1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of
March 3, 1997
between
ACCUMED INTERNATIONAL, INC.
and
DIFCO MICROBIOLOGY SYSTEMS, INC.
2
TABLE OF CONTENTS
Section 1. Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1. Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.7. Payment on the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8. Purchaser's Additional Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9. Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.10. Reconveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.11. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3. Representations and Warranties by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2. Corporate Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3. No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4. Books and Records; Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6. Availability of Assets and Legality of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.7. Governmental Permits; FDA Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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3.8. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.9. Inventories; Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.10. Order Backlog. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11. Title to Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13. Status of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14. Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.16. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.17. Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.18. Continuing Employees and Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.19. Sources of Components and Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20. Confidentiality and Non-disclosure by Competing Bidders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4. Representations and Warranties by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2. Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.8. Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5. Action Prior to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1. Investigation of Seller by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.2. Preserve Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3. Consents of Third Parties; Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4. Operations Prior to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5. Notification by Seller of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.6. No Shopping; Other Similar Investment Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6. Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1. Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7. Covenants of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1. Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3. Post Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8. Additional Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3. Sales and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4. Continuing Employees; Other Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5. Supply Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9. Conditions Precedent to Obligations of Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1. Compliance; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2. Officers' Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3. Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.4. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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9.5. Necessary Governmental Approvals . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6. Tender of Performance . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.7. Release of Threatened Patent Infringement Claim . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10. Conditions to Obligations of Seller . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1. Compliance . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2. Officers' Certificates . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3. Opinion of Purchaser's General Counsel . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4. Tender of Payment . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11. Conditions Precedent to Obligations of Each of Purchaser and Seller . . . . . . . . . . . . . . . . . . . . 39
11.1. No Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2. Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3. No Restraining Order, Injunction or Threatened Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4. Continuation of RELA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12. Indemnification; Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.2. General Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.3. Consideration of Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.4. Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.5. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.6. Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 42
12.7. Coordination of Indemnification Rights . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 43
12.8. Limit on Indemnification; Disbursement of Escrowed Funds . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 44
12.9. Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 45
12.10. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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12.11. Excluded Indemnification Claims 46
Section 13. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.2. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 14. Survival of Representations, Warranties, Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . 48
Section 15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 18. Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 19. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 20. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 21. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 22. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 23. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 24. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 25. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 26. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 27. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 28. Bulk Transfer Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 29. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 30. Seller Extraordinary Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
March 3, 1997 by and between Difco Microbiology Systems, Inc., a corporation
organized under the laws of Michigan ("Seller"), and AccuMed International,
Inc., a corporation organized under the laws of Delaware ("Purchaser").
W I T N E S E T H :
WHEREAS, Seller is, among other things, engaged in the
business of selling instruments and media for blood culturing and Mycobacteria
testing referred to as the ESP Culture System II as more thoroughly described
herein;
WHEREAS, Purchaser desires to acquire all assets and certain
liabilities relating to the ESP System upon the terms and subject to the
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the
respective representations, warranties, covenants, agreements and conditions
contained herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1. Definitions.
Affiliate. "Affiliate" means, with respect
to any Person, any other Person directly or indirectly controlling, controlled
by, or under common control with such Person.
Ancillary Agreements. "Ancillary Agreements"
means the Manufacturing Agreement, License and Non-competition Agreement,
Transition Services and Facility Agreement, the Escrow Agreement, the Escrow
(Base Media Components) Agreement, the Base Media License, the Base Media
Components License, the Instrument of Assumption, the Instruments of Assignment
and the Closing Agreement.
Balance Sheet. "Balance Sheet" has the meaning
given in Section 3.4
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Base Media. "Base Media" means Difco's
proprietary formula for the following products:
Description
Septicemia Aerobic Media - for use in ESP 80A and 40A bottles
Septicemia Anaerobic Media - for use in ESP 80N and 40N bottles
Xxxxxxxxxxx 7H9 Broth - for use in ESP Myco bottles
Base Media Components. "Base Media
Components" means the following ingredients of DCM which are produced by
processes that are proprietary to Difco:
M-0122 Proteose Peptone #3
X-0000 Xxxxxxxx
O-0127 Yeast Extract
X-0000 Xxxxxxxxxxx 7H9 Broth
X-0000 Xxxxxxxx
Base Media License. "Base Media License"
means the Base Media License Agreement between Difco and Purchaser dated as of
the Closing Date in the form attached hereto as Exhibit A.
Base Media Components License. "Base Media
Components License" means the Base Media Components License Agreement between
Difco and Purchaser dated as of the Closing Date in the form attached hereto as
Exhibit B.
Bottle Disposable Products. "Bottle
Disposable Products" means the following products consisting of the bottle
containing culture media, supplements or inhibitors:
80A Aerobic bottles for blood and sterile body fluid
testing 7101-44-1
80N Anaerobic bottles for blood and sterile body fluid
testing 7103-44-9
EZ Draw 40A Aerobic direct draw for blood and sterile body fluid
testing 7105-44-7
EZ Draw 40N Anaerobic direct draw for blood and sterile body fluid
testing 7107-44-5
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ESP Myco For detection of Mycobacteria in respiratory, blood,
stool, tissue, sterile fluids, urine and wound
specimens 7111-42-0
ESP GS Myco growth supplement 7112-42-0
ESP Myco PVNA Myco antibiotic inhibitor 7113-42-0
Claim. "Claim" means any demand, notice,
threat or claim in writing, made by a third party and directed to a Person and
which either seeks to obtain the payment of money, to require the performance
of any act, or to prevent the performance of any act.
Claim Notice. "Claim Notice" has the meaning
given in Section 12.5.
Closing. "Closing" means the sale and
transfer of the Purchased Assets from Seller to Purchaser and the consummation
of the other transactions contemplated hereby.
Closing Agreement. "Closing Agreement" means
the Closing Agreement of even date herewith among Purchaser, Seller Difco and
Difco Laboratories Incorporated, a Wisconsin corporation.
Closing Date. "Closing Date" has the
meaning given in Section 2.6.
Code. "Code" means the Internal Revenue Code
of 1986, as amended.
Confidentiality Agreement. "Confidentiality
Agreement" means the Confidential Disclosure Agreement dated November 8, 1996,
as amended January 7, 1997, between Difco and Purchaser.
Continuing Employees. "Continuing Employees"
has the meaning given in Section 3.18(i).
DCM. "DCM" means the xxxx of materials and
recipe to produce the following products required in the Base Media.
Component No. Description
------------- -----------
M - 6937 Septicemia Aerobic Media - for use in ESP 80A
and 40A bottles
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M - 6938 Septicemia Anaerobic Media - for use in ESP 80N
and 40N bottles
0 - 0713 Xxxxxxxxxxx 7H9 Broth - for use in ESP Myco bottles
Difco. "Difco" means Difco Laboratories
Incorporated, a Michigan corporation.
Encumbrance. "Encumbrance" means any lien,
security interest, hypothecation, mortgage, pledge, easement, conditional sale,
trust or other title retention arrangement, device or agreement.
Escrow Account. "Escrow Account" has the
meaning given in Section 2.7.
Escrow Agent. "Escrow Agent" has the meaning
given in Section 2.7.
Escrow Agreement. "Escrow Agreement" means
the Escrow Agreement among Seller, Purchaser and the Escrow Agent dated as of
the Closing Date in the form attached hereto as Exhibit C .
Escrow (Base Media Components) Agreement.
"Escrow (Base Media Components) Agreement" means the Escrow Base Media
Components Agreement among Difco, Purchaser and the escrow agent named therein
dated as of the Closing Date in the form attached hereto as Exhibit D.
Escrowed Funds. "Escrowed Funds" has the
meaning given in Section 2.7.
ESP Agreements. "ESP Agreements" has the
meaning given in Section 2.1(vi).
ESP Business. "ESP Business" means the
business conducted by Seller of designing, developing, manufacturing and
selling the ESP Product Line in the clinical market as currently conducted by
Seller and shall not include any such business relating to any other market.
ESP Product Line. "ESP Product Line" means
the ESP Culture System II and predecessors comprised of disposables, software,
and instruments for the growth and detection of microorganisms in blood
cultures, sterile body fluids and Mycobacteria samples in instruments
referenced by model Nos. 128, 256 and 384 utilizing ESP intellectual property
which are among the Purchased Assets.
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Excluded Assets. "Excluded Assets" has the
meaning given in Section 2.2.
Expenses. "Expenses" means any and all
reasonable expenses incurred in connection with investigating, defending or
asserting any claim, action, suit or proceeding incident to any matter
indemnified against hereunder (including, without limitation, reasonable court
filing fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel, investigators, expert
witnesses, consultants, laboratory fees, accountants and other professionals).
GAAP. "GAAP" means generally accepted accounting
principles as practiced in United States, applied on a basis consistent with
prior periods.
Governmental Authority. "Governmental
Authority" means any United States federal, state, local, possession or foreign
governmental regulatory or administrative authority, agency, body, bureau,
ministry, department or commission, or any political or governmental
subdivision thereof, or any court.
Governmental Order. "Governmental Order"
means any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any Governmental Authority.
Governmental Permit. "Governmental Permit"
means any license, franchise, contract, permit, privilege, immunity, approval
or other authorization from a Governmental Authority, including clearances and
approvals from the United States Food and Drug Administration under the Food,
Drug and Cosmetics Act.
Indemnified Party. "Indemnified Party" has
the meaning given in Section 12.1.
Indemnifying Party. "Indemnifying Party" has
the meaning given in Section 12.1.
Instruments of Assignment. "Instruments of
Assignment" means, collectively, the Instrument of Assignment in the form
attached as Exhibit E, the Assignment of Trademarks and Copyrights in the form
attached as Exhibit F and the Assignment of Patents in the form attached as
Exhibit G.
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Instrument of Assumption. "Instrument of
Assumption" means the Instrument of Assumption in the form attached as Exhibit
H.
Inventories. "Inventories" means all
finished goods inventory related to the operation of the ESP Business,
including all bottles containing media, instruments and connectors which have
passed quality control procedures (and excluding raw materials and work in
process including empty bottles) maintained, held, including on consignment, or
stored by or for Seller on the Closing Date.
Knowledge of Seller. "Knowledge of Seller"
means the actual knowledge of Management of Seller and shall not include
imputed knowledge.
License and Non-competition Agreement.
"License and Non-competition Agreement" means the Non-clinical License and
Non-competition Agreement among Difco, Seller, Difco Laboratories Incorporated,
a Wisconsin corporation, and Purchaser dated as of the Closing Date in the form
attached as Exhibit I.
Losses. "Losses" means any and all
out-of-pocket losses, costs, liabilities, settlement payments, awards,
judgments, fines, penalties, damages, expenses, or other charges, but excluding
in any event any consequential, incidental, special, punitive or exemplary,
damages or charges.
Management. "Management" shall mean those
persons holding the following offices or having the following titles at Seller
or Difco: President, Executive Vice President of Finance and Operations,
Director of Corporate Development and Executive Vice President of Product
Development.
Manufacturing Agreement. "Manufacturing
Agreement" means the Manufacturing Agreement between Purchaser, Difco and Difco
Laboratories Incorporated, a Wisconsin corporation, dated as of the Closing
Date in the form attached as Exhibit J.
Material Adverse Change. "Material Adverse
Change" means a material adverse change in the business, assets, condition
(financial or otherwise) and results of operations of the ESP Business taken as
a whole.
Material Adverse Effect. "Material Adverse
Effect" means a material adverse effect on the business, assets, condition
(financial or otherwise) and results of operations of the ESP Business taken as
a whole.
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Permitted Encumbrances. "Permitted
Encumbrances" means (i) Encumbrances of lessors and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable, and (ii) other
Encumbrances or imperfections on property which are not material in amount or
do not materially detract from the value of or materially impair the existing
use of the property affected by such Encumbrances or imperfection, (iii) any
Encumbrance for taxes not yet due and payable or being contested in good faith
by appropriate proceedings and (iv) any Encumbrance granted under any of the
ESP Agreements.
Person. "Person" means an individual, a corporation,
a limited liability corporation, a partnership, a limited liability
partnership, an association, a trust or other entity or organization, including
any Governmental Authority.
Purchase Price. "Purchase Price" has the meaning set forth in Section 2.5.
Proceeding. "Proceeding" shall mean any action,
suit, or legal, administrative or arbitration proceeding or investigation
pending before, or conducted by, any arbitrator, tribunal or Governmental
Authority.
RELA Agreement. "RELA Agreement" means the
Manufacturing and Supply Agreement between Difco and RELA, Inc. ("RELA") dated
as of August 15, 1995, as amended by Addendum No. 1, executed as of November
15, 1996 (the "RELA Agreement").
Requirements of Law. "Requirements of Law" means any
federal, state and local statutes, regulations, rules, codes or ordinances
enacted, adopted, issued or promulgated by any Governmental Authority
(including, without limitation, those pertaining to electrical, building,
zoning, environmental and occupational safety and health requirements).
Seller Real Property. "Seller Real Property" means
any land, plant, building, facility, structure, underground storage tank,
fixture, permanently affixed equipment or unit, or other asset which under
applicable law would be deemed a "real property asset" which is owned, leased
or operated by Seller and used in the ESP Business.
Tax. "Tax" means any federal, state, local or
foreign net income, alternative or add-on minimum, gross income, gross
receipts, property, sales, use, transfer, gains, license, excise, employment,
payroll, withholding or minimum tax, value added tax, or any other tax, custom,
duty, governmental fee or
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other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority.
Transition Services and Facility Agreement.
"Transition Services and Facilities Agreement" means the Transition Services
and Facility Agreement between Purchaser and Difco dated as of the Closing Date
in the form attached as Exhibit K.
1.2. Usage.
(i) References to a Person, other
than the parties hereto, are also references to its permitted assigns and
permitted successors in interest (by means of merger, consolidation or sale of
all or substantially all the assets of such Person or otherwise, as the case
may be); and references to a Person who is a party hereto are also references
to its permitted assigns and permitted successors in interest in accordance
with Section 20.
(ii) References to a document are
to it as amended, waived and otherwise modified as of the time in question and
references to a statute or other governmental rule are to it as amended and
otherwise modified as of the time in question (and references to any provision
thereof shall include references to any successor provision in effect as of the
time in question).
(iii) References to Sections or to
Schedules or Exhibits are to sections hereof or schedules or exhibits hereto,
unless the context otherwise requires.
(iv) The definitions set forth
herein are equally applicable both to the singular and plural forms and the
feminine, masculine and neuter forms of the terms defined.
(v) The term "including" and
correlative terms shall be deemed to be followed by "without limitation"
whether or not followed by such words or words of like import.
(vi) The term "hereof" and similar
terms refer to this Agreement as a whole.
(vii) References to the "parties" are
to the Purchaser and Seller, unless the context otherwise requires.
(viii) The date on which any notice or
other writing is deemed given shall be determined pursuant to Section 16.
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Section 2. Purchase and Sale.
2.1. Purchased Assets. Upon the terms and subject
to the conditions of this Agreement, on the Closing Date, Seller shall sell,
transfer, assign, convey and deliver to Purchaser, and Purchaser shall purchase
from Seller, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of the ESP Business and the following assets and properties
of Seller as the same shall exist on the Closing Date (herein collectively
called the "Purchased Assets"), (as to any item which is a document, Seller
shall deliver paper copies and, to the extent practicable, copies in electronic
format).
(i) All notes and United States
accounts receivable generated by the ESP Business, but excluding any
intercompany receivables.
(ii) All Inventories of the ESP
Business, including a copy of the collection of all cultures used in the
production of the ESP Product Line to the extent in the possession of Seller or
its Affiliates or warehoused by a third Person for the benefit of Seller or its
Affiliates and a copy of quality control procedures (it being acknowledged by
the parties that Seller and its Affiliates may retain a copy of such cultures
and quality control procedures for their own use).
(iii) To the extent transferable under
applicable law, the Governmental Permits listed in Schedule 2.1(iii).
(iv) All of the laboratory,
production, quality assurance and control and office machinery and equipment,
furniture and other personal property listed or referred to in Schedule 2.1(iv)
and the maintenance logs pertaining to production equipment that is among the
Purchased Assets.
(v) The trademarks, trade names, and
service marks (and all goodwill associated therewith), and copyrights
registered or unregistered, and the applications for registration thereof and
the patents and applications therefor, trade secrets, know how, technology, and
other intellectual property and proprietary information, and the licenses
relating to any of the foregoing, in each case as listed in Schedule 3.8(i).
(vi) Each of the following: (1) all
purchase orders, quotations, bids and similar items placed with Seller and/or
its Affiliates on or prior to the Closing Date covering the purchase or lease
of products of the ESP Business or covering the rendition of services relating
to the ESP Business, (2) all
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purchase orders, quotations, bids and similar items placed by Seller and/or its
Affiliates on or prior to the Closing Date covering the purchase by Seller
and/or its Affiliates of supplies or materials relating to the ESP Business
(except for empty bottles and related supplies and materials), (3) all reagent
rental agreements, warranties and service agreements entered into by Seller
and/or its Affiliates on or prior to the Closing Date relating to the ESP
Business, (4) the RELA Agreement, (5) to the extent the same are assignable
under such agreements and applicable law, the confidentiality and
non-disclosure agreements referred to in Section 3.18(v), and (6) the other
agreements listed on Schedule 2.1(vi) (collectively, the "ESP Agreements").
(vii) All of the documents and other
information listed on Schedule 2.1(vii), to the extent assignable. (Seller
shall be entitled to retain a copy of such documents as are designated by
footnote on Schedule 2.1(vii).
(viii) All of Seller's rights, claims or
causes of action against third parties relating to the Purchased Assets arising
out of transactions occurring prior to the Closing Date, except in so far and
to the extent the same relate to any of the Excluded Assets and/or Excluded
Liabilities.
(ix) Notwithstanding anything to the
contrary contained herein, there shall not be assigned to Purchaser any ESP
Agreement if an attempted assignment thereof without the consent of the other
party or parties thereto would constitute a breach thereof. Seller shall
cooperate after the Closing with Purchaser, at Purchaser's expense, to obtain
any required consent to the assignment of any such ESP Agreement. The Parties
expressly intend and agree that the beneficial interest in and to such ESP
Agreements shall, to the extent permitted by the relevant agreements and
applicable law, pass to Purchaser and Seller and Purchaser each agree (i) that
Seller shall hold all such agreements for the benefit of Purchaser from and
after the Closing Date, (ii) to make or complete the assignment or assignments
as soon as reasonably possible, and (iii) to cooperate with each other, at
Purchaser's expense, in any other reasonable arrangement designed to enable
Seller or Purchaser ( on behalf of Seller) to fulfill any such agreements until
an effective assignment thereof to Purchaser shall have been obtained. The
Parties further expressly intend and agree that all liabilities and obligations
(and including any liabilities arising from any termination of any such
agreement or claim of breach or damage by the other party or parties as a
result of the transactions contemplated hereby) under or in respect of any such
ESP Agreements shall be assumed by Purchaser as of the Closing Date, whether or
not the assignment thereof can be made, and all
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such liabilities and obligations shall constitute Assumed Liabilities under
this Agreement.
2.2. Excluded Assets. Notwithstanding the
provisions of Section 2.1, no assets of any kind or character whatsoever of the
Seller or any of its Affiliates, whether or not used in or relating to the ESP
Business, other than the Purchased Assets specifically identified in Section
2.1 above, shall be transferred to Purchaser under or pursuant to this
Agreement, and Purchaser shall have no right in or to any such other assets
(the "Excluded Assets"). Without limitation of the generality of the
foregoing, Excluded Assets shall include the following.
(i) All cash, bank deposits and cash
equivalents, accounts receivable (other than as described in Section 2.1(i)),
checks received by Seller or an Affiliate on or prior to the Closing Date,
commercial paper, and certificates of deposit.
(ii) The names "Difco Laboratories,"
"Difco Microbiology Systems" or any related or similar trade names,
trademarks, service marks or logos to the extent the same incorporate the name
"Difco," "MSD" or any variation thereof.
(iii) Seller's rights, claims or causes
of action against other Persons relating to the assets, properties, business or
operations of the ESP Business (1) whether now accrued or hereafter to accrue,
contingent or otherwise, known or unknown, including all rights under express or
implied warranties from manufacturers, vendors and suppliers, claims for
collection and indemnity, claims in bankruptcy, choses in action, and other
rights, privileges, claims, causes of action and options insofar and to the
extent the same relate to, or otherwise constitute or amount to a set-off,
counterclaim or other defense against all or any portion of the Excluded
Liabilities or obligations pursuant to Section 8, (2) for which Losses in
respect thereof relate to the period prior to the Closing Date or (3) which
relate to Excluded Assets.
(iv) All Seller Real Property and all
other real property.
(v) All contracts of insurance.
(vi) All corporate minute books and
stock transfer books and the corporate seal of Seller and its Affiliates and
all books and records relating to taxes, employee benefit matters, employees,
the Seller's business relating to the Non-clinical Purpose (as defined in the
License and Non-competition
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Agreement), all books and records relating to the Excluded Assets and the
Excluded Liabilities and all other books and records not described in Section
2.1(vi).
(vii) All of the assets and properties of
Seller of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, used primarily in connection with Seller's
business other than the ESP Business.
(viii) Seller's rights under the lease agreements relating to real property.
(ix) Seller's employee benefit
agreements, plans or arrangements maintained by Seller and all employment
agreements for employees of Seller who are not Continuing Employees.
(x) All rights to receive corporate and
other Seller or Affiliate services (including those relating to treasury, cash
management, accounting, tax, legal, data processing and management information
services), and all computer programs and computer data bases used in providing
such services or to purchase goods and services to or from the Seller or any
Affiliate.
(xi) All rights of the Seller under this
Agreement and the Ancillary Agreements.
(xii) All service marks, copyrights, trade
names, patents and patent rights, trade secrets, know how, technology and other
intellectual property and proprietary information (including the formula for
the Base Media), whether registered or unregistered and all pending
applications and registrations therefore that are used, owned, licensed or
otherwise held by the Seller or any of its Affiliates, except only the items
set forth in Sections 2.1(v) and (vii).
(xiii) All refunds or credits, if any of
Taxes of the Seller or any Affiliate.
(xiv) All rights in and to the Base Media,
the DCM and the Base Media Components except only as provided in the Base Media
License and the Base Media Components License.
2.3. Assumed Liabilities. On the Closing Date,
Purchaser shall assume and agree to pay and discharge the Assumed Liabilities
described below and deliver to Seller the Instrument of Assumption pursuant to
which Purchaser shall assume and agree to pay and discharge the Assumed
Liabilities in accordance with their respective terms and subject to the
respective conditions thereof.
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For the purposes hereof, the "Assumed Liabilities" shall include the following.
(i) All liabilities and obligations of
Seller or any Affiliate to be paid or performed after the Closing Date under
the ESP Agreements and including payment of invoices dated prior to the Closing
Date and relating to Inventory not received by Seller or an Affiliate prior to
the Closing Date but excluding payment of any amounts in respect of invoices
dated prior to the Closing Date and relating to Inventory, raw materials or
other assets received by Seller or an Affiliate prior to the Closing Date.
(ii) The other liabilities described on
Schedule 2.3, if any.
2.4. Excluded Liabilities. Purchaser shall not
assume or be obligated to pay, perform or otherwise discharge any liability or
obligation of Seller, direct or indirect, known or unknown, absolute or
contingent, not expressly assumed by Purchaser pursuant to Section 2.3 (all
such liabilities and obligations not being assumed being herein called the
"Excluded Liabilities") and, notwithstanding anything to the contrary in
Section 2.3, none of the following shall be "Assumed Liabilities" for purposes
of this Agreement.
(i) Subject to Section 8.3, any Tax
imposed on Seller or any of its Affiliates with respect to any period.
(ii) Subject to Section 8.3, any Tax
imposed in respect of the ESP Business for any period of time ending on or
prior to the Closing Date.
(iii) Subject to Section 8.3, any
liabilities of Seller in respect of any Taxes of Seller.
(iv) Any intercompany payable and other
liabilities or obligations of the ESP Business to Seller or any of its
Affiliates, and accounts payable in respect of any and all invoices dated prior
to the Closing Date and relating to Inventory, raw materials or other assets
received by Seller or an Affiliate prior to the Closing Date.
(v) Any costs and expenses incurred by
Seller incident to its negotiation and preparation of this Agreement, the
Ancillary Agreements and the performance and compliance with the agreements and
conditions contained herein and therein.
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(vii) Any liabilities or obligations in
respect of any Excluded Assets.
(viii) Any liabilities or obligations
pursuant to rebate programs of Seller accrued prior to the Closing Date.
(ix) Any liabilities or obligations
pursuant to incentive, compensation, bonus, promotional plans or arrangements
of Seller in respect of its employees (including Continuing Employees) accrued
prior to the Closing Date.
(x) Any amounts accrued prior to the
Closing Date in respect of any (i) employee, sales representative, distributed
incentive, bonus or other compensation plan or arrangement, and (ii) customer
rebate or other incentive plan or arrangement, excepting only the Assumed
Liabilities, it being understood and agreed that Purchaser is assuming no
liabilities or obligations of Seller other than the Assumed Liabilities.
2.5. Purchase Price. The purchase price for the
Purchased Assets (the "Purchase Price") shall be $6,000,000 in cash.
2.6. Closing Date. The Closing shall be
consummated at 9:00 a.m., Chicago time, on March 3, 1997, provided that if all
of the conditions set forth in Sections 9, 10, and 11 are not satisfied or
waived by the parties on or prior to such date, the Closing shall occur on a
business day mutually agreeable to Purchaser and Seller not sooner than five
business days and not later than ten business days after satisfaction or waiver
of all such conditions, and provided further that the Closing may take place on
such other date as may be agreed upon by Purchaser and Seller after the
conditions set forth in Sections 9, 10 and 11 have been satisfied, at the
offices of Purchaser at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
or at such other place or at such other time as shall be agreed upon by
Purchaser and Seller. The hour of 12:01 a.m. on the date on which the Closing
is actually held is sometimes referred to herein as the "Closing Date." The
Closing shall be effective as of the Closing Date.
2.7. Payment on the Closing Date. Subject to
fulfillment or waiver of the conditions set forth in Sections 9 and 11 at
Closing Purchaser shall pay Seller $6,000,000 by wire transfer of immediately
available funds as follows: (i) $5,600,000 to the account of Seller specified
in writing by Seller and delivered to Purchaser within two business days prior
to the Closing Date, and (ii) $400,000 (the "Escrowed Funds") to an account
designated by the Escrow Agent (the "Escrow Account") in the name of First
Trust National Association as escrow agent (the
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"Escrow Agent") to be held and administered in accordance with the Escrow
Agreement.
2.8. Purchaser's Additional Deliveries. Subject
to fulfillment or waiver of the conditions set forth in Section 10, at Closing
Purchaser shall deliver to Seller all the following (provided that Purchaser's
obligations to deliver the item specified in Section 2.8(iv) shall be limited
to using its commercially reasonable efforts to cause such to be delivered).
(i) Copies of Purchaser's Certificate of
Incorporation certified as of a recent date by the Secretary of State of the
State of Delaware.
(ii) Certificate of good standing of
Purchaser issued as of a recent date by the Secretary of State of the State of
Delaware.
(iii) Certificate of the Secretary or an
Assistant Secretary of Purchaser, dated the Closing Date, in form and substance
reasonably satisfactory to Seller, as to (1) no amendments to the Certificate
of Incorporation of Purchaser since a specified date, (2) the Bylaws of
Purchaser, (3) the resolutions of the Board of Directors of Purchaser
authorizing the execution and performance of this Agreement, the Ancillary
Agreements and the transactions contemplated herein and therein, and (4)
incumbency and signatures of the officers of Purchaser of executing this
Agreement and any Ancillary Agreement.
(iv) Opinion of the General Counsel of
Purchaser substantially in the form contained in Schedule 10.3.
(v) The Instrument of Assumption duly
executed by Purchaser.
(vi) The certificate contemplated by Section
10.2, duly executed by the Chief Executive Officer and President or the Chief
Financial Officer and Corporate Vice President of Purchaser.
(vii) The Ancillary Agreements to which
Purchaser is a party, duly executed by Purchaser.
2.9. Seller's Deliveries. Subject to fulfillment
or waiver of the conditions set forth in Section 10, at Closing Seller shall
deliver to Purchaser all the following (provided that Seller's obligations to
deliver the items specified in Sections 2.9(iv) and (vi) shall be limited to
using its commercially reasonable efforts to cause such items to be delivered).
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(i) Copies of the Articles of
Incorporation of Seller and each of its Affiliates which is party to an
Ancillary Agreement certified as of a recent date by the Michigan Department of
Consumer and Industry Services or other applicable Governmental Authority.
(ii) Certificate of good standing of
Seller and each of its Affiliates which is a party to an Ancillary Agreement
issued as of a recent date by the Michigan Department of Consumer and Industry
Services or other applicable Governmental Authority of their respective
jurisdictions of incorporation.
(iii) Certificates of the Secretary or an
Assistant Secretary of each of Seller and its Affiliates which are party to an
Ancillary Agreement, dated as of the Closing Date, in form and substance
reasonably satisfactory to Purchaser, as to (1) no amendments to their
respective Articles of Incorporation since the respective dates of
certification by the Michigan Department of Consumer and Industry Services or
other applicable Governmental Authority, (2) their respective Bylaws; (3) the
resolutions of the Board of Directors of Seller and each of its Affiliates
which is a party to an Ancillary Agreement to authorizing the execution and
performance of this Agreement, the Ancillary Agreements and the transactions
contemplated herein and therein, and (4) incumbency and signatures of the
officers of Seller and each of its Affiliates which is a party to an Ancillary
Agreement executing this Agreement and any Ancillary Agreement.
(iv) Opinion of Miller, Canfield, Paddock
and Stone, P.L.C., counsel to Seller, substantially in the form contained in
Schedule 9.3.
(v) The Instruments of Assignment duly
executed by Seller;
(vi) The consents, waivers and approvals
listed on Schedule 2.9(vi) relating to the Purchased Assets, the ESP Agreements
and the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements;
(vii) The Ancillary Agreements to which
Seller and/or its Affiliates is a party, duly executed on behalf of Seller and
such Affiliates, respectively;
(viii) The certificate contemplated by
Section 9.2 , duly executed in accordance therewith;
2.10. Reconveyance. Purchaser hereby agrees to
reconvey to Seller any assets that are not intended to be Purchased
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Assets but which are nonetheless conveyed to Purchaser as a result of
inadvertence, mistake, operation of law or otherwise.
2.11. Allocation of Purchase Price. Purchaser and
the Seller shall execute and deliver duplicate IRS Forms 8594, with an
allocation of the Purchase Price as mutually agreed by the Parties within 30
days following the Closing Date and shall file all other returns and reports in
a manner consistent with such allocations.
Section 3. Representations and Warranties by Seller.
Seller hereby represents and warrants to Purchaser as follows.
3.1. Corporate Existence and Power. Seller and each of
its Affiliates which is party to an Ancillary Agreement is a corporation duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction and has all corporate powers and all material
Governmental Permits required to carry on the ESP Business as now conducted by
it. Except as disclosed on Schedule 3.1, to the extent Seller or any of its
Affiliates which is party to an Ancillary Agreement engages in ESP Business in
any jurisdiction other than its jurisdiction of incorporation, Seller or such
Affiliate, as the case may be, is duly qualified to do business and is in good
standing in such other jurisdictions where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. Seller has
heretofore delivered to Purchaser true and complete copies of Articles of
Incorporation and Bylaws, in each case as amended, and as currently in effect
of Seller and each of its Affiliates which is a party to an Ancillary
Agreement.
3.2. Corporate Authorization. The execution,
delivery and performance by Seller and each of its Affiliates which is a party
to an Ancillary Agreement of this Agreement and the respective Ancillary
Agreements to which Seller and such Affiliates (as applicable) are party, and
the consummation by Seller and such Affiliates of the transactions contemplated
herein and therein are within Seller's and such Affiliates' corporate powers
and have been duly authorized by all necessary corporate action on the part of
Seller and such Affiliates. Each of this Agreement and the Ancillary
Agreements to which Seller or an Affiliate is a party constitutes a valid and
binding agreement of Seller and such Affiliates that is a party thereto,
enforceable against Seller and such Affiliates (as applicable) in accordance
with their respective terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditor's rights generally and by
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general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
3.3. No Conflict. Except as set forth on Schedule
3.3, this Agreement, the Ancillary Agreements and the execution and delivery
hereof and thereof by Seller and each of its Affiliates which is party to an
Ancillary Agreement, do not, and the fulfillment and compliance with the terms
and conditions hereof and thereof by Seller and each of its Affiliates which is
party to an Ancillary Agreement and the consummation of the transactions
contemplated herein and therein by Seller and each of its Affiliates which is
party to an Ancillary Agreement will not: require the consent or approval of,
or a notification to any other Person, or conflict with, result in a breach of
the terms, conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under any ESP Agreement, or result in the
creation or imposition of any Encumbrance upon any Purchased Asset under (i)
the Articles of Incorporation or Bylaws of Seller and each of its Affiliates
which is party to an Ancillary Agreement, (ii) any ESP Agreement, (iii) any
other material note, instrument, agreement, mortgage, lease, license,
franchise, permit or other authorization, right restriction or obligation to
which Seller and each of its Affiliates which is party to an Ancillary
Agreement is a party or any of the Purchased Assets is subject or by which
Seller is bound, (iv) any Governmental Order to which Seller is a party or any
of the Purchased Assets is subject or by which Seller is bound, or (v) any
Requirements of Laws affecting Seller or any of its Affiliates which is party
to an Ancillary Agreement or the Purchased Assets, except in each case as would
not reasonably be expected to have a Material Adverse Effect.
3.4. Books and Records; Financial Statements.
Seller has delivered to Purchaser a true, correct and complete copy of the ESP
Balance Sheet as of December 31, 1996 (the "Balance Sheet"). Except as set
forth on Schedule 3.4, such Balance Sheet (including any related schedules or
notes) have, in their entirety, been prepared in accordance with GAAP, and such
Balance Sheet fairly presents in all material respects the financial position
of the ESP Business as of the date (subject in each case to year end and audit
adjustments).
3.5. No Undisclosed Liabilities. Except for (i)
liabilities which are disclosed on Schedule 3.5 or any other Schedule to this
Agreement or reflected in the Balance Sheet, (ii) liabilities incurred in the
ordinary course of business of the ESP Business subsequent to the December 31,
1996, and (iii) the Assumed Liabilities and the Excluded Liabilities, the ESP
Business has no liabilities, contingent or otherwise (including unasserted
claims)
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of a character that would be required under GAAP to be set forth on a balance
sheet of the ESP Business.
3.6. Availability of Assets and Legality of Use.
Except as set forth in Schedule 3.6, all the Purchased Assets which are
personal property and used in the operation of the ESP Business are in good
condition in all material respects (subject to normal wear and tear) and are
generally suitable for the uses for which they are currently being used.
3.7. Governmental Permits; FDA Matters.
(i) Seller or an Affiliate owns,
holds or possesses all Government Permits from a Governmental Authority which
are necessary to entitle it to own or lease, operate and use its assets and to
carry on and conduct its ESP Business substantially as currently conducted,
except any as would not reasonably be expected to have a Material Adverse
Effect. Schedule 3.7(i) sets forth a list of each such Governmental Permit.
Complete and correct copies of all of the Governmental Permits have heretofore
been delivered to Purchaser by Seller.
(ii) Except as set forth in Schedule
3.7(ii): (1) Seller has fulfilled and performed its obligations under each of
the Governmental Permits, and is in compliance with the conditions of such
Permits, and no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a
breach or default under any such Governmental Permit or which permits or, after
notice or lapse of time or both, would permit revocation or termination of any
such Governmental Permit, or which might adversely affect in any material
respect the rights of Seller under any such Governmental Permit, in each case
except as would not reasonably be expected to have a Material Adverse Effect;
(2) no notice of cancellation, of default or of any material dispute concerning
any Governmental Permit, or of any event, condition or state of facts described
in the preceding clause, has been received by, or is known to, Seller, in each
case except as would not reasonably be expected to have a Material Adverse
Effect; and (3) each of the Governmental Permits is valid, subsisting and in
full force and effect and will continue in full force and effect after the
Closing Date, in each case without (a) the occurrence of any breach, default or
forfeiture of rights thereunder, or (b) the consent, approval, or act of, or
the making of any filing with, any Governmental Authority, in each case except
as would not reasonably be expected to have a Material Adverse Effect.
(iii) To the Knowledge of Seller, there
are no rule making or similar proceedings before the United States Food
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and Drug Administration or any comparable federal, state, local or foreign
Governmental Authority which involve or affect the ESP Business, the final
result of which, if unfavorable to the ESP Business, could have a Material
Adverse Effect.
3.8. Intellectual Property.
(i) Schedule 3.8(i) contains a list and
description of.
(1) All United States and foreign
patents and patent applications, all United States federal, state, and foreign
trademarks, service marks, trade names and all copyrights for which
registrations have been issued or applied for, and all other United States, and
foreign trademarks, service marks, trade names and copyrights, proprietary
software and programs pertaining to the ESP Business, owned by Seller or in
which Seller holds any right, license or interest, showing in each case the
product, device, process, service, business or publication covered thereby, the
owner, registered or otherwise, expiration date and number, if any, and, in the
case of any such right, license or interest, a description thereof.
(2) All agreements, licenses,
assignments and indemnities relating to any asset, property or right of the
character described in the preceding clause (1) to which Seller is a party,
showing in each case the parties thereto and the material terms thereof, and,
in the case of written agreements, licenses, assignments or indemnities, the
location of the original instrument.
(3) All licenses or agreements
pertaining to mailing lists, know-how, trade secrets, inventions, disclosures
or uses of ideas used in or relating to the ESP Business to which Seller is a
party, showing in each case the parties thereto and the material terms thereof.
(4) All registered, assumed or
fictitious names under which Seller is conducting the ESP Business or has
within the previous five years conducted the ESP Business.
(ii) To the Knowledge of Seller, all
patents listed in Schedule 3.8(i) as being owned, controlled or used by Seller
are valid and in force and all patent applications of Seller listed therein are
in good standing, all without challenge of any kind, and, except as otherwise
disclosed in Schedule 3.8(ii), Seller owns the entire right, title and interest
in and to such patents and patent applications without qualification,
limitation, burden or encumbrance of any kind, except for Permitted
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Encumbrances, if any. To the Knowledge of Seller, all of the registrations for
trade names, trademarks, service marks and copyrights listed in Schedule 3.8(i)
as being owned, controlled or used by Seller are valid and in force and all
applications for such registrations are pending and in good standing, all
without challenge of any kind, and Seller owns the entire right, title and
interest in and to all such trade names, trademarks, service marks and
copyrights so listed as well as the registrations and applications for
registration therefor without qualification, limitation, burden or encumbrance
of any kind, except for Permitted Encumbrances. Correct and complete copies of
all the patents and patent applications and of all of the trademarks, trade
names, service marks and copyrights and registrations, applications or deposits
therefor and all the licenses listed in Schedule 3.8(i) have heretofore been
made available by Seller to Purchaser.
(iii) To the Knowledge of Seller, except
as disclosed in Schedule 3.8(iii), Seller owns or has the royalty free right to
use all patents, trademarks, service marks, copyrights, trade names,
inventions, improvements, processes, formulae, trade secrets, mailing lists,
know-how and proprietary or confidential information used in conducting the ESP
Business. To the Knowledge of Seller, no infringement of any patent, patent
right, trademark, service xxxx, trade name, or copyright or registration
thereof has occurred or results in any way from the operations of the ESP
Business except as disclosed on Schedule 3.8(iii). To the Knowledge of Seller,
no claim or threat of any such infringement has been made or implied in respect
of any of the foregoing, no claim of invalidity of any patent described in
Schedule 3.8(i) has been made and no proceedings are pending or, to the best
knowledge of Seller, threatened against Seller which challenge the validity or
ownership of any patent, trademark, trade name, service xxxx or copyright or
the ownership of any other right or property described in Schedule 3.8(i), and
Seller does not have Knowledge of the infringing use of any of the same by any
other Person, except in each case as disclosed on Schedule 3.8(iii). To the
Knowledge of Seller, Seller has had no notice of a claim against Seller that
the operations, activities, products, equipment, machinery or processes of the
ESP Business or operations infringe the patents, trademarks, service marks,
trade names, copyrights or other property rights of any other Person, except as
disclosed on Schedule 3.8(iii).
3.9. Inventories; Products.
(i) Except as set forth in Schedule
3.9(i), Seller has good and marketable title to the Inventories, free and clear
of all Encumbrances, except Permitted Encumbrances.
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(ii) The Inventories do not consist of
any items held by Seller on consignment for others. Seller is not under any
obligation or liability with respect to accepting returns of items of Inventory
or merchandise in the possession of its customers other than in the ordinary
course of the business consistent with past practice. Schedule 3.9(ii) hereto
contains a complete list of the addresses of all warehouses and other
facilities in which the Inventories are located.
(iii) Included in the customer files to be
transferred to Purchaser at Closing is a true and complete copy of each product
warranty or guarantee of performance or conformity of products manufactured or
sold by Seller pertaining to the ESP Business to any governmental or industry
specification or standard.
3.10. Order Backlog. Schedule 3.10 lists (i) each
sales order which has been accepted by Seller and which was open December 31,
1996; and (ii) each purchase order that has been issued by Seller which was
open as of December 31, 1996.
3.11. Title to Personal Property. Except as set
forth on Schedule 3.11, Seller has good and marketable title to all Purchased
Assets which constitute personal property in each case, free and clear of all
Encumbrances, except for Permitted Encumbrances.
3.12. Contracts. Except as set forth on Schedule
3.12, Seller is not a party to or bound by, in each case pertaining to the ESP
Business and except in the ordinary course of business.
(i) Any contract for the purchase or
sale of real property.
(ii) Any contract or purchase order
for the purchase of raw materials or supplies in excess of Seller's reasonably
anticipated requirements.
(iii) Any contract or open purchase order,
standing order bid for purchases or other agreement for the purchase of goods
or services which involved the payment of more than $30,000 in calendar 1996 or
which Seller reasonably anticipates will involve the payment of more than
$30,000 in 1997 or which extends beyond December 31, 1997.
(iv) Any contract for the purchase,
licensing or development of software to be used by Seller in connection with
the ESP Business.
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(v) Any consignment, distributor,
dealer, remarketing, manufacturer's representative, sales agency, advertising
representative or advertising or public relations contract or rebate program
which involved the payment of more than $30,000 in calendar 1996 or which
Seller reasonably anticipates will involve the payment of more than $30,000 in
1997 or which extends beyond December 31, 1997.
(vi) Any guarantee of the obligations
of customers, suppliers, officers, directors, employees, Affiliates or others,
except endorsements of negotiable instruments in the ordinary course of
business.
(vii) Any agreement which provides for, or
relates to, the incurrence by Seller of debt for borrowed money secured by the
Purchased Assets.
(viii) Any contract not made in the
ordinary course of business.
(ix) any other contract, order,
judgment, decree, agreement, or instrument or written commitment or
understanding which is material to the ESP Business or which restricts, in a
material manner, the permitted activities of Seller in connection with the ESP
Business.
3.13. Status of Contracts. To the Knowledge of
Seller, except as set forth in Schedule 3.13 or in any other Schedule hereto,
each of the material ESP Agreements constitutes a valid and binding obligation
of Seller and is in full force and effect and (except as set forth in Schedule
3.13 and except for those ESP Agreements which by their terms will expire prior
to the Closing Date or are otherwise terminated prior to the Closing Date in
accordance with the provisions thereof or otherwise in the ordinary course of
business) will continue in full force and effect thereafter, in each case
without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without the consent, approval or act
of, or the making of any filing with, any other Person that is a party thereto,
except in each case as would not reasonably be expected to have a Material
Adverse Effect. To the Knowledge of Seller, (x) Seller has fulfilled and
performed in all material respects its obligations under each of the ESP
Agreements and is not in, or alleged to be in, breach or default under, nor
alleged by any other Person that is a party thereto to be any basis for
termination of, any of the ESP Agreements, (y) no other party to any of the ESP
Agreements has materially breached or defaulted thereunder, and (z) no event
has occurred and no condition or state of facts exists which, with the passage
of time or the giving of notice or both, would constitute
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such a default or breach by Seller, or by any such other Person that is a party
thereto, except in each case as would not reasonably be expected to have a
Material Adverse Effect. To the Knowledge of Seller, Seller is not currently
renegotiating any of the ESP Agreements or paying liquidated damages in lieu of
performance thereunder, except in each case as would not reasonably be expected
to have a Material Adverse Effect. Complete and correct copies of each of the
ESP Agreements have heretofore been made available to Purchaser by Seller.
3.14. Compliance. To the Knowledge of Seller,
Seller has complied in all material respects with all laws, regulations,
orders, judgments or decrees of any Governmental Authority applicable to
Seller's operations of the ESP Business, non-compliance with which would
reasonably be expected to have a Material Adverse Effect.
3.15. Litigation. Except as set forth in Schedule
3.15, there are no actions, suits, proceedings or governmental investigations
or inquiries pending or, to the Knowledge of Seller, threatened in writing
against Seller or the Purchased Assets or the operations of the ESP Business
which in any manner challenges or seeks to delay, prevent or hinder the
consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement.
3.16. Customers and Suppliers. Set forth in
Schedule 3.16 is a list of names of the ten largest customers and the ten
largest suppliers (measured by U.S. dollars, volume of purchases or sales in
each case) of the ESP Product Line and the percentage of ESP Business revenues
which each such customer or supplier represents or represented during each of
the years ended December 31, 1995 and 1996. Copies of the standard forms of
purchase order for inventory and other supplies and sales contracts for
finished goods used by Seller pertaining to the ESP Business have been made
available by Seller to Purchaser. Except as set forth in Schedule 3.16, to the
Knowledge of Seller, there exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship of Seller with any customer or group of customers listed in
Schedule 3.16, or whose purchases individually or in the aggregate are material
to the operations of the ESP Business, or with any supplier or group of
suppliers listed in Schedule 3.16, or whose sales individually or in the
aggregate are material to the operations of the ESP Business, except as may
occur as a result of the transactions contemplated in this Agreement;
3.17. Finders and Brokers. Seller shall pay any
and all fees or commissions owed by it to any broker, finder or
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intermediary in connection with the transactions contemplated by this Agreement
or any Ancillary Agreement.
3.18. Continuing Employees and Related Agreements.
(i) Except as set forth in Seller's
standard form of employment agreement, a copy of which has been delivered to
Purchaser and except as described in Schedule 3.18(i), Seller is not, with
respect to employees listed on Schedule 3.18(ii) (who have been designated by
Purchaser as the employees of Seller to whom Purchaser has or intends to offer
employment following the Closing) (collectively, the "Continuing Employees"), a
party to or bound by any written employee collective bargaining agreement,
employment agreement (other than employment agreements terminable by Seller
without premium or penalty on notice of 30 days or less under which the only
monetary obligation of Seller is to make current wage or salary payments and
provide current fringe benefits), consulting, advisory or service agreement,
deferred compensation agreement, confidentiality agreement or covenant not to
compete.
(ii) Schedule 3.18(ii) contains with
respect to the Continuing Employees: the then current annual compensation of,
and a description of the fringe benefits (other than those generally available
to employees of Seller) provided by Seller to each Continuing Employee.
(iii) Except as set forth in Schedule
3.18(iii), with respect to the Continuing Employees, to the Knowledge of
Seller, Seller has complied in respect of the ESP Business in all material
respects with all applicable federal and state laws, rules and regulations
which relate to wages, hours, discrimination in employment and collective
bargaining and is not liable for any arrears of wages or any Taxes for failure
to comply with any of the foregoing, except as would not reasonably be expected
to have a Material Adverse Effect. Seller is not a party to, and the ESP
Business is not affected by or to the Knowledge of Seller threatened with, any
dispute or controversy with a union or with respect to unionization or
collective bargaining involving the Continuing Employees.
(iv) The employment of each of the
Continuing Employees by Purchaser will not violate, breach or conflict with any
agreement, contract or understanding between any Continuing Employee and Seller
and Seller has no contractual or other rights to prohibit any Continuing
Employee from performing services relating to the ESP Business for Purchaser
commencing upon or following the Closing which will not be released at Closing.
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(v) To the Knowledge of Seller,
except as set forth on Schedule 3.18(v), each Person employed by Seller on the
Closing Date and each former employee of Seller, in each case who was privy to
proprietary information pertaining to the ESP Business has executed a
confidentiality and non-disclosure agreement in favor of Seller. Seller has
delivered to Purchaser true and complete copies of each agreement between
Seller and each Person not listed on Schedule 3.18(v) whom was employed by
Seller on the Closing Date and each former employee of Seller, in each case who
was privy to proprietary information pertaining to the ESP Business.
3.19. Sources of Components and Raw Materials. Set
forth on Schedule 3.19 is a true and complete list of each material source from
which Seller or its Affiliates purchase each component and raw material
necessary to the ESP Product Line.
3.20. Confidentiality and Non-disclosure by
Competing Bidders.
(i) Seller or an Affiliate obtained
confidentiality agreements from each Person with whom Seller has negotiated or
otherwise conducted discussions with respect to the purchase of the Purchased
Assets and the ESP Business and any other Person whom Seller has allowed access
to records, facilities or personnel relating to the ESP Business for the
purpose of conducting due diligence or otherwise investigating Seller and
evaluating acquiring the Purchased Assets and ESP Business. Prior to the
Closing, Seller or such Affiliate shall have requested that each such Person
return to Seller all copies of confidential documents and other information of
Seller provided to such Person in connection with such due diligence
investigation.
(ii) Seller covenants to promptly
notify Purchaser if Seller or any of its Affiliates obtains knowledge of any
facts and circumstances which it believes constitute a breach of any
confidentiality agreement referred to in this Section 3.20, and to use
commercially reasonable efforts, at the expense of Purchaser, to cooperate with
Purchaser to enforce such agreement against such person to the extent it may do
so under such agreement and applicable law.
Section 4. Representations and Warranties by Purchaser.
Purchaser hereby represents and warrants to Seller as follows.
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4.1. Corporate Existence and Power. Purchaser is
a corporation duly incorporated, validly existing and in good standing under
the laws of Delaware and has all corporate powers required to carry on its
business as now conducted.
4.2. Corporate Authorization. The execution,
delivery and performance by Purchaser of this Agreement and the Ancillary
Agreements to which Purchaser is a party and the consummation by Purchaser of
the transactions contemplated herein and therein are within Purchaser's
corporate powers and have been duly authorized by all necessary corporate
action on the part of Purchaser. Each of this Agreement and the Ancillary
Agreements to which Purchaser is a party constitutes the valid and binding
agreement of Purchaser and is enforceable against Purchaser in accordance with
its terms.
4.3. No Conflict. Each of this Agreement and the
Ancillary Agreements to which Purchaser is a party and the execution and
delivery hereof and thereof by Purchaser, do not, and the fulfillment and
compliance with the terms and conditions hereof and thereof and the
consummation of the transactions contemplated herein and therein will not, (1)
conflict with any of, or require the consent of any Person under, the terms,
conditions or provisions of the Certificate of Incorporation and Bylaws of
Purchaser or (2) violate any provisions of, or require any consent,
authorization or approval under, any law or administrative regulation or any
judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to Purchaser.
4.4. Litigation. There are no actions, suits,
proceedings or governmental investigation or inquiries pending or, to the
knowledge of Purchaser, threatened against Purchaser or its Affiliates or their
respective properties, assets, operations or businesses which in any manner
challenges or seeks to delay, prevent or hinder the consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements.
4.5. Consents and Approvals. Except as disclosed
on Schedule 4.5, no consent, approval or action of, filing with, notice to, or
exemption from any Governmental Authority or other Person on the part of
Purchaser is required in connection with the execution, delivery and
performance of this Agreement or any of the Ancillary transactions contemplated
hereby or thereby.
4.6. Financing. Purchaser has sufficient cash
and/or available credit facilities (and has provided the Seller with evidence
thereof prior to the date hereof) or commitments therefor (copies of which have
been furnished to the Seller prior
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to the date hereof) to pay the Purchase Price and to make all other payments in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements.
4.7. Financial Statements. Purchaser's financial
statements as filed with the United States Securities and Exchange Commission
together with Purchaser's reports filed therewith pursuant to the Securities
and Exchange Act of 1934 since January 1, 1995 comply in all material respects
with applicable accounting requirements and with published rules and
regulations of the Securities and Exchange Commission with respect thereto,
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the period involved and fairly present the
financial position of Purchaser as at the dates thereof and the results of its
operations and cash flows or changes in financial position for the period then
ended.
4.8. Finders and Brokers. Purchaser shall pay any
and all fees or commissions owed by it to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement or any
Ancillary Agreement.
Section 5. Action Prior to the Closing.
The parties covenant and agree to take the following actions
between the date hereof and the Closing Date:
5.1. Investigation of Seller by Purchaser. Seller
shall afford to the officers, employees and authorized representatives of
Purchaser (including, without limitation, independent public accountants and
attorneys) complete access during normal business hours to the offices,
properties, employees and business and financial records (including computer
files, retrieval programs and similar documentation) of Seller to the extent
Purchaser shall reasonably deem necessary or desirable and shall furnish to
Purchaser or its authorized representatives such additional information
concerning the business and operations of Seller as shall be reasonably
requested, including all such information as shall be necessary to enable
Purchaser or its representatives to verify the accuracy of the representations
and warranties contained in this Agreement, to verify that the covenants of
Seller contained in this Agreement have been complied with and to determine
whether the conditions set forth in Section 9 have been satisfied. Purchaser
agrees that the confidentiality of any data or information so acquired shall be
maintained by Purchaser and its representatives in accordance with the
Confidentiality Agreement. With respect to the Seller's obligations set forth
above, all requests for access to the ESP Business and the offices, properties,
employees and business and
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financial records of Seller shall be made to such representatives of the Seller
as the Seller shall designate (the "Seller's Representative") who shall be
solely responsible for coordinating all such requests and all access permitted
hereunder. It is further understood and agreed that Purchaser shall not
contact, and Purchaser shall cause its representatives to refrain from
contacting, any of the officers, directors, employees, customers, creditors,
suppliers, or Affiliates of Seller in connection with the transactions
contemplated hereby, whether in person or by telephone, mail or other means of
communication, without the specific prior authorization of a Seller
Representative. In addition, all notices and applications to, filing with, and
other contacts with any Governmental Authority relating to the transactions
contemplated hereby shall be made by Purchaser only after prior consultation
with, and approval by, Seller, which approval shall not be unreasonably
withheld.
5.2. Preserve Accuracy of Representations and
Warranties. Each of the parties hereto shall refrain from taking any action
which is intended to render any representation or warranty contained in Section
3 or Section 4 of this Agreement inaccurate as of the Closing Date. Each party
shall promptly notify the other of any action, suit or proceeding that shall be
instituted or threatened against such party to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this Agreement.
Seller shall promptly notify Purchaser of any lawsuit, claim, proceeding or
investigation that may be threatened, brought, asserted or commenced against
Seller which would have been listed in Schedule 3.15 if such lawsuit, claim,
proceeding or investigation had arisen prior to the date hereof.
5.3. Consents of Third Parties; Governmental
Approvals.
(i) Seller will act reasonably to
secure, before the Closing Date, the consents, approvals and waivers, in form
and substance reasonably satisfactory to Purchaser, listed or described on
Schedule 9.4; provided that neither Seller nor Purchaser shall have any
obligation to offer or pay any consideration or modify terms in order to obtain
any such consents or approvals; and provided, further, that Seller shall not
make any agreement or understanding affecting the ESP Business as a condition
for obtaining any such consents or waivers except with the prior written
consent of Purchaser. During the period prior to the Closing Date, Purchaser
shall act diligently and reasonably to cooperate with Seller to obtain the
consents, approvals and waivers contemplated by this Section 5.3(i).
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(ii) During the period prior to the
Closing Date, Seller and Purchaser shall act reasonably, and shall cooperate
with each other, to secure any consents and approvals of any Governmental
Authority required to be obtained by them in order to permit the consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements, or to otherwise satisfy the conditions set forth in Section 9.5;
provided that Seller shall not make any agreement or understanding affecting
the ESP Business as a condition for obtaining any such consents or approvals
except with the prior written consent of Purchaser.
5.4. Operations Prior to the Closing.
(i) Except as otherwise set forth on
Schedule 5.4, Seller shall operate and carry on the ESP Business in the
ordinary course of business only and substantially as presently operated.
Consistent with the foregoing, Seller shall keep and maintain the Purchased
Assets in good operating condition and repair and shall use reasonable efforts
consistent with good business practice to maintain the business organization of
the ESP Business intact and to preserve the goodwill of the suppliers,
contractors, licensors, employees, customers, distributors and others having
business relations with Seller pertaining to the ESP Business.
(ii) Except as expressly contemplated
by this Agreement, except with the express written approval of Purchaser, and
except in the ordinary course of business, Seller shall not:
(1) adopt or propose any amendment
to its Articles of Incorporation or Bylaws that would affect the ability of
Seller to consummate the transactions contemplated by this Agreement or any
Ancillary Agreement;
(2) merge or consolidate with any
other Person, except (x) as described in Section 30 and (y) if such merger or
consolidation would not materially impair the ability of Seller to consummate
the transactions contemplated herein and in the Ancillary Agreements;
(3) make any material change in the
ESP Business or its operations;
(4) make any capital expenditure
with respect to the ESP Business or enter into any contract or commitment
therefor;
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(5) enter into any contract,
agreement, undertaking or commitment which would have been required to be set
forth in Schedule 3.12 if in effect on the date hereof;
(6) sell, lease (as lessor), transfer
or otherwise dispose of (including any transfers from Seller to any of its
Affiliates), or mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets, other than inventory and minor
amounts of personal property sold or otherwise disposed of for fair value in
the ordinary course of business consistent with past practice and other than
Permitted Encumbrances;
(7) cancel any debts owed to or
claims held by Seller pertaining to the ESP Business (including the settlement
of any claims or litigation), or change credit policies or standards other than
in the ordinary course of business consistent with past practice;
(8) create, incur or assume, or
agree to create, incur or assume, any indebtedness for borrowed money secured
by the Purchased Assets or enter into, as lessee, any capitalized lease
obligations (as defined in Statement of Financial Accounting Standards No. 13)
pertaining to the ESP Business;
(9) accelerate or delay collection
of any notes or United States accounts receivable generated by the ESP Business
in advance of or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of business consistent with
past practice;
(10) delay or accelerate payment of
any account payable or other liability of the ESP Business beyond or in advance
of its due date or the date when such liability would have been paid in the
ordinary course of business consistent with past practice;
(12) make, or agree to make, any
distribution of the Purchased Assets to any of Seller's Affiliates;
(13) make any material change in the
compensation of the Continuing Employees; or
(14) make any material change in the
accounting policies applied in the preparation of the Balance Sheet.
5.5. Notification by Seller of Certain
Matters. During the period prior to the Closing Date, Seller will promptly
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advise Purchaser in writing of (i) any Material Adverse Change, (ii) any notice
or other communication from any third Person alleging that the consent of such
third Person is or may be required in connection with the transactions
contemplated by this Agreement or any Ancillary Agreement, (iii) any material
default under any ESP Agreement or event which, with notice or lapse of time or
both, would become such a default on or prior to the Closing Date and of which
Seller has knowledge, (iv) to the Knowledge of Seller, the existence of any
facts or circumstances which render untrue or inaccurate any of the
representations and warranties made in Section 3, or which would change any of
the disclosure in the Schedules hereto if such Schedules were prepared as of
the date of such notice.
5.6. No Shopping; Other Similar Investment
Opportunities. Prior to the Closing Date or termination of this Agreement,
Seller agrees that neither it nor its Affiliates shall, directly or indirectly,
(i) solicit or initiate the submission of proposals or offers from any other
Person relating to a possible acquisition of the Purchased Assets, (ii)
solicit, initiate or enter into discussions relating to a possible acquisition
of the Purchased Assets, (iii) furnish to any other Person any information (not
already in the public domain) relating to the ESP Business for the purpose of
encouraging such Person to evaluate the desirability of submitting a proposal
or an offer to purchase or otherwise acquire the Purchased Assets or (iv)
assist, participate in, facilitate or encourage any effort or attempt by any
other Person to do or seek any of the foregoing, except in each case as may be
required by any applicable Requirements of Law and provided, however, that
Seller may do or take any action otherwise prohibited by this Section 5.6 in
the event that the Board of Directors of Seller or Difco determines in good
faith that the failure to do so would be inconsistent with its fiduciary
duties. Notwithstanding the foregoing, Seller may do or take any action
otherwise prohibited by this Section 5.6 in response to any unsolicited
inquiry, proposal or offer.
Section 6. Covenants of Seller.
Seller hereby covenants and agrees with Purchaser as follows.
6.1. Commercially Reasonable Efforts. Seller will
use commercial reasonable efforts to obtain the satisfaction of the conditions
to Closing within its control set forth in Section 9 and Section 11.
6.2. Confidentiality. Seller and its Affiliates
shall, and shall use commercially reasonable efforts to cause all
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its and their respective officers, directors, employees, accountants,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other Requirements of Law
(provided, that Seller or such Affiliate shall notify Purchaser as promptly as
practicable that it has been so compelled to allow Purchaser to obtain a
protective order), all confidential documents and information concerning the
ESP Business, except that such Persons shall be relieved of such obligations to
the extent that such information can be shown to have been (i) in the public
domain through no fault of Seller or any Affiliate thereof, (ii) later lawfully
acquired by Seller or any such Affiliate, as the case may be, from a
third-party, or (iii) (if a third-party acquires or is acquired by Difco or any
of its Affiliates) known to, or practiced by, such third-party if such
information was received by such third-party without an obligation of
confidentiality to a Party as to such information, or independently developed
by such third-party as of the date such third-party acquires, or is acquired
by, Difco or any of its Affiliates; and provided that Seller and any such
Affiliate may disclose such information to their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by Seller or such Affiliate, as the case may be, of the
confidential nature of such information and are directed by Seller or such
Affiliate, as the case may be, to treat such information confidentially. The
obligation of Seller and its Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their
own similar information.
6.3. Further Assurances. Following the Closing
and at the expense of Purchaser, Seller shall execute and deliver such other
bills of sale, assignments and other instruments of transfer or conveyance as
Purchaser may reasonably request or as may be otherwise necessary to evidence
and effect the sale, assignment, transfer, conveyance and delivery of the
Purchased Assets to Purchaser and shall take all steps and actions as Purchaser
may reasonably request or as may otherwise be necessary to put Purchaser in
actual possession or control of the Purchased Assets, including the ESP
Agreements.
Section 7. Covenants of Purchaser. Purchaser hereby
covenants and agrees with Seller as follows.
7.1. Commercially Reasonable Efforts.
Purchaser shall use commercially reasonable efforts to obtain the
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satisfaction of the conditions to Closing within its control set forth in
Section 10 and Section 11.
7.2. Confidentiality. Following the Closing Date,
Purchaser shall and shall cause its Affiliates to, and shall use commercially
reasonable efforts to cause all its and their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other Requirements of Law, all confidential documents and information
concerning the Excluded Assets, Excluded Liabilities and the respective
businesses of Seller and its Affiliates other than the ESP Business, except to
the extent that such information can be shown to have been (i) in the public
domain through no fault of Purchaser or any such Affiliate or other Person, or
(ii) later lawfully acquired by Purchaser or any such Affiliate or other
Person, as the case may be, from a third-party; provided that Purchaser and any
such Affiliate may disclose such information to their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by Purchaser or such Affiliate, as the case may be, of the
confidential nature of such information and are directed by Purchaser or such
Affiliate, as the case may be, to treat such information confidentially. The
obligation of Purchaser and its Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their
own similar information.
7.3. Post Closing Covenants.
(i) After the Closing, Purchaser shall
immediately notify and transfer to Seller any payments or other receipts it
receives that constitute Excluded Assets. Pending such transfer, Purchaser
shall segregate any such payments from its other assets and will clearly xxxx
or designate them as the Property of Seller.
(ii) Following the Closing, Purchaser
shall afford Seller, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data relating to the
ESP Business in its possession, with respect to periods through the Closing and
the right to make copies and extracts therefrom to the extent that such access
may be reasonably required by Seller in connection with (a) the preparation of
tax returns, (b) any tax audit, tax protest or other proceeding relating to
taxes, the determination or enforcement of rights and obligations under this
Agreement and the Ancillary Agreements and
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the transactions contemplated hereby and thereby, (d) compliance with
applicable law and regulations, including the requirements of any Governmental
Authority, (e) the determination or enforcement of the rights or obligations of
any Indemnified Party or Indemnifying Party, and/or (f) in connection with any
actual or threatened Proceeding. Further, Purchaser agrees for a period of ten
years after the Closing to not destroy or otherwise dispose of any such books,
records or data unless Purchaser shall first offer in writing to surrender such
books, records and other data to Seller and Seller shall not agree to take
possession thereof during the 30 day period after such offer is received.
Purchaser further agrees to cooperate with Seller in the conduct of any audit
or other proceeding related to Taxes involving the ESP Business.
(iii) If, in order to properly prepare
Seller's Tax returns, it is necessary that Seller be furnished with any
additional information, documents or records relating to the ESP Business not
referred to in Section 7.3(ii), and such information, documents or records are
in the possession or control of Purchaser, Purchaser shall use its best efforts
to furnish or make available such information, documents or records (or copies
thereof) at the Seller's request and cost.
Section 8. Additional Covenants and Agreements.
8.1. Public Announcements. Prior to the Closing, the
parties hereto agree that they will consult with each other before issuing any
press release or making any public statement with respect to this Agreement and
the Ancillary Agreements or the transactions contemplated hereby and thereby
and, except as may be required by applicable law or any listing agreement with
or rules of any national securities exchange or recognized quotation system,
will not issue any such press release or make any such public statement prior
to receiving the written consent (not to be unreasonably withheld) of the other
party.
8.2. Use of Names.
(i) Purchaser and its Affiliates are
hereby granted, for the six-month period beginning on the Closing Date, a
royalty-free right to state in its labeling and inserts for bottles only, that
the media used therein were manufactured by Difco or Difco Laboratories for
AccuMed or AccuMed International.
(ii) Purchaser and its Affiliates are
hereby granted a royalty-free right from and after the Closing Date (1) for a
period of up to six months following the Closing Date to sell Bottle Disposable
Products that are among Inventories that are among Purchased Assets on the
Closing Date and Bottle Disposable
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Products that are manufactured by Seller or an Affiliate (as applicable)
pursuant to the Manufacturing Agreement during a period of up to the earlier of
(x) the date on which labels with Purchaser's name are available in sufficient
volume and (y) the 30th day following the Closing Date, (2) until the earlier
of (x) the six-month anniversary of the Closing Date and (y) the date on which
Purchaser is first commercially reasonably able to release software version 4.1
relating to the ESP Product Line, to send to customers operator manuals and
service manuals containing the name of Seller and/or its Affiliates which are
among Purchased Assets, provided that Purchaser overlays such manuals with a
label indicating that the ESP Product Line has become a product of Purchaser
and indicates that all references to Seller and its Affiliates are to Purchaser
and its Affiliates, and (3) for a period of 30 days following the Closing Date,
Purchaser shall be entitled to use invoices bearing the name of Seller or Difco
if the invoice relates to an ESP product that is among the Purchased Assets
provided that Purchaser overlays a label thereon indicating that the ESP
Product Line has become a product of Purchaser and indicates that the related
ESP Agreement has been assigned to Purchaser.
(iii) Within 90 days following the Closing
Date, Purchaser (at Purchaser's expense) will revise, remove and/ or modify (as
applicable) all references to "Difco" or "Difco Laboratories," "MSD" or "Difco
Microbiology Systems" and replace such references with such other references as
Purchaser deems appropriate in the following, whether in Purchaser's possession
or stocked or warehoused for Purchaser or Seller by a third-party vendor: (1)
computer monitor screens generated by software included in the Purchased
Assets, and on each computer and instruments included in the Purchased Assets
and (2) all other instruments, Inventories and other Purchased Assets (and in
case of installed instruments not owned by Purchaser to use reasonable efforts
to do so).
8.3. Sales and Transfer Taxes.
(i) Seller shall be liable for and shall
pay all Taxes (whether assessed or unassessed) applicable to the ESP Business
or the Purchased Assets, in each case attributable to periods (or portions
thereof) ending on or prior to the Closing Date. Purchaser shall be liable for
and shall pay all Taxes (whether assessed or unassessed) applicable to the ESP
Business or the Purchased Assets, in each case attributable to periods (or
portions thereof) beginning after the Closing Date. For purposes of this
Section 8.3(i), any period beginning before and ending after the Closing Date
shall be treated as two partial periods, one
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ending on the Closing Date and the other beginning on the day after the Closing
Date.
(ii) Notwithstanding Section 8.3(i), any
Tax (including a sales Tax, use Tax, real property transfer or gains Tax, or
documentary stamp Tax) directly attributable to the sale or transfer of the
Purchased Assets (but in no event including any income Tax) shall be paid by
Purchaser. Purchaser and Seller agree to timely sign and deliver such
certificates or forms as may be necessary or appropriate to establish an
exemption from (or otherwise reduce), or make a report with respect to, such
Taxes.
(iii) Seller or Purchaser, as the case may
be, shall provide reimbursement for any Tax paid by one party all or a portion
of which is the responsibility of the other party in accordance with the terms
of this Section 8.3. Within a reasonable time prior to the payment of any said
Tax, the party paying such Tax shall give notice to the other party of the Tax
payable and the portion which is the liability of each party, although failure
to do so will not relieve the other party from its liability hereunder.
8.4. Continuing Employees; Other Employees.
Purchaser shall offer employment with Purchaser to only the Continuing
Employees. Purchaser shall have no liabilities or obligations with respect to
the employees of Seller who are not Continuing Employees, except to pay the
severance amounts listed on Schedule 3.18(ii). Seller expressly agrees that
Seller will hold Purchaser harmless from all liabilities and obligations to the
non-Continuing Employees, other than payment of the severance amounts set forth
on Schedule 3.18(ii), including pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985.
8.5. Supply Agreements. If requested by Seller or
Difco following the Closing (but in no event later than the six month
anniversary of the Closing Date), Seller and Purchaser shall negotiate in good
faith to enter into one or more Supply Agreements for the manufacture, supply
and/or provision (as applicable) by AccuMed to Difco and/or its Affiliates of
the products and services described on Schedule 8.5. The initial pricing for
the products and services shall be as set forth on Schedule 8.5 and the other
terms and conditions of the Supply Agreements(s) shall be no less favorable to
Difco and its Affiliates than the Manufacturing Agreement is to Purchaser.
Section 9. Conditions Precedent to Obligations of
Purchaser. The obligations of Purchaser to proceed with the Closing are
subject to the satisfaction on or prior to the Closing
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Date of all of the following conditions any one or more of which may be waived,
in whole or in part, by Purchaser:
9.1. Compliance; No Material Adverse Change.
(i) Seller shall have complied in all
material respects with the covenants and agreements contained herein which it
has agreed to perform on or prior to the Closing Date except for minor
noncompliance which are not in the aggregate material;
(ii) Each of Seller's representations and
warranties contained in this Agreement shall be made again on and shall be true
on and as of the Closing Date; and
(iii) Except that clause (i) and (ii) of
this condition shall be deemed to be satisfied notwithstanding that any
representation or warranty may not be true or covenant or agreement may have
not been complied with or may have been breached so long as the same shall not
reasonably be expected to have a Material Adverse Effect.
9.2. Officers' Certificates. Purchaser shall have
received a certificate, dated the Closing Date, of an executive officer of
Seller certifying as to the matters specified in Section 9.1.
9.3. Opinion of Seller's Counsel. Purchaser shall
have received an opinion of Miller, Canfield, Paddock and Stone, P.L.C.,
counsel for Seller, addressed to Purchaser, dated the Closing Date and
substantially in the form of Schedule 9.3.
9.4. Necessary Consents. Seller shall have
received consents, in form and substance reasonably satisfactory to Purchaser,
to the transactions contemplated hereby listed or referred to on Schedule 9.4.
9.5. Necessary Governmental Approvals. The
parties shall have received all approvals and actions of Governmental
Authorities, and obtained the issuance of all Governmental Permits in each case
as listed on Schedule 9.5.
9.6. Tender of Performance. Seller shall have
fully complied with the provisions of Section 2.
9.7. Release of Threatened Patent Infringement
Claim. Purchaser shall have received an executed copy of a Release executed
by a Person who has been identified to Purchaser as Beta but who for
confidentiality reasons is not identified herein in favor of Difco releasing
Difco, its Affiliates and their
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respective successors and assigns (expressly including Purchaser), from any and
all Claims of infringement of U.S. Patent (the number of which is not included
herein due to concerns for confidentiality but which has been disclosed to
Purchaser) in form and substance reasonably satisfactory to Purchaser.
Section 10. Conditions to Obligations of Seller.
The obligations of Seller to proceed with the Closing are
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions, any one or more of which may be waived, in whole or in
part, by Seller.
10.1. Compliance. Purchaser shall have complied in
all material respects with the covenants and agreements contained herein which
it has agreed to perform on or prior to the Closing Date, and each of its
representations and warranties contained in this Agreement shall be made again
on and shall be true on and as of the Closing Date.
10.2. Officers' Certificates. Seller shall have
received a certificate, dated the Closing Date, of an executive officer of
Purchaser certifying as to the matters specified in Section 10.1.
10.3. Opinion of Purchaser's General Counsel.
Seller shall have received an opinion of Xxxxx Xxxxxxx, Esq., General Counsel
of Purchaser, addressed to Seller, dated the Closing Date and substantially in
the form of Schedule 10.3.
10.4. Tender of Payment. Purchaser shall have fully
complied with the provisions of Section 2.10.
Section 11. Conditions Precedent to Obligations of Each
of Purchaser and Seller. The obligations of Purchaser and Seller to proceed
with the Closing are subject to the satisfaction on or prior to the Closing
Date of all of the following conditions, any one or more of which may be
waived, in whole or in part, by mutual agreement of Purchaser and Seller.
11.1. No Orders. The transactions contemplated
herein and in the Ancillary Agreements shall not violate any order or decree of
any court or Governmental Authority having competent jurisdiction.
11.2. Ancillary Agreements. Each of the Ancillary
Agreements shall have been executed and delivered by the respective parties
simultaneous with the Closing.
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11.3. No Restraining Order, Injunction or
Threatened Legal Action. No Proceeding exists before any Governmental
Authority against a party hereto, and no Claim has been asserted by any Person
or Governmental Authority, in either event which seeks to enjoin, restrain or
materially alter or adversely affect the transactions contemplated hereby, and
which in the reasonable good faith of such party is likely to render it
impossible, or unlawful, to consummate the transaction contemplated by this
Agreement or which could have a Material Adverse Effect on such party or the
ESP Business; provided, however, that the provisions of this Section 11.3 shall
not apply if the party seeking to invoke this provision has been a significant
factor in soliciting or encouraging such Claim or Proceeding.
11.4. Continuation of RELA Agreement. Until the
earlier to occur of (x) RELA shall have agreed in writing that the RELA
Agreement as in effect on the Closing Date will continue and inure to the
benefit of Purchaser (each amendment, if any, to the RELA Agreement entered
into after the date hereof and prior to the date on which such writing is
delivered shall be reasonably satisfactory to Purchaser), and (y) the
expiration of the applicable notice requirement to the assignment of the RELA
Agreement to Purchaser, Seller shall exercise Seller's rights under the RELA
Agreement pursuant to the instructions, and at the sole cost and expense, of
Purchaser to the extent Seller may do so under the RELA Agreement and
applicable law.
Section 12. Indemnification; Escrow.
12.1. Definitions. As used in this Agreement, the
term "Indemnifying Party" means the party requested to indemnify, hold harmless
or defend and the term "Indemnified Party" means each Person entitled to such
indemnity.
12.2. General Indemnification by Seller. From and
after the Closing Date, subject to the provisions of this Section 12, Seller
agrees to pay and to indemnify fully, hold harmless and defend Purchaser and
its Affiliates and their respective agents, officers, directors, employees,
consultants, representatives, successors and permitted assigns, from and
against any and all Losses and Expenses (whether based on negligent acts or
omissions, statutory liability, strict liability or otherwise) to the extent
arising out of, relating to or based upon allegations of the following.
(i) Any breach of any representation,
warranty or covenant of Seller contained in this Agreement.
(ii) any of the Excluded Liabilities.
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(iii) Each Claim or Proceeding pending as
of, or asserted prior to, the Closing Date before any court, arbitration or
Governmental Authority and judgments existing as of the Closing (including any
modifications thereafter to any such judgments), and any such Claim or
Proceeding threatened in writing at or prior to the Closing Date, in each case
whether or not arising from any violation of, or failure at any time prior to
the Closing Date to comply with, any Requirements of Law except any relating to
any of the Assumed Liabilities.
(iv) Each Claim or Proceeding that arises
on or after the Closing Date insofar and to the extent such Claim or Proceeding
arises from facts, circumstances or events that existed or arose before the
Closing Date except any relating to any of the Assumed Liabilities.
(v) Any violation of any Requirements of
Law as at or existing prior to the Closing Date except any relating to any of
the Assumed Liabilities.
12.3. Consideration of Tax Benefit. For purposes
of this Section 12, Losses and Expenses shall be computed with regard to any
future tax benefit from the payment by the Indemnified Party of the item of
Losses and Expenses giving rise to the indemnification payment.
12.4. Indemnification by Purchaser. From and after
the Closing Date, subject to the provisions of this Section 12.4 Purchaser
agrees to pay and to indemnify fully, hold harmless and defend Seller, its
Affiliates and their respective agents, officers, directors, employees,
servants, consultants, advisers, representatives, successors and permitted
assigns of each such Person, from and against any and all Losses and Expenses
(whether based on negligent acts or omissions, statutory liability, strict
liability or otherwise) to the extent arising out of, relating to or based upon
(i) any breach of any representation, warranty or covenant of Purchaser
contained in this Agreement, (ii) the Assumed Liabilities, (iii) the operation
of the ESP Business on and after the Closing Date, and (iv) any Claim or
Proceeding that arises on or after the Closing Date in connection with the
operation of the ESP Business on and after the Closing Date.
12.5. Notice of Claims.
(i) A party seeking indemnification
hereunder shall deliver to the party obligated to provide indemnification to
such Indemnified Party a notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to any claim for
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indemnification hereunder and shall include in such Claim Notice (if then
known) the amount or the method of computation of the amount of such claim, and
a reference to the provision of this Agreement upon which such claim is based;
provided, that a Claim Notice in respect of any action at law or suit in equity
by or against a third Person as to which indemnification will be sought shall
be given promptly after the action or suit is commenced; provided, further that
failure to give such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent it shall have been prejudiced by
such failure.
(ii) After the giving of any Claim Notice
pursuant hereto, the amount of indemnification to which an Indemnified Party
shall be entitled under this Section 12 shall be determined: (1) by the
written agreement between the Indemnified Party and the Indemnifying Party; (2)
by arbitration in accordance with Section 19; or (3) by any other means to
which the Indemnified Party and the Indemnifying Party shall agree. The
Indemnified Party shall have the burden of proof in establishing the amount of
Loss and Expense suffered by it.
12.6. Third Person Claims.
(i) Subject to Section 12.6(ii), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, and at Indemnified Party's expense, the defense, compromise or
settlement of any Claim or Proceeding against such Indemnified Party whether or
not indemnification will be sought by any Indemnified Party from any
Indemnifying Party hereunder, and in any such case the Indemnifying Party shall
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnified Party in
connection therewith; provided, that the Indemnifying Party may participate,
through counsel chosen by it and at its own expense, in the defense of any such
Claim or Proceeding as to which the Indemnified Party has so elected to conduct
and control the defense thereof; and provided, further, that the Indemnified
Party shall not, without the written consent of the Indemnifying Party (which
written consent shall not be unreasonably withheld), pay, compromise or settle
any such Claim or Proceeding, except that no such consent shall be required if,
following a written request from the Indemnified Party, the Indemnifying Party
shall fail, within 21 days after the date such request is deemed delivered, to
acknowledge and agree in writing that, if such Claim or Proceeding shall be
adversely determined, such Indemnifying Party has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall
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have the right to pay, settle or compromise any such Claim or Proceeding
without such consent, provided that in such event the Indemnified Party shall
waive any right to indemnity therefor hereunder unless such consent is
unreasonably withheld. The Indemnified Party may request the Indemnifying
Party to conduct and control its defense of such Claim in which event the
Indemnifying Party shall, subject to the provisions of this Section 12.6(i)
relating to compromise or settlement, undertake the defense thereof.
(ii) If any Claim or Proceeding against
any Indemnified Party is solely for money damages or, where Seller is the
Indemnifying Party, will have no continuing effect in any material respects on
the ESP Business, then the Indemnifying Party shall have the right to conduct
and control, through counsel of its choosing, the defense, compromise or
settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnifying Party hereunder if the Indemnifying Party has
acknowledged and agreed in writing that, if the same is adversely determined,
the Indemnifying Party has an obligation to provide indemnification to the
Indemnified Party in respect thereof, and in any such case the Indemnified
Party shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnifying
Party in connection therewith; provided, that the Indemnified Party may
participate, through counsel chosen by it and at its own expense, in the
defense of any such claim, action or suit as to which the Indemnifying Party
has so elected to conduct and control the defense. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit, provided that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder unless
the Indemnified Party shall have sought the consent of the Indemnifying Party
to such payment, settlement or compromise and such consent was unreasonably
withheld, in which event no claim for indemnity therefor hereunder shall be
waived.
12.7. Coordination of Indemnification Rights.
(i) Except for any action seeking
specific performance and/or injunctive relief for the breach of any covenant
contained in this Agreement, the indemnification provided to any Person
pursuant to this Agreement shall be such Person's sole remedy for any breach by
any party hereto of any representation, warranty or covenant contained in this
Agreement or in connection with the consummation of the transactions
contemplated hereby.
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(ii) Notwithstanding any provisions to
the contrary contained in this Agreement, the right of any Person to be
indemnified, defended and/or held harmless in connection with any claim
pursuant to any Section of this Agreement shall be reduced to the extent that
such Person is or has been indemnified, defended and/or held harmless pursuant
to any provision of this Agreement or any Ancillary Agreements in respect of
all Losses and Expenses which are the subject of such claim.
(iii) In the event that an Indemnified
Party has a right of recovery against any third party with respect to any
damages in connection with which a payment is made to such Indemnified Party by
an Indemnifying Party, then (1) such Indemnifying Party shall, to the extent of
such payment, be subrogated to all of the rights of recovery of such
Indemnified Party against such third party with respect to such Losses and
Expenses and (2) such Indemnified Party shall, at no expense to the Indemnified
Party, execute all documents required and take all action reasonably necessary
to secure such rights, including the execution of such documents as are
necessary to enable such Indemnifying Party to bring suit to enforce such
rights.
12.8. Limit on Indemnification; Disbursement of
Escrowed Funds.
(i) Seller's indemnification obligation
to Purchaser and the other Indemnified Parties described in Section 12.2, shall
be limited to payment of up to the amount of the Escrowed Funds which shall be
the sole source of recourse for Purchaser and the other Indemnified Parties
described in Section 12.2.
(ii) No Indemnified Party shall be
entitled to payment of any amount in respect of the Losses and Expenses
relating to a Claim Notice unless the aggregate amount exceeds $50,000 (the
"Deductible Amount"), in which case, the Indemnified Party shall be entitled to
the full amount of such Losses and Expenses in excess of the Deductible Amount
subject to the further provisions of this Agreement.
(iii) The Escrowed Funds shall be
disbursed in accordance with the Escrow Agreement, which provides, among other
things, that (1) if no Claim Notice shall have been filed by Purchaser on or
prior to the first anniversary of the Closing Date, the Escrowed Funds will be
disbursed to Seller, and (2) if a Claim Notice has been filed with by Purchaser
on or prior to the first anniversary of the Closing Date, the amount of
Escrowed Funds that are sought in such Claim Notice shall remain in the Escrow
Account
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until final resolution of the Claim described in each such Claim Notice in
accordance with Section 12.5(ii).
12.9. Exclusive Remedy. From and after the Closing
Date, the recourse of Purchaser and the other Indemnified Parties described in
Section 12.2 to the Escrow Account for indemnification claims as provided in
this Agreement and the Escrow Agreement shall be the sole and exclusive remedy
and recourse for any breach of this Agreement or any other claim by Purchaser
and the other Indemnified Parties described in Section 12.2 under or with
respect to this Agreement or any of the transactions contemplated hereby and
Purchaser and the other Indemnified Parties described in Section 12.2 shall
have no other entitlement, remedy or recourse, whether in contract, tort or
otherwise, against Seller and the other Indemnified Parties described in
Section 12.4, all of such entitlement, remedies and recourse being hereby
expressly waived by Purchaser and the other Indemnified Parties described in
Section 12.2. In addition, the amount of indemnification obligations pursuant
to this Section 12 shall be the maximum amount of such Seller's indemnification
obligation hereunder, and Purchaser shall not be entitled to a rescission of
this Agreement or to any further indemnification rights or claims of any nature
whatsoever, all of which Purchaser hereby waives.
12.10. No Other Representations.
(i) Notwithstanding anything to the
contrary contained in this Agreement, Purchaser acknowledges and agrees that
except for the representations and warranties made by the Seller in Section 3
hereof, (a) the Purchased Assets and the ESP Business are being conveyed to
Purchaser on an "AS IS and WHERE IS" basis and (b) SELLER IS NOT MAKING ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE DESIGN, CAPACITY, CONDITION, SAFETY, PERFORMANCE, VALUE,
UTILITY, COMPLIANCE WITH LAWS OR REGULATIONS OR OTHERWISE IN CONNECTION WITH
THE SALE, ASSIGNMENT OR TRANSFER OF THE PURCHASED ASSETS OR THE ESP BUSINESS,
THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY MATTER RELATED HERETO, NOR IS IT
MAKING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED. Without limitation of
the foregoing, Purchaser acknowledges and agrees that the Seller has not made
any representations or warranties to Purchaser with respect to any projections
or forecasts relating to the ESP Business or the Purchased Assets, or any other
information that may have been provided to Purchaser in connection with the
transactions contemplated hereby or under the Ancillary Agreements and
Purchaser has not relied upon any projections, forecasts or other information.
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(ii) Purchaser hereby acknowledges and
agrees that it shall have, and make, no claim or any kind or character
whatsoever, and shall have no remedy or recourse against any officer, director,
shareholder, employee, agent, Affiliate, successor or assign of the Seller
under or in connection with this Agreement, any of the Ancillary Agreements or
the transactions contemplated hereby or thereby, whether in contract, tort or
otherwise, other than as provided herein, and Purchaser hereby expressly waives
any right or entitlement to any such claim, remedy or recourse, except that
Section 12 shall also be for the benefit of and shall be enforceable by each
Indemnified Party.
(iii) The limitations on Purchaser's
claims, rights and remedies set forth in this Agreement are a material
consideration for Seller's willingness to enter into this Agreement, the
Ancillary Agreements and to consummate the transactions contemplated hereby.
12.11 Excluded Indemnification Claim.
Notwithstanding anything to the contrary contained herein, it is the explicit
intention of the parties that Purchaser and the Indemnified Parties described
in Section 12.2 shall have no right to indemnification (or recourse to the
Escrow Account), and no other remedy shall be had in contract, tort or
otherwise, for any individual Claim or series or group of related Claims, in so
far as the Chief Executive Officer, Chief Financial Officer, President
Microbiology Division, General Counsel and/or Microbiology Marketing Manager of
Purchaser had actual knowledge of facts, circumstances or conditions on or
prior to the Closing Date that would reasonably be believed to cause or
constitute a breach of representations, warranties or covenants of Seller
contained herein which are alleged in such Claim or series or group of Claims
to have been breached (an "Excluded Indemnification Claim"). Purchaser hereby
agrees and expressly waives any right or entitlement to indemnification under
this Agreement and any other remedy or recourse in contract, tort or otherwise,
in respect to any such Excluded Indemnification Claim.
Section 13. Termination.
13.1. Termination. Anything contained in this
Agreement to the contrary notwithstanding, this Agreement may be terminated at
any time prior to the Closing Date.
(i) by the mutual written consent of
Purchaser and Seller;
(ii) by Purchaser or Seller if the
Closing shall not have occurred on or before March 31, 1997 (or such later
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date as may be mutually agreed to by Purchaser and Seller), provided that, the
terminating party is not in breach of any of its obligations, agreements,
covenants, representations or warranties pursuant to this Agreement or any
Ancillary Agreement;
(iii) by Purchaser in the event of any
material breach by Seller of any of Seller's agreements, representations,
warranties or covenants contained herein and the failure of Seller to cure such
breach within the longer of (x) ten business days after the date on which
notice from Purchaser requesting such breach to be cured is deemed delivered
and (y) the number of days remaining prior to the Closing Date;
(iv) by Seller in the event of any
material breach by Purchaser of any of Purchaser's agreements, representations,
warranties or covenants contained herein and the failure of Purchaser to cure
such breach within the longer of (x) ten business days after the date on which
notice from Purchaser requesting such breach to be cured is deemed delivered
and (y) the number of days remaining prior to the Closing Date;
(v) by Seller or by Purchaser if the
consummation of the transactions contemplated herein or in any Ancillary
Agreement would violate any nonappealable final order, decree or judgment of
any court or Governmental Authority having competent jurisdiction.
(vi) by Seller if it shall receive a
proposal relating to the disposition of the ESP Business and the Purchased
Assets and if the Board of Directors of Seller or DIFCO determines in good
faith that such termination is appropriate in connection with the proper
exercise of its fiduciary duties (provided, that in such event, Seller shall
pay to Purchaser the greater of $150,000 or the reasonable documented
out-of-pocket expenses incurred by Purchaser directly in connection with the
negotiation and investigation of the transactions contemplated in this
Agreement. Purchaser shall provide Seller with an estimate of such expenses
upon request. Upon such payment by Seller, Seller shall have no other or
further obligation or liability to Purchaser under this Agreement or related to
the transactions contemplated hereby.
13.2. Notice of Termination. Any party desiring to
terminate this Agreement pursuant to Section 13.1 shall give written notice of
such termination to the other party to this Agreement.
13.3. Effect of Termination. If this Agreement
shall be terminated pursuant to this Section 13, all further obligations of the
parties under this Agreement (other than
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pursuant to Section 26) shall be terminated without further liability of any
party to the other, provided that nothing herein shall relieve any party from
liability for its breach of this Agreement.
Section 14. Survival of Representations, Warranties,
Covenants and Agreements. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing for a period of one year except that
covenants which by their terms are to be performed after the Closing shall
survive in accordance with their respective terms.
Section 15. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF MICHIGAN WITHOUT
GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 16. Notices. All notices given pursuant to this
Agreement shall be in writing and shall be made by hand- delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
overnight air courier guaranteeing next business day delivery to the relevant
address specified below. Except as otherwise provided in this Agreement, each
such notice shall be deemed given: at the time delivered by hand, if personally
delivered or mailed; when answered back, if telexed; when receipt is
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next business day
delivery.
If to Purchaser, to:
AccuMed International, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Chief Executive Officer
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
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with a copy to:
AccuMed International, Inc.
0000 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx
Attention: Xx. Xxxxx X. Xxxxxxx
General Counsel
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to Seller, to:
Difco Microbiology Systems, Inc.
00000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Treasurer
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
with a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
or to such other address as such party may indicate by a notice delivered to
the other party hereto.
Section 17. Books and Records. Seller will, not later
than 60 days after the Closing Date, deliver or cause to be delivered to
Purchaser all books and records constituting a part of the Purchased Assets, to
the extent not previously delivered to Purchaser and to the extent not required
by Seller or an Affiliate to perform its obligations pursuant to the
Manufacturing Agreement, in which case, Seller, at the request and expense of
Purchaser, shall provide Purchaser a copy thereof.
Section 18. Injunctive Relief. Each of the parties
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved
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party may be without an adequate remedy at law. Each of the parties therefore
agrees that in the event of such a breach hereof the aggrieved party may elect
to institute and prosecute proceedings in any court of competent jurisdiction
to enforce specific performance or to enjoin the continuing breach hereof. By
seeking or obtaining any such relief, the aggrieved party will not be precluded
from seeking or obtaining any other relief to which it may be entitled.
Notwithstanding Section 19, if Purchaser shall desire to seek specific
performance or any other extraordinary or provisional relief including, but not
limited to, injunctive relief under this Agreement and any amendments hereto,
then any such action shall not be subject to arbitration. In the event that
Purchaser elects, in its sole discretion, to seek such extraordinary or
provisional relief from a court having jurisdiction thereof, Seller agrees to
submit to the non-exclusive jurisdiction of the federal and/or state courts
located in the State of Michigan and waives any and all objections to
jurisdiction and venue that it may have under the laws or court rules of any
state or the United States or court.
Section 19. Arbitration. Except as otherwise provided in
this Agreement, Seller and Purchaser agree that any claim, controversy or
dispute arising out of or relating to this Agreement, the interpretation of any
of the provisions hereof, shall be submitted to neutral, binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (or any successor thereto) and the Federal Arbitration Act, 9
U.S.C.A. sections 1-14 shall apply. Any award or decision obtained from any
such arbitration proceeding shall be final and binding on the parties, and
judgment upon any award thus obtained may be entered in any court having
jurisdiction thereof. Any such arbitration shall be conducted in Livonia,
Michigan (or such other location in the State of Michigan as the Parties may
agree).
Section 20. Successors and Assigns.
(i) Prior to the Closing, the rights of
either party under this Agreement shall not be assigned by such party without
the prior written consent of the other party.
(ii) After the Closing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns. Seller and Purchaser may assign this
Agreement to any of their respective Affiliates or to any Person acquiring all
or substantially all of their respective assets provided that any such assignee
shall first deliver to the other party an agreement pursuant to which the
assignee assumes all of the assignor's obligations under this Agreement and
agrees to be bound by all terms and conditions of this Agreement and the
assignor shall notwithstanding any such assignment remain liable for all of its
obligations hereunder. Nothing in this Agreement,
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expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties and successors and assigns permitted by this
Section 20 any right, remedy or claim under or by reason of this Agreement.
Section 21. Entire Agreement. This Agreement and the
Exhibits and Schedules hereto together with the Ancillary Agreements contain
the entire understanding of the parties with regard to the subject matter
contained herein and therein, and supersede all prior agreements and
understandings between the parties including expressly the Offer Term Sheet
dated as of November 25, 1996 and except for the Confidentiality Agreement.
Section 22. Amendments. This Agreement shall not be
amended, modified or supplemented except by a written instrument signed by an
authorized representative of each of the parties.
Section 23. Interpretation. Section headings herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits hereto shall be construed with and as an integral part of this
Agreement to the same extent as if they were set forth verbatim herein.
Section 24. Waivers. Any term or provision of this
Agreement may be waived, or the time for its performance may be extended, by
the party or parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently authorized for the purposes of this Agreement if, as
to any party, it is authorized in writing by an authorized representative of
such party. The failure of any party to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the
right of any party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to constitute a waiver of
any other or subsequent breach.
Section 25. Expenses. Each party shall pay all costs and
expenses incident to its negotiation and preparation of this Agreement and the
Ancillary Agreements and to its performance and compliance with all agreements
and conditions contained herein or therein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel
and accountants, except as otherwise set forth herein;
Section 26. Partial Invalidity. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but in case any one or
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more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable, in which
case the parties will negotiate in good faith to enter into appropriate
amendments hereto.
Section 27. Execution in Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be considered
an original instrument, and all of which taken together shall constitute one
and the same agreement, and shall become binding when one or more counterparts
have been signed by each of the parties hereto and delivered to each of Seller
and Purchaser.
Section 28. Bulk Transfer Laws. The parties expressly
waive compliance with the bulk transfer and comparable statutory provisions of
all applicable laws of all applicable jurisdictions.
Section 29. Schedules. Disclosure of any fact or item in
any Schedule hereto referred by a particular Section shall, should the
existence of the fact or item or its contents be relevant to any other Section,
be deemed to be disclosed with respect to such other Section(s) whether or not
an explicit cross reference appears and whether or not the Section(s) make
reference to any Schedule. The disclosure of any particular fact or item in
any Schedule shall not be deemed any admission as to whether the fact or item
is "material" or would constitute a "Material Adverse Effect" or a "Material
Adverse Change."
Section 30. Seller Extraordinary Transaction. Nothing in
this Agreement or any of the Ancillary Agreements is intended to, nor shall,
restrict, limit or prevent in any fashion the ability of Difco to consummate
any merger, sale of assets or other business combination transaction and no
covenants of Seller or any covenants imposed on any Affiliate of Seller
hereunder, if any, shall bind or apply to any acquiror or its respective
Affiliates or assets solely by virtue of this Agreement or any Ancillary
Agreement, except only those imposing obligations of confidentiality.
[The remainder of this page has been left blank intentionally.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ACCUMED INTERNATIONAL, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------
Xxxxxxx X. Xxxxx
President, Microbiology Division
DIFCO MICROBIOLOGY SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXXX
--------------------------------
Xxxxxxx X. Xxxxxxx
President
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