and to carry out the transactions
contemplated hereby and thereby. The execution, delivery and performance by
such Stockholder of this Agreement and all agreements, documents and instruments
to be executed and delivered by such
19
Stockholder pursuant hereto do not and will not (a) violate or result in a
violation of, conflict with or constitute or result in a default (whether after
the giving of notice, lapse or time or both) under, accelerate any obligation
under, or give rise to a right of termination of, any material contract,
agreement, obligation, permit, license or authorization to which such
Stockholder is a party or by which such Stockholder or his/her assets are bound,
(b) violate or result in a violation of, or constitute a default (whether after
the giving of notice, lapse of time or both) under, any provision of any law,
regulation or rule, or any order of, or any restriction imposed by, any court or
governmental agency applicable to such Stockholder; (c) require from such
Stockholder any notice to, declaration or filing with, or consent or approval
of, any governmental authority or other third party; or (d) violate or result in
a violation of, or constitute a default (whether after the giving of notice,
lapse of time or both) under, accelerate any obligation under, or give rise to a
right of termination of, any agreement, permit, license or authorization to
which any Stockholder is a party or by which any Stockholder is bound.
3.2 Capitalization
--------------
Prior to giving effect to the other transactions contemplated hereby,
the Stockholders are the sole record and beneficial owners of all of the equity
securities of the Company and, immediately following the Closing, will be the
sole record and beneficial owner of 62.5% of the Common Stock, in each case
free and clear of any Claims including Claims of spouses, former spouses and
other family members. Upon endorsement by the Company's authorized officers of
the certificates representing the Acquired Shares and delivery of such
certificates by the Company to the Investor at the Closing, the Acquired Shares
will be duly issued to the Investor free and clear of any Claims (other than
restrictions imposed by securities laws applicable to unregistered securities
generally).
SEC REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
In order to induce the Company and the Stockholders to enter into this
Agreement, the Investor represents and warrants to the Company and the
Stockholders the following:
4.1 Authority and Non-Contravention. The Investor has full right,
-------------------------------
authority and power under its Certificate of Incorporation and By-laws to enter
into this Agreement and all agreements, documents and instruments executed by
such Investor pursuant hereto and to carry out the transactions contemplated
hereby and thereby. This Agreement and all agreements, documents and
instruments executed by the Investor pursuant hereto are valid and binding
obligations of the Investor enforceable in accordance with their respective
terms. The execution, delivery and performance of this Agreement and all
agreements, documents and instruments executed by the Investor pursuant hereto
have been duly authorized by all necessary action under the Investor's
Certificate of Incorporation and By-laws. The execution, delivery and
performance by the Investor of this Agreement and all agreements, documents and
instruments to be executed and delivered by the Investor pursuant hereto do not
and will not: (i) violate or result in a violation of, conflict with or
constitute or result in a default (whether after the giving of notice, lapse or
20
time or both) under, accelerate any obligation under, or give rise to a right of
termination of, any material contract, agreement, obligation, permit, license or
authorization to which the Investor is a party or by which the Investor or its
assets is bound, or any provision of the Investor's Certificate of Incorporation
or By-laws; (ii) violate or result in a violation of, or constitute a default
(whether after the giving of notice, lapse of time or both) under, any provision
of any law, regulation or rule, or any order of, or any restriction imposed by,
any court or governmental agency applicable to the Investor; or (iii) require
from the Investor any notice to, declaration or filing with, or consent or
approval of, any governmental authority or other third party.
4.2 Investment Banking; Brokerage Fees. The Investor has not incurred or
----------------------------------
become liable for any investment banking fees, brokerage commissions, broker's
or finder's fees or similar compensation (exclusive of professional fees to
lawyers and accountants) in connection with the transactions contemplated by
this Agreement.
4.3 Organization and Corporate Power. The Investor is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified or registered to do business as a foreign
corporation (a) in each jurisdiction listed in Section 4.3 of the Disclosure
-----------------------------
Schedule and (b) in each jurisdiction in which the failure to be so duly
--------
qualified or registered has had, or would be reasonably likely to have, a
material adverse effect on the assets, liabilities, condition (financial or
other), business, results of operations or prospects of the Investor (an
"Investor Material Adverse Effect"). The Investor has all requisite power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement and the agreements contemplated hereby to which it is a
party and to carry out the transactions contemplated hereby and thereby. A copy
of the Investor's Certificate of Incorporation and Bylaws, each as amended and
supplemented to date, and which have been furnished to the Company by the
Investor, are correct and complete as of the date hereof, and the Investor is
not in violation of any term thereof. The Investor is not in violation of any
term or provision of any agreement, instrument, judgment, decree, order,
statute, rule or government regulation applicable to it or to which it is a
party, except for violations which, individually or in the aggregate, would not
have an Investor Material Adverse Effect.
4.4 SEC Reports. The Investor has timely filed all documents required to
-----------
be filed with the Securities and Exchange Commission (the "SEC") (collectively,
---
including all exhibits and schedules thereto and documents incorporated therein
by reference, the "SEC Reports"). As of their respective dates, (i) the SEC
-----------
Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act"), and the Securities Exchange Act
--------------
of 1934, as amended (including the rules and regulations promulgated thereunder,
the "Exchange Act"), as applicable, and (ii) none of the SEC Reports contained
------------
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
4.5 Investment. The Investor is acquiring the Acquired Shares for
----------
investment for its own account, and not with a view to any distribution thereof
in violation of the securities laws.
21
The Investor understands that such Acquired Shares have not been registered
under the Securities Act by reason of specific exemptions therefrom which depend
upon, among other things, the bona fide nature of the investment intent and the
accuracy of the Investor's representations as expressed herein. The Investor's
financial condition and investments are such that it is in a position to hold
such Acquired Shares for an indefinite period, bear the economic risks of the
investment and withstand the complete loss of the investment. The Investor has
extensive knowledge and experience in financial and business matters and has the
capability to evaluate the merits and risks of such Acquired Shares. The
Investor qualifies as an "accredited investor" as such term is defined in
Section 2(15) of the Securities Act and Regulation D promulgated thereunder. The
Investor acknowledges that the Acquired Shares must be held indefinitely unless
subsequently registered under the Securities Act or any applicable state
securities laws or unless exemptions from such registrations are available. The
Investor is aware of the provisions of Rule 144 promulgated under the Securities
Act which permit limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions.
SECTION 5. SEC CLOSING CONDITIONS AND DELIVERIES
The respective obligations of the Investor and the Company and Stockholders
to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent, as applicable; provided, however, that any condition
-----------------
precedent which is not fulfilled as a result of a party's act or failure to act
shall not terminate that party's obligations to consummate this Agreement and
the transactions contemplated hereby.
(a) Representations; Satisfaction of Conditions. The representations
-------------------------------------------
and warranties contained in this Agreement shall be true and correct on and as
of the Closing Date as though newly made at such time after giving effect to all
transactions contemplated hereby, including the Nycomed Acquisition. Each of
the conditions specified in this Section 5 shall have been satisfied or waived
in writing by the Investor or the Company, as applicable, and the Company and
Stockholders shall have furnished the Investor, and the Investor shall have
furnished the Company and Stockholders, with a certificate or certificates dated
as of the date of the Closing with respect to each of the foregoing.
(b) Authorization. The Board of Directors and the stockholders of the
-------------
Company and the Board of Directors of the Investor shall have duly adopted
resolutions in a form reasonably satisfactory to the other party, and shall have
taken all action necessary for the purpose of authorizing the Company and the
Investor, respectively, to consummate all of the transactions contemplated
hereby (including, without limitation with respect to the Company, the issuance
of the Acquired Shares and the Acquisition Financing) and each of the Investor
and the Company shall have received a certificate of the Directors of the other
such party setting forth a copy of such resolutions, the Certificate of
Incorporation and the By-laws of such party and such other matters as may be
reasonably requested by the other party.
22
(c) Nycomed Acquisition; Financing. The Company shall have entered
------------------------------
into, executed and delivered definitive agreements (the "Nycomed Acquisition
-------------------
Agreements") that set forth the terms and conditions of (i) the Nycomed
----------
Acquisition and (ii) the Company's obtaining a firm commitment from Key Bank for
a senior debt financing in the minimum amount of Thirty-Five Million Dollars
($35,000,000) as financing for that portion of the Nycomed Acquisition purchase
price not provided by the Purchase Price, each such agreement in form and
substance acceptable to the Investor in its sole discretion. There shall be no
unsatisfied conditions to close the transactions contemplated by the Nycomed
Acquisition Agreements.
(d) Approvals, Consents and Waivers. The Investor and the Company and
-------------------------------
the Stockholders shall have made all filings with and notifications of
governmental authorities, regulatory agencies and other entities required to be
made by such parties in connection with the execution and delivery of this
Agreement, the performance of the transactions contemplated hereby and the
contemplated operation of the business of the Company subsequent to the Closing
and each of the Investor and the Company shall have received copies of all
authorizations, waivers, consents and permits of the other party, in form and
substance reasonably satisfactory to it, including any and all notices, consents
and waivers required from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the commencement of the business of the
Company, the consummation of the transactions contemplated by this Agreement
and, with respect to the Company and the Stockholders, the Nycomed Acquisition
and to avoid a breach, default, termination, acceleration or modification of any
indenture, loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award as a result of, or in
connection with, the execution and performance of this Agreement and, with
respect to the Company and the Stockholders, the Nycomed Acquisition.
(e) Deliveries by the Parties. At the Closing, the Investor and the
-------------------------
Company and Stockholders shall have delivered, or shall have caused to be
delivered, to the other party or parties, all in form and substance satisfactory
to the recipient thereof, the following, as applicable:
(i) a wire transfer by the Investor to the Company of $15,000,000
as the purchase price for the Acquired Stock;
(ii) a Debenture Purchase Agreement executed by the Investor and
the Company and Stockholders, dated as of the Closing Date, in form and
substance acceptable to such parties;
(iii) a Stockholders' Agreement executed by the Investor and the
Company and Stockholders, dated as of the Closing Date, in form and
substance acceptable to such parties;
23
(iv) a Put/Call Agreement executed by the Investor and the
Company and Stockholders, dated as of the Closing Date, in form and
substance acceptable to such parties (the "Put/Call Agreement");
(v) certificates issued by (i) the Secretary of State of Delaware
certifying that each of the Company and the Investor, respectively, has
legal existence and is in good standing; and, with respect to the Company,
(ii) the Secretary of State (or similar authority) of each jurisdiction in
which the Company has qualified to do business as a foreign corporation (or
is required to be so qualified) as to such foreign qualification;
(vi) a Secretary's Certificate of each of the Investor and the
Company, as applicable, certifying (A) the names of the officers or
directors of each such entity authorized to sign this Agreement and the
other agreements, documents and instruments executed by the Investor and
the Company pursuant hereto, together with the true signatures of such
officers or directors; (B) copies of consent actions taken by the
respective Boards of Directors of the Company and the Investor and the
stockholders of the Company authorizing the appropriate officers or
directors of the Company and the Investor to execute and deliver this
Agreement and all agreements, documents and instruments executed by the
Company and the Investor pursuant hereto, and to consummate the
transactions contemplated hereby and thereby;
(vii) an opinion of Xxxxxxxx Xxxxxxxx & Xxxxx, counsel for the
Company, dated as of the Closing Date, in form and substance acceptable to
the Investor and an opinion of Xxxxxxx, Procter & Xxxx LLP, counsel for the
Investor, dated as of the Closing Date, in form and substance acceptable to
the Company; and
(viii) such other supporting documents and certificates as may be
reasonably requested and as may be required pursuant to this Agreement.
(f) Employment Agreements. Each of the persons listed on Schedule
---------------------
5(f) shall have executed and delivered to the Investor an Employment Agreement,
in form and substance acceptable to each such person and the Investor.
(g) No Material Adverse Change. Since the date of the Financial
--------------------------
Information Sheets, there shall have been no material adverse change in the
financial condition, properties, assets, liabilities, business, operations or
prospects of the Company or the Acquired Business, whether or not in the
ordinary course of business.
(h) All Proceedings Satisfactory. All corporate and other proceedings
----------------------------
taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the Investor.
24
(i) No Litigation, Violation or Injunction. No action or proceeding
--------------------------------------
by or before any court, administrative body or governmental agency shall have
been instituted or threatened which seeks to enjoin, restrain or prohibit, or
might result in damages in respect of, this Agreement or the complete
consummation of the transactions contemplated by this Agreement, including the
Nycomed Acquisition. No law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement, the complete consummation
of the transactions contemplated in this Agreement or the complete consummation
of the Nycomed Acquisition.
(j) Key Person Insurance. The Company shall have in place "key
--------------------
person" term life insurance policies of at least $1 million in the aggregate on
the life of Xxxx X. Xxxxxxx, which shall name the Company as beneficiary.
(k) Repayment of Affiliate Loans; No Bonuses. All accounts receivable
----------------------------------------
or loans receivable from any Person which is affiliated with the Company or any
of its directors, officers, employees or Stockholders shall have been repaid to
the Company.
SECTION 6. SEC SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TRANSACTION RELATED
INDEMNIFICATION
6.1 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations, warranties, covenants, and agreements of the Company, the
Stockholders and the Investor made in this Agreement, in the Disclosure Schedule
delivered to the Investor and all agreements, documents and instruments executed
and delivered in connection herewith (a) are material, shall be deemed to have
been relied upon by the party or parties to whom they are made, and shall
survive the Closing regardless of any investigation on the part of such party or
its representatives and (b) shall bind the parties' successors and assigns
(including, without limitation, any successor to the Company by way of
acquisition, merger or otherwise), whether so expressed or not, and, except as
otherwise provided in this Agreement, all such representations, warranties,
covenants and agreements shall inure to the benefit of the parties and their
respective successors and assigns and to their transferees of Acquired Shares,
whether so expressed or not. Notwithstanding the foregoing, the representations
and warranties contained in Section 2, Section 3 and Section 4 hereof shall
expire and terminate and be of no further force and effect after the date which
is twenty-four (24) months following the date hereof, except that any written
claim for breach thereof made prior to such expiration date and delivered to the
party against whom such indemnification is sought shall survive thereafter and,
as to any such claim, such applicable expiration will not effect the rights to
indemnification of the party making such claim; provided, however, that any such
-------- -------
written claim by the Investor with respect to a breach of the representations
and warranties of the Stockholders or the Company may (i) with respect to a
breach of the representations or warranties contained in the first two sentences
of Section 2.2 (authorization) and Section 2.4(a) (capitalization) or with
respect to fraud, intentional misrepresentation or a deliberate or willful
breach by the Company or any Stockholder (but only as applicable), be given at
any time and (ii) with respect to a breach of the representations or warranties
contained in Section 2.12 (tax matters)
25
and Section 2.20 (environmental matters) be given at any time prior to the
expiration of the applicable statute of limitations.
6.2 Transaction Related Indemnification. The Company, on its own behalf
-----------------------------------
and on behalf of its successors and assigns, and, with respect to the third
sentence of Section 2.11(a) above, the Stockholders, jointly and severally,
agrees to defend, indemnify and hold the Investor, its respective affiliates,
stockholders, directors, officers, employees and agents and each person who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
--------
Act"), (collectively, the "Investor Indemnified Parties" and, individually, an
--- ----------------------------
"Investor Indemnified Party") harmless from and against any and all damages,
--------------------------
liabilities, losses, Taxes, fines, penalties, reasonable costs and expenses
(including, without limitation, reasonable fees of counsel), as the same are
incurred, of any kind or nature whatsoever (whether or not arising out of third-
party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained or suffered by any such
Investor Indemnified Party ("Losses") (with any such Losses to be calculated
------
after giving effect to any insurance proceeds actually received by the
Investor), based upon, arising out of, by reason of or otherwise in respect of
or in connection with any breach of any representation or warranty made by the
Company or the Stockholders in Section 2 or Section 3 of this Agreement
(including, without limitation, in the Disclosure Schedule), or in any other
agreement, document or instrument executed in connection herewith or delivered
or furnished to the Investor hereunder.
6.3 Limitations on Indemnification. The Investor shall not be entitled to
------------------------------
receive any indemnification payments pursuant to Section 6.2 above until the
aggregate Losses for which indemnification would otherwise be available pursuant
to Section 6.2 equal $100,000 (the "Deductible"), whereupon the Investor shall
----------
be entitled to indemnification payments for all accumulated Losses (and not only
those Losses in excess of the Deductible). Notwithstanding anything herein to
the contrary, the maximum amount payable by the Company to all Investor
Indemnified Parties for Losses in respect of claims made by the Investor
Indemnified Parties for indemnification under Section 6.2 shall not exceed
$15,000,000; provided, however, that the Investor Indemnified Parties shall not
-----------------
be subject to any limitation pursuant to this Section 6.3 (including the
Deductible) or otherwise, and shall be entitled to dollar-for-dollar recovery
from the Company in respect of claims for indemnification from the Company for
Losses in connection with (i) fraud, intentional misrepresentation or a
deliberate or willful breach by any Stockholder or the Company of any of their
representations and warranties under this Agreement or in any agreement,
document or instrument executed and delivered by the Company or any Stockholder
pursuant hereto or (ii) the breach by the Company of any of the representations
or warranties contained in Section 2.2 (first two sentences only), Section
2.4(a), Section 2.11, Section 2.12 or Section 2.19, or by any Stockholder of any
of the representations or warranties contained in the third sentence Section
2.11 or in Section 3.1 (first two sentences only) or Section 3.2.
26
6.4 Notice; Payment of Losses; Defense of Claims.
--------------------------------------------
(a) A party which is entitled to indemnification under Section 6.2
(individually and collectively, an "Indemnified Party") shall give written
-----------------
notice thereof to the party required to provide such indemnification hereunder
(individually and collectively, an "Indemnifying Party") promptly after receipt
------------------
of any written claim by any third party and in any event not later than 30
business days after receipt of any such written claim (or not later than ten
(10) business days after the receipt of any such written claim in the event such
written claim is in the form of a formal complaint filed with a court of
competent jurisdiction and served on the Indemnified Party), specifying in
reasonable detail the amount, nature and source of the claim, and including
therewith copies of any notices or other documents received from third parties
with respect to such claim; provided, however, that failure to give such notice
-----------------
shall not limit the right of an Indemnified Party to recover indemnity or
reimbursement except to the extent that the Indemnifying Party suffers any
material damages as a result of such failure. The Indemnified Party shall also
provide the Indemnifying Party with such further information concerning any such
claims as the Indemnifying Party may reasonably request by written notice.
(b) Within 30 days after receiving notice of a claim for
indemnification or reimbursement, the Indemnifying Party shall, by written
notice to the Indemnified Party, either (i) concede or deny liability for the
claim in whole or in part, or (ii) in the case of a claim asserted by a third
party, advise that the matters set forth in the notice are, or will be, subject
to contest or legal proceedings not yet finally resolved. If the Indemnifying
Party concedes liability in whole or in part, it shall, within ten (10) business
days of such concession, pay the amount of the claim to the Indemnified Party to
the extent of the liability conceded. Any such payment shall be made in
immediately available funds equal to the amount of such claim so payable. If
the Indemnifying Party denies liability in whole or in part or advises that the
matters set forth in the notice are, or will be, subject to contest or legal
proceedings not yet finally resolved, then the Indemnifying Party shall make no
payment (except for the amount of any conceded liability payable as set forth
above) until the matter is resolved in accordance with this Agreement.
(c) In the case of any third party claim, if within 20 days after
receiving the notice described in the preceding paragraph (a) the Indemnifying
Party (i) gives written notice to the Indemnified Party stating that the
Indemnified Party would be liable under the provisions hereof for indemnity in
the amount of such claim if such claim were valid and that the Indemnifying
Party disputes and intends to defend against such claim, liability or expense at
the Indemnifying Party's own cost and expense and (ii) provides assurance
reasonably acceptable to such Indemnified Party that such indemnification will
be paid fully and promptly if required and such Indemnified Party will not incur
cost or expense during the proceeding, then counsel for the defense shall be
selected by the Indemnifying Party (subject to the consent of such Indemnified
Party which consent shall not be unreasonably withheld) and such Indemnified
Party shall not be required to make any payment with respect to such claim,
liability or expense as long as the Indemnifying Party is conducting a good
faith and diligent defense at its own expense; provided, however, that the
-----------------
assumption of defense of any such matters by the Indemnifying Party shall relate
solely to the claim, liability or expense that is subject or potentially subject
to indemnification.
27
If the Indemnifying Party assumes such defense in accordance with the preceding
sentence, it shall have the right, with the consent of such Indemnified Party,
which consent shall not be unreasonably withheld, to settle all indemnifiable
matters related to claims by third parties which are susceptible to being
settled provided the Indemnifying Party's obligation to indemnify such
Indemnified Party therefor will be fully satisfied by payment of money by the
Indemnifying Party pursuant to a settlement which includes a complete release of
such Indemnified Party. The Indemnifying Party shall keep such Indemnified Party
reasonably apprised of the status of the claim, liability or expense and any
resulting suit, proceeding or enforcement action, shall furnish such Indemnified
Party with all documents and information that such Indemnified Party shall
reasonably request and shall consult with such Indemnified Party prior to acting
on major matters, including settlement discussions. Notwithstanding anything
herein stated, such Indemnified Party shall at all times have the right to fully
participate in such defense at its own expense directly or through counsel;
provided, however, if the named parties to the action or proceeding include both
-----------------
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate under applicable standards of
professional conduct, the reasonable expense of separate counsel for such
Indemnified Party shall be paid by the Indemnifying Party provided that such
Indemnifying Party shall be obligated to pay for only one counsel in any
jurisdiction. If no such notice of intent to dispute and defend is given by the
Indemnifying Party, or if such diligent good faith defense is not being or
ceases to be conducted, such Indemnified Party shall, at the expense of the
Indemnifying Party, undertake the defense of (with counsel selected by such
Indemnified Party), and shall have the right to compromise or settle, such
claim, liability or expense (exercising reasonable business judgment). If such
claim, liability or expense is one that by its nature cannot be defended solely
by the Indemnifying Party, then such Indemnified Party shall make available all
information and assistance that the Indemnifying Party may reasonably request
and shall cooperate with the Indemnifying Party in such defense.
6.5 Limitation on Contribution and Certain Other Rights. Each Stockholder
---------------------------------------------------
hereby agrees that if, following the Closing, any payment is made by such
Stockholder, or otherwise becomes due from such Stockholder, pursuant to Section
6.2 in respect of any Losses (a "Loss Payment"), then that Stockholder shall
------------
have no rights against the Company, or any other stockholder, director, officer
or employee thereof (in their capacity as such), whether by reason of
contribution, indemnification, subrogation or otherwise, in respect of any such
Loss Payment, and shall not take any action against the Company or any such
Person with respect thereto.
SECTION 7. SEC COVENANTS OF THE COMPANY
The Company agrees that it shall comply with the following covenants from
and after the Closing so long as the Investor is a stockholder of the Company,
except as shall otherwise be expressly agreed pursuant to a written consent of
the Investor.
7.1 Financial Statements. The Company will maintain a system of accounts
--------------------
in accordance with generally accepted accounting principles, keep full and
complete financial records and furnish to the Investor the following: (a) within
30 days after the end of each fiscal year
28
commencing with the year ending December 31, 1999, all financial information
required by the Investor to be included in its financial statements on an annual
basis, and as soon as practicable thereafter a copy of the balance sheet of the
Company as of the end of such year, together with statements of income, retained
earnings and cash flows of the Company for such year, audited and certified by
independent public accountants of recognized national standing reasonably
satisfactory to the Directors of the Company, prepared in accordance with
generally accepted accounting principles consistently applied; (b) within 25
days after the end of each fiscal quarter commencing with the fiscal quarter
ending March 31, 2000, all financial information required by the Investor to be
included in its financial statements on a quarterly basis and for the applicable
year to date, and as soon as practicable thereafter a copy of the unaudited
balance sheet of the Company as of the end of such fiscal quarter and the
unaudited statements of income and cash flows for the Company for such fiscal
quarter and for the year to date, such information provided under (a) and (b) to
set forth in comparative form the corresponding figures for the prior fiscal
period and to include a brief written discussion and analysis by management of
the results shown therein; (c) within 30 days after the end of each month
commencing with the month ending December 31, 1999, a copy of the unaudited
balance sheet of the Company as of the end of such month and the unaudited
statement of income for the Company for such month and for the year to date and
(d) such other financial information the Investor may reasonably request.
7.2 Budget and Operating Forecast; Inspection.
-----------------------------------------
(a) The Company will prepare and submit to the directors of the
Company and the Investor an annual budget and plan for each fiscal year of the
Company at least 30 days prior to the beginning of such fiscal year, together
with management's written discussion and analysis of such budget and plan. The
budget shall be accepted as the budget for such fiscal year when it has been
approved by a majority of the directors of the Company and, thereupon, a copy of
such budget as so approved promptly shall be sent to the Investor. The Company
shall review the budget periodically and shall advise the directors and the
Investor of all changes therein and all material deviations therefrom.
(b) The Company will, upon reasonable prior notice to the Company,
permit authorized representatives (including, without limitation, accountants
and legal counsel) of the Investor to visit and inspect any of the properties of
the Company, including its books of account (and to make copies thereof and take
extracts therefrom), and to discuss its affairs, finances and accounts with its
officers, administrative employees and independent accountants, all at such
reasonable times and as often as may be reasonably requested by the Investor.
The foregoing shall be in addition to, and not in lieu of, the Investor's rights
under applicable law.
7.3 Directors; Meetings; Indemnification. The Company's Board of
------------------------------------
Directors shall initially consist of five (5) members, two of which shall be
chosen by the Investor and the remaining three of which shall be chosen by the
Stockholders, provided however that one of the Directors chosen by the
Stockholders shall be an individual who is not and has never been an employee,
consultant or officer of the Company or Nycomed or any holder of any securities
of the Company or Nycomed or any of their respective
29
affiliates or a member of their respective immediate families, if applicable (an
"Independent Director"). The Company will ensure that meetings of its Directors
are held at least four (4) times each year at intervals of not more than four
(4) months, with adequate advance notice given to all Directors. The Company
shall pay or provide to each Director of the Company who is not an employee of
the Company or the Investor, as compensation for such director's services as a
director of the Company, an equal amount of fees, options and other
compensation, and shall pay or reimburse each such Director for his reasonable
travel expenses incurred in connection with attending meetings or other
functions of the Directors and committees thereof and for the reasonable costs
incurred by him in connection with any other work on behalf of the Company as
its director. The Articles of Incorporation and/or By-laws of the Company will
in respect of all times during which any Director nominated by the Investor (an
"Investor Nominee") serves as a Director of the Company provide for exculpation
----------------
and indemnification of the Directors and limitations on the liability of the
Directors to the fullest extent permitted under applicable state law, and the
Company shall, as promptly as practicable following the date hereof, obtain and
maintain a reasonable amount of liability insurance coverage (but no less than
$1,000,000 coverage per occurrence) for the Directors and officers on terms
satisfactory to the Investor's Nominee, covering, among other things, violations
of federal or state securities laws.
7.4 Conduct of Business. The Company will continue to engage principally
-------------------
in the business now conducted by the Acquired Business or a business or
businesses similar thereto or reasonably compatible therewith. The Company will
keep in full force and effect its existence as a corporation.
7.5 Payment of Taxes, Compliance with Laws, etc. The Company will pay and
-------------------------------------------
discharge all lawful Taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that the Company shall not be required to pay
-----------------
and discharge any such Tax, assessment, charge, levy or claim so long as the
validity thereof is being contested by the Company in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
The Company will materially comply with all applicable laws and regulations in
the conduct of its business, including, without limitation, (i) all applicable
federal and state securities laws in connection with the issuance of any equity
interest and (ii) all Environmental Laws as defined in Section 2.19 above.
7.6 Insurance. The Company will keep its insurable properties insured,
---------
upon reasonable business terms, by financially sound and reputable insurers
against liability, and the perils of casualty, fire and extended coverage in
amounts of coverage at least equal to those customarily maintained by companies
in the same or similar business as the Company and of the same or similar size
as the Company. The Company will also maintain with such insurers insurance
against other hazards and risks and liability to Persons and property to the
extent and in the manner customary for companies engaged in the same or similar
business.
30
7.7 Key Person Insurance. The Company will use its best efforts to
--------------------
maintain in effect after the Closing the "key person" term life insurance
policies referred to in Section 5(k) hereof.
7.8 Maintenance of Properties. The Company will maintain all properties
-------------------------
used or useful in the conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted.
7.9 Material Adverse Changes. The Company shall promptly advise the
------------------------
Investor of any event which represents or is reasonably likely to result in a
material adverse change in the condition (financial or otherwise), business or
prospects of the Company, and of each suit or proceeding commenced or threatened
against the Company which, if adversely determined, in the reasonable judgment
of the Company, is reasonably likely to have a Material Adverse Effect. The
Company shall promptly advise the Investor of any recall of the Company's
products and services, any other adverse developments relating to the Company's
products and services, and any suit or proceeding commenced or threatened which
is related to the Company's products and services. The Company shall promptly
provide written notice to the Investor of (i) any default or alleged default
under the Nycomed Acquisition Agreements and (ii) any claim made against the
Company or any Stockholder under the Nycomed Acquisition Agreements, which
notice shall describe such default, alleged default or claim with specificity.
7.10 Management Compensation. Subject to the Stockholder's employment
-----------------------
contracts entered into in connection with the Closing, all compensation
decisions for key management of the Company (including options and grants,
employment agreements, bonuses and phantom equity awards) shall be made by a
compensation committee to be appointed by the Company's Board of Directors (the
"Compensation Committee"); provided, further, that all decisions regarding (a)
---------------------- -----------------
the annual compensation of any Stockholder or any other employee of the Company
which is proposed to exceed $200,000 or (b), subject to any option grants in
place as of the Closing, the granting of any options, equity awards or other
similar rights shall be made by the Compensation Committee, including in each
case, the affirmative vote of the Investor's Nominees. Compensation paid by the
Company to its management will be comparable to compensation paid to management
in companies in the same or similar businesses of similar size and maturity and
with comparable financial performance. Notwithstanding the foregoing, subject
to the Stockholder's employment contracts entered into in connection with the
Closing, all employment agreements providing for a term of employment shall be
subject to the prior review and approval of the Compensation Committee.
7.11 Affiliate Transactions. All transactions and agreements (including
----------------------
without limitation any amendment of an existing agreement) by and between the
Company and any stockholder, director, officer, or key employee of the Company
or any person controlling, controlled by, under common control with or otherwise
affiliated with, or a member of the family of, any such person, shall be
conducted on an arm's length basis, shall be on terms and conditions no less
favorable to the Company than could be obtained from unrelated Persons, and
shall be approved in advance in writing by a majority of the Directors after
full disclosure of the terms thereof.
31
7.12 Non-Competition and Related Agreements. Subject to the Stockholder's
--------------------------------------
employment contracts entered into in connection with the Closing, the Company
shall have entered into a non-competition agreement with each of the individuals
identified on Schedule 7.12 hereto, in form and substance acceptable to the
Investor in its sole discretion.
7.13 Enforcement of Rights. The Company will diligently enforce all of its
---------------------
rights under each of, and will not amend any of, the agreements referred to in
Section 5(e) and Section 7.12 hereof. The Company will not effect any transfer
of any of the outstanding securities of the Company on the record books of the
Company unless such transfer is made in accordance with the terms of this
Agreement and the Stockholders' Agreement. The Company will not waive or release
any rights under, or consent to the amendment of, any such agreement without the
written consent of the Investor.
7.14 Significant Transactions. So long as the Investor is a stockholder of
------------------------
the Company, the Company shall not, without first having obtained the
affirmative vote or written consent of the Investor (and in the case of (c)
below the affirmative vote or written consent of the holder or holders of at
least two-thirds (2/3) of the outstanding voting securities of the Company
including the Investor):
(a) declare or pay any dividends or make any distributions of cash,
property or securities with respect to any Common Stock or any other class of
stock, or directly or indirectly redeem, purchase or otherwise acquire for
consideration (or pay into or set aside for a sinking fund for such purpose) any
shares of Common Stock or any other class of stock, or directly or indirectly
redeem, purchase or make any payments with respect to any equity appreciation
rights, phantom rights or similar rights;
(b) authorize or issue, or obligate itself to issue, any convertible
debt or other debt with any equity participation or, except as otherwise
contemplated by the Put/Call Agreement or the Debenture Purchase Agreement, any
Common Stock or any other equity security senior to or on a parity with the
Common Stock as to liquidation preferences, conversion, redemptions or
distribution rights or with any special voting rights, or create, incur, assume,
become liable for, or permit to exist any other indebtedness for borrowed money
or pledge or hypothecate any assets;
(c) permit any subsidiary of the Company to issue any equity
securities, other than to the Company;
(d) create, incur, assume, become liable for, or permit to exist any
indebtedness for borrowed money, or pledge or hypothecate any assets, except as
set forth on Section 7.14(d) of the Disclosure Schedule;
------------------------------------------
(e) sell, lease or otherwise dispose of (whether in one transaction or
a series of related transactions) all or substantially all of its assets, or
consent to or facilitate the sale of all or a majority of its outstanding
membership interests, or merge with or into, or consolidate with, another
entity;
32
(f) acquire any other corporation or business concern, whether by
acquisition of assets, capital stock or otherwise, and whether in consideration
of the payment of cash, the issuance of equity securities or otherwise;
(g) materially alter the business plan of the Company as currently
proposed;
(h) make any material investment in another business entity, enter
into any joint venture or similar arrangement, or make or permit any loans or
advances to, or guarantees for the benefit of, any Person, except for reasonable
advances to employees in the ordinary course of business;
(i) liquidate, dissolve or wind up its operations, or effect a
recapitalization or reorganization in any form (including, without limitation,
any reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes or any reincorporation transaction);
(j) amend the Articles of Incorporation or By-laws of the Company, or
enter into or become subject to any agreement or arrangement (including, without
limitation, by way of amendment or modification), or take any other action, that
eliminates, amends, restricts or otherwise adversely affects the rights of the
Investor or the Company's ability to perform its obligations hereunder, under
the Certificate of Incorporation or By-laws of the Company or under any of the
agreements executed in connection herewith;
(k) adopt any new or amend any existing equity participation plan
(including, without limitation, an equity participation plan), employee equity
ownership plan or phantom equity or similar plan;
(l) enter into any agreement to do any of the foregoing; or
(m) consummate any public offering of securities.
7.15 Election of Directors. Subject to the requirements of Section 2 of
---------------------
the Stockholders' Agreement, the Company shall take proper action on the day of
the Closing to enlarge the size of the Board of Directors to five (5) members
and to effect the election as Director of the Company of Xxxxxx X. X'Xxxxx and
Xxxxxx X. Xxxxx (each, an "Investor's Nominee"). One Investor's Nominee shall
------------------
also be appointed as a Member of each of the Compensation Committee and the
audit committee of the Company's Board of Directors (the "Audit Committee"),
---------------
each of which shall have three (3) members and shall be comprised of the
Investor's Nominee and two (2) members designated by the Stockholders, one (1)
of whom shall be an Independent Director.
7.16 Company Indemnification.
-----------------------
(a) Without limitation of any other provision of this Agreement, the
Company agrees to defend, indemnify and hold each Investor Indemnified Party
harmless from and against
33
any and all Losses based upon, arising out of, by reason of or otherwise in
respect of or in connection with (i) any breach of any covenant or agreement
made by the Company in this Section 7 or in any agreement executed in connection
herewith, or (ii) any third party or governmental claims relating in any way to
such Investor Indemnified Party's status as a security holder, creditor,
director, agent, representative or controlling person of the Company or
otherwise relating to such Investor Indemnified Party's involvement with the
Company (including, without limitation, any and all Losses under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, which relate directly or indirectly to the
registration, purchase, sale or ownership of any securities of the Company or to
any fiduciary obligation owed with respect thereto), including, without
limitation, in connection with any third party or governmental action or claim
relating to any action taken or omitted to be taken or alleged to have been
taken or omitted to have been taken by any Investor Indemnified Party as
security holder, director, agent, representative or controlling person of the
Company or otherwise, alleging so-called control person liability or securities
law liability; provided, however, that the Company will not be liable to the
-----------------
extent that such Losses arise from and are based on (A) an untrue statement or
omission or alleged untrue statement or omission in a registration statement or
prospectus which is made in reliance on and in conformity with written
information furnished to the Company by or on behalf of such Investor
Indemnified Party, or (B) conduct by an Investor Indemnified Party which
constitutes fraud, willful misconduct or malfeasance.
(b) If the indemnification provided for in Section 7.16(a) above for
any reason is held by a court of competent jurisdiction to be unavailable to an
Investor Indemnified Party in respect of any Losses referred to therein, then
the Company, in lieu of indemnifying such Investor Indemnified Party thereunder,
shall contribute to the amount paid or payable by such Investor Indemnified
Party as a result of such Losses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Investor, or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Investor in connection with the action or inaction which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Investor shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Investor and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(c) Each of the Company and the Investor agrees that it would not be
just and equitable if contribution pursuant to Section 7.16(b) were determined
by pro rata or per capita allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph.
34
SECTION 8. SEC TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated any time prior to the
-----------
Closing Date as follows:
(a) With the mutual consent of the Company and Investor;
(b) By either the Company or the Investor, if the Closing has not
occurred on or before December 31, 1999 (the "Closing Deadline");
----------------
(c) By the Investor, if there has been a material misrepresentation or
breach of warranty on the part of either the Company or the Stockholders in the
representations and warranties contained herein or a material breach of
covenants on the part of either the Company or the Stockholders and the same has
not been cured within 30 days after notice thereof. In the event of any
termination pursuant to this Section 8.1(c), written notice setting forth the
reasons therefor shall forthwith be given by the Investor to the Company.
(d) By the Company if there has been a material misrepresentation or
breach of warranty on the part of the Investor in the representations and
warranties contained herein or a material breach of covenants on the part of the
Investor and the same has not been cured within 30 days after notice thereof.
In the event of any termination pursuant to this Section 8.1(d), written notice
setting forth the reasons therefor shall forthwith be given by the Company to
the Investor.
Notwithstanding anything herein to the contrary, the right to terminate
this Agreement under Section 8.1 shall not be available to any party to the
extent the failure of such party, respectively, to fulfill any of its
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date (as a result, for
example, of an action or failure to act causing a failure of a condition
precedent).
8.2 Effect of Termination. All obligations of the parties hereunder shall
---------------------
cease upon any termination pursuant to Section 8.1, provided, however, that (i)
the provisions of this Section 8 hereof shall survive any termination of this
Agreement in any event; (ii) nothing herein shall relieve any party from any
liability for a material error or omission in any of its representations or
warranties contained herein or a material failure to comply with any of its
covenants, conditions or agreements contained herein, provided, further, that no
-----------------
party shall have any liability for any such material error or omission or
failure to comply other than for willful errors or omissions or failures to
comply; and (iii) any party may proceed as further set forth in Section 8.3
below.
8.3 Right to Proceed. Notwithstanding anything in this Agreement to the
----------------
contrary, if any condition set forth in Section 5 hereof which is precedent to
the Investor's obligations hereunder has not been satisfied, the Investor shall
have the right to proceed with the transactions contemplated hereby, and if any
of the conditions specified in Section 5 hereof which is precedent to the
obligations of the Company or Stockholders hereunder has not been satisfied, the
Company or Stockholder, as applicable, shall have the right to proceed with the
transactions contemplated hereby without waiving any rights hereunder.
35
SECTION 9. SEC GENERAL
9.1 Waivers and Consents; Amendments.
--------------------------------
(a) For the purposes of this Agreement and all agreements, documents
and instruments executed pursuant hereto, no course of dealing between or among
any of the parties hereto and no delay on the part of any party hereto in
exercising any rights hereunder or thereunder shall operate as a waiver of the
rights hereof and thereof. No covenant or provision hereof may be waived
otherwise than by a written instrument signed by the party or parties so waiving
such covenant or other provision as contemplated herein expressly referring to
the covenant or provision to be waived.
(b) No amendment to this Agreement may be made without the written
consent of the Company, Stockholders holding a majority of the outstanding
Common Stock and the Investor, except that an amendment of Section 7 shall only
require the written consent of the Company and the Investor. Any such amendment
shall be in writing, shall specifically reference this Agreement and shall be
signed by all required parties.
9.2 Governing Law. This Agreement shall be deemed to be a contract made
-------------
under, and shall be construed in accordance with, the laws of the State of New
York, without giving effect to conflict of laws principles thereof.
9.3 Section Headings and Gender; Construction. The descriptive headings
-----------------------------------------
in this Agreement have been inserted for convenience only and shall not be
deemed to limit or otherwise affect the construction of any provision thereof or
hereof. The use in this Agreement of the masculine pronoun in reference to a
party hereto shall be deemed to include the feminine or neuter, and vice versa,
as the context may require. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other agreements, documents
and instruments executed and delivered in connection herewith with counsel
sophisticated in investment transactions. In the event an ambiguity or question
of intent or interpretation arises, this Agreement and the agreements, documents
and instruments executed and delivered in connection herewith shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement and the agreements, documents and instruments
executed and delivered in connection herewith.
9.4 Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
9.5 Notices and Demands. Any notice or demand which is required or
-------------------
provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy or other method of facsimile, or five days after being
36
sent by certified or registered mail, postage and charges prepaid, return
receipt requested, or one day after being sent by overnight delivery providing
receipt of delivery, to the following addresses, if to the Company, Organichem
Corporation, 00 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000, Attention:
President, or at any other address designated by the Company to the Investor in
writing; if to a Stockholder, to the address of such Stockholder set forth in
Section 9.5 of the Disclosure Schedule or at any other address designated by the
--------------------------------------
Stockholders to the Investor and the Company in writing; if to the Investor,
Albany Molecular Research, Inc., 00 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: Chief Financial Officer, or at any other address designated by the
Investor to the Company and the Stockholders in writing.
9.6 Dispute Resolution.
------------------
(a) All disputes, claims, or controversies arising out of or relating
to (i) this Agreement or the negotiation, validity or performance hereof or the
transactions contemplated hereby and thereby, (ii) the Investor's ongoing
investment in the Company, that are not resolved by mutual agreement shall be
resolved solely and exclusively by binding arbitration to be conducted before
the American Arbitration Association (the "Arbitrator"). The arbitration shall
----------
be held in Albany, New York and shall be conducted in accordance with the rules
and regulations promulgated by the commercial arbitration rules of the American
Arbitration Association unless specifically modified herein.
(b) The parties covenant and agree that the arbitration shall commence
within 180 days of the date on which a written demand for arbitration is filed
by any party hereto. In connection with the arbitration proceeding, the
arbitrator shall have the power to order the production of documents by each
party and any third-party witnesses. In addition, each party may take up to
three depositions as of right, and the arbitrator may in his or her discretion
allow additional depositions upon good cause shown by the moving party.
However, the arbitrator shall not have the power to order the answering of
interrogatories or the response to requests for admission. In connection with
any arbitration, each party shall provide to the other, no later than seven (7)
business days before the date of the arbitration, the identity of all persons
that may testify at the arbitration and a copy of all documents that may be
introduced at the arbitration or considered or used by a party's witness or
expert. The arbitrator's decision and award shall be made and delivered within
six (6) months of the selection of the arbitrator. The arbitrator's decision
shall set forth a reasoned basis for any award of damages or finding of
liability. The arbitrator shall not have power to award damages in excess of
actual compensatory damages and shall not multiply actual damages or award
punitive damages or any other damages that are specifically excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.
(c) The parties covenant and agree that they will participate in the
arbitration in good faith and that they will, except as provided below, (i) bear
their own attorneys' fees, costs and expenses in connection with the
arbitration, and (ii) share equally in the fees and expenses charged by the
Arbitrator. The arbitrator may in his or her discretion assess costs and
expenses (including the reasonable legal fees and expenses of the prevailing
party) against any party to a
37
proceeding. Any party unsuccessfully refusing to comply with an order of the
arbitrator shall be liable for costs and expenses, including attorneys' fees,
incurred by the other party in enforcing the award. This Section 9.6 applies
equally to requests for temporary, preliminary or permanent injunctive relief,
except that in the case of temporary or preliminary injunctive relief any party
may proceed in a court of appropriate jurisdiction without prior arbitration for
the purpose of avoiding immediate and irreparable harm or to enforce its rights
under any non-competition covenants.
9.7 Consent to Jurisdiction. Except as provided in Section 9.6(c) above,
-----------------------
each of the parties hereto irrevocably and unconditionally consents to the
exclusive jurisdiction of the Arbitrator to resolve all disputes, claims or
controversies arising out of or relating to (i) this Agreement, the
Stockholders' Agreement or any other agreement executed and delivered pursuant
to this Agreement or the negotiation, validity or performance hereof and thereof
or the transactions contemplated hereby and thereby or the Investor's ongoing
investment in the Company, and further consents to the sole and exclusive
jurisdiction of the courts of the State of New York for the purposes of
enforcing the arbitration provisions of Section 9.6 of this Agreement. Each
party further irrevocably waives any objection to proceeding before the
Arbitrator based upon lack of personal jurisdiction or to the laying of venue
and further irrevocably and unconditionally waives and agrees not to make a
claim in any court that arbitration before the Arbitrator has been brought in an
inconvenient forum. Each of the parties hereto hereby consents to service of
process by certified mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail is made for the express benefit of
the other parties hereto.
9.8 Remedies; Severability. Notwithstanding Sections 9.6 and 9.7 above,
----------------------
it is specifically understood and agreed that any breach of the provisions of
this Agreement, the Stockholders' Agreement or any other agreement executed and
delivered pursuant to this Agreement, or of the provisions of the Certificate of
Incorporation, as amended to date, by any Person subject hereto will result in
irreparable injury to the other parties hereto, that the remedy at law alone
will be an inadequate remedy for such breach, and that, in addition to any other
remedies which they may have, such other parties may enforce their respective
rights by actions for specific performance (to the extent permitted by law).
The Company may refuse to recognize any unauthorized transferee as one of its
stockholders for any purpose, including, without limitation, for purposes of
dividend and voting rights, until the relevant party or parties have complied
with all applicable provisions of this Agreement. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be deemed prohibited or invalid under such applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement, provided such partial invalidity
shall not materially defeat the intent of this Agreement.
9.9 Integration. This Agreement, including the exhibits, documents and
-----------
instruments referred to herein or therein, constitutes the entire agreement, and
supersedes all other prior
38
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, including, without limitation, the
provisions of any term sheet or letter of intent between the parties hereto in
respect of the transactions contemplated herein, which provisions of the term
sheet or letter of intent shall be completely superseded by the representations,
warranties, covenants and agreements of the Company contained herein.
9.10 Assignability; Binding Agreement. This Agreement may not be assigned
--------------------------------
by any party hereto without the prior written consent of each other party
hereto. This Agreement (including without limitation the provisions of Section
6) shall be binding upon and enforceable by, and shall inure to the benefit of,
the parties hereto and their respective successors, heirs, executors,
administrators and permitted assigns, and no others. Notwithstanding the
foregoing, nothing in this Agreement is intended to give any Person not named
herein the benefit of any legal or equitable right, remedy or claim under this
Agreement, except as expressly provided herein.
9.11 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "Affiliate" of a person shall mean (i) with respect to a person,
any Member of such person's family (including any child, step-child, parent,
step-parent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law); (ii) with respect to an
entity, any officer, director, stockholder, partner or investor in such entity
or of or in any affiliate of such entity; and (iii) with respect to a Person or
entity, any Person or entity which directly or indirectly controls, is
controlled by, or is under common control with such Person or entity;
(b) "Company's knowledge" (including the term "knowledge of the
Company" and similar expressions) means (i) knowledge of the officers or
directors of the Company or the Stockholders and (ii) knowledge that any such
individual could be expected to have or obtain in the course of conducting a
reasonable investigation concerning the applicable matter;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of securities, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "Person" means any individual or any corporation, partnership,
association, trust, unincorporated organization or other entity; and
(e) "Subsidiary" of a Person means any corporation more than fifty
percent (50%) of whose outstanding voting securities, or any partnership,
limited liability company joint venture or other entity more than fifty percent
(50%) of whose total equity interest, is directly or indirectly owned by such
Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, the parties have executed this Agreement or have caused
this Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
COMPANY: ORGANICHEM CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
STOCKHOLDERS:
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxxx XxXxxxxx
-----------------------------------
Xxxxxxx XxXxxxxx
/s/ Xxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxx
/s/ Xxxxxxxx Xxxxx
-----------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxxx
INVESTOR: ALBANY MOLECULAR RESEARCH, INC.
By: /s/ Xxxxxx X. X'Xxxxx
-------------------------------
Name: Xxxxxx X. X'Xxxxx, Ph.D.
Title: Chairman and Chief Executive Officer
S-1
