EXHIBIT 10.53
ASSET PURCHASE AGREEMENT
BETWEEN
NEXGEN BACTERIUM INC.
A PANAMANIAN COMPANY
("Seller")
and
THE BIO BALANCE CORP.,
a Delaware corporation
("Buyer"),
a wholly owned subsidiary of
New York Health Care, Inc. ("NYHC")
Dated as of August 11, 2003
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TABLE OF CONTENTS
Recital 5
Article 1. SALE OF ASSETS; . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2 Complete Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3. No Assumption of Liabilities . . . . . . . . . . . . . . . . . . . 6
Article 2. PAYMENT AND BUYBACK RIGHT . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Article 3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Article 4. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . . . . 6
4.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . 6
4.2 Power and Authorization . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Title to Assets; Intellectual Property . . . . . . . . . . . . . . 6
4.4 Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Shareholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Governmental Authorizations and Regulations . . . . . . . . . . . . 8
4.8 Manufacturing and Technology Rights . . . . . . . . . . . . . . . . 8
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.10 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Article 5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . 9
5.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . 9
5.2 Power; Authorization . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Shares Validly Issued . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 10
Article 6. CLOSING CONDITIONS OF SELLER . . . . . . . . . . . . . . . . . . . . 10
6.1 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 License Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
Article 7. CLOSING CONDITIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . 10
7.1 Satisfactory Due Diligence; Material Adverse Change . . . . . . . . 10
7.2 Consents, Approvals and Waivers . . . . . . . . . . . . . . . . . . 11
7.3 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . 11
Article 8 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Seller Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2 Buyer Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Indemnification Claims . . . . . . . . . . . . . . . . . . . . . . 12
8.4 Defense of Third Party Actions . . . . . . . . . . . . . . . . . . 12
8.5 Survival of Representations and Warranties . . . . . . . . . . . . 13
8.6 Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article 9. POST-CLOSING COVENANTS AND RESTRICTIONS . . . . . . . . . . . . . . 13
9.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.3 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.4 Lock-Up Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.5 Legend on Stock Certificate . . . . . . . . . . . . . . . . . . . . 14
Article 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.2 Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . . 15
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.4 Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.8 Title and Headings . . . . . . . . . . . . . . . . . . . . . . . . 16
10.9 Successor and Assigns . . . . . . . . . . . . . . . . . . . . . . . 16
10.10 Rights of Third Parties . . . . . . . . . . . . . . . . . . . . . 16
10.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.12 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . 16
10.13 Disclosure of Information . . . . . . . . . . . . . . . . . . . . 16
..
EXHIBITS . . . . . . . . . . . . . . . . . .
Exhibit A Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit B Confidentiality Agreements . . . . . . . . . . . . . . . . . . 19
Exhibit C Legal Opinions of Counsel to Seller . . . . . . . . . . . . . 20
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of August 11, 2003
(the "Effective Date") by and between NexGen Bacterium Inc., a Panamanian
company ("Seller"); and The Bio Balance Corp., a Delaware corporation ("Buyer")
which is a wholly-owned subsidiary of New York Health Care, Inc. ("NYHC").
RECITALS
A. The Seller is engaged in the research and/or development and/or promotion
and/or marketing and/or sale of (i) probiotic bacteria; (ii) live microbial
food supplements ("Supplement") and/or the technology for their manufacture
and/or preservation; (iii) novel probiotic bacterial strains of Bacillus
subtilis HE and Bacillus licheniformis, including, in particular, ATCC
deposited strains PTA-5310 and PTA-5311, which exhibit superior probiotic
activity as compared to Biosporin, pharmaceutical compositions, foodstuff
and feedstuff containing same and use thereof in the treatment of diseases
and disorders which may benefit from probiotic treatment as well as use
thereof as pharmaceutical carriers; ((i)-(iii) collectively, the
"Technology").
B. The Seller claims and represents that the Supplement benefits the health
and wellbeing of humans by restoring and/or improving intestinal microbial
balance.
C. The Supplement is not currently being manufactured for commercial purposes
but is available in limited quantities for testing and other research
purposes by the Seller under the laboratory name "BSL Plus".
D. The Seller has entered into this Agreement with the Buyer, pursuant to
which all rights and interest in and/or related to the Technology, as well
as all other associated, ancillary and derivative rights shall be sold and
transferred to Buyer, subject to the terms and conditions herein contained.
AGREEMENT
NOW THEREFORE the parties to this Agreement, hereby agree as follows:
ARTICLE 1. SALE OF ASSETS
1.1 PURCHASE AND SALE. Subject to the terms and conditions contained herein,
Buyer agrees to buy and Seller agrees to sell those certain tangible and
intangible assets, contracts, rights and properties, including without
limitation, the Technology and related Intellectual Property Rights (as defined
in section 4.3.1 below), all as described in Exhibit A to this Agreement
(collectively, the "Assets").
1.2 COMPLETE TRANSFER. Seller expressly agrees that the sale of the Assets
under this Agreement constitutes a complete transfer of all of its rights, title
and
interest with respect to the Assets, and that Seller reserves no rights to
license, manufacture, market or otherwise transfer the Assets.
1.3 NO ASSUMPTION OF LIABILITIES. This Agreement does not transfer, Buyer
does
not assume, and Buyer expressly disclaims any and all liabilities, costs, debts,
claims and obligations of Seller relating to the Assets or otherwise. Buyer
shall have no obligation with respect to any obligations of Seller, whether such
obligations arose prior or subsequent to the Closing Date.
ARTICLE 2. PAYMENT AND BUYBACK RIGHT.
2.1 PURCHASE PRICE. Upon the terms and subject to the conditions herein
contained, in
reliance upon the representations, warranties and agreements of the Seller as
herein contained, and in consideration of the sale, assignment, transfer and
delivery to the Buyer of the Assets, the Buyer will, upon the closing as set
forth in Article 3, deliver to Seller stock certificates representing an
aggregate of 1,000,000 shares of unregistered common stock of NYHC (the
"Shares") as well as the sum of $250,000 (collectively, the "Purchase Price" or
the "Consideration").
2.2 TAXES. Seller shall be responsible for any and all sales or other
transaction
taxes, sales, income, capital gains, duties and other similar charges payable in
connection with the sale of the Assets or the transactions and payments
contemplated hereby.
ARTICLE 3. CLOSING.
3.1 CLOSING DATE. Subject to the fulfillment of the closing conditions as
set forth in
articles 6 and 7 below, the closing of the transactions contemplated herein (the
"Closing") shall be held at the offices of Buyer's attorney on August 11, 2003.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
4.1 ORGANIZATION AND STANDING. Seller represents that it is a
corporation organized, validly existing and in good standing under the laws of
Panama.
4.2 POWER AND AUTHORIZATION. Seller has all requisite legal power and
authority to enter into and perform this Agreement in accordance with its terms.
The execution and delivery of this Agreement and the transactions contemplated
hereby have been validly and duly authorized by all necessary corporate action
and no further authorization or approval, whether from directors or shareholders
of any corporate parties of Seller, or governmental bodies or otherwise, is
necessary to enable Seller to enter into and perform the same; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
4.3 TITLE TO ASSETS; INTELLECTUAL PROPERTY.
4.3.1 GOOD TITLE. Seller has good and marketable title in and to all of the
Assets including any patents, patent applications, service marks, trade names,
trademarks, trademark applications, copyrights, copyright applications, trade
secrets, know-how, data or other proprietary or intellectual property rights
included in the Assets (collectively, "Intellectual Property Rights"). The
Intellectual Property Rights are not subject to any mortgage, pledge, lien,
lease, claim, encumbrance, charge, security interest, royalty obligation or
other interest or claim of any kind or nature whatsoever, and Seller does not
license any component thereof from a third party. There are no material
agreements or arrangements between Seller and any third party which are
reasonably likely to have a material effect upon Seller's title to and other
rights respecting the Assets. Seller has the sole right to bring actions for
infringement of any of the Intellectual Property Rights included in the Assets.
To the best of Seller's knowledge, there has been no unauthorized use,
infringement or misappropriation of any of the Intellectual Property Rights.
4.3.2 EMPLOYEES.
The Assets do not include any inventions of any of Seller's employees or
consultants made or owned prior to their appointment by Seller. All current or
former employees and consultants have assigned in writing all of their rights in
the Intellectual Property Rights related to the Assets to Seller. No current
or former employee or consultant of Seller owns or has claimed an interest in
any Intellectual Property Rights related to the Assets or, to the best of
Seller's knowledge, any other Intellectual Property Rights directly or
indirectly competitive with those related to the Assets.
4.3.3 PROTECTION OF OWNERSHIP INTEREST. Seller has taken and will take all
reasonable security measures to protect the secrecy, confidentiality and value
of all Intellectual Property Rights transferred in accordance with this
Agreement. Seller has not taken any action or, to its knowledge, failed to take
an action that directly or indirectly caused the proprietary information
contained in the Assets to enter the public domain or in any way affected its
value or Seller's absolute and unconditional ownership thereof. None of the
Intellectual Property Rights is subject to escrow and none of such rights has
been disclosed to any third party.
4.3.4 NO LIMITATIONS ON ASSETS. With respect to the transfer of rights in
and to the Assets under this Agreement, Buyer shall be subject to no
limitations, obligations or restrictions with regard to the sale, license,
distribution or other transfer or exploitation of the Assets, whether in the
form transferred to Buyer or after modification. All rights to any tangible or
intangible property material (including, but not limited to, all Intellectual
Property Rights in the Assets) to the Assets and used in Seller's business as
presently conducted or currently planned by Seller, or as conducted by any prior
owner of any portion of the Assets, have been validly transferred to Seller free
of any adverse claims by any such predecessor entity, or any partner, limited
partner, security holder or creditor of any such predecessor entity, and no such
property rights remain in any such entity. Seller is under no obligation to pay
any other party any royalties or other fixed or contingent amounts based upon
the sale, license, distribution or other use or exploitation of the Assets.
4.3.5 NO VIOLATION OF THIRD PARTY RIGHTS. The use of the Assets and the
Intellectual Property Rights in the Assets in the conduct of Seller's business
have not and do not infringe or conflict with the rights of others under any
Intellectual Property Rights in any jurisdiction in the world.
4.3.6 NO INDEMNITY OBLIGATIONS. Seller has not agreed to indemnify any third
party for or against any infringement of any Intellectual Property Rights.
4.3.7 NON DISCLOSURE AGREEMENTS. Seller has taken reasonable steps including
without limitation, entering into non-disclosure agreements with all officers,
directors, shareholders, employees and consultants involved in Seller's business
as it relates to the Assets to maintain the secrecy and confidentiality of and
proprietary rights in the Intellectual Property Rights. Exhibit E, hereto
annexed, lists the persons who have entered into such non-disclosure agreements.
Seller will prior to the Closing Date have delivered to Buyer a true copy of
each such executed agreement.
4.4 CONFLICTING AGREEMENTS. Neither the execution nor delivery by seller of
this Agreement nor compliance by Seller with the terms and provisions hereof
will (a) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, the
bylaws or articles of incorporation of the Seller, any award of any Arbitrator
or any other agreement, any regulation, law, judgment, order or the like to
which Seller is subject or any Contract, or (b) result in the creation of any
lien upon all or any of the Assets. Seller is not a party to, or otherwise
subject to any provision contained in, any instrument evidencing indebtness, any
agreement relating thereto or any other contract or agreement which restricts or
otherwise limits the transfer of the Assets.
4.5 SHAREHOLDINGS. The Shares will be received for Seller's own account and
the Seller will not receive Shares as an agent or nominee. The Seller is
obtaining the Shares for investment purposes only and not with a view to their
further distribution. The Seller agrees to execute and deliver to the Buyer the
usual and customary investment representation letter confirming these
representations. The aforementioned notwithstanding the Seller may distribute
the its Shares to its own shareholders, and may also direct a portion of the
shares to its officers, employees, consultants and advisors.
4.6 LITIGATION. No action, suit, proceeding or investigation is pending or
threatened against Seller: (a) which questions the validity of this Agreement or
the right of Seller to enter into this Agreement or seeks to prevent any of the
transactions contemplated under this Agreement, (b) which is reasonably likely
to have a material adverse effect on the Assets, (c) which challenges the
ownership or use, in any respect, of the Assets, or (d) which challenges the
rights of Seller under or the validity of any of the Intellectual Property
Rights. There is no judgment, decree, injunction, rule or order of any court,
governmental department, commission agency, instrumentality or Arbitrator or
other similar ruling outstanding against Seller relating to the Assets or this
transaction. No action, suit, proceeding or investigation is pending or
threatened by Seller against any third party relating to the Assets.
4.7 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Seller is not in violation
of any laws, material governmental orders, rules or regulations, whether
federal, state, local or foreign, to which Seller or the Assets are subject.
Seller will prior to the Closing Date have delivered to Buyer a true and correct
list of all licenses, franchises, permits and other governmental authorizations
held by Seller that are material in connection with Seller's business related to
the ownership and use of the Assets.
4.8 MANUFACTURING AND TECHNOLOGY RIGHTS. Seller has not granted rights to
manufacture, publish, produce, assemble, license or sell the Intellectual
Property Rights or any of its technology to any person and is not bound by any
agreement which affects Seller's exclusive right to manufacture, publish,
produce, assemble, license, distribute or sell the Intellectual Property Rights.
4.9 TAXES. There are no tax liens against the Assets and there is no basis
for any such
lien.
4.10 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller.
4.11 FULL DISCLOSURE. This Agreement, the Exhibits hereto, and all other
documents delivered by Seller to Buyer or their attorneys or agents in
connection herewith or therewith or with the transactions contemplated hereby or
thereby, when taken as a whole, do not contain any
untrue statement of a material fact nor, to Seller's knowledge, omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION AND STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Buyer is a
wholly-owned subsidiary of NYHC.
5.2 POWER; AUTHORIZATION. The terms and conditions hereof, and particularly
as they relate to the Shares and the registration thereof, require acceptance by
the Board of Directors of NYHC. Upon said acceptance:
5.2.1 Buyer shall have all requisite legal power and authority to enter into
and perform this
Agreement in accordance with its terms.
5.2.2 The execution and delivery of this Agreement and the transactions
contemplated hereby shall have been validly and duly authorized by all necessary
corporate action on the part of Buyer and no further authorization or approval,
whether from directors or shareholders of Buyer or governmental bodies or
otherwise, shall be necessary to enable Buyer to enter into and perform the
same.
5.2.3 This Agreement, when executed and delivered, shall constitute the
legal and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
5.3 CAPITALIZATION. As of March 31, 2003, NYHC's authorized capital stock
consisted of 100,000,000 shares of common stock, par value $.01 per share,
of which 23,943,821 shares are issued and outstanding, and 5,000,000 shares
of convertible preferred stock, $.01 par value per share, of which 590,375
preferred shares are issued and outstanding.
5.4 SHARES VALIDLY ISSUED. When issued in compliance with the provisions of
this Agreement, the Shares will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances; provided, however, that the
Shares may be subject to restrictions on transfer as provided by the terms
herein contained and/or under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.
5.5 CONFLICTING AGREEMENTS. Neither the execution nor delivery by Buyer of
this Agreement nor compliance by Buyer with the terms and provisions hereof will
conflict with, or result in a breach of (a) the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, the bylaws or
articles of incorporation of Buyer or any agreement to which Buyer is a party,
which would prevent any of the transactions contemplated under this Agreement,
or (b) any regulation, law, judgment, order or the like to which Buyer is
subject, the
default or violation of which would prevent any of the transactions contemplated
under this Agreement.
5.6 LITIGATION. No action, suit, proceeding or investigation is pending or
threatened against Buyer which questions the validity of this Agreement or the
right of Buyer to enter into this Agreement or seeks to prevent any of the
transactions contemplated under this Agreement.
5.7 BROKERAGE. There are no claims for brokerage commissions, finders' fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
5.8 FINANCIAL STATEMENTS. Buyer has delivered to Seller copies of NYHC's
Form 10-Q report (unaudited balance sheet and unaudited statement of income and
cash flows for the three-month periods ending March 31, 2003 and June 30, 2003)
and its Form 10-K report for the year ended December 31, 2002 (collectively, the
"Financial Statements"). The Financial Statements, together with any notes
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except as disclosed therein, and present fairly the financial condition and
position of Buyer as at December 31, 2002, March 31, 2003 and June 30, 2003;
provided, however, that the unaudited financial statements are subject to normal
recurring year end audit adjustments (which are not expected to be material),
and do not contain all footnotes required under generally accepted accounting
principles.
ARTICLE 6. CLOSING CONDITIONS OF SELLER. Seller's obligations to sell the Assets
are subject to the fulfillment by Buyer on or prior to the Closing Date of all
of the conditions set forth in this Section 6. Buyer acknowledges and agrees
that Seller shall not owe Buyer any amount for a failure of the closing to occur
as a result of a failure by Buyer to fulfill any closing condition of Seller.
6.1 MATERIAL ADVERSE CHANGE. The representations and warranties made by
Buyer in Section 5 above shall be true and correct as of the Closing Date.
6.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by Buyer on or prior to the Closing Date shall have
been performed or complied with in all respects.
6.3 LICENSE AGREEMENT. Buyer shall have executed the License Agreement in
the form hereto appended as Exhibit D.
ARTICLE 7. CLOSING CONDITIONS OF BUYER. Buyer's obligations to purchase the
Assets are subject to the fulfillment by Seller on or prior to the Closing Date
of all of the conditions set forth in this Section 7, and Buyer shall not owe
Seller any amount for a failure of the closing to occur as a result of a failure
by Seller to fulfill any closing condition of Buyer.
7.1 SATISFACTORY DUE DILIGENCE; MATERIAL ADVERSE CHANGE.
Buyer shall be satisfied in its sole discretion: (a) that the representations
and warranties made by Seller in Section 4 above are true and correct as of the
Closing Date; (b) that any matters which Buyer deems to be unacceptable and
which have been specified in writing to Seller have been remedied to Buyer's
satisfaction; and (c) with the results of its business, technical, legal and
financial review of the books, records, agreements and other legal documents and
business organization of Seller.
7.2 CONSENTS, APPROVALS AND WAIVERS. Seller shall have obtained, in a manner
satisfactory to Buyer and its counsel, any and all approvals, consents, permits
and waivers and made all filings necessary or appropriate for the sale and
transfer of the Assets under this Agreement.
7.3 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by Seller on or prior to the Closing Date shall have
been performed or complied with in all respects.
7.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to Buyer and its counsel, and Buyer and its counsel shall have received all
such counterpart originals or certified or other copies of such documents and
instruments as they may reasonably request.
ARTICLE 8. INDEMNIFICATION.
8.1 SELLER INDEMNITY. Seller agrees to indemnify Buyer, NYHC, their
respective affiliates, subsidiaries, and successors and hold them harmless from
and against any and all liabilities, losses, damages, costs or expenses
(including without limitation reasonable legal and expert witnesses' fees and
expenses) incurred by any of them, directly or indirectly, to the extent that
such liabilities, losses, damages, costs or expenses ("Damages") are occasioned
by, caused by or arise out of:
8.1.1 Any breach by Seller of any of the representations or warranties, or
failure to perform any of the covenants, made by such Seller in this Agreement,
or any certificate, exhibit, instrument or other document delivered pursuant to
this Agreement.
8.1.2 Any debts, claims, liabilities, or obligations of Seller not expressly
assumed by Buyer pursuant to this Agreement.
Seller understands and agrees that Buyer's remedies, as stated above for
breaches described in subsections 8.1.1 and 8.1.2 will be inadequate and that in
the event of any such breach, and without prejudice to or derogating from any
other rights or remedies due Buyer hereunder or at law, Seller shall forfeit the
Consideration and return it to Buyer.
8.2 BUYER INDEMNITY. Buyer agrees to indemnify Seller and hold it harmless
from and against any and all liabilities, losses, damages, costs or expenses
(including without limitation reasonable legal and expert witnesses' fees and
expenses) incurred by the Seller to the extent that such Damages are occasioned
by, caused by or arise out of any breach of any of the representations or
warranties or failure to perform any of the covenants made by Buyers in this
Agreement.
8.3 INDEMNIFICATION CLAIMS. If either party hereto (the"Claimant") wishes to
assert an indemnification claim against the other party hereto, the Claimant
shall deliver to the other party a written notice setting forth:
8.3.1 the specific representation and warranty or covenant alleged to have
been breached by such other party;
8.3.2 a detailed description of the facts and circumstances giving rise to
the alleged breach of such representation and warranty; and
8.3.3 a detailed description of, and a reasonable estimate of the total
amount of, the Damages actually incurred or expected to be incurred by the
Claimant as a direct result of such alleged breach.
8.4 DEFENSE OF THIRD PARTY ACTIONS. If either party hereto (the "Indemnified
Party") receives notice or otherwise obtains knowledge of the commencement or
threat of any claim, demand, dispute, action, suit, examination, audit,
proceeding, investigation, inquiry or other similar matter that may give rise to
an indemnification claim against the other party hereto (the "Indemnifying
Party"), then the Indemnified Party shall promptly deliver to the Indemnifying
Party a written notice describing such complaint or the commencement of such
action or proceeding; provided, however, that the failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party from liability under
this Agreement with respect to such claim only if, and only to the extent that,
such failure to notify the Indemnifying Party results in the forfeiture by the
Indemnifying Party of rights and defenses otherwise available to the
Indemnifying Party with respect to such claim or the opportunity to defend or
participate in the defense of said claim. The Indemnifying Party shall have the
right, upon written notice delivered to the Indemnified Party within 20 days
after receipt of the notice to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of the fees and disbursements of such counsel. In the
event, however, that the Indemnifying Party declines or fails to assume the
defense of the action or proceeding or to employ counsel reasonably satisfactory
to the Indemnified Party, in either case within such 20 day period, then such
Indemnified Party may employ counsel, reasonably acceptable to the Indemnifying
Party, to represent or defend it in any such action or proceeding and the
Indemnifying Party shall pay the reasonable fees and disbursements of such
counsel as incurred; provided, however, that the Indemnifying Party shall not be
required to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any jurisdiction in any single action or proceeding. In
any action or proceeding with respect to which indemnification is being sought
hereunder, the Indemnified Party or the Indemnifying Party, whichever is not
assuming the defense of such action, shall have the right to participate in such
litigation and to
retain its own counsel at such party's own expense. The Indemnifying Party or
the Indemnified Party, as the case may be, shall at all times use all
commercially reasonable efforts to keep the Indemnifying Party or the
Indemnified Party, as the case may be, reasonably apprised of the status of the
defense of any action, the defense of which they are maintaining, and to
cooperate in good faith with each other with respect to the defense of any such
action. No Indemnified Party may settle or compromise any claim, or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder, without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld. The Indemnifying Party shall not settle any
claim or assertion, unless the Indemnified Party consents in writing to such
settlement, which consent shall not be unreasonably withheld.
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations,
warranties and indemnities provided under, or set forth in this Agreement or
other document or instrument delivered pursuant to this Agreement shall survive
the Closing Date, and shall remain in force or effect for a period of
forty-eight (48) months, after which all liability of Seller and Buyer with
respect to such representations and warranties shall thereupon be extinguished;
provided, however, that if, within such forty eight month period, Claimant
delivers a written notice to the other party hereto then the specific
representation, warranty or indemnification claim set forth in such notice shall
survive such expiration date (and shall not be extinguished thereby) until the
final disposition of such specific claim.
8.6 THRESHOLD. Neither the Seller nor the Buyer shall be required to make
any indemnification payment pursuant to Section 8.1 or 8.2, respectively, until
such time as the total amount of all Damages that have been directly or
indirectly suffered or incurred by an Indemnified Party, or to which an
Indemnified Party has or otherwise becomes subject to, exceeds $10,000 in the
aggregate. At such time as the total amount of such Damages exceeds $10,000 in
the aggregate, the Indemnified Party shall be entitled to be indemnified against
the full amount of such Damages (and not merely the portion of such Damages
exceeding $10,000).
ARTICLE 9. POST-CLOSING COVENANTS.
9.1 FURTHER ASSURANCES. Seller shall not voluntarily undertake any course of
action, which interferes in any way with the rights, obtained by Buyer hereunder
or is otherwise inconsistent with the satisfaction of its obligations or
agreements set forth in this Agreement. Seller hereby agrees not to contest
Buyer's ownership of the Intellectual Property Rights or Buyer's title to the
Assets. Seller shall execute, acknowledge and deliver any further assignments,
conveyances and other assurances, documents and instruments of transfer,
consistent with the terms of this Agreement, which are reasonably requested and
prepared by Buyer or its counsel, and shall take any other action, consistent
with the terms of this Agreement, that may be reasonably requested and prepared
by Buyer or its counsel for the purpose of assigning, transferring, granting,
conveying, and confirming to Buyer or reducing to its possession, any or all of
the Assets.
9.2 CONFIDENTIALITY. From and after the Closing Date, to the maximum extent
permitted by applicable law, all technical, business, legal and other
information directly relating to the Assets and Intellectual Property Rights
thereto shall at all times be and remain the sole and
exclusive property of Buyer. At all times after the Closing Date, Seller shall
retain in strictest confidence, and shall not disclose to third parties or use
for its benefit or for the benefit of any third party, all information assigned
to Buyer under this Agreement or in any other way relating to the Assets. Seller
understands and agrees that Buyer's remedies at law for a breach by Seller of
its obligations under this Section will be inadequate and that Buyer shall, in
the event of any such breach, be entitled to equitable relief (including without
limitation injunctive relief and specific performance) in addition to all other
remedies provided under this Agreement or available to Buyer at law. Without
derogating from the generality of the aforementioned or from any other right or
remedy due Buyer from Seller, Seller agrees that in the event of its breach of
any of its obligations under this Section 9, it shall forfeit the Consideration.
9.3 NONCOMPETITION. Without in any way derogating from Seller's undertakings
and Buyer's rights pursuant to Sections 1.1 and 1.2 above, for and during a
period of five years immediately following the Closing Date, Seller may not
engage directly or indirectly in any activities involving technology and/or
products similar to the Assets or competitive with the activities of the Buyer,
and in general may not engage in research and/or development and/or promotion
and/or marketing and/or sales of (i) any microbial food supplements making use
of bacillus based bacteria, (ii) other prebiotic or probiotic products or
technology intended to treat human or animal digestive or intestinal diseases or
disorders, (iii) any other improvements and/or developments and/or applications
of the Technology and/or the Intellectual Property Rights.
9.4 REGISTRATION RIGHTS. Reference is made to Exhibit D, the Registration
Rights Agreement, annexed hereto, which is deemed incorporated herein by
reference and made a part hereof.
9.5 DEMAND REGISTRATION RIGHTS. Reference is made to Exhibit D, the
Registration Rights Agreement, annexed hereto, which is deemed incorporated
herein by reference and made a part hereof.
9.6 LOCK-UP AGREEMENT. Seller's registration rights pursuant to the terms
of Sections 9.4 and 9.5 above notwithstanding, Seller shall not sell or
otherwise transfer or dispose of the Shares for a period of 180 days following
the effective date of a registration statement in respect of the Shares or for a
period of one (1) year following the Closing Date, whichever period ends sooner.
However, in the event that the common stock of NYHC trades at or above a price
of five ($5.00) dollars per share for ten (10) days within any thirty (30) day
period, the said lock-up shall immediately expire.
9.7 LEGEND ON STOCK CERTIFICATE. Each certificate representing Shares
issued pursuant to this agreement shall be endorsed with the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AN
AGREEMENT BETWEEN THE BIO BALANCE CORP., NEW YORK HEALTH CARE,
INC. (THE "COMPANY") AND THE HOLDER, HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE "ACT"), AND
MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR ITS
SUCCESSOR RULE UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT EXEMPTIONS FROM SUCH
REGISTRATION AND FROM THE PROVISIONS OF ANY APPLICABLE STATE
"BLUE SKY" LAWS ARE AVAILABLE.
ARTICLE 10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York. Any action or
proceeding brought by either party against the other arising out of or related
to this Agreement shall be brought exclusively in a state or federal court in
New York.
10.2 WAIVERS; CUMULATIVE REMEDIES. Any waiver, consent or the like must be
in writing. Any waiver by either party of any breach of this Agreement by the
other party shall not constitute a waiver of any other or subsequent breach of
this Agreement. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.
10.3 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon receipt by facsimile
with a confirming copy sent by first-class mail, postage prepaid, or fifteen
(15) days after deposit in the postal system by certified or registered mail,
return receipt requested, postage prepaid to the addresses first set forth below
such other address as a party may designate for itself by providing notice
hereunder:
If to Seller: If to Buyer:
X. Xxxxx, Xxxx Xxxxx, Chief Business Officer
NexGen Bacterium Inc The Bio Balance Corp.
Xxxxxx- Xxxxxxx Building 16 East 34 Street Street, 0xx xxxxx
0xx Xxxxx Xxx Xxxx, XX 00000
Xxxx 00 Xxxxxx Fax: (000) 000 0000
Panama City, Panama
Fax: Xxxxx Xxxxx, President
New York Health Care, Inc.
0000 XxXxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Copies To:
Xxxxxxx X. Xxxxx
Scheichet& Xxxxx, P.C.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
10.4 AUDIT. Each party shall provide the other with notice of an audit by
any tax authority of such party's books and records, which is reasonably likely
to relate to the Assets or the sale of the Assets in this transaction.
10.5 ATTORNEYS' FEES. In any action brought to construe or enforce this
Agreement, the prevailing party shall receive, in addition to any other remedy
to which it may be entitled, compensation for all costs incurred in pursuing
such action, including, but not limited to, reasonable attorneys and expert
witnesses fees and costs.
10.6 EXPENSES. Except as otherwise provided for herein, each party shall
bear its own expenses and legal fees incurred on its behalf with respect to this
Agreement and the transaction contemplated hereby.
10.7 SEVERABILITY. In case any provision of this Agreement is held to be
invalid or unenforceable, such provision shall be deemed amended to the extent
required to make it valid and enforceable and such amended provision and the
remaining provisions of this Agreement will remain in full force and effect.
10.8 TITLE AND HEADINGS. The titles and headings contained in this
Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.9 SUCCESSOR AND ASSIGNS. The provisions hereof shall inure to the benefit
of and be binding upon the successors and assigns of the parties hereto.
10.10 RIGHTS OF THIRD PARTIES. Nothing contained in this Agreement, express
or implied, shall be deemed to confer any rights or remedies upon, or obligate
any of the parties hereto, to any person or entity.
10.11 PUBLICITY. The terms of this Agreement shall be considered confidential
information of Parties. All parties agree that the specific provisions hereof
shall not be revealed or disclosed by it without the prior written consent of
the other except to the extent such disclosure is required by applicable law or
regulation.
10.12 ENTIRE AGREEMENT; COUNTERPARTS AMENDMENT. This Agreement, the Exhibits
hereto and the other documents delivered pursuant hereto constitute the full,
exclusive, complete and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof, and supersedes and revokes
all other previous discussions, understanding and agreements between the
parties, whether oral or written, with regard to the subject matter hereof. This
Agreement may be executed in two or more counterparts and all counterparts so
executed shall constitute one and the same agreement binding on all parties
hereto. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the affected party.
10.13 DISCLOSURE OF INFORMATION. Seller declares that it has received all
the information necessary or appropriate for deciding whether to receive the
Shares as consideration for the Assets. Seller further represents that its
officers and agents have had an opportunity to ask questions and receive answers
from Buyer regarding the terms and conditions pertaining to the Shares and the
business, properties, prospects and financial conditions of Buyer. Seller has
arrived at an independent view concerning the value of Buyer, recognizes that
the transactions in which Seller is acquiring the Shares is occurring in an
arms' length transaction and is not relying upon any statements by Buyer as to
the value of Buyer or the Shares. Seller agrees to execute and deliver to NYHC
the usual and customary stock subscription agreement.
The parties to this Agreement have caused this Agreement to be executed and
delivered as of August 11, 2003
/s/ Xxxx Xxxxx
--------------
The BioBalance Corp.
Printed Name: Xxxx Xxxxx
Title: Chief Business Officer
-----------------------
/s/ Xxxxx Xxxxx
----------------
New York Health Care, Inc.
Printed Name: Xxxxx Xxxxx
Title: President and Chief
-------------------
Executive Officer
-----------------
/s/ Michel Xxxxxxxx Xxxxx Nuezo
--------------------------------------------------------------------------------
NexGen Bacterium Inc.
Printed Name: Michel Xxxxxxxx Xxxxx Nuezo
Title: General Attorneys
-----------------
EXHIBIT A
ASSETS
The following assets are the subject of this Purchase Agreement:
1. All know-how possessed by the Seller in connection with novel probiotic
bacterial strains of Bacillus subtilis HE and Bacillus licheniformis, including,
in particular, ATCC deposited strains PTA-5310 and PTA-5311, which exhibit
superior probiotic activity as compared to Biosporin, pharmaceutical
compositions, foodstuff and feedstuff containing same and use thereof in the
treatment of diseases and disorders which may benefit from probiotic treatment
as well as use thereof as pharmaceutical carriers.
2. Patent Application as attached.
3. Any additional patents or patent applications that may be filed relating
to the Assets.
EXHIBIT B
Confidentiality Agreements
The following persons, natural and corporate, have entered into confidentiality
agreements, pursuant to which each such person has undertaken to maintain the
secrecy and confidentiality of and proprietary rights in the Assets and the
related Intellectual Property Rights:
Xxxx Olshenitsky
Xx Xxxxx Xxxxxxx
Xx. Xxxxx Xxxxxxxxxx
EXHIBIT C
Legal Opinion of Counsel to Seller
(to be submitted under counsel's letterhead)
I, the undersigned _____________ , an advocate licensed to practice in
_________ hereby declare and confirm that
a. __________________ Inc. is registered, and in good standing in the
jurisdiction of __________;
b. The Asset Purchase Agreement (the "Agreement") dated as of August 11, 2003
by and among NexGen Bacterium Inc. and The Bio Balance Corp. was executed
by ___________ on behalf of _________ pursuant to a resolution adopted by
the Board of Directors of ________ in accordance with the memorandum and
by-laws _________. A true copy of such Board resolution authorizing and
instructing ________ to execute the above-mentioned Asset Purchase
Agreement on behalf of ______ is hereto annexed.
Respectfully,
________________
