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Exhibit No. 10.01
Stock Purchase Agreement
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Exhibit 10.01
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of this 30th day of
November, 1995, by and between ALK LABORATORIES, INC., a corporation organized
under the laws of the State of Delaware ("Purchaser"), and HYCOR BIOMEDICAL
INC., a corporation organized under the laws of the State of Delaware
("Seller").
BACKGROUND:
Purchaser is engaged, among other things, in the business of
manufacturing and selling diagnostic reagents and test kits. Seller is the owner
of all of the issued and outstanding capital stock of Meridian Bio-Medical, Inc.
(the "Company"), a Colorado corporation. The Company manufactures and sells
biological extracts used by physicians to diagnose and treat allergies as well
as diluents and sterile accessories required for formulating allergy treatment
regimens. Purchaser desires to buy all of the issued and outstanding capital
stock of the Company, and Seller desires to sell such stock to Purchaser, upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale
1.1. Shares. At the Closing (as defined below) Purchaser shall
purchase from Seller and Seller shall sell to Purchaser, all of the issued and
outstanding shares of the capital stock of the Company (the "Shares"). In
exchange for the Shares, Purchaser shall pay an aggregate of Three Million Five
Hundred Thousand Dollars ($3,500,000.00) in immediately available funds (the
"Purchase Price"). The Purchase Price shall be subject to adjustment as set
forth below.
1.2. Net Worth Adjustment.
(a) If the Net Book Value (as defined below) of the
Company as of the Closing Date (as defined below) is less than One
Million Nine Hundred Fifteen Thousand Dollars ($1,915,000.00), the
purchase price for the Shares shall be decreased by the amount of such
shortfall. If the Net Book Value of the Company as of
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the Closing Date is more than $1,915,000, Seller and Purchaser shall
take such action (including, without limitation, an advance of cash by
Purchaser to the Company) as may be necessary to cause the Company to
either (i) declare and pay a dividend to Seller as shareholder of
record immediately prior to the Closing or (ii) cause the Company to
remain obligated to Seller (rather than release as provided in Section
9.5) with respect to intercompany indebtedness (the "Retained
Indebtedness"), in either case in a sum sufficient to reduce the Net
Book Value of the Company to $1,915,000. The amount, if any, by which
the Net Book Value of the Company as of the Closing Date is more or
less than $1,915,000 is referred to herein as the "Adjustment Amount."
For purposes hereof, the "Net Book Value" of the Company as of the
Closing Date shall equal the total consolidated assets (not including
intercompany receivables) of the Company less the total consolidated
liabilities (not including intercompany indebtedness except as
necessary to accomplish the actions described in the second sentence of
this subparagraph (a)) of the Company as reflected on the Closing
Balance Sheet (as defined below).
(b) Not less than five (5) business days prior to the
Closing Date, Seller shall prepare and deliver to Purchaser for
Purchaser's approval an estimated balance sheet of the Company as of
the Closing Date and a calculation of the estimated Adjustment Amount
(the "Estimated Adjustment Amount") determined in accordance with
Paragraph 1.2(a). Purchaser shall review such estimated balance sheet
and Estimated Adjustment Amount and the parties shall negotiate in good
faith to resolve any differences with respect thereto prior to Closing,
and, if they are unable to resolve any such differences, the parties
shall request Seller's independent accountants to prepare such estimate
and shall postpone the Closing until such accountants have done so. At
or immediately prior to the Closing, either (i) the Seller shall pay to
Purchaser by wire transfer to such account as Purchaser may designate,
a price adjustment as provided in Paragraph 1.2(a) in an amount equal
to the Estimated Adjustment Amount or (ii) the Net Book Value of the
Company shall be decreased to $1,915,000 in the manner provided in
Paragraph 1.2(a); the Company shall pay to the Seller by wire transfer
to such account as the Seller may designate a dividend or a payment on
the Retained Indebtedness in an amount equal to the Estimated
Adjustment Amount; and the Purchaser shall,
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if required, advance to the Company sufficient funds to pay such
dividend or make such payment.
(c) Within twenty (20) days after the Closing Date,
Seller shall prepare and deliver to Purchaser a balance sheet of the
Company as of the close of business on the Closing Date (the "Closing
Balance Sheet"). The Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting principles as in effect
in the United States ("GAAP"). A physical inventory of the Company
shall be taken in connection with the preparation of the Closing
Balance Sheet and Representatives of Purchaser shall be permitted to
observe such inventory and review and comment upon Seller's work and
procedures and all drafts of the Closing Balance Sheet. Seller shall
include on the Closing Balance Sheet: (i) an accrual for 11/12ths of
the bonus due ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the Company's Manager Incentive Plan
for fiscal year 1995 calculated in a manner consistent with past
practices; and (ii) an accrual for 2/3rds of an estimated amount of
commissions due under the Company's 1995 Sales Commissions Plan for the
last quarter of 1995 which shall be calculated as of the Closing Date
by reducing each Participants' sales targets by 33%.
(d) Following Seller's delivery of the Closing Balance
Sheet to Purchaser, Purchaser shall review the Closing Balance Sheet.
To facilitate such review, Seller shall provide Purchaser or its
independent accountants access to any work papers, schedules and other
documents prepared or utilized by Seller in connection with its
preparation of the Closing Balance Sheet and determination of the
Company's Net Book Value as of the Closing Date.
(e) The Closing Balance Sheet as prepared by Seller
shall be final and binding on Purchaser unless, within twenty (20) days
after the date Seller has delivered the Closing Balance Sheet and made
available to related work papers, schedules and other documents to
Purchaser, Purchaser shall have given written notice of objection (a
"Notice of Objection") to Seller. The Notice of Objection shall state
in reasonable detail the nature of Purchaser's objection(s). Seller and
Purchaser shall thereafter promptly consult with each other with
respect to the objection(s). Seller and Purchaser shall use their best
good faith efforts to resolve any objection(s) within thirty (30) days
after the Notice of Objection.
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If Seller and Purchaser are unable to resolve their differences within
thirty (30) days after the Notice of Objection has been given, then
either party may request that such disagreement be referred to the
Newport Beach, California office of Coopers & ▇▇▇▇▇▇▇ for determination
(the "Resolving Accounting Firm") and the determination of the
Resolving Accounting Firm shall be binding and conclusive upon the
parties. Seller and Purchaser shall cooperate fully with the Resolving
Accounting Firm and shall execute such engagement letters and other
agreements in connection with the engagement of the Resolving
Accounting Firm as it may reasonably request. Seller and Purchaser
shall give the Resolving Accounting Firm such assistance and access to
the assets and books and records of the Company (including those
maintained at Seller's offices), and any applicable work papers,
schedules and other documents as of the Resolving Accounting Firm shall
reasonably request. The fees and expenses of the Resolving Accounting
Firm shall be borne equally by Seller and Purchaser.
(f) Within ten (10) days after the Adjustment Amount,
if any, has been finally determined as provided in this Section 1.2,
(i) if the Adjustment Amount results in an adjustment in favor of
Purchaser, Seller shall pay, by wire transfer to such account as
Purchaser may designate, the difference between the Adjustment Amount
and the Estimated Adjustment Amount, together with interest thereon
accruing from the Closing Date to the date of payment at the rate of 8-
3/4% per annum, which payment shall constitute a reduction of the
Purchase Price; or (ii) if the Adjustment Amount results in an
adjustment in favor of Seller, Purchaser shall cause the Company to
adjust the amount of the dividend paid, if any, in connection with the
Closing pursuant to Paragraph 1(a) above, or to pay the Retained
Indebtedness to Seller, in each case in an amount equal to the
difference between the Adjustment Amount and the Estimated Adjustment
Amount, together with interest thereon accruing from the Closing Date
to the date of payment at the rate of 8-3/4% per annum, and to wire
transfer such amount to such account as Seller may designate.
ARTICLE II
Closing; Payment of Purchase Price
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2.1. Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at 10:00 a.m., local time,
on December 1, 1995 (the "Closing Date") at the offices of Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or
at such other time and place as the parties hereto may agree. All transactions
which take place at the Closing shall be deemed to have taken place
simultaneously, and no delivery or payment shall be considered to have been made
until all transactions to be made at the Closing have been completed.
2.2. Payment of Purchase Price. On the Closing Date, Purchaser
shall pay the Purchase Price to Seller in immediately available funds by wire
transfer to such account as Seller may designate in writing.
ARTICLE III
Representations and Warranties of Seller
Seller represents and warrants to Purchaser, which
representations and warranties shall be true and correct as of the Closing Date
and which shall (except as set forth in Paragraph 12.3(a), hereof) survive the
Closing notwithstanding any investigation made by or information furnished to
Purchaser in connection herewith, that, except as set forth in the Disclosure
Schedule attached hereto (the "Disclosure Schedule")
3.1. Organization and Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
3.2. Authority of Seller. Seller has the corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Subject to Section 7.3 hereof, the execution and delivery
hereof, and the consummation of the transactions contemplated hereby, have been
duly and validly authorized by all necessary corporate action on the part of
Seller. This Agreement has been duly and validly executed and delivered by
Seller and is a legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms. Neither the execution, delivery and
performance hereof, nor the consummation of the transactions contemplated
hereby, nor compliance with any of the provisions hereof by Seller will: (i)
conflict with or result in a breach of or violation under Seller's Articles
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of Incorporation or By-Laws and/or any agreement governing the organization or
operation of Seller; (ii) conflict with or result in a breach of or violation
under the Company's Articles of Incorporation or By-Laws and/or any agreement
governing the organization or operation of the Company; (iii) result in any
conflict with, breach of, or default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture or warrant or any franchise, license,
permit, agreement or other instrument or obligation to which Seller and/or the
Company is a party or by which Seller, the Company and/or any of the properties
or assets of Seller and/or the Company may be bound; (iv) violate any order,
writ, injunction, judgment, decree, law, statute, rule or regulation applicable
to Seller, the Company and/or any of the properties or assets of Seller and/or
the Company; (v) require any consent, approval, authorization, license, permit,
registration, filing, recording or waiver under any applicable law, rule or
regulation, under any order, writ, judgment, injunction, decree, determination
or award which affects or binds Seller, the Company and/or any of the assets of
Seller and/or the Company, or under any governmental or judicial license,
franchise, permit or approval held by the Company or which binds or affects the
Company or its assets provided, that, Seller makes no representation as to any
consents, approvals or authorizations of the United States Food and Drug
Administration (the "FDA") that may be required for the Purchaser to continue to
operate the business of the Company from and after the Closing Date in the
manner presently being conducted; (vi) require any consent, approval,
authorization or waiver under any note, bond, mortgage, indenture, warrant,
agreement or other instrument or obligation to which Seller and/or the Company
is a party or by which Seller, the Company and/or any of the properties or
assets of Seller and/or the Company may be bound; or (vii) arising result in the
creation or imposition of any lien, claim or encumbrance upon any of the assets
of the Company.
3.3. Organization and Standing of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. The Company: (i) has the corporate
power and authority and possesses all rights, privileges, franchises, licenses,
permits, authorizations and approvals, governmental or otherwise, necessary to
entitle it to use its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as
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presently conducted or proposed to be conducted; and (ii) is duly qualified and
in good standing to do business in every jurisdiction where the failure to
qualify would have a material adverse effect upon its business or properties.
The Disclosure Schedule hereto sets forth a complete list of all jurisdictions
in which the Company is qualified to do business as of the date hereof. There
have been delivered or made available to Purchaser true and complete copies of
the Articles or Certificate of Incorporation, as amended to date, and the
By-laws, as in effect on the date hereof, of the Company. The stock certificate
and transfer books and minute books of the Company, as heretofore made available
to Purchaser and its representatives, are true, complete and correct.
3.4. Capital Stock of the Company. The authorized capital stock
of the Company consists of 1,000 shares of common stock, $1.00 par value (the
"Common Stock"), of which 1,000 shares are validly issued and outstanding, fully
paid and nonassessable. Seller is the beneficial and record owner of all of such
shares of the Common Stock (which constitute the "Shares" as defined herein),
and Seller has good and marketable title to such shares, free and clear of all
liens, claims and encumbrances of any kind. The Company is not authorized to
issue any other class of capital stock. The Company holds no shares of the
Common Stock in its treasury. No shares of the Common Stock or any other
securities issued by the Company have been issued in violation of any preemptive
rights or any applicable securities or other laws, and there are no existing
options, warrants, rights, calls, puts or commitments of any character relating
to authorized but unissued shares of the Company's capital stock, to any of the
Company's issued and outstanding Common Stock or to any other securities issued
or to be issued by the Company. Except for this Agreement there are no voting
agreements, understandings or arrangements, whether written or oral, which
govern the voting of the Company's capital stock, the management of the Company
or the sale or transfer of the Company's capital stock, and there are no
existing restrictions on the transfer of shares of the Common Stock.
3.5. Subsidiaries. The Company does not own, and to
Seller's knowledge since the date of its incorporation has not owned, any
capital stock of, any equity in, or any other ownership or investment interest
in, any corporation, limited liability company, partnership, joint venture or
other business entity. No other corporation or other business entity has been
merged with or consolidated into the Company.
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3.6. Financial Statements and Information.
(a) Seller has furnished the following unaudited
financial statements (the "Financial Statements") of the Company to
Purchaser:
(i) Balance sheets as of December 31, 1992,
1993 and 1994 and the related statements of operations for the
years ended on such dates; and
(ii) A balance sheet as of September 30, 1995
and related statements of operations for the nine-month period
then ended. The balance sheet dated September 30, 1995 is
referred to herein as the "September Balance Sheet."
(b) The Financial Statements have been prepared in
accordance with the books and records of the Company and in accordance
with GAAP applied on a consistent basis, and, subject to customary
year-end adjustments in the case of the September 30, 1995 statements,
fairly present the financial condition and results of operations of the
Company as of the dates and for the periods indicated.
3.7. Tangible Personal Property.
(a) The Company owns or leases all of the tangible
personal property and assets used by the Company in connection with the
conduct of its business as historically conducted. All of the tangible
personal property owned or leased by the Company is currently in its
possession. To Seller's knowledge, all machinery and equipment,
including laboratory and office equipment, owned or leased and
currently being used by the Company is in operating condition.
(b) Except for leased property, the Company has good
and marketable title to all tangible personal property used in the
conduct of its business, free and clear of all liens, claims and
encumbrances, except for: (i) liens set forth in the Disclosure
Schedule (which liens shall be satisfied on or prior to Closing unless
the obligations therefor are reflected on the Closing Balance Sheet);
and (ii) minor encumbrances which do not materially affect the
marketability, present use or value thereof (it being understood that
any liens securing any obligation to pay monies shall be deemed to
affect marketability).
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(c) The Disclosure Schedule identifies each lease
under which the Company has rights in tangible personal property and
pursuant to which the annual rental payment is greater than $10,000 per
year. Each such lease is valid and enforceable in all respects.
(d) The inventory of the Company is of a quality
useable and saleable in the ordinary course of its business as
conducted on the date hereof and does not include any obsolete or
discontinued items except as reserved for in the September Balance
Sheet or Closing Balance Sheet. Without limitation to the foregoing,
the finished goods inventory of the Company is (subject to the
foregoing reserves) in good condition, properly stored and in
compliance with all applicable federal, state and local laws. All raw
materials and work in process are suitable and processable for the
production of finished products of good, usable and merchantable
quality subject to applicable reserves.
3.8. Real Property.
(a) The Company does not own or lease any real estate
other than its facility at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, the
legal description for which is set forth in the Disclosure Schedule
(the "Real Estate"). The Company has good and marketable title to the
Real Estate, free and clear of all liens, claims or encumbrances of any
kind, except (i) liens set forth in the Disclosure Schedule (which
liens shall be satisfied on or prior to Closing); (ii) statutory liens
for 1995 real estate taxes which are not yet delinquent or payable;
(iii) municipal and zoning ordinances, recorded building and use
restrictions and covenants, and recorded utility easements servicing
the Real Estate which, in each case, do not render the Company's title
to the Real Estate unmerchantable or materially impair the present use,
occupancy or value of the Real Estate (collectively, "Permitted
Liens").
(b) The Company's use of the Real Estate is in
material compliance with all applicable zoning laws, all local, state
and federal laws, ordinances and regulations affecting the use and
occupancy of the Real Estate and the terms and restrictions of the
industrial parks, if any, in which the Real Estate is located. The
current use of the Real Estate is not a special use exception or a
legal, nonconforming use. The Company has not received any notice and
has no knowledge of
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any: (i) pending or threatened condemnation proceedings involving the
Real Estate; (ii) any planned or actually commenced improvements which
may result in an assessment involving the Real Estate; (iii) any due
but unpaid obligations which could create a lien on the Real Estate;
(iv) any governmental agency or court orders requiring the repair,
alteration or correction of any existing condition with respect to the
Real Estate; or (v) other matters adversely affecting the Company
involving the Real Estate. Each of the buildings and other improvements
(the "Improvements") located on the Real Estate is located within the
boundary lines of such parcel, is not in violation of applicable set
back requirements, zoning laws and ordinances and does not encroach on
any easements which may affect such parcel. Each of the Improvements
has been approved by all necessary governmental authorities, and, to
Seller's knowledge, is in good condition, working order and repair and
is free of structural and mechanical defects.
3.9. Intangible Personal Property.
(a) The accounts, notes and claims receivable of the
Company represent valid claims against the obligors thereof which arose
in the ordinary course of business and to the Seller's knowledge will
at Closing be current, except as reflected on the Aging Schedules (as
defined below) or in subsequent schedules prepared at the time of
Closing, and collectible, except to the extent reserved against in the
Closing Balance Sheet. A true and complete aging schedule of the
Company's receivables dated as of September 30, 1995 has been delivered
to Purchaser (the "Aging Schedule").
(b) The Company owns or licenses all of the patents,
patent applications, inventions, designs, models, processes,
formulations and know-how used by the Company in connection with the
conduct of its business as historically conducted and as presently
conducted. The Disclosure Schedule hereto, identifies all patents owned
and patent applications made by the Company (and the jurisdictions in
which such patents have been issued and such applications filed) and
all processes and formulations owned by the Company. The Company owns
such patents, inventions, designs, models, processes, formulations and
know-how free and clear of all liens, claims and encumbrances.
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(c) The Disclosure Schedule identifies any license,
agreement or arrangement to which the Company is a party, whether as
licensee, licensor, or otherwise, with respect to any patent, patent
application, invention, design, model, process, formulation or know-how
except for licenses for off-the-shelf computer software and similar
non-exclusive licenses. To Seller's knowledge, (i) the Company is not
infringing or violating any patent or other rights of others in
connection with its present use of any invention, design, model,
process, formulation or know-how; and (ii) no other person is
infringing or violating any patent or other rights of the Company in
connection with its present use of any invention, design, model,
process, formulation or know-how.
(d) The Company owns or licenses all of the trade
names, trademarks, service marks and copyrights used by the Company in
connection with the conduct of its business as historically conducted
and as presently conducted. The Disclosure Schedule identifies all
trade names, trademarks, service marks and registrations thereof, and
all copyright registrations (by jurisdiction), owned by the Company.
The Company owns all such trade names, trademarks, service marks and
registrations thereof, and all such copyright registrations, free and
clear of all liens, claims and encumbrances.
(e) The Disclosure Schedule identifies each license,
agreement, or arrangement, to which the Company is a party, whether as
a licensee, licensor, or otherwise, with respect to any trade names,
trademarks, services marks or copyrights. To Seller's knowledge: (i)
the Company has not infringed and is not now infringing any trade name,
trademark, service ▇▇▇▇ or copyright belonging to any other person; and
(ii) no other person is now infringing any trade name, trademark,
service ▇▇▇▇ or copyright of the Company.
3.10. Contracts and Commitments.
(a) The Disclosure Schedule identifies each contract
or arrangement for the purchase of goods or services involving
aggregate consideration of Ten Thousand Dollars ($10,000.00) per year
or more to which the Company is a party and the expiration dates or
term of each such contract, if applicable. All of the Company's
purchase contracts for goods or services were entered into in the
ordinary course of business, and no
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such contracts are in excess of the normal, ordinary and usual
requirements of the Company's business as historically conducted. No
such contract involves the entire output of a supplier or provides that
any supplier will be the exclusive supplier of the Company.
(b) The Disclosure Schedule hereto identifies each
contract or arrangement for the sales of goods or services to which the
Company is a party and each outstanding bid, quotation or offer made or
tendered by the Company for any such sale, in each case involving
aggregate consideration of Ten Thousand Dollars ($10,000.00) per year
or more and the expiration dates or term of each such contract, if
applicable. All of the Company's sales contracts for goods or services
were made in the ordinary course of business.
(c) Except for Benefit Plans (as defined below)
identified in the Disclosure Schedule, the Company is not a party to
nor bound by: (i) any contract or arrangement with stockholders,
directors, officers, employees, agents, sales representatives,
consultants, distributors or dealers; or (ii) any agreements or
arrangements involving employees of the Company that contain any
severance or termination pay liabilities or obligations; or (iii) any
bonus, vacation pay, sick pay, group insurance, deferred compensation,
stock purchase, stock option, profit sharing, pension, retirement,
fringe benefit or other employee benefit plans involving such
employees.
(d) The Disclosure Schedule identifies all policies of
insurance owned by the Company and relating to the business or assets
of the Company as of the date hereof. All such policies are in full
force and effect, are not void and all premiums thereon are paid to
date. The Company has complied in all material respects with each
such policy and has not failed to present any claim or give any
notice thereunder in a due and timely manner. The Disclosure Schedule
sets forth a current summary description of each claim made by the
Company under, or which has been made against the Company and has
been paid or defended in accordance with the terms of, any insurance
policy of the Company within two (2) years prior to the date hereof.
(e) The Company is not a party to nor bound by any
contract or arrangement with manufacturers, wholesalers or dealers
under which the Company serves
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as distributor, dealer or sales representative for products
manufactured by others.
(f) Except as otherwise disclosed in this Agreement,
the Company is not a party to any contract, lease or commitment,
whether written or oral: (i) involving aggregate consideration to or an
aggregate expenditure by the Company in excess of Ten Thousand Dollars
($10,000.00) per year; or (ii) involving performance over a period of
more than 30 days, except such contracts, leases or commitments as have
been entered into in the ordinary course of business and as may be
cancelled by the Company without liability (other than for goods or
services delivered thereunder prior to cancellation) on not more than
thirty (30) days notice.
(g) The Company has provided or made available to
Purchaser with true and complete copies of each contract, agreement,
lease or other obligation identified in the Disclosure Schedule with
reference to Sections 3.7, 3.9, 3.10 or 3.14 hereto. To Seller's
knowledge each of the contracts, agreements, leases or other material
obligations to which the Company is a party or by which the Company or
its properties is bound is in full force and effect. The Company has
not received notice of nor is it aware that it has materially breached,
violated or committed a default under, or committed or omitted any act
which, with notice or lapse of time, or both, would constitute a breach
or violation of, or default under, any contract, agreement, lease or
other obligation to which the Company is a party, or by which it or its
properties is bound. Neither Seller nor the Company has any knowledge
that any other party is in breach or violation of, or default under, or
has committed or omitted any act which, with notice or lapse of time,
or both, would constitute a breach or violation of, or default under,
any such contract, agreement, lease or other obligation.
3.11. Licenses, Permits and Authorizations. The Company
has all approvals, authorizations, consents, licenses, franchises, orders and
other permits of, and has made all filings with, any governmental authority,
whether foreign, federal, state, regional or local, which are required for the
conduct of the Company's business as presently conducted (including, but not
limited to, the approval of the FDA, and all such licenses, permits and other
authorizations are listed on the Disclosure Schedule,
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hereto. All such approvals, authorizations, consents, licenses, franchises,
orders and other permits are in full force and effect, and all fees and charges
payable with respect thereto have been paid.
3.12. Taxes.
(a) Seller or the Company has filed all federal,
state, local and foreign tax returns and reports required under
applicable law to be filed with respect to the Company's income,
operations and/or assets, and each such return or report is complete
and correct in all material respects, and the tax liability with
respect to the Company's income, operations and/or assets is properly
reflected thereon. All taxes, assessments and other governmental
charges reflected on such tax returns and reports which are due and
payable have been paid, other than those taxes which are currently
payable without penalty or interest but for which adequate reserves
have been set aside on the books of the Company or, in the case of
federal income taxes and income taxes for those states permitting
consolidated returns, the books of Seller. The Company has withheld
amounts from its employees, and has filed all federal, foreign, state
and local returns and reports with respect to employee income tax
withholding and social security and unemployment taxes in compliance
with the tax withholding provisions of the Internal Revenue Code of
1986, as amended (the "Code") and other applicable federal, foreign,
state or local laws. No currently effective waiver or extension of any
statute of limitations relating to taxes or other governmental charges
has been executed or given by Seller or the Company, and no requests
for such waivers are pending.
(b) No tax return of Seller or the Company is
currently under examination by the Internal Revenue Service or any
other taxing authority; neither the Internal Revenue Service, nor any
other taxing authority, is now asserting or, to the knowledge of
Seller, threatening to assert against Seller or the Company any
adjustment, deficiency, lien or claim for additional taxes or interest
thereon or penalties in connection therewith; and all returns filed by
Seller or the Company with the Internal Revenue Service or any other
taxing authority through the taxable years or periods ended December
31, 1992 have been examined and closed or are returns with regard to
which the statute
16
of limitations for the assessment of additional tax has expired.
(c) There is no tax sharing agreement or arrangements
binding the Company or any other agreement, express or implied,
relating to the taxable income of the Company.
3.13. Labor Practices and Labor Matters.
(a) The Disclosure Schedule identifies each of the
Company's employees together with his/her job title and salary or wage
rate as of September 30, 1995.
(b) The Company is in substantial compliance with the
Federal Fair Labor Standards Act and all federal, state and local laws,
ordinances, rules, regulations and orders relating to employment
discrimination, employee welfare and labor standards which are
applicable to the Company, including without limitation: (i) any laws,
rules or regulations relating to the employment of any person not a
citizen of the United States; and (ii) any provisions thereof relating
to wages, bonuses, collective bargaining, equal pay and the payment of
social security and similar payroll taxes. To Seller's knowledge, there
is no basis for any claim by any past or present employee of the
Company that such employee was wrongfully discharged or subject to any
employment discrimination by the Company or its management arising out
of or relating to such employee's race, sex, color, religion, handicap
or any other protected characteristic under applicable law. No
proceedings are pending before any court, government agency or
instrumentality or arbitrator relating to labor matters, and there is
no pending investigation by any governmental agency of which Seller has
knowledge or, to the knowledge of Seller and the Company, threatened
claim by any such agency or other person relating to labor or
employment matters.
(c) The Company is not a party to any agreement or
contract with any union, labor organization, employee group, or other
entity or individual which affects the employment of employees of the
Company, including without limitation, any collective bargaining
agreements or labor contracts.
(d) To the knowledge of Seller and the Company, none
of the employees of the Company is in the
17
process of being organized by or into labor unions or associations.
Since December 31, 1991, the Company has not been subject to a strike
or other work stoppage and, to the knowledge of Seller and the Company,
there are no strikes or work stoppages contemplated or threatened
against the Company.
(e) The Disclosure Schedule lists each of the states
where the Company has or maintains any unemployment or workers
compensation accounts. Since December 31, 1994, the Company has not had
any adverse change in its contribution rate or its experience rating
for unemployment or workers' compensation purposes in any state. No
unemployment or workers' account of the Company has a negative balance.
(f) To Seller's knowledge, the Company is in
substantial compliance with the Occupational Safety and Health Act of
1970, as amended, ("OSHA") and all other federal, state or local laws
or ordinances, including orders, rules and regulations thereunder,
regulating or otherwise affecting health and safety of the work place
("OSHA Laws").
3.14. Benefit Plans. Each employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended, ("ERISA") to which Seller or the Company is required to make
contributions for the benefit of the Company's employees is identified and
described on the Disclosure Schedule. With respect to each such plan: (i) to the
extent such plan is intended to qualify under Section 401(a) of the Code, such
plan is so qualified, and Seller or the Company has received a current favorable
determination letter to such effect from the Internal Revenue Service (or has
received sufficient evidence that a timely application for such determination
with respect to such plan has been submitted to the IRS) or is relying on the
qualification of a standardized prototype plan which Seller or the Company has
duly adopted; (ii) the provisions of such plan are in material compliance with
ERISA and the Code; (iii) Seller and the Company are in material compliance with
ERISA and the Code, including, without limitation, ERISA's fiduciary and
prohibited transaction rules, participating and vesting provisions, reporting
and disclosure provisions and funding requirements; and (iv) no such plan is
subject to Title IV of ERISA. Neither Seller nor the Company is a party to any
multiemployer plan (as defined in Section 3(37) of ERISA) covering any present
or former employee of the Company, nor has Seller or the Company incurred any
withdrawal liability
18
in connection with any such plan. Each employee welfare benefit plan (as defined
in Section 3(1) of ERISA) to which Seller or the Company is required to make
contributions for the benefit of the Company's employees is also identified and
described in the Disclosure Schedule. With respect to each such plan: (i) the
provisions of such plan are in material compliance with ERISA and the Code (ii)
Seller and the Company are in material compliance with ERISA and the Code,
including, without limitation, ERISA's fiduciary and prohibited transaction
rules and reporting and disclosure requirements. To Seller's knowledge, no such
employee pension or welfare benefit plan is currently under audit or review by
the Department of Labor, the Internal Revenue Service or any other federal or
state agency, and no such action is contemplated or under consideration. No
actions or claims (except those routinely submitted in the ordinary course of
plan administration) are currently pending, or, to Seller's knowledge, currently
threatened, against any such employee pension or welfare benefit plan. Seller
has provided or made available to Purchaser true and complete copies of each
such employee pension and welfare benefit plan (or a written description thereof
in the case of any unwritten plan), each trust agreement or other funding
arrangement for such plans, and the most recent annual return/report on Internal
Revenue Service Form 5500 for each such plan. Since December 31, 1991 and, to
Seller's knowledge, prior thereto no health or life insurance benefits have been
promised or provided to retirees of the Company, and neither Seller nor the
Company has promised or committed to provide such benefits to any employee of
the Company after retirement except as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985 as amended ("COBRA"). To Seller's knowledge,
neither Seller nor the Company has made any direct or implied commitment to
create any additional employee pension or welfare benefit plan or to modify,
change or terminate any existing employee pension or welfare benefit plan for
the benefit of any of the Company's employees.
3.15. Litigation.
(a) There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry before any federal, state,
municipal, foreign or other court or governmental or administrative
body or agency, any securities or commodities exchange, other
regulatory body or any private arbitration tribunal now pending, or, to
the knowledge of Seller or the Company, threatened, against, relating
to or affecting: (i) the transactions contemplated by this Agreement;
(ii)
19
Seller which would adversely affect Seller's ability to consummate
the transactions contemplated hereby; or (iii) the Company or any
director, officer or other employee thereof in his capacity as such, or
the assets, properties or business of the Company. Nor, to the
knowledge of Seller and the Company, does any basis exist for any such
claim, action, suit, proceeding, arbitration, investigation or inquiry.
(b) Neither the Company nor any of its officers,
directors or employees, currently is or has been permanently or
temporarily enjoined or prohibited by any order, judgment or decree of
any court or governmental or administrative body or agency, or any
other regulatory body, from engaging in or continuing any conduct or
practice in connection with the business engaged in by the Company.
(c) There is not in existence any order, judgment or
decree of any court or governmental or administrative body or agency,
or any other regulatory body, enjoining or prohibiting the Company from
taking, or requiring the Company to take, any action of any kind or to
which the Company or any of its businesses, properties or assets are
subject or bound.
(d) The Company is not in default under any order,
writ, injunction or decree of any court or governmental or
administrative body or agency or any other regulatory body.
(e) The Disclosure Schedule lists, attaches or refers
to all communications (other than bulletins or notices or the like of
general application) received by the Company or Seller from the FDA
since December 31, 1991, and any proceedings commenced against or
threatened by the FDA against the Company since December 31, 1991, with
respect to the Company's product or facility licenses or any of its
products, processes or procedures, including, without limitation, any
communications or proceedings relating to any actual or proposed recall
or withdrawal of any product from the market.
3.16. Depositories, Powers of Attorney. The Disclosure
Schedule sets forth: (i) the name of each bank or similar entity in which the
Company has an account, lockbox or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto; and (ii) the name of each
person, corporation, firm or other
20
entity holding a general or special power of attorney from the Company and a
description of the terms thereof.
3.17. Customers and Suppliers. The Disclosure Schedule hereto
identifies each of the Company's Major Customers and Major Suppliers (both as
defined below) and states the dollar volume of sales made to and purchases made
from such persons during the Company's last fiscal year and the nine (9) months
ended September 30, 1995. For purposes of this Section, "Major Customer" shall
mean each of the Company's twenty five (25) largest customers, by sales volume,
during each of the Company's last two fiscal years or during the nine (9) months
ended September 30, 1995. For the purposes of this Section, "Major Supplier"
shall mean each of the Company's ten (10) largest vendors, by purchase volume,
during each of the Company's last two fiscal years or during the nine (9) months
ended September 30, 1995. The Company has not received any written notice or, to
Seller's knowledge, any indication from any of its twenty five (25) largest
customers or ten (10) largest suppliers during the nine (9) months ended
September 30, 1995 to the effect that such person intends to cease doing
business or to materially reduce its business with the Company or to terminate
any agreement with the Company.
3.18. Brokers and Finders. Except that Seller has engaged
Deloitte & Touche LLP to advise Seller in connection with the sale of the
Company, neither Seller or the Company, nor any officer, director or employee
thereof has employed any broker or finder, or incurred any liability for any
brokerage fees, commissions or finders' fees, in connection with the
transactions contemplated by this Agreement.
3.19. Compliance With Environmental Laws.
(a) The Company is in material compliance in all
respects with the provisions of the Solid Waste Disposal Act, the Clean
Air Act, the Clean Water Act, the Water Quality Act of 1987, the
Federal Insecticide, Fungicide and Rodenticide Act, the Marine
Protection, Research and Sanctuaries Act, the Pollution Prevention Act
of 1990, the National Environmental Policy Act, the Noise Control Act,
the Safe Drinking Water Act, the Emergency Planning and Community
Right- to-know Act, the Resource Conservation and Recovery Act of 1976
("RCRA"), the Comprehensive Environmental Responsibility, Cleanup and
Liability Act of 1980 ("CERCLA"), the Toxic Substance Control Act of
1976 and the Pollution Control Act, each as amended from time to
21
time, or any other federal, state, local or foreign laws, including
rules and regulations thereunder, regulating or otherwise affecting the
environment and/or the disposal of waste or other materials
("Environmental Laws"). To Seller's knowledge, no person or entity has
caused or permitted materials to be generated, stored, treated,
recycled, or disposed of on, under or at the Real Estate, which
materials, if known to be present, would require clean
up, removal or other remedial or responsive action under Environmental
Laws. To Seller's knowledge there are no above ground or underground
storage tanks, and no polychlorinated biphenyls or asbestos, on the
Real Estate. The Company is not subject to any judgment, decree, order
or citation related to or arising out of Environmental Laws, and the
Company has not been notified that it has been named or listed as a
potentially responsible party by any governmental body or agency in any
matter arising under Environmental Laws. Since December 31, 1991, the
Company has obtained all material permits, licenses and approvals
required under Environmental Laws, and all such permits, licenses and
approvals are in full force and effect, and any fees and/or conditions
for such permits, licenses and approvals have been paid and are
complied with. The Company has disposed of all waste in substantial
compliance with all Environmental Laws, and the Seller is not aware of
any existing condition that is likely to form the basis of any present
or future claim, demand or action seeking clean up of or remediation
with respect to any facility, site, location or body of water, surface
or subsurface, for which the Company could be liable or responsible,
whether as a result of the disposal of its waste at such site or
otherwise.
(b) A true and correct copy of all environmental
claims, reports, studies, compliance actions, correspondence with
environmental regulators or the like of or in the possession of the
Company or Seller with respect to the Company and the Real Estate have
been furnished or made available to Purchaser.
3.20. Transactions with Affiliates. No Affiliate (as
defined below) of the Company has had any interest in any transaction, lease,
contract or other arrangement with the Company. Without limitation to the
foregoing, no Affiliate of the Company has had: (i) any interests in any entity
which has purchased, sold or furnished to the Company any goods or services;
(ii) a beneficial interest in any lease, contract, commitment or understanding
to which the
22
Company is a party or by which it is bound or affected; (iii) any
interest or claim against the Company or any assets of the Company; or (iv) any
interest in any assets used in the business of the Company. For purposes hereof,
"Affiliate" shall mean as to any person, any second person directly or
indirectly controlling, controlled by or under common control with such first
person (whether such control exists through the ownership of voting stock, by
contract or otherwise) and/or any second person who is a director and/or officer
of such first person and/or any of the foregoing Affiliates. For
purposes hereof, any first person that owns or controls a majority of the
outstanding equity or voting securities of any second person shall be deemed to
control such second person.
3.21. Products. Since December 31, 1991 no claim for
product liability has been asserted against the Company or the Company's
business, and no event has occurred which is reasonably likely to result in any
such claim. There has been no recurrent or general failure of any product
manufactured or marketed by the Company so as to require a general replacement
or recall with respect thereto. Neither Seller nor the Company knows of any
deficiency or inadequacy in the manufacturing, design or formulation of any of
the Company's products which is reasonably likely to hereafter result in any
such claim or failure.
3.22. Product Warranties. Except to the extent of any
warranty reserve reflected on the September Balance Sheet or Closing Balance
Sheet: (i) all products manufactured and sold by the Company (and the delivery
thereof) have been in conformity with all applicable contractual commitments and
all expressed or implied warranties; and (ii) no liability for any warranty
claims exists for the replacement thereof or other damages in connection with
such sales and deliveries. The Company has not made any guaranties or warranties
with respect to any product heretofore manufactured or sold by the Company other
than as set forth in the Company's standard terms and conditions of sale. All
product labeling is in conformity with all applicable laws. Copies of the
standard terms and conditions of sale (containing applicable warranty
provisions) have been delivered or made available to Purchaser.
3.23. Absences of Certain Changes or Events. Since the
date of the September Balance Sheet, the Company has not: (i) taken any action
which would have constituted a violation under Section 5.1 hereof if the Company
had then been bound by Section 5.1 hereof; or (ii) failed to take any
23
action which would have been required by Section 5.1 hereof, if the Company had
been bound by Section 5.1 hereof. Since the date of the September Balance Sheet,
there has not been: (i) any material adverse change in the assets, liabilities,
properties (tangible or intangible), business, operations, financial condition
or results of operations of the Company; or (ii) any material damage,
destruction, loss or claim, whether or not covered by insurance, adversely
affecting the assets, properties (tangible or intangible), business, operations,
financial condition or results of operations of the Company.
3.24. Undisclosed Liabilities. The Company is not obligated as
a guarantor or cosigner or otherwise liable for any obligation of any kind of
any other person or entity. The Company is not subject to any obligation,
liability, debt or commitment, contingent or otherwise except for: (i)
liabilities reflected on the September Balance Sheet; (ii) liabilities incurred
in the ordinary course of business since the date of the September Balance Sheet
and properly reflected on the Company's books of account; (iii) liabilities not
required to be disclosed on the September Balance Sheet in accordance with GAAP,
but otherwise disclosed herein or not required to be disclosed herein because of
materiality or amount thresholds; and (iv) liabilities arising hereunder.
3.25. Files and Records. The Disclosure Schedule lists each
place outside of the Company's facility at Round Rock, Texas where any records,
files, documents or other information relating to the Company or its business
are stored or maintained by Seller and its affiliates or any person under their
control and a brief description of the nature of the records or information
stored or maintained at each such location.
3.26. No Material Omissions. No representation or
warranty by Seller contained herein or in any writing required to be furnished
pursuant hereto to Purchaser contains any untrue statement of fact or omits to
state any material fact required to make the statements herein or therein
contained not misleading.
ARTICLE IV
Representations and Warranties
of Purchaser
Purchaser represents and warrants to Seller, which
representations and warranties shall (except as set forth in
24
Paragraph 12.3(b) hereof) survive the Closing notwithstanding any investigation
made by or information furnished to Seller in connection herewith as follows:
4.1. Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
4.2. Authority of Purchaser. Purchaser has the corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Subject to Section 8.9, hereof, the execution and delivery
hereof, and the consummation of the transactions contemplated hereby, have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been duly and validly executed and delivered by
Purchaser and is a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms. Neither the execution, delivery
and performance hereof, nor the consummation of the transactions contemplated
hereby, nor compliance with any of the provisions hereof by Purchaser will: (i)
conflict with or result in a breach of or violation under Purchaser's Articles
of Incorporation or By-Laws; (ii) result in any conflict with, breach of or
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage or
indenture or any franchise, license, permit, agreement or other instrument or
obligation to which Purchaser is a party or by which Purchaser or any of its
properties or assets may be bound; (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Purchaser or any of its
properties or assets; (iv) require any consent, approval, authorization,
license, permit, registration, filing, recording or waiver under any applicable
law, rule or regulation, under any order, writ, judgment, injunction, decree,
determination or award which affects or binds Purchaser, or under any
governmental or judicial license, franchise, permit or approval held by
Purchaser or which binds or affects Purchaser or its assets; or (v) require any
consent, approval, authorization or waiver under the note, bond, mortgage,
indenture, agreement or other instrument or obligation to which Purchaser is a
party or by which Purchaser or any of its properties or assets may be bound.
4.3. Brokers and Finders. Neither Purchaser nor any officer,
director or employee of Purchaser has employed any broker or finder or incurred
any liability for any
25
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
4.4. Litigation. There is no claim, action, suit,
proceeding, arbitration, investigation or inquiry before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, other regulatory body or any private arbitration tribunal now pending,
or, to the knowledge of Purchaser, threatened, against or relating to or
affecting: (i) the transactions contemplated by this Agreement; or (ii)
Purchaser which would adversely affect Purchaser's ability to consummate the
transactions contemplated hereby.
4.5. No Material Omissions. No representation or
warranty by Purchaser contained herein or in any writing furnished pursuant
hereto to Seller contains any untrue statement of fact or misstates any material
fact required to make the statements herein or therein contained not misleading.
4.6 Financial Ability. Purchaser has the financial ability to
consummate the transactions contemplated hereby.
ARTICLE V
Seller's Pre-Closing Covenants
Except and to the extent Purchaser may otherwise permit in
writing, Seller covenants and agrees as follows:
5.1. Conduct of Business in Ordinary Course. Until the Closing,
Seller shall cause the Company to carry on its business diligently and
substantially in the manner as heretofore conducted, and shall not permit the
Company to make or initiate any unusual or novel methods of purchase, sale,
management, accounting, manufacture or operation, or make any adjustments in the
pricing or formulation of its products or services not consistent with its past
business practices. Seller shall not permit the Company to enter into any
contract or commitment to engage in any transaction not in the ordinary course
of its business or not consistent with its past business practices. Seller shall
cause the Company to use its best efforts to preserve for Purchaser its business
organization, including present key employees, and its relationships with
suppliers, customers and others having business relations with the Company.
Without limiting the scope of the foregoing, Seller shall cause the Company to:
26
(a) Except as set forth in the Disclosure Schedule
with respect to the discontinuance of the Company's tissue culture
media operation, use, preserve and maintain its properties and assets
on a basis consistent with past practices;
(b) Maintain all insurance covering the Company and
its business, properties or assets in effect as of the date hereof;
(c) Continue to purchase raw materials and supplies
in accordance with current and historical practices;
(d) Pay all debts and obligations incurred by the
Company in the operation of its business as the same become due and
payable, except to the extent the Company is contesting such debts or
obligations in good faith by appropriate proceedings and has
established appropriate reserves therefor; and
(e) Maintain its books, accounts and records in the
usual manner and on a basis consistent with past practice.
Furthermore, and without limiting the scope of the foregoing, Seller shall not
permit the Company to:
(f) Make any capital expenditures, or commitments
with respect thereto (including, without limitation, capital leases),
other than capital expenditures or commitments not in excess of Five
Thousand Dollars ($5,000.00) in the aggregate;
(g) Enter into any agreement or agreements for the
sale of assets or properties, other than agreements for the sale of
inventory made in the ordinary course of business and the transfer of
the assets relating the tissue culture media operation as set forth in
the Disclosure Schedule;
(h) Grant any severance or termination pay to, or
increase benefits payable under any existing severance or termination
pay policies with, or enter into or modify any employment agreements
with employees, agents and/or representatives;
(i) Except for normal, scheduled increases to take
effect November 1, 1995, adopt or amend or increase compensation or
benefits payable under, or
27
take any actions which might result in adverse tax or other
consequences with respect to, any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, collective
bargaining agreement, or other plan, agreement, trust, fund or
arrangement for the benefit of any employee or class of employees;
(j) Commit any act or omit to do any act, or permit
any act or omission to act, which will or may cause a material breach
of any contract, agreement, lease or commitment involving the Company,
its assets or properties;
(k) Change its price list for products or change its
credit policy;
(l) Incur any indebtedness other than indebtedness
for accounts payable to trade creditors incurred in the ordinary
course of business in connection with obtaining materials or services;
(m) Authorize or issue any capital stock or
securities convertible into capital stock, including without
limitation, options, warrants, convertible debt or other rights to
acquire capital stock; or
(n) Amend its Articles of Incorporation, Certificate
of Incorporation or other charter documents or By-Laws.
5.2. Inspection. Until the Closing, Seller shall cause the
Company to provide Purchaser and its authorized representatives and agents:
(i) full access during normal business hours to the Real Estate and all plant
and other properties, books, records, contracts and documents of the Company;
and (ii) all such information with respect to the business and affairs of the
Company as they may reasonably request. No review, examination, inspection,
study or audit made by Purchaser pursuant hereto shall be deemed to be a waiver
by Purchaser of, or a release of Seller from, any representations, warranties,
covenants, conditions, liabilities or obligations set forth in this Agreement.
5.3. No Solicitation. Until the Closing or termination of
this Agreement as provided in Article XIII, below, Seller shall not, nor shall
it permit any of its officers, directors, employees, agents, representatives or
affiliates to, directly or indirectly, solicit, initiate, encourage or enter
into any discussions or negotiations
28
with, or provide any assistance or information to, or enter into any agreement
with, any person or group of persons (other than Purchaser) concerning any
acquisition, directly or indirectly, of an equity interest in, or merger,
consolidation, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase of all or a substantial portion of the
assets of, the Company (any such proposal or offer being an "Acquisition
Proposal") or assist or participate in, facilitate or encourage any effort or
attempt by any other person to do or seek to do any of the foregoing; provided,
however, that receipt of and response by Seller to an unsolicited (except for
persons with whom discussions were held prior to September 29, 1995)
Acquisition Proposal by any other person without any solicitation, initiation,
encouragement, assistance or participation after the date of this Agreement and
without entering into any discussions or negotiations with respect to any such
unsolicited Acquisition Proposal will not constitute a violation hereof,
provided that Seller promptly advises such person that negotiations are not
permitted pursuant to this Agreement.
5.4. Interim Financial Statements and Aging Schedules. Until
the Closing, Seller shall cause the Company to furnish to Purchaser, promptly
upon completion thereof, the financial statements of the Company (including a
balance sheet and a statement of results of operations) for each month after
September 30, 1995, and the then ending year to date period, together with
financial statements as of the corresponding dates and for the corresponding
periods during the preceding fiscal year, which financial statements shall be
prepared in accordance with GAAP consistently applied subject only to usual and
customary year end adjustments. Seller further shall cause the Company to
furnish to Purchaser current accounts receivable aging schedules and schedules
of any inventory adjustments as and when requested by Purchaser.
5.5. Best Efforts. Until the Closing, Seller shall use its
best efforts to take or cause to be taken all actions and to do or cause to be
done all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions set forth in Articles VII and VIII hereof
and to consummate and make effective the transactions contemplated hereby.
29
ARTICLE VI
Purchaser's Pre-Closing Covenants
Except and to the extent Seller may otherwise permit in
writing, Purchaser covenants and agrees as follows:
6.1. Environmental Audit. Purchaser shall promptly after
receipt thereof deliver to Seller a copy of any Environmental Audit (as defined
below) prepared by or for Purchaser with respect to the Real Estate before
Closing, including the Environmental Site Assessment and Due Diligence
Compliance Audit dated October 17, 1995 prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. and
any related report of such firm or its consultants (the "▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Audit").
6.2. Best Efforts. Until the Closing, Purchaser shall use
its best efforts to take or cause to be taken all actions and to do or cause to
be done all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions set forth in Articles VII and VIII,
hereof, and to consummate or make effective the transactions contemplated
hereby.
ARTICLE VII
Conditions to Seller's Obligations
Each and every obligation of Seller under this Agreement shall
be subject to the fulfillment, prior to or at the Closing, of each of the
following conditions. If any of the following conditions to Closing shall not
have been satisfied, Seller may elect to terminate this Agreement as
contemplated by Article XIII, hereof, or to consummate the transactions
contemplated herein despite such failure, in which case Seller shall retain all
of its rights to indemnification pursuant to Article XII hereof.
7.1. Purchaser's Representations and Warranties. Each
representation and warranty made by Purchaser herein shall be true and correct
on and as of the Closing Date with the same effect as though each such
representation or warranty had been made or given on and as of the Closing
Date.
7.2. Purchaser's Covenants. Purchaser shall have performed
and complied with all of the terms, covenants and
30
conditions set forth herein which are to be performed or complied with by
Purchaser before or as of the Closing Date.
7.3. Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the Boards of Directors of
Seller and Chr. ▇▇▇▇▇▇ Holding A/S.
7.4. Opinion of Counsel. ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C., counsel for
Purchaser, shall have delivered to Seller an opinion in form and substance
satisfactory to Seller and Seller's counsel.
7.5. Legal Actions or Proceedings. No suit, action,
investigation, inquiry or other proceeding by any governmental authority or
other person or legal or administrative proceeding shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby or which otherwise seeks to affect, or could affect, the
transactions contemplated hereby or impose damages or penalties upon any party
hereto if such transactions are consummated.
7.6. Purchaser's Deliveries. Purchaser shall have tendered
delivery of the items contemplated by Article X, hereof.
ARTICLE VIII
Conditions to Purchaser's Obligations
Each and every obligation of Purchaser under this Agreement
shall be subject to the fulfillment, prior to or at Closing, of each of the
following conditions. If any of the following conditions to Closing shall not
have been satisfied, Purchaser may elect to terminate this Agreement as
contemplated by Article XIII, hereof, or to consummate the transactions
contemplated hereby despite such failure, in which case Purchaser shall retain
all of its right to indemnification pursuant to Article XII, hereof.
8.1. Seller's Representations and Warranties. Each
representation and warranty made by Seller herein shall be true and correct on
and as of the Closing Date with the same effect as though each such
representation and warranty had been made or given on and as of the Closing
Date.
8.2. Seller's Covenants. Seller shall have performed and
complied with all of the terms, covenants and
31
conditions set forth herein which are to be performed or complied with by
Seller before or as of the Closing Date.
8.3. Manager's Certificate. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
executed and delivered to Purchaser a certificate dated the Closing Date in the
form of Exhibit 8.3 attached hereto.
8.4. Approvals and Consents. Purchaser shall have received,
at or before Closing, all consents, approvals, permits and licenses
("Consents"), excluding FDA Consents, which Purchaser reasonably deems
necessary to operate the business of the Company after the Closing in
substantially the same manner as currently conducted, including, but not
limited to, Consents from governmental and regulatory agencies, lenders,
equipment lessors, landlords, manufacturers, suppliers, customers and other
parties whose approval may be necessary to avoid the acceleration of any
indebtedness or the termination of any contracts, licenses or permits affecting
the Company, and/or its business and properties.
8.5. Environmental Audit. Purchaser shall have received, at
its cost and expense, an Environmental Audit (as defined below), or other
evidence satisfactory to Purchaser, in its sole discretion, which confirms to
Purchaser's satisfaction that the Company, its business and assets and the Real
Estate are in compliance with all Environmental Laws. For purposes hereof,
"Environmental Audit" shall mean a review for purposes of determining whether
the Company, its business and assets and the Real Estate are in compliance with
Environmental Laws and whether there exists any condition or circumstance which
requires or will require a cleanup, removal or other remedial action under
Environmental Laws on the part of the Company, including, but not limited to,
the subsurface investigation described in the supplemental letter agreement
with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. dated November 2, 1995.
8.6. Title Insurance. Prior to the Closing, Seller shall
have delivered to Purchaser, at Seller's cost and expense, a binding commitment
of Ticor Title Insurance Company to issue an ALTA owner's policy of title
insurance on the Real Estate in an amount of $697,200, naming the Company as
proposed insured. Such commitment shall show title to the Real Estate to be
vested in the Company, free and clear of all liens, claims and encumbrances
except the liens described in Section 3.8(a)(ii) and (iii) and such other liens
as Purchaser may approve, and shall commit to issue the standard owner's policy
of title insurance, insuring the Company's interest in the Real Estate as fee
32
simple owner. Such commitment shall contain such special endorsements as
Purchaser may reasonably require, including without limitation: (i) extended
coverage insuring over the standard preprinted exceptions including a gap
coverage endorsement insuring title to the Real Estate through the Closing
Date; (ii) non-imputation; (iii) non-arbitration; (iv) access; and (v) zoning.
8.7. Survey. Prior to the Closing, Seller shall have
delivered to Purchaser, at Seller's cost and expense, a Texas Category 1-A
Survey of the Real Estate prepared by a surveyor licensed in the State of
Texas. Such survey shall contain a surveyor's certificate in such form as will
cause Ticor Title Insurance Company to delete all survey exceptions from the
policy of title insurance and shall: (i) set forth the legal description of
the Real Estate which shall be the same description as set forth in the title
insurance commitment for the Real Estate referred to in Section 8.6, above;
(ii) indicate the boundary lines by course and dimension of the Real Estate;
(iii) indicate the location of all recorded easements, rights of way, public
utilities, water courses, drains, sewers and roads crossing the Real Estate and
the locations and names of all streets abutting or adjacent to the Real Estate;
and (iv) clearly designate the location of all Improvements and all other
material matters affecting the Real Estate.
8.8. Due Diligence. Purchaser and its accountants and
counsel shall have had an opportunity to examine and review all aspects of the
operation of the Company's business and the Company's assets and the Real
Estate, and Purchaser and its representatives shall be satisfied in their
absolute discretion as to the results of such examination and review and of
their continuing due diligence investigations and evaluations of the Company,
its assets and business and the Real Estate. No such review, examination,
inspection, study or audit shall be deemed to be a waiver by Purchaser of, or a
release of Seller from, any representations, warranties, covenants, conditions,
liabilities or obligations as set forth in this Agreement.
8.9. Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the Boards of Directors of
Seller and Chr. ▇▇▇▇▇▇ Holding A/S.
8.10. Seller's Opinion. Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Seller's counsel, shall have delivered to Purchaser an opinion in form and
substance reasonably satisfactory to Purchaser and Purchaser's counsel.
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8.11. Legal Actions or Proceedings. No suit, action,
investigation, inquiry or other proceeding by any governmental authority or
other person or legal or administrative proceeding shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby or which otherwise seeks to affect, or could affect, the
transactions contemplated hereby or impose damages or penalties upon any party
hereto if such transactions are consummated.
8.12. Seller's Deliveries. Seller shall have tendered
delivery of the items contemplated by Article IX hereof.
ARTICLE IX
Seller's Deliveries at Closing
At Closing, Seller shall deliver the following to Purchaser:
9.1. The Shares. A stock certificate or certificates
evidencing the Shares duly endorsed in blank. The Shares shall be delivered
free and clear of all liens, security interests, claims, charges, options,
pledges and encumbrances of any kind.
9.2. Payment for Title Evidence. Proof of payment of all
premiums and payments due in connection with the insurance covered by the
commitment contemplated by Section 8.6 hereof, together with proof of payment
for the survey required to obtain such commitment as contemplated by Section
8.7 hereof.
9.3. Bring Down Certificate. A Bring Down Certificate dated
as of the Closing Date to the effect that, except as noted in such certificate,
each representation and warranty made by Seller herein is true and correct on
and as of the date of such certificate with the same effect as though each such
representation or warranty had been made or given on and as of such date, and
that Seller has performed and complied with all of the terms, covenants and
conditions set forth herein which are to be performed or complied with by
Seller before or as of the Closing.
9.4. Resignations. Resignations from such officers and
directors of the Company and such attorneys-in-fact as may be designated by
Purchaser at least two (2) business days prior to the Closing Date.
34
9.5. General Release. A general release of Seller in form
and substance satisfactory to Purchaser dated as of the Closing Date and
releasing any and all claims against the Company as of the Closing Date,
including any claims for loans or advances made to the Company, except to the
extent necessary to effectuate the Net Book Value Adjustment described in
Paragraph 1.2(a), above.
9.6. Books and Records. Except as provided in Section 11.5,
hereof, all books and records relating to the Company, its business or the Real
Estate in the possession of Seller or any third parties as of the Closing Date.
Seller shall be entitled to retain copies of all such books and records.
9.7. Copyrights. One or more assignments in form and
substance reasonably acceptable to Purchaser pursuant to which Seller and/or
its affiliates shall assign to the Company any and all copyrights or other
rights to any and all pamphlets, brochures or other printed materials used in
connection with the business of the Company in which Seller and its affiliates
have or purport to have, any copyright or other rights (the "Promotional
Literature").
9.8. Employment Agreements. One or more assignments in form
and substance reasonably acceptable to Purchaser pursuant to which Seller shall
assign to the Company any and all agreements between Seller and the employees
of the Company.
ARTICLE X
Purchaser's Deliveries at Closing
At Closing, Purchaser shall deliver the following to Seller:
10.1. Payment. The Purchase Price as contemplated by Section 2.2, hereof.
10.2. Bring Down Certificate. A Bring Down Certificate dated
as of the Closing Date to the effect that, except as noted in such certificate,
each representation and warranty made by Purchaser herein is true and correct
in all material respects on and as of the date of such certificate with the
same effect as though each such representation or warranty had been made or
given on and as of such date and that Purchaser has performed and complied with
all the terms, covenants and conditions set forth herein which are
35
to be performed or complied with by Purchaser before as of the Closing.
ARTICLE XI
Conduct Subsequent to Closing
11.1. Tax Matters.
(a) Seller and Purchaser agree to cooperate in
filing a timely and irrevocable election under Sections 338(a) and
338(h)(10) of the Code and under comparable statutes in any other
jurisdiction designated by Purchaser with respect to the Company (the
"Section 338(h)(10) Elections"). The Section 338(h)(10) Elections
shall properly reflect the Purchase Price (as adjusted pursuant to
Section 1.2, above) and the Price Allocation (as defined below).
Purchaser shall provide to Seller a draft version of any filings
associated with the Section 338(h)(10) Elections at least 30 days
prior to the due date of any such filing. Purchaser and Seller agree
to allocate the Modified Aggregate Deemed Sales Price ("MADSP") (as
defined below) among the Company's assets in the manner set forth on
Exhibit 11.1, hereto, and accordance with the Treasury regulations
promulgated under Section 338(h)(10). The allocation of the MADSP to
the assets of the Company made pursuant to this Section 11.1(a) shall
be the "Price Allocation" and shall be binding on the parties hereto.
Seller and Purchaser agree to file all relevant tax returns consistent
with the Price Allocation. For the purposes hereof, "Modified
Aggregate Deemed Sales Price" has the meaning ascribed to it in
Treasury Regulation Section 1.338(h)(10)-1(f).
(b) Seller shall include the Company through the
Closing Date in its consolidated United States federal income tax
return and in those state and local tax returns that are filed on a
consolidated or combined basis in accordance with applicable law and
past practice of Seller and the Company.
11.2. Execution and Delivery of Further Instruments by
Seller. Seller shall, at any time and from time to time after the Closing upon
the reasonable request of Purchaser, execute, acknowledge and deliver to
Purchaser such further instruments and take such other actions as Purchaser may
reasonably request in order to consummate the transactions contemplated by this
Agreement.
36
11.3. Execution and Delivery of Further Instruments by
Purchaser. Purchaser shall at any time, and from time to time after the
Closing upon the reasonable request of Seller, execute, acknowledge and deliver
to Seller such further instruments and take such other actions as Seller may
reasonably request in order more effectively to consummate the transactions
contemplated by this Agreement.
11.4. Non-Competition and Non-Disclosure Covenant.
(a) Seller agrees that it shall not, at any time
during the five (5) year period commencing on the date of the Closing
(the "Term"), either directly or indirectly, whether as an agent,
stockholder (except as a holder of no more than 5% of the stock of a
publicly-held company provided it does not participate in the business
of such company or render advice or assistance to such company),
employer, consultant, representative, trustee, partner, proprietor or
otherwise: (i) acquire an ownership interest in, participate or engage
in or render advice or assistance to any business, wherever located,
engaged in the development, manufacture or sale of (A) biological
extracts useful to physicians for the in vivo diagnosis and/or
treatment of allergies or (B) diluents or sterile accessories useful
for formulating allergy treatment regimens; (ii) divert or attempt to
divert any business from the Company, or contact, solicit or entice or
attempt to contact, solicit or entice any supplier or customer of the
Company or any other person or entity having business dealings with
the Company so as to cause or attempt to cause any such customer,
supplier or other person or entity not to do business with the Company
or Purchaser; or (iii) disclose to any person other than an employee
or agent of Seller or the Company having a need to know such
information in the ordinary course of business, or to any other person
to whom such disclosure has been authorized by the Board of Directors
of Purchaser any trade secret, confidential proprietary information or
any other information not generally known to the public relating to
the Company if disclosure thereof would be materially advantageous to
competitors of the Company or otherwise detrimental to the Company.
(b) Seller acknowledges and agrees that a breach of
the provisions of Paragraph 11.4(a), above, will cause irreparable
injury to Purchaser, and the
37
Company and Purchaser shall be entitled to an injunction enjoining and
restraining Seller from doing or continuing to do any such act or
creating any other violations or threatened violations of said
paragraph.
(c) Seller agrees that the terms and conditions of
this Paragraph 11.4 are reasonable and necessary for the protection of
Purchaser and the Company, and the trade secrets and confidential
information related thereto and for the prevention of damage or loss
to Purchaser and the Company as a result of action taken by the
Seller.
11.5. Agreement With Respect to Certain Records of the
Company and Access to Certain Information of the Company. Except for any
materials listed on Exhibit 11.5 hereto, within five (5) days after the Closing
Date Seller shall cause to be delivered to the Company's facility in Round
Rock, Texas all files, records, documents and other information relating to the
Company and its business in the possession or under the control of Seller and
its affiliates which are not then located at such facility. From and after the
Closing Date, Purchaser shall have the right, upon its reasonable request, to
inspect and copy, at Purchaser's expense, and during regular business hours of
Seller, any of Seller's records or documents related to the Company which are
retained by Seller. In addition, from and after the Closing Date, Seller shall
use its reasonable good faith efforts to assist and facilitate the transition
of the Company's accounting and financial reporting systems and functions from
Seller to Purchaser and the transfer of data and information relating to the
Company from Seller's data processing system to Purchaser's system. Without
limitation, Seller shall: (i) continue to provide the Company with the ability
to access Seller's computer system for a period of up to six (6) months after
the Closing Date in order to perform all of the computer and accounting
functions currently being performed on Seller's system, including, inventory,
order entry, accounts receivable, accounts payable and payroll functions and
monthly financial statement generation; (ii) permit the Company to use Seller's
computer hardware and software and the T1 line located at the Company's
facility as necessary to access Seller's computer system during such six (6)
month period; (iii) provide Purchaser and its representatives with such access
to Seller's MIS personnel as Purchaser may reasonably request; (iv) deliver to
or permit Purchaser to copy tapes, disks and other media containing information
relating to the Company; (v) assist Purchaser as reasonably requested with
programming, technical and other support in connection with
38
such transition and data transfer; (vi) provide Purchaser with all source code
and other documentation relating to the treatment set system developed by
Seller for the Company and, for a period of up to one (1) year from and after
the Closing Date, provide Purchaser with technical support via telephone
consultation as reasonably necessary to assist Purchaser in the operation of
such system; and (vi) provide Purchaser with an ASCII comma delimited or tab
separated file for the current customer, vendor and inventory master files, and
inventory quantity on hand file, and any other data files as reasonably
requested by Purchaser; provided, that in each case, Purchaser shall not
unreasonably interfere with Seller's business operations and Purchaser shall
conform to Seller's security procedures. Such assistance and access shall be
provided to Purchaser free of charge; provided, that Purchaser shall reimburse
Seller for any extraordinary out of pocket expenses incurred in connection
therewith, including, without limitation, any line charges.
11.6. Records. For at least five years after the Closing,
Purchaser shall preserve and keep all of the Company's tax and accounting
records, and the Seller shall preserve and keep any records related to the
Company retained by Seller. Purchaser and Seller each agree to permit the
other party, and its attorneys, accountants, agents and designees, such
reasonable access to the records in such party's possession from and after the
date hereof as the other party may deem necessary or desirable. Any such
examination shall be at the expense of the examining party, shall be performed
at the place where such records are regularly maintained by the other party and
shall not unreasonably interfere with the other party's normal business
activities. A party may dispose of such records at any time after such five
year period; provided, however, that it shall give the other party at least 60
days' written notice of its intention to do so and afford the other party the
opportunity to take possession of such records as the other party may desire.
11.7. Use of Sales Literature. After the Closing, the
Company and Purchaser shall have the right to use all Promotional Literature
(as defined in Section 9.7) which bears the name of Seller or any of its
affiliates in the ordinary course of business until the supplies of such
literature on hand at Closing are exhausted. After existing supplies are
exhausted, Purchaser shall assure that any reprints or reissues of any
Promotional Literature which Purchaser or the Company may continue to use do
not bear the name of Seller or any of its affiliates.
39
11.8. 401(k) Plans. After the Closing Date, if Purchaser so
elects, Seller agrees to cooperate with Purchaser in effecting either a
plan-to-plan transfer of account balances of employees of the Company in
Seller's 401(k) plans to Purchaser's 401(k) plan. Such transfer or rollovers
shall be accomplished only to the extent requested and authorized by Purchaser
with respect to employees of the Company who are eligible to participate in
Purchaser's 401(k) plan and who consent to or elect to make any such transfer
or rollover.
11.9. Health Insurance. For a period of up to one (1) month
following the Closing Date, Seller agrees to continue to provide health
insurance coverage to those employees of the Company that are currently covered
by Seller's AETNA preferred provider option. The Company shall reimburse
Seller for all insurance premiums incurred by Seller in connection with the
continuation of such coverage.
ARTICLE XII
Indemnification
12.1. Indemnification by Seller. Seller shall indemnify and
hold Purchaser, the Company and/or their respective shareholders, directors,
officers, employees, agents, successors and/or assigns harmless from and
against any and all losses, liabilities, damages, claims, costs, expenses
and/or assessments, including attorneys and other professional fees and costs
as well as fines, penalties and/or interest (collectively, "Losses") suffered
or incurred by any of them which result from or arise out of:
(i) The falsity or breach of any representation or
warranty made by Seller herein or in any certificate delivered
pursuant hereto;
(ii) The failure by Seller to comply with or perform
any covenant or agreement of Seller set forth herein or in any
document, agreement, instrument or certificate delivered hereunder;
(iii) Any assessments, claims or liabilities
(including interest and penalties) for federal, state or local income,
sales, use, franchise or other taxes relating to, imposed upon or
assessed against the sales, income, property or business of the
Company for all periods ending on and before the Closing Date
(including, without limitation, taxes for which the Company is liable
as a member of Seller's consolidated
40
group) except for any such liabilities which are identified as such
and fully reflected on the Closing Balance Sheet;
(iv) Any Loss relating to or arising out of the
litigation or worker's compensation claims disclosed in the Disclosure
Schedule or the product liability matter described in Section 3.21 of
the Disclosure Schedule.
(v) Any Loss (excluding any Loss to the extent it is
accrued on the Closing Balance Sheet or otherwise disclosed herein)
resulting from third party claims (including fines and penalties
sought to be imposed or enforcement proceedings commenced by
governmental agencies) based upon, alleging or arising out of any act,
omission or occurrence by or relating to the Company on or before the
Closing Date, including, without limitation, any Loss relating to or
arising out of nonperformance or breach of contract or warranty, any
claims for worker's compensation or unemployment compensation, any
product liability or other claim for personal injury or for property
damage and/or any claim for violation of wage hour laws or employment
discrimination; or
(vi) Any violation by the Company of Environmental
Laws or OSHA Laws as in effect on the Closing Date (except for matters
disclosed in the ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Audit), or any violation of such
laws otherwise relating to the Real Estate, involving in either case
an act or failure to act or a condition occurring or existing prior to
the Closing Date, including, without limitation, costs of
investigation, remediation and clean-up, fines and sanctions arising
out of or resulting from any environmental contamination or the
storage, release or discharge of any substances or materials prior to
or on the Closing Date, and the costs of any correction or remediation
required to bring any facilities or equipment of the Company into
compliance with Environmental and/or OSHA Laws.
12.2. Indemnification by Purchaser. Purchaser shall
indemnify and hold Seller and/or its shareholders, directors, officers,
employees, agents, successors and/or assigns harmless from and against any and
all Losses suffered or incurred by any of them which result from or arise out
of:
41
(i) The falsity or breach of any representation or
warranty made by Purchaser herein or in any document, instrument or
certificate delivered pursuant hereto;
(ii) The failure by Purchaser to comply with or
perform any covenant or agreement of Purchaser set forth herein or in
any certificate delivered hereunder;
(iii) Any act, omission or occurrence by or relating
to the Company after the Closing Date, including, without limitation,
any Loss related to any claim for nonperformance or breach of
contract, claim for worker's compensation or unemployment
compensation, claim for personal injury or for property damage and/or
any claim for violation of wage hour laws or employment
discrimination.
12.3. Limitation on Liability. Anything in this Agreement to
the contrary notwithstanding:
(a) Neither party shall be required to indemnify the
other or make any payment with respect to any Loss arising under
clauses 12.1(i), 12.2(i), 12.1(ii) and 12.2(ii), above, if the falsity
or breach in question or the failure to comply or nonperformance in
question, as the case may be, was disclosed in the Bring Down
Certificate delivered by it pursuant to Section 9.3 or 10.2, hereof,
as the case may be;
(b) Neither party shall be required to indemnify the
other or make any payment with respect to any Losses arising under
clauses 12.1(i), 12.1(v) or 12.1(vi), above, with respect to claims
against Seller and 12.2(i) or 12.2(iii), above, with respect to claims
against Purchaser, or for nonperformance of any covenant or agreement
to be performed prior to the Closing, unless and until the aggregate
amount of such Losses incurred by a party exceeds Seventy Thousand
Dollars ($70,000.00) (the "Basket Amount"), but if and when the
aggregate amount of Losses incurred by a party does exceed the Basket
Amount, then such party shall have the right to be indemnified for the
full amount of all Losses in excess of such Basket Amount; provided,
however, that in no event shall the amount which any party shall be
required to pay with respect to Losses arising under clauses 12.1(i),
or 12.1(vi), above, with respect to claims against Seller or 12.2(i),
above, with respect to claims against Purchaser, or for the
nonperformance of any covenant or agreement to be
42
performed prior to the Closing exceed in the aggregate an amount equal
to the Purchase Price.
(c) No party shall be entitled to indemnification or
payment from any other party pursuant to this Article XII unless the
Indemnified Party (as defined in Section 12.5) shall have provided the
Indemnifying Party (as defined in Section 12.4) with notice of its
claim to indemnification as provided in Section 12.4:
(i) within twelve (12) months after the
Closing Date in the case of Losses arising out of any breach
of warranty or nonperformance described in clauses 12.1(i),
12.2(i), 12.1(ii) and 12.2(ii) other than Losses arising out
of the warranties set forth in the first three sentences of
Section 3.2, and Sections 3.4, 3.7(b), 3.9(b), 3.9(d) and 4.2
(the "Title Warranties") and Losses arising out of the
nonperformance by any party of any covenants or agreements to
be performed after the Closing Date (the "Post-Closing
Covenants"); and
(ii) within the period of the applicable
statute of limitations in all other cases, including any
Losses arising out of the breach of any Title Warranty or the
nonperformance of any Post-Closing Covenant.
12.4. Notice of Claims. Promptly after any person entitled
to indemnification hereunder (A) receives notice of any claim or the
commencement of any action or proceeding against it, or (B) has knowledge of
any claim, action or proceeding against it or any Loss for which it intends to
seek indemnification hereunder, such person shall, if a claim for reimbursement
with respect thereto is to be made against any party hereto obligated to
provide indemnification (the "Indemnifying Party") hereunder, promptly give the
Indemnifying Party written notice of such claim or Loss or the commencement of
such action or proceeding, provided, however, that failure to give such
notification shall not affect indemnification hereunder, except to the extent
that (X) the Indemnifying Party is unable to defend any such claim or is
required to pay a greater amount or accrue additional expenses with respect to
any claim or Loss as a result of such failure to provide prompt notice, or (Y)
such notice is not given within the period, if any, specified in Section 12.3,
hereof.
43
12.5. Compromise of Third Party Claims. The Indemnifying
Party shall have the right to compromise or defend, at its own expense and by
its counsel, any third party claim made against the person seeking
indemnification (the "Indemnified Party"); provided, however, that no
compromise of any claim shall be made without the consent of the Indemnified
Party (which shall not be unreasonably withheld) unless such compromise results
in the full and unconditional release of all claims against the Indemnified
Party by the person asserting such claim and imposes no obligations on the
Indemnified Party except a release of related counterclaims. If the
Indemnifying Party shall undertake to compromise or defend any such third party
claim, it shall promptly notify the Indemnified Party of its intention to do
so. The Indemnified Party shall cooperate with the Indemnifying Party or its
counsel in the defense against any such third party claim and in any compromise
thereof. Such cooperation shall include, but not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party. Except as provided below, after the Indemnifying
Party has notified the Indemnified Party of its intention to undertake to
compromise or defend any such third party claim, the Indemnifying Party shall
not be liable for any additional legal expense incurred by the Indemnified
Party. However, the Indemnified Party shall have the right to retain its own
counsel and participate in the defense of such claim at the expense of the
Indemnified Party, in which case the Indemnifying Party shall cooperate in
providing information to and consulting with the Indemnified Party about the
claim. If the Indemnifying Party does not assume the defense of such claim,
the Indemnified Party may defend against or settle such claim in such manner
and on such terms as it deems appropriate, and shall be indemnified by the
Indemnifying Party for the amount of any judgment or settlement and for all
losses or expenses, including attorneys' and other professional fees and costs,
incurred by the Indemnified Party in connection with the defense or settlement
of such claim.
12.6. Tax Effect of Indemnification Payments. In determining
the amount of any claim for indemnification for the purposes of this Article
XII, there shall be subtracted an amount equal to: (i) the present value of
any tax benefit (federal, state, local or foreign) realized, or reasonably
expected to be realized, by the Indemnified Party by reason of such claim,
minus (ii) the present value of any tax detriment (federal, state, local or
foreign) incurred, or reasonably expected to be incurred by the Indemnified
Party as a consequence of the receipt of an indemnity
44
payment pursuant to this Article XII. For purposes of this Section 12.6,
"present value" shall be calculated using the applicable annual federal
mid-term rate, as that term is defined in the Code, in effect for the month in
which the calculation is made.
12.7. Insurance. In determining the amount of any claim
indemnification for the purposes of this Article XII, there shall be subtracted
an amount equal to all insurance proceeds actually received by the Indemnified
Party with respect to such claim, net of any increase in insurance premiums
incurred by the Indemnified Party which can be demonstrated by such party to be
directly related to such claim.
12.8. Payment. If any Indemnified Party shall incur any Loss
for which it is entitled to indemnification hereunder, the Indemnifying Party
shall make the indemnification payment required under this Article XII within
ten (10) days after receipt by the Indemnifying Party of written notice from
the Indemnified Party stating the amount of the Loss and of the indemnification
payment requested. Any indemnification payment required under this Section
12.8 which is not made when due shall bear interest at the rate per annum
determined, from time to time, under the provisions of Section 6621(a)(2) of
the Code from the date due until paid.
12.9. Adjustment to Final Purchase Price. Seller and
Purchaser agree that any indemnification payment made under this Article XII
shall constitute and be treated as an adjustment to the Final purchase Price
for Tax purposes.
12.10. Attorneys Fees. If any dispute between Seller and
Purchaser under this Agreement or with respect to the transaction contemplated
hereby is determined, resolved or adjudicated by a court or public or private
tribunal or panel, the party prevailing in such dispute shall be entitled to
recover from the other its reasonable attorneys fees and other professional
fees and costs incurred in such disputes.
ARTICLE XIII
Termination
13.1. Termination. This Agreement, and the transactions
contemplated hereby, may not be terminated except as follows:
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(a) Upon the mutual consent of Seller and Purchaser;
(b) By Seller, if any of the conditions to its
obligations set forth in Article VII hereof, shall not have been
satisfied or waived at the time of Closing;
(c) By Purchaser, if any of the conditions to its
obligations set forth in Article VIII hereof, shall not have been
satisfied or waived at the time of Closing; or
(d) By Seller or Purchaser, if the Closing has not
occurred on or before December 1, 1995 (or such later date as may have
been approved by the parties hereto); provided, however, that the
right to terminate this Agreement under this Section 13.1(d) shall not
be available to any party whose failure to fulfill or perform any
obligation under this Agreement has been the cause of, or has resulted
in, the failure of the Closing to occur on or before such date.
13.2. Remedies. If Seller or Purchaser shall terminate this
Agreement pursuant to the provisions of this Article XIII, such termination
shall not waive or terminate any rights or remedies which the terminating party
may have against any other party hereto, whether at law or equity. Nothing
contained herein shall be deemed to require any party to terminate this
Agreement rather than to proceed with the Closing if a condition precedent to
the obligations of such party has not been satisfied. Seller and Purchaser
acknowledge that the Company constitutes unique property, and that there is no
adequate remedy at law for the damage which either might sustain as a result of
the failure by the other to consummate the transactions contemplated hereby,
and, accordingly, that each of Seller and Purchaser is entitled to the remedy
of specific performance to enforce the consummation of the transactions
contemplated hereby.
ARTICLE XIV
Miscellaneous
14.1. Expenses. Each party shall pay its own expenses and
costs relating to the negotiation, execution and performance of this Agreement.
Without limitation to the foregoing, Seller shall be responsible for any fee
payable to Deloitte & Touche, LLP in connection with the transactions
contemplated hereby. The foregoing
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notwithstanding: (i) all stock transfer fees, real estate transfer fees, stamp
taxes and other transfer fees incurred in connection with the transactions
contemplated hereby shall be borne equally by Seller and Purchaser; (ii)
Purchaser shall pay all costs and fees in connection with the transfer of FDA
licenses and authorizations and obtaining FDA Consents; and (iii) Seller shall
pay all other taxes and fees incident to the consummation of the transactions
contemplated hereby, including, without limitation, any applicable sales or use
taxes.
14.2. Governing Law. The parties hereto agree that all terms
and conditions of this Agreement and the documents delivered in connection
herewith shall be governed by, construed and enforced in accordance with the
laws of the State of California, without giving effect to any choice of law or
conflict provision or rule that would cause the application of the laws of any
jurisdiction other than the State of California.
14.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when hand delivered, including, without limitation, by courier or
overnight delivery service, or when sent by facsimile (transmission confirmed),
or two (2) days after being mailed, certified or registered mail, with postage
prepaid addressed as follows (or to such other person or address as the party
to receive such notice may have designated from time to time by notice in
writing pursuant hereto):
If to Seller: Hycor Biomedical Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: ALK Laboratories, Inc.
Research Center
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Brien ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to: ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14.4. Certain Definitions; Interpretation. Unless the
context clearly otherwise requires, as used herein, the term "Agreement" means
this Agreement and the Exhibits hereto. 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. The use
of the neuter pronoun "it" shall also refer as appropriate to the masculine
and/or feminine gender, and vice versa. The use of the singular herein shall,
where appropriate, be deemed to include the plural and vice versa. As used
herein, the word "person" refers to any individual, corporation, limited
liability company, partnership, trust, governmental body or authority or other
organization or entity. As used herein, the term "including" means "including,
without limitation." As used herein, "to the knowledge of the Company or the
Seller" means the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
after due inquiry of the employees of Seller and the Company that have
knowledge of specific matters. The Disclosure Schedule and other exhibits
hereto shall not vary, change or alter the literal meaning of any
representation or warranty of Seller contained in this Agreement, other than by
creating exceptions and setting forth information with respect thereto.
Exceptions and information set forth for one representation or warranty shall
be considered set forth for all representations and warranties to the extent
applicable.
14.5. Headings. The headings to Articles and Sections of
this Agreement are for reference only and shall not be used in construing the
provisions hereof or otherwise affect the meaning hereof.
14.6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original but all of which shall
constitute but one and the same agreement and shall become binding upon the
parties when each party hereto has executed one or more counterparts.
14.7. Entire Agreement. This Agreement embodies the entire
agreement and understanding between Seller and Purchaser and supersedes all
prior agreements and
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understandings related to the subject matter hereof. There are no
representations, warranties, covenants, promises or agreements on the part of
either party to the other party hereto which are not explicitly set forth
herein.
14.8. Modifications, Waivers. Any modification or amendment
of or with respect to any provisions of this Agreement or any agreement,
instrument or document delivered pursuant hereto shall not be effective unless
it shall be in writing and signed by Seller and Purchaser and shall designate
specifically the terms and provisions so modified. Any waiver of or with
respect to any provisions of this Agreement or any agreement, instrument or
document delivered pursuant hereto shall not be effective unless it shall be in
writing and signed by the party against whom it is sought to be enforced;
provided, however, that a party shall be deemed to have waived any condition to
Closing for its benefit set forth in Articles VI or VII, hereof, if such party
has knowledge at the Closing that such condition has not been satisfied and if
such party nevertheless proceeds with the Closing without exercising its right
to terminate this Agreement as provided in Section 13.1, hereof.
14.9. Benefit; Assignment. This Agreement shall be binding
upon and inure to the benefit of Purchaser, Seller and their respective
successors and permitted assigns. Neither Purchaser nor Seller may assign its
rights nor delegate its obligations hereunder without the written consent of
the other; provided, however, that Purchaser may assign its rights and delegate
its obligations hereunder to any Affiliate of Purchaser, but Purchaser shall
not be released from its obligations hereunder. Except as provided in Sections
12.1 and 12.2, hereof, this Agreement shall not be deemed to confer any rights
or remedies upon any person other than the parties hereto and their respective
successors and permitted assigns.
14.10. Publicity. Unless and until the Closing shall occur
as contemplated hereby, neither Seller nor Purchaser shall issue any press
release or make any public announcement or statement (including any general
announcement to customers or suppliers of the Company) or make any filing with
any governmental agency with respect to the transactions contemplated hereby
without the approval of the other party; provided, however, that either party
may, without such approval, issue such press releases or make such statements
or filings as either party shall consider in good faith to be required by
applicable securities laws or to be otherwise required by law, after notice to
the other.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date, month and year first written, above.
SELLER:
HYCOR BIOMEDICAL INC.
/s/s By:
__________________________
(Title)
PURCHASER:
ALK LABORATORIES, INC.
/s/s By:
___________________________
(Title)
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Exhibit 11.1
Price Allocation
Asset Allocation
----- ----------
Land and Building $697,200
Accounts Receivable, Book Value of such
Inventory, Prepaids and assets as reflected on
other current assets the Closing Balance
Sheet
Improvements, Furniture, Book Value of such
Fixtures, Machinery, assets as reflected on
Equipment and other the Closing Balance
tangible assets Sheet
Goodwill and other Balance of the Purchase
Intangibles Price
