EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
dated as of
February 13, 1998,
by and among
SERACARE, INC.,
a Delaware corporation,
as Buyer
and
CONSOLIDATED TECHNOLOGIES, INC.,
a Texas corporation, and
CONCO ASSOCIATES, INC. (dba Cone Biotech),
a Texas corporation
as Sellers
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................1
ARTICLE II PURCHASE OF ASSETS/DISCHARGE OF LIABILITIES/CLOSING........8
2.1 Purchase and Sale of Assets................................8
2.2 Assumption of Certain Liabilities.........................10
2.3 Purchase Price and Allocation.............................11
2.4 Right to Offset Against Buyer Shares......................13
ARTICLE III CLOSING...................................................13
3.1 Closing Matters...........................................13
3.2 Items to be Delivered at the Closing By Seller............14
3.3 Items to be Delivered at the Closing by Buyer.............15
3.4 Resale of Inventory.......................................15
3.5 Third Party Approvals.....................................15
ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS.....16
4.1 Organization, Good Standing and Related Matters...........16
4.2 Authorization; No Conflicts...............................17
4.3 Financial Statements; Changes; Contingencies..............17
4.4 Tax and Other Returns and Reports.........................19
4.5 Material Contracts........................................20
4.6 Intentionally Omitted.....................................21
4.7 Real and Personal Property; Title to and Condition
of Purchased Assets; Leases...............................21
4.8 Intangible Property.......................................22
4.9 Legal Proceedings.........................................23
4.10 Labor Relations...........................................24
4.11 Insurance.................................................24
4.12 Permits and Licenses......................................24
4.13 Compliance with Law.......................................25
4.14 Employee Benefits.........................................25
4.15 Certain Interests.........................................27
4.16 No Brokers or Finders.....................................27
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4.17 Accuracy of Information...................................27
4.18 Inventories...............................................28
4.19 Customers and Suppliers...................................28
4.20 Environmental Compliance..................................28
4.21 Investment Intent.........................................29
4.22 Business Relationship.....................................29
4.23 Disclosure/Legend.........................................29
4.24 Rule 144..................................................30
4.25 Powers of Attorney........................................30
4.26 Capital Adequacy and Reasonably Equivalent Value
for the Purchased Assets..................................30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER...................31
5.1 Organization and Related Matters..........................31
5.2 Authorization.............................................31
5.3 No Conflicts..............................................31
5.4 No Brokers or Finders.....................................32
5.5 Legal Proceedings.........................................32
5.6 Buyer's Stock.............................................32
5.7 Accuracy of Information in Exchange Act Reports...........32
ARTICLE VI COVENANTS WITH RESPECT TO CONDUCT OF THE SELLERS
PRIOR TO CLOSING..........................................33
6.1 Access....................................................33
6.2 Material Adverse Changes; Reports;
Financial Statements......................................33
6.3 Conduct of Business.......................................34
6.4 Notification of Certain Matters...........................36
6.5 Permits and Approvals.....................................36
6.6 Preservation of Business Prior to Closing Date............37
6.7 Payments to Creditors.....................................37
6.8 Passage of Title and Risk of Loss.........................37
ARTICLE VII ADDITIONAL CONTINUING COVENANTS...........................37
7.1 Employment Matters........................................38
7.2 Expenses and Taxes........................................38
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7.3 Payment of Costs Associated with Lease Assignments........38
7.4 Registration Rights.......................................39
7.5 Nomination of WJC to Board of Directors...................39
7.6 Discharge of Company Liabilities..........................39
7.7 Intentionally Omitted.....................................39
7.8 Proration of Recurring Expenses...........................40
7.9 Real Property Transfer Documentation......................40
7.10 Maintenance of Books and Records..........................41
7.11 Payments Received.........................................41
ARTICLE VIII CONDITIONS OF PURCHASE....................................41
8.1 General Conditions........................................41
8.2 Conditions to Obligations of Buyer........................42
8.3 Conditions to Obligations of the Sellers..................43
ARTICLE IX TERMINATION OF OBLIGATIONS; SURVIVAL......................44
9.1 Termination of Agreement..................................44
9.2 Effect of Termination.....................................44
ARTICLE X INDEMNIFICATION...........................................45
10.1 Indemnification of Buyer..................................45
10.2 Indemnification of the Sellers............................46
10.3 Procedure.................................................47
10.4 Survival..................................................48
10.5 Notice....................................................49
10.6 Not Exclusive Remedy......................................49
10.7 Aggregate Dollar Limitation...............................49
ARTICLE XI ARBITRATION...............................................49
11.1 Arbitration...............................................49
11.2 Judicial Arbitration and Mediation
Services, the Sellers.....................................49
11.3 Arbitration Panel.........................................50
11.4 Provisional Remedies......................................50
11.5 Enforcement of Judgment...................................50
11.6 Discovery.................................................50
11.7 Consolidation.............................................50
11.8 Power and Authority of Arbitrator.........................51
11.9 Law to be Applied.........................................51
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11.10 Costs.....................................................51
ARTICLE XII GENERAL...................................................51
12.1 Amendments; Waivers.......................................51
12.2 Schedules; Exhibits; Integration..........................51
12.3 Best Efforts; Further Assurances..........................52
12.4 Governing Law.............................................52
12.5 Assignment................................................53
12.6 Headings..................................................53
12.7 Counterparts..............................................53
12.8 Publicity and Reports.....................................54
12.9 Confidentiality...........................................54
12.10 Parties in Interest.......................................54
12.11 Notices...................................................54
12.12 Expenses..................................................55
12.13 Remedies; Waiver..........................................56
12.14 Attorney's Fees...........................................56
12.15 Knowledge Convention......................................56
12.16 Representation By Counsel; Interpretation.................56
12.17 Specific Performance......................................57
12.18 Severability..............................................57
SCHEDULES
SCHEDULE 1.1 Products
SCHEDULE 2.1(a) Purchased Assets
SCHEDULE 2.2(b) Assumed Liabilities
SCHEDULE 2.3 Purchase Price Allocation
SCHEDULE 2.4 Sellers Liabilities
SCHEDULE 4.1 Jurisdictions in which Sellers is Required to be Qualified
to Do Business as a Foreign Person; Directors and Executive
Officers
SCHEDULE 4.2 Permits and Approvals
SCHEDULE 4.3 Capitalization
SCHEDULE 4.3(a) Audited Financial Statements
SCHEDULE 4.3(b) Unaudited Interim Financial Statements
SCHEDULE 4.3(c) Auditors' Letters
SCHEDULE 4.3(d) Material Adverse Changes
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SCHEDULE 4.3(e) Liabilities
SCHEDULE 4.4 Tax Returns
SCHEDULE 4.5 Material Contracts
SCHEDULE 4.5(b) Assumed Contracts
SCHEDULE 4.7(a) Real and Personal Property
SCHEDULE 4.8 Intangible Property
SCHEDULE 4.9 Orders, Actions and Labor Matters
SCHEDULE 4.10 Labor Relations
SCHEDULE 4.11 Insurance
SCHEDULE 4.12 Permits and Licenses
SCHEDULE 4.13 Law Compliance
SCHEDULE 4.13(a) Licenses Related to the Business
SCHEDULE 4.14(a)(i) Employee Benefit Plans, and Collective Bargaining and
Employee Agreements
SCHEDULE 4.14(a)(vii) Employees, Consultants and Agents Entitled to Severance,
Parachute or Other Payments or Benefits
SCHEDULE 4.15 Certain Interests
SCHEDULE 4.19 Customers and Suppliers
SCHEDULE 4.20 Environmental Compliance
SCHEDULE 5.6 Buyer's Stock
SCHEDULE 7.6 Liabilities and Obligations of Sellers
SCHEDULE 7.9 Real Property Owned by Sellers
SCHEDULE 8.2(e) Assignment of Intellectual Property Rights
SCHEDULE 8.2(g) Permitted Liens
EXHIBITS
Exhibit A Percentage Interest in the Sellers
Exhibit B Xxxx of Sale
Exhibit C Assignment and Assumption of Lease
Exhibit D Assignment and Assumption Agreement
Exhibit E Form of Opinion of Counsel of the Sellers
Exhibit F Non-Competition Agreement
Exhibit G Opinion of Counsel of the Buyer
Exhibit H Registration Rights
Exhibit I Employment Agreement of Xxxxxxx X. Xxxx
Exhibit J Employment Agreement of Xxxxx Xxxx
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of February 13,
1998, by and among SeraCare, Inc., a Delaware corporation ("Buyer"),
Consolidated Technologies, Inc., a Texas corporation ("CTI") and Conco
Associates, Inc., a Texas corporation ("Biotech") (collectively referred to
herein as the "Sellers") (the Buyer and the Sellers are collectively referred
to herein as the "Parties" or individually as the "Party").
B A C K G R O U N D
A. The Sellers develop and manufacture intermediate biological
materials, invitro diagnostic products and proficiency testing specimens; and
X. Xxxxxxx desire to sell, and Buyer desires to purchase, such
business and certain of the assets used therein on the terms and conditions
set forth in this Agreement.
A G R E E M E N T
In consideration of the mutual covenants and agreements as set
forth herein and intending to be legally bound, the Parties agree as follows:
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Article I have the meanings assigned to them in this Article I and include
the plural as well as the singular,
all accounting terms not otherwise defined herein have the meanings
assigned under generally accepted accounting principles,
all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of the body of this Agreement,
pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms, and
the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"Acquisition" means the acquisition of the Purchased Assets by the
Buyer as contemplated by this Agreement.
"Action" means any action, complaint, petition, investigation, suit
or other proceeding, whether civil or criminal, in law or in equity, or
before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person.
"Agreement" means this Agreement by and among the Buyer and the
Sellers, as such may be amended or supplemented, together with all Exhibits
and Schedules attached or incorporated by reference.
"Approval" means any approval, authorization, assignment, consent,
qualification or registration, or any waiver of any of the foregoing,
required to be obtained from, or any notice, statement or other communication
required to be filed with or delivered to, any Governmental Entity or any
other Person.
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"Associate" of a Person means:
a corporation or organization (other than a Party to this
Agreement) of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities;
any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar capacity; and
any relative or spouse of such Person or any relative of such
spouse who has the same home as such Person or who is a director or officer
of the Sellers or any of their Affiliates.
"Assumed Contracts" means the Leases and each Contract of the
Sellers specifically identified on Schedule 4.5 as a Contract which will be
assigned to and assumed by Buyer.
"Assumed Liabilities" has the meaning specified in Section 2.2(b).
"Auditors" means BDO Xxxxxxx LLP, independent public accountants to
the Sellers.
"Business" means the business of the Sellers, and shall be deemed
to include any of the following incidents of such business: income, cash
flow, operations, condition (financial or other), assets, properties,
anticipated revenues and income, prospects, liabilities, personnel and
management, but shall not include the Excluded Assets.
"Buyer Shares" has the meaning set forth in Section 2.3.
"Buyer's Common Stock" means the common stock, par value $.001 per
share, of SeraCare, Inc.
"Closing" means the consummation of the purchase and sale of the
Purchased Assets under this Agreement.
"Closing Date" means the date of the Closing.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
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"Confidential Information" means all information and material which
is proprietary to a party, whether or not marked as "confidential" or
"proprietary," which is disclosed to the other and relates to the party's
past, present or future business activities, including, without limitation,
all of the following: data, documentation, diagrams, flow charts, research,
development, processes, procedures, Know How, new product information,
marketing techniques and materials, marketing timetables, strategies and
development plans, including trade names, trademarks, client supplier or
personnel names and other information related to clients, suppliers or
personnel, pricing policies, projections and other financial information, and
other information of a similar nature, whether or not reduced to writing or
other tangible form, and any other Trade Secrets or non-public business
information. Confidential Information shall not include information which
(i) is currently in the public domain or subsequently comes into the public
domain through no fault of the receiving party and not in breach of this
Agreement; (ii) was already known to the receiving party on the date of
disclosure through a proper and lawful source, provided that such prior
knowledge can be substantiated and proved by documentation; or (iii) properly
and lawfully becomes available to the receiving party from sources
independent of the party.
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, Leases, license or
understanding, whether or not in writing.
"Customer Deposits" means all deposits paid to the Sellers in
connection with the Business on account of merchandise purchased by customers
and not delivered by the Sellers prior to the Closing Date and all amounts
received by the Sellers in payment for services (or portions thereof) to be
rendered in connection with the Business on or after the Closing Date.
"Encumbrance" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others,
or restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any
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applicable federal or state securities law and except for any encumbrance
securing payment or performance of any Assumed Liability.
"Equity Securities" means any capital stock or other equity
interest or any securities convertible into or exchangeable for capital stock
or any other rights, warrants or options to acquire any of the foregoing
securities.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended, and the related regulations and published interpretations.
"Exchange Act" means the U.S Securities Exchange Act of 1934, as
amended.
"Excluded Assets" means the assets identified in Section 2.1(b).
"Excluded Liabilities" has the meaning specified in Section 2.2(a).
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state
or local, domestic or foreign.
"Hazardous Substance" means substances that are defined or listed
in, or otherwise classified pursuant to, any applicable Laws as "hazardous
substances," "hazardous materials," "hazardous wastes" or "toxic substances,"
or any other formulation intended to define, list or classify substances by
reason of deleterious properties such as ignitibility, corrosivity,
reactivity, radioactivity, carcinogenicity, reproductive toxicity or "EP
toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude
oil, natural gas or geothermal energy.
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"Indemnifiable Claim" means any Loss for or against which any party
is entitled to indemnification under this Agreement
"Indemnified Party" means the Party entitled to indemnity under this
Agreement.
"Indemnifying Party" means the Party obligated to provide
indemnification under this Agreement.
"Intangible Property" means any patents, patent applications (pending
or otherwise), industrial and intellectual property rights, copyrights,
unpublished works, inventions, Trade Secrets, Know How, research and
development findings, computer firmware and software (existing in any form),
marketing rights, contractual rights, licenses and all related agreements and
documentation, and all Marks.
"Intellectual Property Rights" means all industrial and intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service xxxx applications, copyrights, computer programs and other computer
software, inventories, Know How, Trade Secrets, proprietary processes and
formulae.
"Inventory" has the meaning specified in Section 2.1(a).
"IRS" means the U.S. Internal Revenue Service or any successor
entity.
"Know How" means any information, including, but not limited to,
invention records, research and development records and reports, experimental
and engineering reports, pilot designs, production designs, production
specifications, raw material specifications, quality control reports and
specifications, drawings, photographs, models, tools, parts, algorithms,
processes, methods, market and competitive analysis, or other information
possessed by the Sellers, whether or not considered proprietary or a Trade
Secret.
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"Law" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order.
"Leases" mean (a) that certain lease agreement dated July 10, 1989 by
and between Biotech and Teachers Realty Corporation , as amended and as
assigned to CTI pursuant to that certain Assignment of Lease and Assumption
Agreement dated March 6, 1990, and (b) that certain Real Estate Lease dated
January 1, 1994, between Xxxxxx X. Xxxx and Xxxxxxx X. Xxxx as landlord and CTI
as Tenant relating to the premises located at 0000 Xxxxxxxxx 00, Xxxxxx, Xxxxx
00000, in each case relating to the real property leasehold interests used by
the Sellers in connection with the operation of the Business, together with all
amendments, modifications, alterations and other changes thereto.
"License" means all licenses, permits, consents, authorizations,
registrations and approvals related to the Business, with or from Governmental
Entities which have jurisdiction over it, including all export licenses, Food
and Drug Administration ("FDA") certificates and licenses, Clinical Laboratory
Improvement Amendments ("CLIA") licenses or approvals and occupancy, fire,
business and other permits from local officials.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, obligation, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including, but not limited to, interest
or other carrying costs, penalties, legal, accounting and other professional
fees and expenses incurred in the investigation, collection, prosecution and
defense of claims, actual or threatened, and amounts paid in settlement, that
may be imposed on or otherwise incurred or suffered by the specified person;
provided, however, "Loss" shall not include any amount that is received by such
specified person under a valid and collectible insurance policy.
"Xxxx" means any brand name, copyright, patent, service xxxx,
trademark, trade name, and all registrations or applications for registration
of any of the foregoing.
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"Material Contract" means any Contract meeting the criteria set forth
in Section 4.5 hereof.
"Non-Competition Period" has the meaning set forth in Exhibit F.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ of any Governmental Entity, including, but not limited to,
the OSHA and the FDA.
"Permit" means any license, permit, franchise, certificate of
authority, authorization, or order, or any waiver of the foregoing, required to
be issued by any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Prepaid Expenses" mean all advance payments, security deposits, rent
deposits and utility deposits paid by the Sellers to third parties in
connection with the Purchased Assets that remain outstanding as credit balances
in favor of the Sellers on the Closing Date.
"Products" means products, technology and services, sold, licensed,
or otherwise exploited by either of the Sellers in connection with their
Business as described in Schedule 1.1.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Real Property" means all Purchased Assets consisting of real
property, appurtenances thereto, rights in connection therewith, and any
interest therein, including without limitation leasehold estates.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
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"Tax" means any foreign, federal, state, county or local income,
sales and use, ad valorem, excise, franchise, real and personal property,
transfer, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, severance or withholding tax or charge imposed
by any Governmental Entity, any interest and penalties (civil or criminal)
related thereto or to the nonpayment thereof, and any Loss in connection with
the determination, settlement or litigation of any Tax liability.
"Tax Return" means a report, return or other information required to
be supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that includes the Sellers.
"Trade Secrets" mean formulas, patterns, devices or compilations of
information used in connection with or relating to the Business and which gives
an opportunity to obtain an advantage over competitors who do not know or use
it, including, but not limited to, formulas for chemical compounds, processes
of manufacturing, treating or preserving materials, patterns for machines or
any forms, plans, drawings, specifications, customer lists, marketing and
competition analysis and project management, inventory and cost control systems
and techniques.
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PURCHASE OF ASSETS/DISCHARGE OF LIABILITIES/CLOSING
PURCHASE AND SALE OF ASSETS.
PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, on the Closing Date the Sellers shall sell, convey, assign, transfer
and deliver to Buyer, and Buyer shall purchase, acquire and accept from the
Sellers, all of the assets, properties, rights, privileges, claims and rights
of every kind and nature, real and personal, tangible and intangible, absolute
or contingent, wherever located, owned by the Sellers or used in connection
with the Business (the "Purchased Assets"), except the assets specifically
identified in Section 2.1(b) (the "Excluded Assets"). The Purchased Assets
include, but are not limited to, the following assets, except as changed by
assets acquired or disposed of in the ordinary course of the Business after the
date hereof through the Closing Date:
All Real Property owned by or any leasehold interest in
Real Property held by either of the Sellers, except to the extent rejected
by Buyer pursuant to Section 7.9 hereof;
All fixtures and improvements attached to the Real Property
owned by Sellers or to any Real Property in which each Seller has a
leasehold interest;
All machinery, apparatus, office equipment, furniture and
fixtures, warehouse equipment, medical equipment, supplies, owned and
leased vehicles, and all other equipment of every type owned or leased by
the Sellers and used in connection with the Business;
All inventory of usable goods, including all merchandise,
raw materials, work in progress, finished products and other tangible
personal property held for sale or used in connection with the Business as
of the date hereof (the "Inventory"), together with any additions thereto
and subject to any reductions therefrom received or incurred by Sellers
operating the Business in the ordinary course after the date hereof
through the Closing Date;
All of the Sellers' rights and interests arising under or
in connection with any Contracts to which either of the Sellers is a party
and which relate to the Business, or under any other documents relating to
the Business;
Information services systems and computer hardware and
equipment;
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Sales data, including all sales representative account
books, logs and other documents reflecting sales strategies and
appointments, customer lists, information relating to customers,
suppliers' names, mailing lists, advertising matter and all rights thereto
relating to the Business;
All of Sellers' right, title and interest in and to all
livestock used in the operation of the Business;
All of Sellers' Intangible Property, and corporate and
trade names and Marks, including all of Sellers' rights in their
respective corporate names and Marks in any location in the United States
or in any foreign country;
All of Sellers' books and records relating to the Business
(except as excluded pursuant to Section 2.1(b));
Transferable Permits;
All Customer Deposits (if any) and all Prepaid Expenses;
and
All goodwill associated with the foregoing.
EXCLUDED ASSETS. The assets that constitute Excluded Assets
shall include only:
Cash, bank deposits and other cash equivalents of the
Sellers as of the Closing Date;
The consideration delivered to Sellers pursuant to this
Agreement;
Sellers' articles of incorporation, nontransferable
franchises, corporate seals, minute books, stock books and other corporate
records having to do with the corporate organization and capitalization of
either of the Sellers, and all income tax records and nontransferable
Permits;
Sellers' books of account, provided, however, that copies
of such books of account shall be provided to Buyer at or promptly
following the Closing;
Any shares of the capital stock of Sellers held as treasury
shares;
All of Sellers' accounts receivable;
Any assets of Sellers' employee benefit plans; and
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The assets specifically described on Schedule 2.1(a).
ASSUMPTION OF CERTAIN LIABILITIES.
(a) LIABILITIES NOT ASSUMED. Except for the liabilities and
obligations specifically assumed pursuant to and identified in Section 2.2(b)
below, Buyer shall NOT assume, shall NOT take subject to and shall NOT be
liable for, any liabilities or obligations of any kind or nature, whether
absolute, contingent, accrued, known or unknown, of Sellers or any Affiliate of
Sellers, the ("Excluded Liabilities") including, but not limited to, the
following:
Any liabilities or obligations incurred arising from or out
of or in connection with Sellers' operations, the condition of their
assets or places of business, their ownership of the Purchased Assets, or
the issuance, sale, repayment or repurchase of any of their securities.
Any liabilities or obligations incurred, arising from or
out of, in connection with or as a result of claims made by or against
Sellers whether before or after the Closing Date that arise out of events
occurring prior to the Closing Date.
Any liabilities or obligations incurred, arising from or
out of, in connection with or as a result of any alleged or actual defect
in any Products or in connection with any alleged or actual breach of
warranty (whether express or implied) in relation to any Products sold or
manufactured by Sellers prior to the Closing Date.
Any liabilities or obligations (whether assessed or
unassessed) of Sellers for any Taxes, including any Taxes arising by
reason of the transactions contemplated herein, as of, or for any period
ending on or prior to, the Closing Date.
All fees and expenses of Sellers in connection with the
transactions contemplated herein.
Any obligations or liabilities of Sellers relating to the
Excluded Assets.
Any liabilities or obligations of Sellers to former or
current stockholders, officers, directors, employees or Affiliates of
Sellers, including without limitation any liabilities or obligations of
Sellers in connection with any employee benefit plans or collective
bargaining, labor or employment agreement or other similar arrangement or
obligations in respect of retiree health benefits.
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Any liabilities or obligations of Sellers incurred, arising
from or out of or in connection with this Agreement or the events or
negotiations leading up to this Agreement.
(b) ASSUMED LIABILITIES. Notwithstanding Section 2.2(a), on the
Closing Date Buyer shall assume the liabilities or obligations specifically
identified on Schedule 2.2(b) attached hereto and incorporated herein by this
reference (the "Assumed Liabilities").
PURCHASE PRICE AND ALLOCATION.
PAYMENT OF PURCHASE PRICE. Subject to adjustment as provided
in this Section, the aggregate consideration to be paid by Buyer to the Sellers
pursuant to this Agreement (the "Purchase Price") shall consist of and be paid
as follows:
Effective as of the Closing Date, Buyer shall assume the
Assumed Liabilities.
On the Closing Date, Buyer shall pay to CTI the sum of $4.6
million and to Biotech the sum of $1 million (collectively, the "Closing
Cash Payments") by wire transfer of immediately available funds to such
accounts as may be designated by the respective Sellers prior to the
Closing.
On the Closing Date, Buyer shall issue 436,364 shares of
Buyer's Common Stock (the "Buyer Shares"), registered in the name of CTI;
PROVIDED, HOWEVER, that:
(A) Buyer shall retain the certificate evidencing
390,910 of the Buyer Shares and (subject to any right of offset in
favor of Buyer hereunder) shall promptly deliver such certificate and
such Buyer Shares to CTI upon receipt of evidence reasonably
satisfactory to Buyer that Sellers have satisfied and discharged
certain of its liabilities and obligations in accordance with Section
7.6 of this Agreement;
(B) Buyer shall retain the certificate evidencing
45,454 of the Buyer Shares and (subject to any right of offset in
favor of Buyer hereunder) shall deliver such certificate and such
Buyer Shares to CTI
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on the date which is 180 days after the Closing Date; and
(C) Buyer shall have a right of offset against the
Buyer Shares as provided in Section 2.4 of this Agreement.
ALLOCATION OF PURCHASE PRICE. The Purchase Price
(consisting of the Assumed Liabilities, the Closing Cash Payments and the
Buyer Shares) shall be allocated among the Purchased Assets and the
Non-Competition Agreement as determined in good faith by the Parties and
their respective accountants within 60 days following the Closing. Buyer and
each of the Sellers agree to file all federal, state, local and foreign Tax
returns in accordance with the allocation as so determined. Each of the
Parties agrees to complete within 60 days of the Closing Date IRS Form 8594
(Asset Acquisition Statement) as required by Section 1060 of the Code, and
further agree not to make any change or file any amendment or supplement
thereto unless it has given at least 15 days advance written notice to the
other Party (together with an explanation and copy of the proposed amendment
or supplement).
CLOSING INVENTORY ADJUSTMENT.
Sellers hereby represent and warrant that the aggregate net
book value of the Inventory delivered to Buyer on the Closing Date (the
"Closing Inventory") will not be less than $750,000. Within 45 days
following the Closing Date, Buyer shall conduct a physical inspection,
count and valuation of the Closing Inventory and Buyer shall permit a
representative of Sellers to monitor such process. Such inspection, count
and valuation of the Closing Inventory (the "Closing Inventory Audit")
shall be conducted by Buyer in good faith and in accordance with GAAP.
Promptly following completion of the Closing Inventory Audit, Buyer shall
notify Sellers in writing of Buyer's calculation of the net book value of
the Closing Inventory. Sellers shall have 15 days from the receipt of
Buyer's written notice to review the results of the Closing Inventory
Audit and to notify Buyer if Sellers intend to dispute Buyer's
determination, and Sellers' failure to respond to Buyer within such period
shall be deemed acceptance of Buyer's determination. If the Parties do
not agree on the Closing Inventory value, such dispute may be submitted
for final determination by the Auditors; provided, however, that at any
Party's election, the Closing Inventory Value shall be determined by
arbitration pursuant to Article XI hereof.
The net book value of the Closing Inventory, as determined
pursuant to clause (i) above, is referred to herein as the "Closing
Inventory Value." Promptly upon final determination of the Closing
Inventory Value, the Sellers shall pay to Buyer in cash the amount (if
any) by which the Closing Inventory value is less than
14
$750,000 or, at Sellers' option, shall notify Buyer in writing to offset
such amount against the Buyer shares held by Buyer pursuant to Section
2.3(a)(iii).
RIGHT TO OFFSET AGAINST BUYER SHARES.
In addition to any other available remedies, Buyer may set-off
against delivery of the Buyer Shares any amounts which may become due from
Sellers to Buyer pursuant to either of Section 2.3(c)(ii) or Section 10.1 of
this Agreement and which remain unpaid for a period of five (5) or more
calendar days following delivery by Buyer to Sellers of a written demand for
payment. If at any time Buyer exercises its rights pursuant to this Section
2.4, the number and value of Buyer Shares to be delivered to CTI under
Section 2.3 of this Agreement shall be reduced by the amount of the Sellers'
obligation that Buyer has elected to set-off. For purposes of this
provision, the Buyer Shares shall have a value equal to the average closing
bid price reported by NASDAQ (or any other exchange or automated quotation
system on which Buyer's Common Stock is traded or quoted) for the last 10
trading days immediately preceding the date of final determination of the
amount owed.
CLOSING
CLOSING MATTERS.
CLOSING. The Closing will take place effective as of 11:59
p.m., California time, on February 13, 1998 (the "Closing Date"), following the
fulfillment or waiver of all conditions precedent to the Closing and shall be
held at the offices of O'Melveny & Xxxxx LLP in Newport Beach, California.
Such Closing Date may be changed by agreement among the Parties.
SIMULTANEOUS DELIVERY. All acts with respect to the Closing
shall be considered as having taken place simultaneously, and no delivery or
payment shall be considered as having been made until all deliveries, payments
and Closing transactions have been accomplished.
15
NO EQUITABLE CONVERSION. Before the Closing, neither the
execution of this Agreement nor the performance of any provision contained
herein shall cause Buyer to become liable for (i) the operations of the
Sellers or the Business of the Sellers; (ii) the condition of the Sellers'
assets; (iii) the cost of any labor or materials furnished to any such
property; (iv) compliance with any laws, requirements, or regulations of, or
Taxes, or assessments or other charges now or hereafter due to, any
Governmental Entity; or (v) for any other Encumbrances or expenses whatsoever
pertaining to the conduct of the Sellers' Business or the ownership, title,
possession, use or occupancy of the property of the Sellers.
ITEMS TO BE DELIVERED AT THE CLOSING BY SELLERS.
At the Closing, the Sellers shall deliver or cause to be delivered
to Buyer the following, in form and substance satisfactory to Buyer and
Buyer's counsel, against delivery of the items specified in Section 3.3:
A Percentage Interest in the Sellers in the form of
Exhibit A;
A Xxxx of Sale in the form of Exhibit B;
Assignment and Assumption of the Leases in the form of
Exhibit C (and related estoppel certificates from lessors) with respect to
each facility covered by the Leases, together with any necessary consents
of the lessors;
Assignment and Assumption Agreement in the form of
Exhibit D;
Instruments of transfer in the form customarily used in
commercial transactions in the area in which the personal property is
located sufficient to transfer each personal property interest owned by
Sellers and used in the Business and not otherwise transferred by the Xxxx
of Sale referred to in clause (b) above;
The employment agreement referred to in Section 8.1(b)
executed by Xxxxxxx X. Xxxx ("WJC");
The employment agreement referred to in Section 8.1(c)
executed by Xxxxx Xxxx ("KC");
16
The closing certificates referred to in Section 8.2(a);
The opinion of counsel of Sellers referred to in Section
8.2(c) in the form of Exhibit E and the certificates, consents and other
documents referred to herein as then deliverable by Sellers;
Any Approvals and Permits required to be obtained before
consummation of the Acquisition referred to in Sections 6.5 and 8.2(d);
The assignments of Intellectual Property Rights referred to
in Section 8.2(h) executed by the Sellers;
A Non-Competition Agreement in substantially the form of
Exhibit F, duly executed by Xxxxxxx X. Xxxx;
A current list of the locations of all items included in
the Purchased Assets held by other persons, if any;
The keys to all vehicles and all locks located on or in the
Purchased Assets (and any and all cards, devices or things necessary to
access any of the Purchased Assets) shall be surrendered on request to
Buyer's representatives at the facilities where such assets are located;
Evidence of the receipt of the consent to the assignment of
any Assumed Contract specified by Buyer prior to the Closing; and
Such other instruments of transfer necessary or appropriate
to transfer to and vest in Buyer all of Sellers' right, title and interest
in and to the Purchased Assets.
Sellers shall take or cause to be taken all such actions as may reasonably be
required to put Buyer in actual possession and operating control of the
Purchased Assets.
17
ITEMS TO BE DELIVERED AT THE CLOSING BY BUYER.
At the Closing, Buyer shall deliver or cause to be delivered to
Sellers as provided in Section 2.3 (i) the Closing Cash Payment, (ii) the
Assignment and Assumption Agreement in the form of Exhibit D, (iii) the
opinion of counsel to Buyer in the form of Exhibit G, (iv) the employment
agreements with each of Xxxxxxx X. Xxxx and Xxxxx Xxxx, executed by the
Buyer, and (v) the certificates, consents and other documents referred to
herein as then deliverable to Sellers against delivery of the items specified
in Section 3.2.
RESALE OF INVENTORY.
Buyer is purchasing certain of the Inventory for resale and shall
deliver to Sellers on the Closing Date a certificate certifying that the
Inventory is being purchased for resale to the extent stated therein.
18
THIRD PARTY APPROVALS.
To the extent that Sellers' rights under any Contracts,
authorizations, Permits, equipment leases or other of the Purchased Assets to
be assigned to Buyer hereunder may not be assigned without the Approval of
another Person, which Approval has not been obtained prior to the Closing,
this Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful, and
Sellers, at their expense, shall use their commercially reasonable efforts to
obtain any such required Approval(s) as promptly as possible after Closing.
If any such Approvals are not obtained or if any attempted assignment would
be ineffective or would impair Buyer's rights under the Purchased Asset in
question so that Buyer would not in effect acquire the benefit of all such
rights, Sellers, to the maximum extent permitted by law and by the terms of
any documents affecting the Purchased Asset, at Sellers' expense, shall act
for six months after the Closing as Buyer's agent in order to obtain for
Buyer the benefits thereunder and shall cooperate, to the maximum extent
permitted by law and by the terms of any document affecting the Purchased
Assets, with Buyer in any other reasonable arrangement designed to provide
such benefits to Buyer.
19
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLERS
The Sellers, jointly and severally, hereby represent and warrant to
Buyer that:
ORGANIZATION, GOOD STANDING AND RELATED MATTERS.
Each of the Sellers is a duly organized corporation, validly
existing and in good standing under the laws of its respective jurisdiction
of incorporation or organization. Each of the Sellers has all necessary
corporate power and authority to execute, deliver and perform this Agreement
and any related agreements to which it is a party. Schedule 4.1 correctly
sets forth the jurisdictions in which each of the Sellers is organized and
each jurisdiction in which the Sellers are qualified or licensed to do
business as a foreign Person. The Sellers have all necessary corporate power
and authority to own their respective properties and assets and to carry on
their respective businesses as now conducted and are duly qualified or
licensed to do business as foreign corporations in good standing in all
jurisdictions in which the character or the location of the assets owned or
leased by either of the Sellers or the nature of the business conducted by
either of the Sellers requires licensing or qualification, except where any
such failure would not have a material adverse effect on their respective
businesses, assets or financial condition. Except as set forth on Schedule
4.1, neither of the Sellers has any subsidiaries or holds any direct or
indirect equity interest in any other Person. Schedule 4.1 lists all names
under which either of the Sellers has conducted business during the last five
years.
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AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance of this Agreement and any
related agreements by the Sellers has been duly and validly authorized by the
Boards of Directors of the Sellers and by all other necessary corporate
action on the part of the Sellers. This Agreement and each of the related
agreements constitutes the legally valid and binding obligations of the
Sellers, enforceable against the Sellers in accordance with their respective
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors rights generally. Except as disclosed on
Schedule 4.2, the execution, delivery and performance of this Agreement by
the Sellers and the execution, delivery and performance of any related
agreements or contemplated transactions by the Sellers will not violate, or
constitute a breach or default (whether upon lapse of time and/or the
occurrence of any act or event or otherwise) under, the charter documents or
bylaws of the Sellers or any Material Contract of the Sellers, result in the
imposition of any Encumbrance against any asset or properties of the Sellers
or any of the Purchased Assets, or violate any Law. Schedule 4.2 lists all
Permits and Approvals required to be obtained by each of the Sellers to
consummate the transactions contemplated by this Agreement. Except for
matters identified in Schedule 4.2 as requiring that certain actions be taken
by or with respect to a third party or Governmental Entity, the execution and
delivery of this Agreement by the Sellers and the performance of this
Agreement and any related or contemplated transactions by the Sellers will
not require filing or regis tration with, or the issuance of any Permit by,
any other third party or Governmental Entity.
21
FINANCIAL STATEMENTS; CHANGES; CONTINGENCIES.
AUDITED FINANCIAL STATEMENTS. Attached as Schedule 4.3(a)
hereto are true and complete copies of the audited combined balance sheets
for each of the Sellers as of December 31, 1995 and 1996 and the related
combined statements of operations, changes in shareholders' deficit and cash
flows for the twelve month periods then ended (collectively, the "Audited
Financial Statements" and, together with the Unaudited Financial Statements,
the "Financial Statements"). All such Audited Financial Statements have been
examined and audited by the Auditors whose reports thereon are included with
such Audited Financial Statements. All such Audited Financial Statements
have been prepared in conformity with GAAP applied on a consistent basis
(except for changes, if any, required by GAAP and disclosed therein). Such
statements of operations and cash flow present fairly the results of
operations and cash flows of each of the Sellers for the periods covered, and
the balance sheets present fairly the financial condition of each Seller as
of their respective dates.
UNAUDITED INTERIM FINANCIAL STATEMENTS. Attached as
Schedule 4.3(b) hereto are true and correct copies of the consolidated and
consolidating balance sheets for each of the Sellers for the twelve-month
period ended December 31, 1997, and the related combined statements of
operations and cash flows and changes in shareholder's equity for the period
then ended (the "Unaudited Financial Statements"). The Unaudited Financial
Statements have been certified by the respective chief financial officers of
the Sellers. The Unaudited Financial Statements have been prepared in
conformity with GAAP applied on a consistent basis (except for changes, if
any, required by GAAP and disclosed therein). The statements of operations
and cash flows present fairly the results of operations and cash flows of the
Sellers for the period covered, and the balance sheets present fairly the
financial condition of each Seller as of December 31, 1997. All such
Unaudited Financial Statements reflect all adjustments (which consist only of
normal recurring adjustments not material in amount and include, but are not
limited to, estimated provisions for year-end adjustments) necessary for a
fair presentation. At the dates of such balance sheets, neither of the
Sellers had any material liability (actual, contingent or accrued) that, in
accordance with GAAP applied on a consistent basis, should have been shown or
reflected therein but was not.
AUDITORS' LETTERS. The Sellers have delivered to Buyer
copies of each management letter or other letter delivered to Sellers by the
Auditors in connection with the Financial Statements delivered to the Buyer
or relating to any review by the Auditors of the internal controls of the
Sellers during the two years ended December 31, 1995 and 1996, or thereafter,
and have made available for inspection by Buyer all reports and working
papers produced or developed by the Auditors or management in connection with
their audit, examination or review of such financial statements, as well as
all such reports and working papers for prior periods for which any tax
liability of the Sellers have not been finally determined or barred by
applicable statutes of limitation. Since January 1, 1995, there have been no
changes in any of the significant accounting policies, practices or
procedures of either Seller.
22
NO MATERIAL ADVERSE CHANGES. Except as disclosed on
Schedule 4.3(d), with respect to the Sellers, since December 31, 1997,
whether or not in the ordinary course of business, there has not been,
occurred or arisen:
any change in or event affecting the Sellers, the Business
or the Purchased Assets that has had or may reasonably be expected to have
a material adverse effect on the Sellers, the Business, or the Purchased
Assets,
any agreement, condition, action or omission which would be
proscribed by (or require consent under) Section 6.3 had it existed,
occurred or arisen after the date of this Agreement,
any strike or other labor dispute,
any casualty, loss, damage or destruction (whether or not
covered by insurance) of any Purchased Assets of the Sellers that has in
volved or may involve a loss to the Sellers of more than $5,000, or
any sale, lease or other disposition of any of the
Purchased Assets for a price in excess of $5,000, except in the ordinary
course of business.
NO OTHER LIABILITIES OR CONTINGENCIES. Neither of the
Sellers has any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, probable of
assertion or not, except liabilities that (i) are reflected or disclosed in
the Financial Statements, or (ii) were incurred after December 31, 1997 in
the ordinary course of business or in the aggregate do not exceed $5,000, or
(iii) liabilities under the executory portion of any written purchase order,
sales order, lease, agreement or commitment of any kind by which the Sellers
are bound and which was entered into in the ordinary course of Sellers'
business and consistent with past practice, or (iv) are liabilities incurred
or contemplated to be incurred by Sellers pursuant to this Agreement.
23
TAX AND OTHER RETURNS AND REPORTS.
Except as set forth on Schedule 4.4, each Seller has timely filed
or will file all required Tax Returns and has paid all Taxes due for all
periods ending on or before the Closing Date. Adequate provision has been
made in the books and records of each Seller, and in the Financial Statements
referred to in Section 4.3 above, for all Taxes whether or not due and
payable and whether or not disputed. Schedule 4.4 lists the date or dates
through which the IRS and any other Governmental Entity have examined the
United States federal income tax returns and any other Tax Returns of each
Seller. All required Tax Returns, including amendments to date, have been
prepared in good faith without negligence or willful misrepresentation and
are complete and accurate in all material respects. Except as set forth in
the Schedule 4.4, no Governmental Entity has, during the past three years,
examined or is in the process of examining any Tax Returns of either Seller.
Except as set forth on Schedule 4.4, no Governmental Entity has proposed,
asserted or assessed or threatened in writing to propose or assert, any
deficiency, assessment or claim for Taxes and, to Sellers' knowledge, there
would be no basis for any such deficiency, assessment or claim.
24
MATERIAL CONTRACTS.
Schedule 4.5 lists each Material Contract to which either
Seller is a party or to which either Seller and any of its respective
properties are subject or by which any thereof is bound. Unless otherwise so
noted on Schedule 4.5, each such Material Contract was entered into in the
ordinary course of business. For purposes of this Agreement, each Contract
that (a) after December 31, 1997 obligates either of the Sellers to pay an
amount of $5,000 or more, (b) has an unexpired term as of December 31, 1997
in excess of one year, (c) represents a contract upon which the Business is
substantially dependent or which is otherwise material to the Business or to
the financial condition or results of operations of the Sellers, (d) provides
for an extension of credit other than consistent with normal credit terms,
(e) limits or restricts the ability of the Sellers to compete or otherwise to
conduct their Business in any manner or place, (f) provides for a guaranty or
indemnity by the Sellers, (g) grants a power of attorney, agency or similar
authority to another person or entity, (h) contains a right of first refusal
with respect to any of the Purchased Assets, (i) contains a right or
obligation of any Affiliate, officer or director or any Associate, of the
Sellers to the Sellers, (j) was not made in the ordinary course of business,
shall be deemed to be a Material Contract and has been identified on such
Schedule 4.5. True copies of the agreements appearing on Schedule 4.5,
including all amendments and supplements, have been delivered to Buyer. Each
Material Contract is valid and subsisting; each Seller has duly performed all
its obligations thereunder to the extent that such obligations to perform
have accrued; and no breach or default, alleged breach or default, or event
which would (with the passage of time, notice or both) constitute a breach or
default thereunder by the Sellers or, to Seller's knowledge, any other party
or obligor with respect thereto, has occurred or as a result of this
Agreement or performance thereof will occur. Except as otherwise disclosed on
Schedule 4.5, consummation of the transactions contemplated by this Agreement
will not (and will not give any person a right to) terminate or modify any
rights of, or accelerate or augment any obligation of the Sellers under any
of the Material Contracts so listed.
The Assumed Contracts are those Material Contracts of
Sellers which are to be assigned to and assumed by Buyer effective as of the
Closing, all as expressly indicated on Schedule 4.5.
25
INTENTIONALLY OMITTED.
REAL AND PERSONAL PROPERTY; TITLE TO AND CONDITION OF
PURCHASED ASSETS; LEASES.
Schedule 4.7(a) lists all property (whether real or personal),
except for Intangible Property of the Sellers, which is owned or leased by
either of the Sellers and which is used in or otherwise material to the
operation of the Business as presently conducted by Sellers. Sellers have
good and marketable title to each of the Purchased Assets, free and clear of
any Encumbrances except for Encumbrances consisting of liens for Taxes not
yet due or matters otherwise described in Schedule 4.7(a), and at the
Closing, will deliver the Purchased Assets (other than the Real Property
which is the subject of Section 7.9 hereof) to the Buyer, free and clear of
any such Encumbrances. The Purchased Assets constitute the principal assets
necessary for the operation of the Business in the manner presently conducted
by Sellers. Except as disclosed on Schedule 4.7(a), all of the Purchased
Assets are in a good state of maintenance and repair (except for ordinary
wear and tear) and are adequate for the Business. Each Seller has all right,
power and authority to sell, convey, assign, transfer and deliver the
Purchased Assets to Buyer in accordance with the terms of this Agreement.
The Real Property listed on Schedule 4.7(a) consists of all of
the real property and real property leasehold interests used by Sellers in
the conduct of the Business. With respect to the Leases:
The Leases are valid, binding and enforceable, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws and equitable principles relating to or limiting
creditors' rights generally;
Each of the Leases (copies of which have been delivered to
Buyer) constitutes the entire agreement to which the Sellers are a party
with respect to the subject properties which are demised pursuant
thereto;
To Sellers' knowledge, all conditions precedent to the
enforceability of the Leases have been satisfied and there exists no
breach or default, nor state of facts which, with the passage of time,
notice, or both, would result in a breach or default on the part of
either the Sellers or the lessors thereunder;
To Sellers' knowledge, all space and improvements leased by
the Sellers have, in all material respects, been fully and
satisfactorily completed and furnished in accordance with the provisions
of the Leases;
26
To Sellers' knowledge, the Sellers have received no notice of
noncompliance with any restriction encumbering any leased property, nor
have the Sellers received written notice of any zoning violations
affecting any leased property; and
There is no pending or, to Sellers' knowledge, threatened
Action that would materially interfere with the quiet enjoyment of any
such leasehold by the Sellers or, after the Closing, by Buyer.
INTANGIBLE PROPERTY.
Schedule 4.8, lists all of the Intangible Property in which
either of the Sellers has an interest and which is material to the
Business. Such assets include all Permits or other rights with respect
to any of the foregoing. Except as described in Schedule 4.8, each
Seller has complete rights to and ownership of all Intangible Property
required for use in connection with the Business, the absence of which
would have a material adverse effect on the Business. Except as
described in Schedule 4.8, neither Seller uses any Intangible Property
by consent of any other Person, and neither Seller is required to or
makes any payments to others with respect thereto, and such Intangible
Property is fully assignable free and clear of any Encumbrances. Each
Seller has in all material respects performed all obligations required
to be performed by it, and is not in default in any material respect
under any Material Contract relating to any of the foregoing. Neither of
the Sellers has received any written notice to the effect that (or is
otherwise aware that) the Intangible Property or their use of the
Intangible Property conflicts with any rights of any Person.
Except as described in Schedule 4.8:
each Seller owns, has the exclusive right to use, sell,
license or dispose of, and has the right to bring actions for the
infringement of its respective interest in the Products as in existence
on the date hereof;
each Seller owns, has the exclusive right to use, sell,
license or dispose of, and has the right to bring actions for the
infringement of, its respective interest in all Intangible Property
which is material to the conduct of the Business as presently conducted;
the execution, delivery and performance of this Agreement
and the consummation of the other transactions contemplated hereby will
not breach, violate or conflict with any Intangible Property, will not
cause the forfeiture or termination or give rise to a right of
forfeiture or termination of, or in any way impair the right of either
Seller to use, sell, license or dispose of or to bring any action for
the infringement of, any Intangible Property or the Products, or portion
thereof, except in each case as would not have a material adverse effect
on the Purchased Assets or the Business;
27
there are no royalties, honoraria, fees or other payments
payable by either Seller to any Person by reason of the ownership, use,
license, sale or disposition of the Intangible Property or the Products;
the manufacture, marketing, license, sale or use of any
product presently licensed or sold by each Seller, including the
Products, will not violate any license or agreement with any third party
or infringe any Intellectual Property Right of any other party;
there is no pending or, to Sellers' knowledge, threatened
Action, contesting the validity, ownership or right to use, sell,
license or dispose of any of the Products, nor to Sellers' knowledge is
there any basis for any such Action, nor has either Seller received any
notice asserting that any of the Products or the proposed use, sale,
license or disposition thereof conflicts or will conflict with the
rights of any other party, nor to Sellers' knowledge is there any basis
for any such assertion;
each Seller has taken all steps reasonably necessary to
safeguard and maintain the secrecy and confidentiality of, and their
proprietary rights in, all such Intangible Property and rights; and
employees and Affiliates of the Sellers, and each of
their Associates, if applicable, have taken all actions necessary to
irrevocably assign or otherwise transfer to the Sellers all of their
respective right, title and interest in and to any Intangible Property
owned by them which are material for the conduct of the Business as
presently conducted.
LEGAL PROCEEDINGS.
There is no Order or Action pending or, to Sellers' knowledge,
threatened against the Sellers, or any of the Purchased Assets, that
individually or when aggregated with one or more other Orders or Actions have
or might reasonably be expected to have a material adverse effect on the
Sellers, the Business or Purchased Assets, or on the Sellers' ability to
perform this Agreement. Schedule 4.9 lists each Order, Action and Labor
Matter that involves a claim or potential claim of aggregate liability in
excess of $5,000 against, or that enjoins or compels or seeks to enjoin or to
compel any activity by either Seller.
28
LABOR RELATIONS.
With respect to each Seller and its employees, independent sales
representatives, consultants, agents, officers and directors, (i) to the
extent required, the Sellers have paid and performed all material obligations
with respect to their respective employees, independent sales
representatives, consultants, agents, officers and directors, including
without limitation all wages, salaries, commissions, bonuses, severance pay,
vacation pay, benefits and other direct compensation reimbursed to such
persons; (ii) the Sellers are in compliance in all material respects with all
federal, state, local and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours; (iii) there is no pending, or to the Sellers' knowledge, threatened,
charge, complaint, allegation, application or other process against the
Sellers or before the National Labor Relations Board or any comparable state,
local or foreign agency, governmental or administrative; (iv) there is no
labor strike, dispute, slowdown or work stoppage or other job action pending,
or to the Sellers' knowledge, threatened against or otherwise affecting or
involving the Sellers; and (v) no employees of the Sellers are covered by any
collective bargaining agreements and to the best knowledge of the Sellers, no
effort is being made by any union to organize any of the Sellers' employees.
29
INSURANCE.
The Sellers are, and at all times during the past five years have
been, insured with reputable insurers against all risks normally insured
against by companies in similar lines of business, and all of the insurance
policies and bonds maintained by the Sellers are in full force and effect.
Schedule 4.11 lists all insurance policies and bonds that are material to the
Business and as in effect as of the Closing Date. Neither of the Sellers is
in default under any such policy or bond. All insurance policies maintained
by the Sellers will remain in full force and effect through the Closing Date,
and neither of the Sellers has received written notice or other indication
from any insurer or agent of any intent to cancel or not so renew any of such
insurance policies. The Sellers have complied with and implemented all
outstanding (i) requirements and recommendations of any insurance company
that has issued a policy with respect to any of the Purchased Assets or
Business and (ii) to Seller's knowledge, requirements and recommendations of
any Governmental Entity with respect to any such insurance policy.
PERMITS AND LICENSES.
Schedule 4.12 lists all Permits and Licenses that are required by
any Governmental Entity and that are material to the conduct of the Business
as now conducted or the ownership and operation of the Purchased Assets. All
such Permits and Licenses are valid and in full force and effect and, except
as disclosed in Schedule 4.12, will remain so upon consummation of the
transactions contemplated by this Agreement. To Sellers' knowledge, no
suspension, cancellation or termination of any such Permit or License is
threatened or imminent.
COMPLIANCE WITH LAW.
The conduct of the Business by Sellers has not violated,
and as presently conducted does not violate, in any material respect, any
federal, state, local or foreign laws, including, but not limited to, CLIA
rules, regulations or ordinances, or Order, or any industry standards, nor
has either Seller received any notice of any such violation which remains
outstanding except those listed on Schedule 4.13.
30
The Sellers have adhered to standard operating procedures
accepted by the FDA (copies of which standard operating procedures have
previously been delivered to the Buyer) and have tested and/or secured
appropriate testing of all blood and plasma products necessary for the
conduct of the Business according to standard industry practice. Schedule
4.13(a) sets forth a true, correct and complete list of all recall letters
and warning letters from the FDA received by the Sellers or relating to the
Business during the last 5 years and, with respect to each such letter, (i)
the date of recall or warning, (ii) the date each recall or warning first
appeared in FDA Enforcement Reports, (iii) an accurate description of the
facility involving the recall or warning, (iv) the number of units involved,
(v) the distribution of each of the recalled units by state and/or country,
(vi) the reason given by the FDA for each recall or warning, and (vii) any
continuing obligations arising from such recall or warning.
EMPLOYEE BENEFITS.
EMPLOYEE BENEFIT PLANS, COLLECTIVE BARGAINING AND
EMPLOYEE AGREEMENTS, AND SIMILAR ARRANGEMENTS.
Schedule 4.14(a)(i) lists all employee benefit plans
and collective bargaining, employment or severance agreements or other
similar arrangements to which each Seller is or within the last three
years has been a party or by which it is or within the last three years
has been bound, including, without limitation, (a) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, severance, welfare or incentive plan,
agreement or arrangement, (b) any plan, agreement or arrangement
providing for "fringe benefits" or perquisites to employees, officers,
directors or agents, including, but not limited to, benefits relating to
Sellers' automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life insurance
and other types of insurance, (c) any employment agreement, or (d) any
other "employee benefit plan" (within the meaning of Section 3(3) of
ERISA).
The Sellers have delivered to Buyer true and complete
copies of all documents and summary plan descriptions with respect to
such plans, agreements and arrangements, or summary descriptions of any
such plans, agreements or arrangements not otherwise in writing.
To Sellers' knowledge, there are no negotiations, demands
or proposals that are pending or have been made which concern matters
now covered, or that would be covered, by plans, agreements or
arrangements of the type described in this section.
The Sellers are in substantial compliance with the
applicable provisions of ERISA (as amended through the date of this
Agreement), the regulations and published
31
authorities thereunder, and all other Laws applicable with respect to
all such employee benefit plans, agreements and arrangements. The
Sellers have performed all of their obligations under all such plans,
agreements and arrangements. There are no Actions (other than routine
claims for benefits) pending or, to Sellers' knowledge, threatened
against such plans or their assets, or arising out of such plans,
agreements or arrangements, and all such plans, agreements and
arrangements have been operated in compliance with their terms. To
Sellers' knowledge, no facts exist which could give rise to any such
Actions.
Except as set forth on Schedule 4.14(a)(i), no
employee, consultant or agent of either Seller is entitled to any
severance, parachute or other form of payment or benefit from the
Sellers or their respective successors or assigns arising or becoming
due as a result of the consummation of the Acquisition.
QUALIFIED PLANS. No plan listed in Schedule 4.14(a)(i) is
a stock bonus, pension or profit-sharing plan within the meaning of Section
401(a) of the Code.
TITLE IV PLANS. No plan listed in Schedule 4.14(a)(i) is
a plan subject to Title IV of ERISA.
MULTIEMPLOYER PLANS. No plan listed in Schedule
4.14(a)(i) is a "multiemployer plan" (within the meaning of Section 3(37) of
ERISA). Neither of the Sellers has ever contributed to or had any obligation
to contribute to any multiemployer plan.
HEALTH PLANS. All group health plans of the Sellers have
been operated in compliance with the group health plan continuation coverage
requirements of the Code to the extent such requirements are applicable.
FINES AND PENALTIES. There has been no act or omission by
the Sellers that has given rise to or, to Sellers' knowledge, may give rise
to fines, penalties, taxes, or related charges under Section 502(c) or (k) or
Section 4071 of ERISA or Chapter 43 of the Code.
32
CERTAIN INTERESTS.
Except as disclosed on Schedule 4.15, no Affiliate of the Sellers,
nor any officer or director of any thereof, nor Associate of any such
individual, has any material interest in any of the Purchased Assets or in any
other property used in or pertaining to the Business; no such Person is
indebted or otherwise obligated to the Sellers; and neither of the Sellers is
indebted or otherwise obligated to any such Person, except for amounts due
under normal arrangements applicable to all employees generally as to salary or
reimbursement of ordinary business expenses not unusual in amount or
significance. Except as disclosed on Schedule 4.15, the consummation of the
transactions contemplated by this Agreement will not (either alone, or upon the
occurrence of any act or event, or with the lapse of time, or both) result in
any benefit or payment (severance or other) arising or becoming due from the
Sellers or the successor or assign of the Sellers to any Person.
NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker, or
other Person or firm engaged by or acting on behalf of the Sellers or any of
their respective Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any brokerage or finder's or similar fee
or other commission as a result of this Agreement or such transactions.
33
ACCURACY OF INFORMATION.
None of the information supplied or to be supplied by or on behalf of
the Sellers (a) to any Person for inclusion in any document or application
filed with any Governmental Entity having jurisdiction over or in connection
with the transactions contemplated by this Agreement or (b) to Buyer, its
agents or representatives in connection with these transactions, this Agreement
or the negotiations leading up to this Agreement, did contain, or at the
respective times such information is or was delivered, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as disclosed to Buyer in the information identified in
this Agreement and on the Schedules, there is no fact or information known to
the Sellers that has or is likely to have a material adverse effect on the
Business or the Purchased Assets. If any of such information at any time
subsequent to delivery and prior to Closing becomes untrue or misleading, in
any material respect, the Sellers will promptly notify Buyer in writing of such
fact and the reason for such change.
INVENTORIES.
Sellers have maintained their respective Inventories in the ordinary
course of business consistent with standards and practices generally accepted
and used within the industry. The value of obsolete, damaged or excess
inventory and of inventory below standard quality has been written down on the
most recent balance sheet included in the Financial Statements or, with respect
to Inventories purchased since such balance sheet date, on the books and
records of the Sellers, to ascertainable market value, or adequate reserves
described on such balance sheet have been provided therefor, and the value at
which inventories are carried reflects the customary inventory valuation policy
of the Sellers (which fairly reflects the value of obsolete, spoiled or excess
inventory) for stating inventory, in accordance with GAAP consistently applied.
34
CUSTOMERS AND SUPPLIERS.
Schedule 4.19 lists the names of and describes all Contracts with,
and the appropriate percentage of Business attributable to, the ten largest
customers of the Business at the date of this Agreement, and any sole-source
suppliers of material goods or services (not including electricity, gas,
telephone or water) to the Sellers with respect to which alternative sources of
supply are not readily available on comparable terms and conditions. To
Sellers' knowledge, except as set forth in Schedule 4.19, there have been no
adverse changes in the relationships between the Sellers and any significant
customers of the Business since December 31, 1997.
ENVIRONMENTAL COMPLIANCE.
Except as set forth in Schedule 4.20, (a) neither of the Sellers has
generated, used, transported, treated, stored, released or disposed of, or has
suffered or permitted anyone else to generate, use, transport, treat, store,
release or dispose of any Hazardous Substance in violation of any Laws; (b)
there has not been any generation, use, transportation, treatment, storage,
release or disposal of any Hazardous Substance in connection with the conduct
of the Business of the Sellers or the use of any property or facility of the
Sellers or, to Sellers' knowledge, any nearby or adjacent properties or
facilities, which has created or might reasonably be expected to create any
liability under any Laws or which would require reporting to or notification of
any Governmental Entity; (c) no asbestos or polychlorinated biphenyl or
underground storage tank is contained in or located at any facility of the
Sellers or any facility or improvement used in the operation of the Business;
and (d) any Hazardous Substance handled or dealt with in any way in connection
with the Business of the Sellers, whether before or during the Sellers'
ownership, has been and is being handled or dealt with in all material respects
in compliance with applicable Laws.
35
INVESTMENT INTENT.
CTI is acquiring the Buyer Shares for investment purposes only, for
its own account and not as a nominee or agent for any other person, and not
with a view to or for resale in connection with any distribution thereof within
the meaning of the Securities Act. CTI was not organized for the specific
purpose of acquiring the Buyer Shares.
BUSINESS RELATIONSHIP.
CTI is or, by reason of its business or financial experience or the
business or financial experience of its professional advisors who are
unaffiliated with and who are not compensated by the Buyer or any affiliate or
selling agent of the Buyer directly or indirectly, could be reasonably assumed
to have the capacity to protect its own interests in connection with the Buyer
Shares and to evaluate the merits and risks of its investment therein. CTI is
generally familiar with the business and affairs of Buyer and has discussed
with Buyer Buyer's plans, operations and financial condition.
DISCLOSURE/LEGEND.
Buyer has disclosed to the Sellers that:
the sale of the Buyer Shares has not been registered under the
Securities Act, or qualified under the securities laws of any state, and the
Buyer Shares must be held indefinitely unless a sale or transfer of the Buyer
Shares is subsequently registered under the Securities Act and qualified under
applicable state securities laws or exemptions therefrom are available; and
any certificate representing the Buyer Shares will bear the
following restrictive transfer legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL
36
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH."
RULE 144.
CTI understands that in addition to the restrictions described above:
(a) the shares which constitute the Buyer Shares are restricted securities
within the meaning of Rule 144 promulgated under the Securities Act; (b) the
exemption from registration provided under Rule 144 will not be available in
any event for at least one year from the date of sale of the Buyer Shares to
the Sellers, and even then, Rule 144 will not be available unless: (i) a public
trading market then exists for the Buyer Shares, (ii) adequate information
concerning Buyer is then available to the public, and (iii) the other terms and
conditions of Rule 144 are met; and (c) any unregistered sale of the Buyer
Shares may be made by CTI only in accordance with the terms and conditions of
Rule 144 or other exemption from the registration requirements of the
securities laws.
POWERS OF ATTORNEY.
Neither of the Sellers has given any power of attorney (irrevocable
or otherwise) to any person or entity for any purpose relating to the Business,
Purchased Assets or Assumed Liabilities, other than powers of attorney given to
regulatory authorities in connection with routine qualifications to do business.
CAPITAL ADEQUACY AND REASONABLY EQUIVALENT VALUE FOR THE
PURCHASED ASSETS.
Each of the Sellers, after giving effect to the transactions
contemplated by this Agreement, will have assets exceeding its liabilities on
both a balance sheet and market value basis. Neither of the Sellers has
incurred or will incur debts beyond its ability to pay as such debts mature.
Each of the Sellers has the intent and capacity to discharge all of its current
and anticipated obligations both before and after giving
37
effect to the transactions contemplated hereby. Each of the Sellers represents
and acknowledges that it is receiving "reasonably equivalent value" for the
Purchased Assets hereunder within the meaning of 11 U.S.C. Section 548.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers that:
ORGANIZATION AND RELATED MATTERS.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified or
licensed to do business as a foreign corporation and is in good standing in all
jurisdictions in which the character or location of the assets owned or leased
by Buyer or the nature of the business conducted by Buyer requires such
licensing or qualification, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, financial
condition or results of operations of Buyer. Buyer has all necessary corporate
power and authority to carry on its business as it are now being conducted.
Buyer has the necessary corporate power and authority to execute, deliver and
perform this Agreement and any related agreements to which it is a party.
38
AUTHORIZATION.
The execution, delivery and performance of this Agreement and any
related agreements by Buyer has been duly and validly authorized by the Board
of Directors of Buyer and by all other necessary corporate action on the part
of Buyer. This Agreement and each of the related agreements constitute the
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting creditors' rights
generally.
NO CONFLICTS.
The execution, delivery and performance of this Agreement and any
related agreements by Buyer will not violate the provisions of, or constitute a
breach or default, whether upon lapse of time and/or the occurrence of any act
or event or otherwise, under (a) the respective charter documents or bylaws of
Buyer, (b) any Law to which Buyer is subject, or (c) any Contract to which
Buyer is a party that is material to the financial condition, results of
operations or conduct of the business of Buyer, provided that the appropriate
regulatory approvals are received as contemplated by Section 6.5 and specified
consents, if any, are secured.
NO BROKERS OR FINDERS.
No agent, broker, finder or investment or commercial banker, or other
Person or firms engaged by or acting on behalf of Buyer or its Affiliates in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will be entitled to any
broker's or finder's or similar fees or other commissions as a result of this
Agreement or such transactions.
39
LEGAL PROCEEDINGS.
There is no Order or Action pending or to the best knowledge of
Buyer, threatened against Buyer that individually or when aggregated with one
or more other Actions has or might reasonably be expected to have a material
adverse effect on Buyer's ability to perform this Agreement or on Buyer's
business or assets.
BUYER'S STOCK.
As of the Closing Date, and after giving effect to the transactions
contemplated hereby, the authorized capital stock of Buyer shall consist of
(a) 25,000,000 shares of Common Stock, par value $.001 per share, of which
6,741,413 shares shall be issued and outstanding, and (b) 25,000,000 shares
of Preferred Stock, par value $.001 per share, of which 3,600 shares shall
have been designated Series A Preferred Stock (2,000 shares of which shall be
issued and outstanding), and 15,000 shares shall have been designated Series
B Preferred Stock (of which 15,000 shares shall be issued and outstanding).
The outstanding shares of Common Stock and Preferred Stock of the Buyer have
been validly issued and are fully paid and nonassessable. Upon issuance in
accordance with the terms of this Agreement, the Buyer Shares will be validly
issued, fully paid and nonassessable. Except as disclosed on Schedule 5.6,
as of the Closing Date, there will be no outstanding securities convertible
into or exchangeable for any shares of capital stock of the Buyer, or any
rights to subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance of, or any calls or commitments
relating to the issuance of, any capital stock of the Buyer.
40
ACCURACY OF INFORMATION IN EXCHANGE ACT REPORTS.
Each periodic report filed with the Securities and Exchange
Commission by Buyer pursuant to either of Section 13 or Section 15 of the
Exchange Act, as of the date such report was filed and as amended, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Since November 30, 1997, there
has been no change in or event affecting the Buyer which has had or is
reasonably expected to have a material adverse effect on the business,
financial condition or results of operations of the Buyer and its
subsidiaries, taken as a whole.
41
COVENANTS WITH RESPECT TO CONDUCT OF THE SELLERS
PRIOR TO CLOSING
ACCESS.
The Sellers shall authorize and permit, Buyer and its
representatives (which term shall be deemed to include its independent
accountants and counsel) to have access during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with
the conduct of the Business, to all of their properties, books, records,
operating instructions and procedures, Tax Returns and all other information
with respect to the Business as Buyer may from time to time request, and to
make copies of such books, records and other documents and after first
securing the Sellers' prior consent, which may not be unreasonably withheld,
to discuss the Business with such other Persons, including, without
limitation, their respective directors, officers, employees, accountants,
counsel, suppliers, customers, and creditors, as Buyer considers necessary or
appropriate for the purposes of familiarizing itself with the Business,
obtaining any necessary Approvals of or Permits for the transactions
contemplated by this Agreement and conducting an evaluation of the
organization and Business of the Sellers. Without limiting the generality of
the foregoing, Buyer shall be entitled, at Buyer's expense, to conduct or
cause to be conducted on any real property owned or leased by either of the
Sellers after first securing Sellers' prior written consent, which may not be
unreasonably withheld, and, in the case of leased property, the written
consent of the lessor, Phase I environmental studies.
42
MATERIAL ADVERSE CHANGES; REPORTS; FINANCIAL STATEMENTS.
Prior to the Closing, the Sellers will promptly notify Buyer
of any event of which the Sellers obtain knowledge which has had or might
reasonably be expected to have a material adverse effect on the Business or
the Purchased Assets or which if known as of the date hereof would have been
required to be disclosed to Buyer. Prior to the Closing, the Buyer will
promptly notify the Sellers of any event of which the Buyer obtains knowledge
which has had or might reasonably be expected to have a material adverse
effect on the business, financial condition or results of operations of the
Buyer and its subsidiaries, taken as a whole, or which if known as of the
date hereof would have been required to be disclosed to the Sellers hereunder
or disclosed in any subsequent periodic report or other filing with the
Securities and Exchange Commission.
Between the date hereof and the Closing Date, the Sellers
will furnish to Buyer (i) any report by the Sellers submitted to their
respective Boards of Directors and the working papers related thereto and
other operating or financial reports (including any projections and budgets)
prepared for management of the Business and the working papers related
thereto, (ii) as soon as available, copies of all portions of all reports,
renewals, filings, certificates, statements and other documents filed with
any Governmental Entity, (iii) monthly and quarterly unaudited balance
sheets, statements of operations and cash flow and changes in shareholder's
equity for the Sellers, and (iv) such other reports as Buyer may reasonably
request relating to the Sellers. Each of the financial statements delivered
pursuant to this Sec tion 6.2(b) shall be prepared in accordance with GAAP
consistently applied during the periods covered (except as disclosed
therein), except that such financial statements may omit footnote disclosures
required by GAAP to the extent the content thereof would not materially
differ from those disclosures reported in the most recent audited period and
year-end adjustments to the extent not material. Each of the financial
statements delivered pursuant to this Section 6.2(b) shall be accompanied by
a certificate of the chief financial officer of the Sellers to the effect
that such financial statements present fairly the financial condition and
results of operations of the Sellers for the periods covered and reflect all
adjustments (which consist only of normal recurring adjustments not material
in amount) necessary for a fair presentation.
43
CONDUCT OF BUSINESS.
During the period from the date of this Agreement to the earlier of
(i) the Closing Date, and (ii) the date of any termination of this Agreement
under Article IX hereof, the Sellers agree with and for the benefit of Buyer
that except as otherwise contemplated by this Agreement, without the prior
written consent of Buyer, which shall not be unreasonably withheld, the
Sellers shall not:
conduct the Business in any manner except in the ordinary
course substantially as now conducted; or
except as required by their terms, amend, terminate or
renegotiate any Material Contract or default (or take or omit to take any
action that, with or without the giving of notice or passage of time,
would constitute a default) in any of their obligations under any Material
Contract or enter into any new Material Contract or take any action that
would jeopardize the continuance of their material supplier or customer
relationships; or
terminate, amend or fail to renew any existing insurance
coverage; or
terminate or fail to renew or preserve any Permits; or
engage in any transaction exceeding $100,000 or otherwise out
of the usual and ordinary course of business; or
purchase inventory outside the ordinary course of business, or
extend return or other post-sale support rights of customers outside of
the ordinary course of business, or enter into an agreement to do any of
the foregoing; or
grant any general or uniform increase in the rates of pay or
benefits to officers, directors or employees (or a class thereof) or any
increase in salary or benefits of any officer, director, employee or agent
or pay any special bonus to any person, or enter into any new employment
of any Person with a salary in excess of $60,000 per year, collective
bargaining or severance agreement; or
adopt or amend in any respect any employee pension,
profit-sharing, retirement, bonus, deferred compensation, insurance,
incentive compensation, severance, thrift, vacation or other plan,
agreement, trust fund or arrangement for the benefit of their employees
(whether or not legally binding) other than amendments of existing benefit
44
plans effected after consultation with Buyer that are necessary to conform
to legal requirements or to consummate the transactions contemplated by
this Agreement; or
sell, transfer, mortgage, encumber or otherwise dispose of any
assets, except (i) for dispositions of property (other than the Purchased
Assets) not material in amount, or (ii) sales of Inventory in the ordinary
course of business; or
declare, issue, make or pay any dividend or other distribution
of any asset which is included within one or more of the categories of
Purchased Assets; or
make any material investment, by purchase, contributions to
capital, property transfers, or otherwise, in any other Person; or
dispose of or permit to lapse any rights to the use of any
Intangible Property or dispose of or disclose any Intangible Property that
is not a matter of public knowledge; or
introduce any new method of management or operation in respect
of the Business; or
take, or cause to be taken, any action that would cause any of
the representations or warranties of the Sellers in this Agreement to be
untrue, incorrect, incomplete or misleading; or
solicit or encourage, or authorize any officer, director or
employee of, or any investment banker, attorney, accountant or other
representative of the Sellers or any Affiliate of the Sellers, to solicit
or encourage (including by way of furnishing nonpublic information), any
inquiries or the making of any proposal that may reasonably be expected to
lead to any proposal for the partial or total acquisition of the Sellers
or their assets (collectively "Inquiry or Proposal") (if the Sellers or
any officer, director, shareholder or employee of the Sellers, or
investment banker, attorney, accountant or other representative of the
Sellers or any Affiliate of any of them, receives an Inquiry or Proposal,
then the Sellers shall promptly notify Buyer by telephone and telecopy of
such fact and shall transmit to Buyer a copy of any such written Inquiry
or Proposal); or
commence any proceeding to merge, consolidate or liquidate or
dissolve; or
agree to or make any commitment to take any actions prohibited
by this Section 6.3.
45
NOTIFICATION OF CERTAIN MATTERS.
From the date hereof to the Closing Date, the Sellers shall
give prompt notice to Buyer, and Buyer shall give prompt notice to the
Sellers, of (i) the occurrence, or failure to occur, of any event that would
be likely to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect, and (ii) any failure of
Buyer or the Sellers, as the case may be, to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
No such notification shall affect the representations or
warranties of the Parties or the conditions to their respective obligations
hereunder.
PERMITS AND APPROVALS.
The Sellers agree to use commercially reasonable efforts to
obtain, and will promptly prepare all registrations, filings and
applications, requests and notices preliminary to all, Permits and Approvals
that are necessary, or which are requested in writing by Buyer, to consummate
the transactions contemplated by this Agreement.
To the extent that the Approval of a third party with
respect to any Contract is required in connection with the transactions
contemplated by this Agreement, the Sellers agree to use commercially
reasonable efforts to obtain such Approval prior to the Closing Date. In the
event that any such Approval is not obtained prior to the Closing Date (but
without limitation on Buyer's rights under Section 8.2), the Sellers shall
cooperate with Buyer in an effort to obtain for Buyer the benefits of each
such Contract, consistent with the provisions of Section 3.5 hereof.
PRESERVATION OF BUSINESS PRIOR TO CLOSING DATE.
During the period beginning on the date hereof and ending on the
Closing Date, (a) the Sellers will use reasonable commercial efforts to
preserve the Business and to preserve the goodwill of customers, suppliers
and others having business relations with the Sellers and (b) the Sellers
will cooperate to keep available to Buyer, the services of the officers and
employees of the Sellers that Buyer may wish to retain following the Closing.
Nothing in this Section shall obligate Buyer or the Sellers to retain or
offer employment to any officer or employee of the Sellers after the Closing.
46
PAYMENTS TO CREDITORS.
Sellers shall timely pay in accordance with their terms (a) all
accounts payable and other amounts owed or accruing through the period ending
on the Closing Date to all suppliers, vendors and other commercial or trade
creditors of the Business, and (b) all commissions and other amounts owed or
accruing through the period ending on the Closing Date to any manufacturer's
representatives, dealers or other salespersons.
PASSAGE OF TITLE AND RISK OF LOSS.
Legal title, equitable title, and risk of loss with respect to the
property and rights to be transferred hereunder shall not pass to Buyer until
the Purchased Assets, property or right is transferred at the Closing.
ADDITIONAL CONTINUING COVENANTS
EMPLOYMENT MATTERS.
EMPLOYEES. Sellers shall be solely responsible for and
shall promptly pay all accrued vacation, sick pay and COBRA coverage and all
severance and related obligations to employees of Sellers, including any
obligations or liabilities of Sellers under any Employee Benefit Plan,
arising on or prior to the Closing or as a result of the transactions
contemplated by this Agreement. Buyer does not assume, and shall not be
deemed to assume, any liability or obligation of Sellers relating to
employment matters involving current or former employees of Sellers except to
the extent expressly provided on Schedule 2.2(b) attached hereto.
WARN. Sellers represent and warrant that for purposes of
the Worker Adjustment and Retraining Notification Act ("WARN") and with
respect to employees performing services for the Business no single site of
employment of the Business has, or during the past 90 days has had, 50 or
more employees.
NO THIRD PARTY BENEFICIARIES. Notwithstanding any possible
inferences to the contrary, neither Sellers nor Buyer intends for this
Section 7.1 to create any rights or
47
obligations except as between Sellers and Buyer, and no past, present or
future employees of Sellers or Buyer shall be treated as third party
beneficiaries of this Section 7.1.
EXPENSES AND TAXES.
All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such expense. Any sales, use or other transfer taxes applicable to the
conveyance and transfer from Sellers to Buyer of the Purchased Assets and any
other transfer or documentary taxes or any filing or recording fees
applicable to such conveyance and transfer shall be paid by Sellers.
PAYMENT OF COSTS ASSOCIATED WITH LEASE ASSIGNMENTS.
Sellers are responsible for the payment of all fees, if any,
required pursuant to the Leases for the assignment thereof to Buyer and agree
to pay such fees directly to the landlords under such Leases, or, if Buyer
advances such fees, Sellers will reimburse Buyer for such fees promptly upon
invoice therefor. Further, promptly after the Closing and if so requested by
Buyer, Sellers shall reimburse Buyer for the legal fees incurred by Buyer in
connection with procuring all necessary landlord consents and estoppel
certificates relating to the Leases.
48
REGISTRATION RIGHTS.
Following the issuance of the Buyer shares, the Sellers receiving the
Buyer shares shall have the registration rights set forth in Exhibit H attached
hereto (the "Registration Rights Exhibit").
NOMINATION OF WJC TO BOARD OF DIRECTORS.
Buyer agrees that for so long as WJC remains an employee of Buyer
following the Closing, Buyer shall cause WJC to be nominated for election to
the Board of Director's of Buyer and shall cause WJC to be identified as a
Board nominee in any proxy materials distributed to Buyer's shareholders.
DISCHARGE OF COMPANY LIABILITIES.
Promptly following the Closing, Sellers shall, from the
proceeds of the Closing Cash Payments and all other available cash and cash
equivalents of Sellers, satisfy and discharge the following liabilities and
obligations:
all accounts payable and liabilities of Sellers accrued or
accruing as of the Closing Date other than Assumed Liabilities and (other
than liabilities to any Affiliate of Sellers or to Xxxxxx X. Xxxx or to
Cone Bio-Products);
all capitalized lease obligations of Sellers accrued or
accruing as of the Closing Date (except to the extent included in the
Assumed Liabilities);
all loans, bonds and notes payable, and any other
obligations of Sellers for borrowed money (other than to any Affiliate of
Sellers or to Xxxxxx X. Xxxx or Cone Bio-Products); and
all other liabilities and obligations of Sellers identified
on Schedule 7.6.
Prior to the satisfaction and discharge of all liabilities in
accordance with subparagraph (a) above, Sellers shall not make any payments or
distributions (by way of dividends, redemptions or repurchases of securities,
debt repayment, or otherwise) to any Affiliate or stockholder of Sellers.
INTENTIONALLY OMITTED.
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PRORATION OF RECURRING EXPENSES.
Except to the extent such items have been expressly assumed or
allocated to one of the Parties hereunder, all obligations for utilities,
payments due under the Assumed Contracts and other recurring expenses of the
Business shall be prorated between Sellers and the Buyer as of the Closing
Date. Each Party hereto agrees to pay promptly upon demand by the other Party
(accompanied by a reasonably itemized statement of the claim and basis therefor
and supporting documentation from such other party) its proportionate share of
the obligations so prorated.
REAL PROPERTY TRANSFER DOCUMENTATION.
Sellers and the Buyer contemplate that, concurrent with or promptly
following the Closing, CTI will acquire fee simple title to the Property
described on Schedule 7.9 attached hereto (referred to herein as the "Owned
Property"). Upon transfer of such title to CTI, the lease between CTI and each
of Xxxxxxx X. Xxxx and Xxxxxx X. Xxxx relating to such Owned Property will be
terminated. CTI hereby grants to Buyer, effective as of the Closing Date, a
ninety-day rent and royalty free license to occupy and use such Owned Property
(together with all improvements and fixtures thereon, and all rights,
privileges, licenses, tenements, easements and appurtenances relating thereto)
in the manner in which the Owned Property was used prior to the Closing.
Within ten days after the Closing Date, Sellers, at their sole expense, shall
provide Buyer with a preliminary title report for an owner's policy of title
insurance for the Owned Property. Within 60 days following the Closing Date,
Buyer shall notify Sellers if Buyer has, for any reason stemming from any
title, Encumbrance, environmental or Hazardous Substance issue, elected to
reject the Owned Property. If Buyer rejects the Owned Property, Buyer and
Sellers shall enter into a twelve month lease (which lease shall commence upon
the receipt by Sellers from Buyer of notice of rejection) with rent payable at
a rate equal to rents of comparable properties. Upon the earlier to occur of
the sixtieth day after the Closing Date or Sellers'
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receipt of notice from Buyer requesting conveyance of the Owned Property,
Sellers shall, for no additional consideration, convey to Buyer by grant
deed, or other necessary or desirable conveyance document, fee simple title
to the Owned Property, subject only to such liens, Encumbrances, easements
and rights of others as may be of record as of the Closing Date and approved
by Buyer. The transfer of such Owned Property shall be effected through an
escrow service, title company or as otherwise may be the custom and practice
for the transfer of similar properties in the applicable jurisdiction. Other
than as indicated above, Sellers shall pay all expenses related to the
transfer and conveyance to Buyer of such Owned Property, including, but not
limited to, recording fees, documentary, transfer, mortgage and intangible
taxes, escrow and title insurance fees and costs and all other similar fees
and expenses.
MAINTENANCE OF BOOKS AND RECORDS.
Sellers and Buyer shall each preserve all material records possessed
by such party relating to the Business or the Purchased Assets prior to the
Closing Date for a period of at least five years following the fiscal year to
which the records relate. After the Closing Date, where there is a legitimate
purpose, each such party shall provide the other parties and their
representatives with access, upon prior reasonable written request specifying
the need therefor, during regular business hours, to the books of account and
records of such party, but, in each case, only to the extent relating to the
Purchased Assets or the Business prior to the Closing Date, and the other
parties and their representatives shall have the right to make reasonable
copies of such books and records at their own expense.
PAYMENTS RECEIVED.
The Sellers and the Buyer agree that after the Closing they will hold
and will promptly transfer and deliver to the other, from time to time as and
when received by them, any cash, checks with appropriate endorsements (using
their best efforts not to convert such checks into cash), or other property it
may receive on or after the Closing which properly belongs to the other party.
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CONDITIONS OF PURCHASE
GENERAL CONDITIONS.
The obligations of the Parties to effect the Closing shall be subject
to the following conditions, except to the extent waived in writing by the
Parties:
NO ORDERS; LEGAL PROCEEDINGS. No Law or Order shall have been
enacted, entered, issued, promulgated or enforced by any Governmental Entity,
nor shall any Action have been instituted and remain pending or have been
threatened and remain so by any Governmental Entity at what would otherwise be
the Closing Date, which prohibits or restricts or would (if successful)
prohibit or restrict the transactions contemplated by this Agreement or (with
respect to obligations of Buyer only) which would impair to any material extent
the value of the Purchased Assets or the ability of the Buyer to conduct the
Business as presently conducted following the Closing Date. No Governmental
Entity shall have notified any Party to this Agreement that consummation of the
transactions contemplated by this Agreement would constitute a violation of any
Laws of any jurisdiction or that it intends to commence proceedings to restrain
or prohibit such transactions or force divestiture or rescission, unless such
Governmental Entity shall have withdrawn such notice and abandoned any such
proceedings prior to the time which otherwise would have been the Closing Date.
EMPLOYMENT OF WJC. WJC will be appointed to the Board of
Directors of the Buyer and shall have entered into an employment agreement
substantially in the form attached hereto as Exhibit I.
EMPLOYMENT OF KC. KC shall have entered into an employment
agreement substantially in the form attached hereto as Exhibit J.
CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing shall be subject to
the following conditions, except to the extent waived in writing by Buyer:
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REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE SELLERS.
The representations and warranties of the Sellers herein contained shall be
true and correct in all material respects as of the Closing Date with the same
effect as though made at such time (but without giving effect to any
qualification as to materiality contained therein); the Sellers shall have in
all material respects performed all obligations and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
them at or prior to the Closing Date, and the Sellers shall have delivered to
Buyer certificates in form and substance satisfactory to Buyer, dated the
Closing Date, to such effect. The Sellers' certificates shall be signed by
their chief executive officers and chief financial officers.
NO MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in or affecting the Business or the Purchased Assets
subsequent to the date hereof.
OPINION OF COUNSEL. Buyer shall receive at the Closing from
Jenkens & Xxxxxxxxx, counsel to the Sellers, an opinion dated the Closing Date,
in form and substance as set forth in Exhibit E.
APPROVALS AND PERMITS. The Sellers shall have obtained and
provided to Buyer all required Permits and Approvals listed on Schedule 4.2 and
referred to in Section 6.5, each in form and substance satisfactory to Buyer.
INTELLECTUAL PROPERTY RIGHTS. All Intellectual Property
Rights which are used in the Business and which are held by Persons other than
the Sellers, either through direct or indirect ownership, by license or
otherwise, shall have been assigned to the Sellers for no consideration on or
prior to the Closing Date. After the Closing, Sellers will cooperate with
Buyer to record all such assignments (as listed on Schedule 8.2(e) hereto) with
the United States Patent and Trademark Office.
STANDARD OPERATING PROCEDURES. The Buyer shall have received
true and correct copies of Sellers' standard operating procedures accepted by
the FDA and required by its customers.
ASSETS. The Purchased Assets shall be free and clear of
liens, charges or other Encumbrances (other than liens identified on Schedule
8.2(g) (the "Permitted Liens")), or the Sellers shall have entered into
suitable escrow arrangements with the Buyer in order to satisfy such liens,
charges or Encumbrances.
AUTHORIZATION DOCUMENTS. The Buyer shall have received a copy
of the resolutions of the Boards of Directors of each of the Sellers approving
the Acquisition, certified by their respective corporate secretaries.
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CONDITIONS TO OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to effect the Closing shall be subject
to the following conditions, except to the extent waived in writing by the
Sellers:
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF BUYER. The
representations and warranties of Buyer herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time (but without giving effect to any qualification as to materiality
contained therein); Buyer shall have in all material respects performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Buyer at or prior to the Closing
Date, and Buyer shall have delivered to the Sellers a certificate in form and
substance satisfactory to the Sellers, dated the Closing Date to such effect.
The Buyer's Certificate shall be signed by its Chief Executive Officer and
Chief Financial Officer.
DELIVERY OF BUYER SHARES. Buyer shall have issued
certificates representing the Buyer Shares to be held as provided in Section
2.3.
AUTHORIZATION DOCUMENTS. The Sellers shall have received a
copy of the resolutions of the Board of Directors of Buyer approving the
Acquisition, certified by the secretary of Buyer.
NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the business, financial condition or results of
operations of the Buyer subsequent to the date of this Agreement.
OPINION OF COUNSEL. Sellers shall receive at the Closing from
O'Melveny & Xxxxx LLP, counsel to the Buyer, an opinion dated the Closing Date,
substantially in the form attached hereto as Exhibit G.
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TERMINATION OF OBLIGATIONS; SURVIVAL
TERMINATION OF AGREEMENT.
Anything herein to the contrary notwithstanding, this Agreement and
the transactions contemplated by this Agreement shall terminate if the
Closing does not occur on or before the close of business on February 17,
1998, unless extended by mutual consent in writing of Buyer, the Sellers, and
otherwise may be terminated at any time before the Closing as follows and in
no other manner:
MUTUAL CONSENT. By mutual consent in writing of Buyer and
the Sellers.
CERTAIN CONDITIONS NOT MET BY EARLIER DATE. By Buyer by
written notice to the Sellers if any conditions set forth in Section 8.2
shall not have been met by February 15, 1998.
CERTAIN CONDITIONS NOT MET BY EARLIER DATE. By Sellers by
written notice to Buyer if any of the conditions set forth in Section 8.3
shall not have been met by February 15, 1998.
MATERIAL BREACH. By Buyer or the Sellers if there has been
a material misrepresentation or other material breach by the other Party (in
the case of Buyer, by the Sellers and in the case of the Sellers, by Buyer)
in its representations, warranties and covenants set forth herein; provided,
however, that if such breach is susceptible to cure, the breaching Party
shall have ten business days after receipt of notice from the other Party of
its intention to terminate this Agreement if such breach continues in which
to cure such breach.
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EFFECT OF TERMINATION.
In the event that this Agreement shall be terminated pursuant to
any of subparagraphs (b), (c) or (d) of Section 9.1, all further obligations
of the Parties under this Agreement shall terminate without further liability
of any Party to another; provided that the obligations of the Parties
contained in Article XI (Arbitration) and Sections 12.4 (Governing Law), 12.8
(Publicity), 12.9 (Confidentiality), 12.11 (Notices), 12.12 (Expenses) and
12.14 (Attorney's Fees) shall survive any such termination. A termination
under any of subparagraphs (b), (c) or (d) of Section 9.1 shall not relieve
any Party of any liability for a breach of, or for any misrepresentation
under this Agreement, or be deemed to constitute a waiver of any available
remedy (including specific performance if available) for any such breach or
misrepresentation.
INDEMNIFICATION
INDEMNIFICATION OF BUYER.
The Sellers covenant and agree to indemnify, defend and hold
harmless Buyer and its directors, officers, employees, affiliates, agents,
representatives, successors and assigns (collectively, the "Buyer Indemnified
Persons"), from and against any and all Losses of Buyer or the Buyer
Indemnified Persons, directly or indirectly, as a result of, or based upon or
arising from:
any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by the Sellers in
or pursuant to this Agreement and any related agreements;
the failure of the Sellers to perform or observe fully any
covenant, provision or agreement to be performed or observed by them pursuant
to this Agreement and any related agreements;
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any actual or threatened claim, suit, action or proceeding
arising out of or resulting from the ownership by Sellers of the Purchased
Assets or the conduct by the Sellers of their respective businesses or
operations on or before the Closing Date, provided that such Loss is not a
result of or based upon or does not arise in connection with any neglect,
disregard or intentional misconduct on the part of Buyer or any Buyer
Indemnified Persons;
the (i) generation, use, transportation, treatment, storage,
release, disposal or presence of any Hazardous Substance in connection with
the Business or at any facility used in connection with the operation of the
Business, on or prior to the Closing; and (ii) the violation by Sellers,
prior to the Closing, of any Law relating to the generation, use,
transportation, treatment, storage, release, disposal or presence of
Hazardous Substances or the protection of the environment; or
any of the Excluded Liabilities and any other liability or
obligation of Sellers or any of their respective Affiliates not expressly
assumed by Buyer pursuant to Section 2.2(b) hereof.
The Sellers agree to reimburse Buyer, or any other Buyer Indemnified Person,
as the case may be, promptly upon demand for any unreimbursed payment made or
Loss suffered by Buyer or the Buyer Indemnified Person, as the case may be,
at any time after the Closing Date in respect of any Loss to which the
foregoing indemnity relates.
INDEMNIFICATION OF THE SELLERS.
Buyer covenants and agrees to indemnify, defend and hold harmless
the Sellers and their respective directors, officers, employees, affiliates,
agents, representatives, successor and assigns (collectively, the "Seller
Indemnified Persons") from and against any and all Losses of the Sellers and
the Seller Indemnified Parties, directly or indirectly, as a result of, or
based upon or arising from:
any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Buyer in or
pursuant to this Agreement or in any related agreements;
the failure of Buyer to perform or observe fully any
covenant, provision or agreement to be performed or observed by it pursuant
to this Agreement or any related agreement;
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any actual or threatened claim, suit, action or proceeding
arising out of or resulting from the ownership by the Buyer of the Purchased
Assets or the conduct by the Buyer of the Business or Buyer's operations
after the Closing Date, provided that such Loss is not a result of or based
upon or does not arise in connection with any neglect, disregard or
intentional misconduct on the part of the Sellers or any Seller Indemnified
Persons; or
any of the Assumed Liabilities.
Buyer agrees to reimburse the Sellers or the Seller Indemnified Parties as
the case may be, promptly upon demand for any unreimbursed payment made or
Loss suffered by the Sellers or the Seller Indemnified Parties, as the case
may be, at any time after the Closing Date in respect of any Loss to which
the foregoing indemnity relates.
PROCEDURE.
NOTICE. Any Party seeking indemnification with respect to
any Loss shall give prompt written notice to the Party required to provide
indemnity hereunder (the "Indemnifying Party").
DEFENSE. In the event any person or entity not a Party to
this Agreement shall make a demand or claim or file or threaten to file or
continue any lawsuit, which demand, claim or lawsuit may result in liability
to an Indemnified Party in respect of matters embraced by the indemnity under
this Agreement, or in the event that a potential loss, damage or expense
comes to the attention of any Party in respect of matters embraced by the
indemnity under this Agreement, then the Party receiving notice or aware of
such event shall promptly notify the other Party or Parties of the demand,
claim or lawsuit (the "Notice"). Except as provided in the next sentence,
within ten (10) days after Notice by the Indemnified Party to an Indemnifying
Party of such demand, claim or lawsuit, the Indemnifying Party shall have the
option, at its sole cost and expense, to retain counsel for the Indemnified
Party, to defend any such demand, claim or lawsuit, provided that counsel who
will conduct the defense of such demand, claim or lawsuit will be approved by
the Indemnified Party whose approval will not unreasonably be withheld. The
Indemnified Party shall have the right, at its own expense, to participate in
the defense of any suit, action or proceeding brought against it with respect
to which indemnification may be sought hereunder; provided, however, if (a)
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, or (b) the
employment of counsel by such Indemnified Party has been authorized in
writing by the Indemnifying Party, or (c) the Indemnifying Party has not in
fact employed counsel to assume the defense of such
58
action within a reasonable time; then, the Indemnified Party shall have the
right to retain its own counsel at the sole cost and expense of the
Indemnifying Party, which costs and expenses shall be paid by the
Indemnifying Party on a current basis. No Indemnifying Party, in the defense
of any such demand, claim or lawsuit, will consent to entry of any judgment
or enter into any settlement without the consent of the Indemnified Party.
In the event that the Indemnifying Party shall fail to respond within ten
(10) days after receipt of the Notice, the Indemnified Party may retain
counsel and conduct the defense of such demand, claim or lawsuit, as it may
in its sole discretion deem proper, at the sole cost and expense of the
Indemnifying Party, which costs and expenses shall be paid by the
Indemnifying Party on a current basis. Except as explicitly provided in this
Section 10.3(b), failure to provide Notice shall not limit the rights of such
Party to indemnification.
CERTAIN LIMITATIONS. Notwithstanding Section 10.3(b), in
the event that any demand, claim or lawsuit for which indemnification is
payable hereunder relates with respect to any Party to a criminal
investigation, quasi criminal investigation, governmental or regulatory
claim, civil claim involving allegations of criminal conduct or a matter in
which the licensure of such Party could be jeopardized, such Indemnified
Party shall have the sole right to retain counsel to represent it in such
matter and the Indemnifying Party shall pay the reasonable fees and expenses
of such counsel on a current basis, and the Indemnified Party shall have the
right to conduct and control the defense, compromise or settlement of any
such Indemnifiable Claim if the Indemnified Party chooses to do so, on behalf
of and for the account and risk of the Indemnifying Party who shall be bound
by the result so obtained.
WAIVER OF SUBROGATION AND OTHER RIGHTS. Each Indemnified
Party shall not be required to proceed against any particular Indemnifying
Party for indemnification or otherwise in respect of any Losses before
enforcing its rights hereunder against any other Indemnifying Party, and each
Party expressly waives all rights it may have, now or in the future, under
any statute, at common law, or at law or in equity, or otherwise, to compel
the Indemnified Party to proceed against any Indemnifying Party in respect of
any Losses before proceeding against, or as a condition to proceeding
against, any other Indemnifying Party.
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SURVIVAL.
This Article X shall survive any termination of this Agreement
pursuant to any of paragraphs (b), (c) or (d) of Section 9.1 hereof. This
indemnification further shall survive the Closing and shall remain in effect
until the third anniversary of the Closing Date; PROVIDED, HOWEVER, that (a)
the indemnification provided hereunder with respect to any Taxes of Seller
(Sections 2.2(a)(iv) and 4.4) and with respect to all employee benefit matters
(Sections 2.2(a)(vii) and 4.14) shall survive for the applicable statute of
limitations, (b) the indemnification provided hereunder with respect to
environmental matters and Hazardous Substances (Sections 2.2(a), 4.20 and
10.1(d)) shall survive until the seventh anniversary of the Closing Date, and
(c) the indemnification provided hereunder with respect to title to the
Purchased Assets (Section 4.7(a)) shall survive the Closing indefinitely. Any
matter as to which a claim has been asserted by notice to the other Party that
is pending or unresolved at the end of any applicable limitation period shall
continue to be covered by this Article X notwithstanding any applicable statute
of limitations (which the Parties hereby waive) until such matter is finally
terminated or otherwise resolved by the Parties or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and paid.
NOTICE.
The Sellers and the Buyer agree promptly to notify the other Party of
any liabilities, claims or misrepresentations, breaches or other matters
covered by this Article X upon discovery or receipt of notice thereof, whether
before or after Closing.
NOT EXCLUSIVE REMEDY.
This Article X shall not be deemed to preclude or otherwise limit in
any way the exercise of any other rights or pursuit of other remedies for the
breach of this Agreement or with respect to any misrepresentation.
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AGGREGATE DOLLAR LIMITATION.
The aggregate dollar amount of all payments the Sellers shall
be obligated to make pursuant to this Article X shall not exceed the amount of
the Purchase Price; provided, however, notwithstanding anything to the contrary
herein, the Sellers' indemnification obligations with respect to Tax matters
and ERISA matters shall be unlimited as to dollar amount. In addition, Buyer
and the Buyer Indemnified Persons shall not be entitled to indemnification
under this Article X unless and until the aggregate of all claims made by Buyer
for indemnity pursuant to this Article X exceed the sum of $50,000; PROVIDED,
HOWEVER that if at anytime the $50,000 threshold is satisfied, Buyer and the
Buyer Indemnified Persons shall be entitled to indemnification for the full
amount of such Losses, not just the amount in excess of $50,000.
The aggregate dollar amount of all payments Buyer shall be
obligated to make pursuant to this Article X shall not exceed $1 million.
ARBITRATION
ARBITRATION.
Except as otherwise provided in this Agreement, any controversy or
claim arising out of or relating to this Agreement or the breach hereof shall
be settled by arbitration in the County of Los Angeles, State of California.
JUDICIAL ARBITRATION AND MEDIATION SERVICES, THE
SELLERS.
The arbitration shall be administered by Judicial Arbitration and
Mediation Services ("JAMS") in its Los Angeles office.
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ARBITRATION PANEL.
The arbitration shall be conducted before a panel of three
arbitrators selected as follows. Each party hereto shall appoint one
arbitrator from the JAMS panel of retired judges, after which, and within ten
days of the appointment of such arbitrators, these two arbitrators shall
appoint a third arbitrator from the JAMS panel of retired judges. If within
ten days the two arbitrators appointed by the parties hereto cannot agree upon
a third arbitrator, such third arbitrator shall be appointed by JAMS in
accordance with its rules.
PROVISIONAL REMEDIES.
Each of the Parties reserves the right to file with a court of
competent jurisdiction an application for temporary or preliminary injunctive
relief, writ of attachment, writ of possession, temporary protective order
and/or appointment of a receiver on the grounds that the arbitration award to
which the applicant may be entitled may be rendered ineffectual in the absence
of such relief.
ENFORCEMENT OF JUDGMENT.
Judgment upon the award rendered by the arbitration panel may be
entered in any court having jurisdiction thereof.
DISCOVERY.
The Parties may obtain discovery in aid of the arbitration to the
fullest extent permitted under law, including California Code of Civil
Procedure Section 1283.05. All discovery disputes shall be resolved by the
arbitration panel.
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CONSOLIDATION.
Any arbitration hereunder may be consolidated by JAMS with the
arbitration of any other dispute arising out of or relating to the same subject
matter when the arbitration panel determines that there is a common issue of
law or fact creating the possibility of conflicting rulings by more than one
arbitration panel. Any disputes over which arbitration panel shall hear any
consolidated matter shall be resolved by JAMS.
POWER AND AUTHORITY OF ARBITRATOR.
The arbitration panel shall not have any power to alter, amend,
modify or change any of the terms of this Agreement nor to grant any remedy
which is either prohibited by the terms
of this Agreement or not available in a court of law. The arbitration panel
shall not be authorized to award punitive damages against any Party.
LAW TO BE APPLIED.
All questions in respect of procedure to be followed in conducting
the arbitration as well as the enforceability of this agreement to arbitrate
which may be resolved by state law shall be resolved according to the law of
the State of California. Any action brought to enforce the provisions of this
Section shall be brought in the Los Angeles County Superior Court.
COSTS.
The costs of the arbitration, including any JAMS administration fee,
and arbitrator's fee, and costs of the use of facilities during the hearings,
shall be borne equally by the Parties. Costs and attorneys' fees shall be
awarded to the prevailing party as contemplated by Section 12.14 hereof.
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GENERAL
AMENDMENTS; WAIVERS.
This Agreement and any schedule or exhibit attached hereto may be
amended only by agreement in writing of all Parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed
by the party to be bound and then only to the specific purpose, extent and
instance so provided.
SCHEDULES; EXHIBITS; INTEGRATION.
Each schedule and exhibit delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement,
although schedules need not be attached to each copy of this Agreement. This
Agreement, together with such schedules and exhibits, constitutes the entire
agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings of the Parties in connection
therewith, including, but not limited to, any letter or letters of intent
between Buyer, the Sellers.
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BEST EFFORTS; FURTHER ASSURANCES.
STANDARD. Each Party will use its best efforts to cause all
conditions to its obligations to be timely satisfied and to perform and fulfill
all obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
effected substantially in accordance with its terms as soon as reasonably
practicable. Sellers shall take or shall cause to be taken such other
reasonable actions as Buyer may require more effectively to transfer, convey
and assign to, and vest in, Buyer, and put Buyer in possession of, the
Purchased Assets as contemplated by this Agreement. In the event that any
Purchased Assets cannot be fully and effectively transferred to Buyer without
the consent of a third party or parties, Sellers shall thereafter be obligated
to use its best efforts to assure Buyer the benefits of such contract,
commitment, other arrangement or other Purchased Asset. The Parties shall
cooperate with each other in such actions and in securing requisite Approvals.
Each Party shall execute and deliver both before and after the Closing such
further certificates, agreements and other documents and take such other
actions as the other Party may reasonably request to consummate or implement
the transactions contemplated hereby or to evidence such events or matters.
LIMITATION. As used in this Agreement, the term "best
efforts" shall not mean efforts which require the performing party to do any
act that is commercially unreasonable under the circumstances, to make any
capital contribution or to expend any funds other than reasonable out-of-pocket
expenses incurred in satisfying its obligations hereunder, including, but not
limited to, the fees, expenses and disbursements of its accountants, actuaries,
counsel and other professionals.
GOVERNING LAW.
This Agreement, the legal relations between the Parties and
any Action, whether contractual or non-contractual, instituted by any Party
with respect to matters arising under or growing out of or in connection with
or in respect of this Agreement, including, but not limited to, the
negotiation, execution, interpretation, coverage, scope, performance, breach,
termination, validity, or enforceability of this Agreement, shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts made and performed in such State and without regard to
conflicts of law doctrines, except to the extent that certain matters are
preempted by federal law or are governed as a matter of controlling law by the
law of the jurisdiction of incorporation of the respective Parties.
Each Party hereby irrevocably submits to and accepts for
itself and its properties, generally and unconditionally, the exclusive
jurisdiction of and service of process pursuant to the laws of the State of
California and the rules of its courts, waives any defense of forum non
conveniens and agrees to be bound by any judgment rendered thereby arising
under or
65
out of in respect of or in connection with this Agreement or any related
document or obligation. Each Party further irrevocably designates and
appoints the individual identified in or pursuant to Section 11.11 hereof to
receive notices on its behalf, as its agent to receive on its behalf service
of all process in any such Action before any body, such service being hereby
acknowledged to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to each Party
at its address provided in Section 12.11; PROVIDED that, unless otherwise
provided by applicable law, any failure to mail such copy shall not affect
the validity of the service of such process. If any agent so appointed
refuses to accept service, the designating party hereby agrees that service
of process sufficient for personal jurisdiction in any action against it in
the applicable jurisdiction may be made by registered or certified mail,
return receipt requested, to its address provided in Section 11.11. Each
Party hereby acknowledges that such service shall be effective and binding in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of any Party to bring
any action or pro ceeding against the other Party in any other jurisdiction.
ASSIGNMENT.
Neither this Agreement nor any rights or obligations under it is
assignable by any Party hereto without the prior written consent of the other
Party, which shall not be unreasonably withheld; PROVIDED, HOWEVER, that at the
Buyer's sole option, Buyer may assign all of its rights and privileges under
this Agreement to SeraCare Technology, Inc., a Nevada corporation, or to any
Affiliate of Buyer or to any post-Closing purchaser of all or substantially all
of the Purchased Assets.
HEADINGS.
The descriptive headings of the Articles, Sections and subsections of
this Agreement are for convenience only and do not constitute a part of this
Agreement.
66
COUNTERPARTS.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different Parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall
become effective (unless otherwise provided therein) when one or more
counterparts have been signed by each Party and delivered to the other Party.
Facsimile signatures shall constitute original signatures for all purposes of
this Agreement.
PUBLICITY AND REPORTS.
The Sellers and Buyer shall coordinate all publicity relating to the
transactions contemplated by this Agreement and no Party shall issue any press
release, publicity statement or other public notice relating to this Agreement,
or the transactions contemplated by this Agreement, without obtaining the prior
consent of the Sellers and Buyer except to the extent that a particular action
is required by applicable law.
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CONFIDENTIALITY.
All information disclosed by any Party (or its representatives)
whether before or after the date hereof, in connection with the transactions
contemplated by, or the discussions and negotiations preceding, this Agreement
to any other Party (or its representatives) shall be kept confidential by such
other party and its representatives and shall not be used by any Persons other
than as contemplated by this Agreement, except to the extent that such
information (a) was known by the recipient when received, (b) it is or
hereafter becomes lawfully obtainable from other sources, (c) is necessary or
appropriate to disclose to a Governmental Entity having jurisdiction over the
Parties, (d) as may otherwise be required by law or (e) to the extent such duty
as to confidentiality is waived in writing by the other Party. If this
Agreement is terminated, each Party shall use all reasonable efforts to return
upon written request from the other Party all documents (and reproductions
thereof) received by it or its representatives from such other Party (and, in
the case of reproductions, all such reproductions made by the receiving Party),
unless the recipients provide assurances reasonably satisfactory to the
requesting Party that such documents have been destroyed.
PARTIES IN INTEREST.
This Agreement shall be binding upon and inure to the benefit of each
Party and their respective successors and permitted assigns, and nothing in
this Agreement, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement (except for the Buyer and Seller Indemnified Persons under Article X
hereof). Nothing in this Agreement is intended to relieve or discharge the
obligation of any third person to any Party to this Agreement.
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NOTICES.
Any notice or other communication hereunder must be given in writing
and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism provided that any notice so given is also mailed
as provided in clause (c) or (c) mailed by certified or registered mail,
postage prepaid), receipt requested as follows:
IF TO BUYER, ADDRESSED TO:
SeraCare, Inc.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxxx Xxxxx
WITH A COPY TO:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
IF TO THE SELLERS, ADDRESSED TO:
Consolidated Technologies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: President
WITH A COPY TO:
Jenkens & Xxxxxxxxx, a Professional Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: X. Xxxxxxx Xxxx, Esq.
Xxxxx Xxxxxx, Esq.
69
or to such other address or to such other person as either Party shall have
last designated by such notice to the other Party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.11 and an appropriate answerback is received, (ii) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually delivered at such address.
EXPENSES.
The Sellers and Buyer shall each pay their own expenses incident to
the negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby, including, but not limited to, the fees,
expenses and disbursements of their respective investment bankers, accountants
and counsel.
REMEDIES; WAIVER.
Except to the extent this Section 12.13 is inconsistent with any
other provision in this Agreement or applicable law, all rights and remedies
existing under this Agreement and any related agreements or documents are
cumulative to and not exclusive of, any rights or remedies otherwise available.
No failure on the part of any Party to exercise or delay in exercising any
right hereunder shall be deemed a waiver thereof, nor shall any single or
partial exercise preclude any further or other exercise of such or any other
right.
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ATTORNEY'S FEES.
In the event of any Action by any Party arising under or out of, in
connection with or in respect of, this Agreement, the prevailing Party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
Action; PROVIDED, HOWEVER, that no Party shall be considered a prevailing party
unless such Party has recovered more or paid less as a result of an
arbitrator's or a final judicial order than the amount offered or demanded in
writing by an opposing Party during the course of any settlement discussions.
Attorneys' fees incurred in enforcing any judgement in respect of this
Agreement are recoverable as a separate item. The Parties intend that the
preceding sentence be severable from the other provisions of this Agreement,
survive any judgment and, to the maximum extent permitted by law, not be deemed
merged into such judgment.
KNOWLEDGE CONVENTION.
Whenever any statement herein or in any schedule, exhibit,
certificate or other document delivered to any Party pursuant to this Agreement
is made "to its knowledge" or "to its best knowledge" or words of similar
intent or effect of any Party or its representative, such person shall make
such statement only after conducting a reasonable investigation of the subject
matter thereof, and each statement shall be deemed to include a representation
that such investigation has been conducted.
REPRESENTATION BY COUNSEL; INTERPRETATION.
The Sellers and Buyer each acknowledge that each Party to this
Agreement has been represented by counsel in connection with this Agreement and
the transactions contemplated by this Agreement. Accordingly, any rule of Law,
including, but not limited to, Section 1654 of the California Civil Code, or
any legal decision that would require interpretation of any claimed ambiguities
in this Agreement against the Party that drafted it has no application and is
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of Buyer and the Sellers.
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SPECIFIC PERFORMANCE.
The Sellers and Buyer each acknowledge that, in view of the
uniqueness of the Business and the transactions contemplated by this Agreement,
each Party would not have an adequate remedy at law for money damages in the
event that this Agreement has not been performed in accordance with its terms,
and therefore agrees that the other Party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
SEVERABILITY.
If any provision of this Agreement is determined to be invalid,
illegal or unenforceable by any Governmental Entity, the remaining provisions
of this Agreement shall remain in full force and effect provided that the
economic and legal substance of the transactions contemplated is not affected
in any manner materially adverse to any Party. In the event of any such
determination, the Parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof. To the extent permitted by Law, the Parties hereby to the same extent
waive any provision of Law that renders any provision hereof prohibited or
unenforceable in any respect.
72
IN WITNESS WHEREOF, each of the Parties hereto has executed or caused
this Agreement to be executed by its duly authorized officers as of the day and
year first above written.
"BUYER"
SERACARE, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Xxxxx X. Xxxxx
Chairman of the Board, President and
Chief Executive Officer
"SELLERS"
CONSOLIDATED TECHNOLOGIES, INC.,
a Texas corporation
By: /s/ Xxxxxxx X. Xxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxx
----------------------------------------------------
Title: President
---------------------------------------------------
CONCO ASSOCIATES, INC.,
a Texas corporation
By: /s/ Xxxxxxx X. Xxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxx
----------------------------------------------------
Title: President
---------------------------------------------------
S-1
LIST OF OMITTED SCHEDULES AND EXHIBITS*
SCHEDULES
SCHEDULE 1.1 Products
SCHEDULE 2.1(a) Purchased Assets
SCHEDULE 2.2(b) Assumed Liabilities
SCHEDULE 2.3 Purchase Price Allocation
SCHEDULE 2.4 Sellers Liabilities
SCHEDULE 4.1 Jurisdictions in which Sellers is Required to be Qualified to
Do Business as a Foreign Person; Directors and Executive
Officers
SCHEDULE 4.2 Permits and Approvals
SCHEDULE 4.3 Capitalization
SCHEDULE 4.3(a) Audited Financial Statements
SCHEDULE 4.3(b) Unaudited Interim Financial Statements
SCHEDULE 4.3(c) Auditors' Letters
SCHEDULE 4.3(d) Material Adverse Changes
SCHEDULE 4.3(e) Liabilities
SCHEDULE 4.4 Tax Returns
SCHEDULE 4.5 Material Contracts
SCHEDULE 4.5(b) Assumed Contracts
SCHEDULE 4.7(a) Real and Personal Property
SCHEDULE 4.8 Intangible Property
SCHEDULE 4.9 Orders, Actions and Labor Matters
SCHEDULE 4.10 Labor Relations
SCHEDULE 4.11 Insurance
SCHEDULE 4.12 Permits and Licenses
SCHEDULE 4.13 Law Compliance
SCHEDULE 4.13(a) Licenses Related to the Business
SCHEDULE 4.14(a)(i) Employee Benefit Plans, and Collective Bargaining and
Employee Agreements
SCHEDULE 4.14(a)(vii) Employees, Consultants and Agents Entitled to
Severance, Parachute or Other Payments or Benefits
SCHEDULE 4.15 Certain Interests
_______________________________
* Registrant agrees to furnish supplementally a copy of any of the
omitted Schedules and Exhibits listed above to the Commission upon
request.
SCHEDULE 4.19 Customers and Suppliers
SCHEDULE 4.20 Environmental Compliance
SCHEDULE 5.6 Buyer's Stock
SCHEDULE 7.6 Liabilities and Obligations of Sellers
SCHEDULE 7.9 Real Property Owned by Sellers
SCHEDULE 8.2(e) Assignment of Intellectual Property Rights
SCHEDULE 8.2(g) Permitted Liens
S-3
EXHIBITS
Exhibit A Percentage Interest in the Sellers
Exhibit B Xxxx of Sale
Exhibit C Assignment and Assumption of Lease
Exhibit D Assignment and Assumption Agreement
Exhibit E Form of Opinion of Counsel of the Sellers
Exhibit F Non-Competition Agreement
Exhibit G Opinion of Counsel of the Buyer
Exhibit H Registration Rights
Exhibit I Employment Agreement of Xxxxxxx X. Xxxx
Exhibit J Employment Agreement of Xxxxx Xxxx
