SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
December
27, 2005
Date
of
Report (Date of earliest event reported)
Discovery
Laboratories, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-26422
|
94-3171943
|
||
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
Number)
|
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976
(Address
of principal executive offices)
(215)
488-9300
(Registrant's
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
Asset
Purchase Agreement with Laureate Pharma
On
December 27, 2005, Discovery Laboratories, Inc. (the “Company”) entered into an
Asset Purchase Agreement with Laureate Pharma, Inc., a wholly-owned subsidiary
of Safeguard Scientifics, Inc., whereby the Company agreed to purchase
Laureate’s manufacturing operations in Totowa, New Jersey for $16 million in
cash. The transaction closed on December 30, 2005. Since October 2003, Laureate
has been the Company’s manufacturer pursuant to the terms of the Technology
Transfer and Manufacturing Agreement, dated October 3, 2003, as amended,
between
the parties.
The
assets purchased by the Company include an assignment of Laureate’s rights as
tenant under the lease for the Totowa facility, which consists of approximately
21,000 square feet in a building located at 710 Union Boulevard, Totowa,
New
Jersey. The leased property is specifically designed for the production of
sterile pharmaceuticals in compliance with current Good Manufacturing Practice
(cGMP) requirements. The lease provides for annual rental payments of
approximately $150,000 through the end of the lease term in December 2014.
The
lease is subject to customary terms and conditions and contains an early
termination option, first beginning in December 2009. The early termination
option can only be exercised by the landlord upon a minimum of two years’ prior
notice, subject to certain conditions, and upon payment of significant early
termination amounts to the Company, starting with $8 million in 2009 and
decreasing by $2 million per year through 2013.
The
Company will continue to employ a majority of the employees currently employed
at the facility, including approximately 16 employees that are members of
a
labor union. The Company has entered into an agreement with the union to
enter
into a separate collective bargaining arrangement with respect to such union
employees that will terminate in December 2009. Laureate has agreed to a
two-year non-solicitation covenant regarding employees that remain at the
Totowa
facility.
The
foregoing description of the transaction does not purport to be complete
and is
qualified in its entirety by reference to the Asset Purchase Agreement, a
copy
of which is filed as Exhibit 10.1 to this report and is incorporated herein
by
reference. The Asset Purchase Agreement has been filed in order to provide
investors and the Company’s stockholders with information regarding its terms
and in accordance with applicable rules and regulations of the Securities
and
Exchange Commission. Pursuant to the Asset Purchase Agreement, each of the
Company and Laureate made customary representations, warranties and covenants
and agreed to indemnify each other for certain losses arising out of breaches
of
such representations, warranties, covenants and other specified matters.
The
representations, warranties and covenants that were made by the parties to
and
solely for the benefit of each other and any expressly intended third party
beneficiaries in the context of all of the terms and conditions of the Asset
Purchase Agreement and in the context of the specific relationship between
the
parties. Accordingly, investors and stockholders should not rely on the
representations, warranties and covenants. Furthermore, investors and
stockholders should not rely on the representations, warranties and covenants
as
characterizations of the actual state of facts or continuing intentions of
the
parties, since they were only made as of the date of the Asset Purchase
Agreement. Information concerning the subject matter of such representations,
warranties and covenants may change after the date of the Asset Purchase
Agreement, which subsequent information may or may not be fully reflected
in the
Company’s reports or other filings with the Securities and Exchange
Commission.
2
In
connection with this transaction, the Company will incur a $17 million charge
to
research and development expense in the fourth quarter of 2005.
On
December 30, 2005, in connection with the closing of the acquisition, the
Company drew down $2.4 million from its capital equipment lease financing
arrangement with General Electric Capital Corporation.
The
press
release, dated December 28, 2005, announcing the Asset Purchase Agreement,
is
filed as Exhibit 99.1 to this report and is incorporated herein by
reference.
Acceleration
of Stock Options
On
December 27, 2005, pursuant to and in accordance with the recommendation
of the
Compensation Committee of the Board of Directors of the Company, the Board
of
Directors approved full acceleration of vesting of certain unvested stock
options granted under the Company’s Amended and Restated 1998 Stock Incentive
Plan that are held by employees and officers of the Company and that have
an
exercise price of $9.02 or greater. Options to purchase approximately 1,050,706
shares of the Company’s common stock are subject to this acceleration, including
options to purchase approximately 984,749 shares of common stock held by
employees at or above the level of Vice President. This accelerated vesting
became effective as of December 27, 2005.
The
Board
of Directors decided to accelerate the vesting of these “out-of-the-money”
options primarily to minimize certain future compensation expense that the
Company would otherwise recognize in its consolidated statements of operations
with respect to these options pursuant to Financial Accounting Standards
Board
Statement No. 123 (revised 2004), “Share-Based Payment” (“FASB 123(R)”) which
becomes effective as to the Company for reporting periods beginning after
December 31, 2005. The Company believes that the aggregate future compensation
expense that will be eliminated as a result of the acceleration of the vesting
of these options is approximately $7,240,049, calculated in accordance with
FASB
123(R) (of which approximately $6,574,444 is attributable to options held
by
employees at or above the level of Vice President).
In
connection with the accelerated vesting, holders of accelerated options to
purchase an aggregate of 1,018,831 shares of common stock or 97% of the total
options subject to vesting acceleration, including each affected employee
at or
above the level of Director, will enter into written “lock-up” agreements with
the Company to refrain from selling shares acquired upon the exercise of
such
accelerated options (other than shares needed to cover the exercise price
and
satisfy withholding taxes) until the date on which the exercise would have
been
permitted under the option’s pre-acceleration vesting terms or, in certain
circumstances, the employee’s last day of employment or upon a “change in
control” (as such term may be defined in any applicable agreement between the
individual and the Company), if such last date of employment or “change in
control” is earlier.
3
Item
1.02. Termination
of a Material Definitive Agreement.
On
December 30, 2005, the Technology Transfer and Manufacturing Agreement, dated
October 3, 2003, by and between the Company and Laureate, which provided
that
Laureate would manufacture Surfaxin® for the Company, was terminated in
connection with the closing of the Company’s purchase of the Laureate
manufacturing operations in Totowa, New Jersey, as described above in Item
1.01
of this Current Report on Form 8-K.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
|
10.1
|
Asset
Purchase Agreement, dated as of December 27, 2005, by and between
Laureate
Pharma, Inc. and Discovery Laboratories,
Inc.*
|
|
99.1
|
Press
release, dated December 28, 2005
|
*
Exhibits and schedules to the Asset Purchase Agreement are not filed. The
Company will furnish supplementally a copy of any omitted exhibit or schedule
to
the Securities and Exchange Commission upon request.
Cautionary
Note Regarding Forward-looking Statements:
To
the
extent that statements in this Current Report on Form 8-K are not strictly
historical, including statements as to business strategy, outlook, objectives,
future milestones, plans, intentions, goals, future financial conditions,
future
collaboration agreements, the success of the Company’s product development or
otherwise as to future events, such statements are forward-looking, and are
made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements contained in this Current
Report are subject to certain risks and uncertainties that could cause actual
results to differ materially from the statements made. Such risks and others
are
further described in the Company's filings with the Securities and Exchange
Commission including the most recent reports on Forms 10-K, 10-Q and 8-K,
and
any amendments thereto.
4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| Discovery Laboratories, Inc. | ||
| |
|
|
| By: | /s/ Robert J. Capetola | |
|
Name: Robert J. Capetola, Ph.D. |
||
| Title: President and Chief Executive Officer | ||
| Date: January 3, 2006 | ||
5
Exhibit
10.1
ASSET
PURCHASE AGREEMENT
among
LAUREATE
PHARMA, INC.
(a
Delaware corporation),
and
DISCOVERY
LABORATORIES, INC.
(a
Delaware corporation)
TABLE
OF CONTENTS
|
Section
|
Page
|
|
INTRODUCTION
|
1
|
||
|
BACKGROUND
|
1
|
||
|
1.
|
Definitions
|
1 | |
|
2.
|
Sale
and Purchase
|
10 | |
|
2.1
|
Agreement
to Sell and Purchase
|
10
|
|
|
2.2
|
Purchase
Price
|
12
|
|
|
2.3
|
Assumption
of Liabilities
|
12
|
|
|
2.4
|
Consent
of Third Parties
|
13
|
|
|
3.
|
Closing
|
14
|
|
|
3.1
|
Location;
Date
|
14
|
|
|
3.2
|
Deliveries
|
14
|
|
|
4.
|
Representations
and Warranties of Seller
|
15
|
|
|
4.1
|
Organization
and Standing
|
16
|
|
|
4.2
|
[Reserved]
|
16
|
|
|
4.3
|
Authority
and Binding Effect
|
16
|
|
|
4.4
|
Consents
and Approvals
|
16
|
|
|
4.5
|
[Reserved]
|
16
|
|
|
4.6
|
[Reserved]
|
16
|
|
|
4.7
|
Taxes
|
16
|
|
|
4.8
|
[Reserved]
|
17
|
|
|
4.9
|
[Reserved]
|
17
|
|
|
4.10
|
Inventory
|
17
|
|
|
4.11
|
Title
to Purchased Assets and Related Matters
|
17
|
|
|
4.12
|
Condition
of Purchased Assets
|
18
|
|
|
4.13
|
Real
Property
|
18
|
|
|
4.14
|
Intellectual
Property.
|
19
|
|
|
4.15
|
Contracts
|
20
|
|
|
4.16
|
Employees/Independent
Contractors
|
21
|
|
|
4.17
|
Governmental
Permits
|
21
|
|
|
4.18
|
Compliance
with Law and Court Orders
|
21
|
|
|
4.19
|
Claims
|
22
|
|
|
4.20
|
Insurance
|
22
|
|
|
4.21
|
Non-Real
Estate Leases
|
22
|
|
i
TABLE
OF CONTENTS
(continued)
|
Section
|
Page
|
|
4.22
|
Employee
Benefit Plans
|
22
|
|
|
4.23
|
[Reserved]
|
23
|
|
|
4.24
|
Environmental
Matters
|
23
|
|
|
4.25
|
[Reserved]
|
25
|
|
|
4.26
|
Broker’s
or Finder’s Fee
|
25
|
|
|
4.27
|
[Reserved]
|
25
|
|
|
4.28
|
Certain
Personal Property
|
25
|
|
|
4.29
|
[Reserved]
|
25
|
|
|
4.30
|
[Reserved]
|
25
|
|
|
4.31
|
Solvency
|
25
|
|
|
4.32
|
FDA
|
25
|
|
|
4.33
|
Statements
and Other Documents Not Misleading.
|
26
|
|
|
5.
|
Representations
and Warranties of Buyer
|
26
|
|
|
5.1
|
Organization
and Standing
|
26
|
|
|
5.2
|
Authority
and Binding Effect
|
26
|
|
|
5.3
|
Validity
of Contemplated Transactions
|
26
|
|
|
5.4
|
Broker’s
or Finder’s Fee
|
27
|
|
|
5.5
|
Availability
of Funds
|
27
|
|
|
5.6
|
Claims
|
27
|
|
|
5.7
|
FDA
|
27
|
|
|
6.
|
Pre-Closing
Covenants
|
27
|
|
|
6.1
|
Access
|
27
|
|
|
6.2
|
[Reserved]
|
27
|
|
|
6.3
|
Operation
of the Business
|
27
|
|
|
6.4
|
Update
of Schedules
|
28
|
|
|
6.5
|
Employees
and Business Relations
|
28
|
|
|
6.6
|
Confidentiality.
|
30
|
|
|
6.7
|
Related
Parties
|
30
|
|
|
6.8
|
Transfer
of Purchased Assets and Business
|
30
|
|
|
6.9
|
Fulfillment
of Closing Conditions
|
30
|
|
|
6.10
|
DMF
|
31
|
|
|
6.11
|
[Reserved]
|
31
|
|
|
6.12
|
[Reserved]
|
31
|
|
ii
TABLE
OF CONTENTS
(continued)
|
Section
|
Page
|
|
6.13
|
[Reserved]
|
31
|
|
|
6.14
|
Environmental
|
31
|
|
|
6.15
|
Further
Assurances
|
31
|
|
|
7.
|
Post-Closing
Covenants
|
31
|
|
|
7.1
|
Transition
Period
|
31
|
|
|
7.2
|
Employees
|
31
|
|
|
7.3
|
Tax
Matters
|
32
|
|
|
7.4
|
Governmental
Permits
|
33
|
|
|
7.5
|
Existing
Seller Clients
|
34
|
|
|
7.6
|
DMF
|
34
|
|
|
7.7
|
Insurance
|
34
|
|
|
7.8
|
Totowa
Property Signage
|
34
|
|
|
8.
|
Conditions
Precedent to Obligations of Buyer
|
34
|
|
|
8.1
|
Representations
and Warranties; Performance of Obligations
|
34
|
|
|
8.2
|
Closing
Documents
|
34
|
|
|
8.3
|
Closing
Consents
|
34
|
|
|
8.4
|
[Reserved]
|
35
|
|
|
8.5
|
[Reserved]
|
35
|
|
|
8.6
|
Legal
Matters
|
35
|
|
|
8.7
|
Opinion
of Seller’s Counsel
|
35
|
|
|
9.
|
Conditions
Precedent to Obligations of Seller
|
35
|
|
|
9.1
|
Representations
and Warranties; Performance of Obligations
|
35
|
|
|
9.2
|
Legal
Matters
|
35
|
|
|
9.3
|
Consents
|
35
|
|
|
10.
|
Indemnification
|
35
|
|
|
10.1
|
By
Seller
|
35
|
|
|
10.2
|
By
Buyer
|
36
|
|
|
10.3
|
Procedure
for Claims
|
37
|
|
|
10.4
|
Limitations
on Liability
|
37
|
|
|
10.5
|
Third
Party Claims
|
39
|
|
|
10.6
|
Right
of Offset
|
40
|
|
|
10.7
|
Effect
of Investigation or Knowledge
|
40
|
|
|
10.8
|
Contingent
Claims
|
40
|
|
iii
TABLE
OF CONTENTS
(continued)
|
Section
|
Page
|
|
11.
|
Termination
|
40
|
|
|
11.1
|
Grounds
for Termination
|
40
|
|
|
11.2
|
Effect
of Termination
|
41
|
|
|
12.
|
Other
Matters
|
41
|
|
|
12.1
|
Public
Announcements
|
41
|
|
|
12.2
|
Reasonable
Best Efforts
|
41
|
|
|
12.3
|
Nondisparagement
|
41
|
|
|
13.
|
Miscellaneous
|
41
|
|
|
13.1
|
Contents
of Agreement
|
41
|
|
|
13.2
|
Amendment,
Parties in Interest, Assignment, Etc
|
42
|
|
|
13.3
|
Interpretation
|
42
|
|
|
13.4
|
Sole
Remedy
|
42
|
|
|
13.5
|
Dispute
Resolution
|
42
|
|
|
13.6
|
Expenses
|
43
|
|
|
13.7
|
Bulk
Sales
|
43
|
|
|
13.8
|
Notices
|
43
|
|
|
13.9
|
Governing
Law
|
44
|
|
|
13.10
|
Counterparts
|
44
|
|
iv
|
Exhibits
|
|
|
Exhibit
A
|
Bill
of Sale, Assignment and Assumption Agreement
|
|
Exhibit
B-1
|
Transition
Services Agreement
|
|
Exhibit
B-2
|
Quality
Agreement
|
|
Exhibit
C-1
|
Notices
related to Drug Establishment Registrations for Totowa
|
|
Exhibit
C-2
|
Notices
related to Drug Establishment Registrations for Totowa
|
|
Exhibit
C-3
|
Notices
related to Drug Establishment Registrations for Totowa
|
|
Exhibit
D
|
Form
of Opinion
|
|
Exhibit
E
|
Parent
Guaranty
|
|
Exhibit
F
|
Consent
to Assignment
|
|
Exhibit
G
|
Assignment
of Lease and Termination and Option Agreement
|
|
Exhibit
H-1
|
Amendment
to Lease
|
|
Exhibit
H-2
|
Amendment
to Termination and Option Agreement
|
|
Exhibit
I
|
Termination
Agreement
|
v
ASSET
PURCHASE AGREEMENT
INTRODUCTION
This
ASSET PURCHASE AGREEMENT is dated as of December 27, 2005. The parties
are
Laureate Pharma, Inc., a Delaware corporation (“Seller”),
and
Discovery Laboratories, Inc., a Delaware corporation (“Buyer”).
Buyer
and Seller are referred to herein as the “Parties.”
BACKGROUND
Seller
owns and operates the Business (defined below). This Agreement defined
below
sets forth the terms and conditions upon which Buyer is purchasing the
Purchased
Assets (defined below) and assuming the Assumed Liabilities (defined below)
from
Seller and Seller is selling the Purchased Assets and transferring the
Assumed
Liabilities to Buyer.
NOW,
THEREFORE, in consideration of the respective covenants, representations
and
warranties herein contained, and intending to be legally bound hereby,
the
parties hereto agree as follows:
1. Definitions.
For
convenience, certain terms used in more than one part of this Agreement
are
listed in alphabetical order and defined or referred to below.
“33%
Cap”
is
defined in Section
10.4(a).
“Accounts
Receivable”
means,
as of any specified date, any trade accounts receivable, notes receivable,
bid
or performance deposits and other miscellaneous receivables of the Business.
“Accrued
Bonus”
is
defined in Section
6.5(b).
“Action”
is
defined in Section
10.5(a).
“Affiliates”
means,
with respect to a Party, Persons controlling, controlled by or under common
control with that Party, as well as any officers, directors and majority-owned
entities of that Party and of its other Affiliates. For the purposes of
the
foregoing, ownership, directly or indirectly, of 20% or more of the voting
stock
or other equity interest shall be deemed to constitute control.
“Agreement”
means
this Asset Purchase Agreement, including all schedules and exhibits hereto.
“Allocation”
is
defined in Section
7.3(d).
“Allocation
Arbiter”
is
defined in Section
7.3(d).
“Amendment
to Lease”
means
the Amendment No. 1 to the Agreement of Lease dated December 3, 2004, between
Norwell Land Company, as Landlord, and Seller, as Tenant, substantially
in the
form of Exhibit
H-1.
“Amendment
to Termination and Option Agreement”
means
Amendment No. 1 to the Termination and Option Agreement dated December
3, 2004,
between Norwell Land Company, as Landlord, and Seller, as Tenant, substantially
in the form of Exhibit
H-2.
“Ancillary
Agreements”
means
the Termination Agreement, the Amendment to Lease and the Amendment to
Termination and Option Agreement.
“Assets”
means
all of Seller’s assets, properties, business, goodwill and rights of every kind
and description, real and personal, tangible and intangible, located at
the
Totowa Property and used in the operation of the Business.
“Assignee”
is
defined in Section
13.2.
“Assignment
of Lease and Termination and Option Agreement”
means
the Assignment of Lease and Termination and Option Agreement, by and between
Seller, as tenant, and Buyer, as assignee, substantially in the form of
Exhibit
G.
“Association”
is
defined in Section
13.5(b).
“Assumed
Liabilities”
is
defined in Section
2.3(a).
“Bill
of Sale, Assignment and Assumption Agreement”
means a
bill of sale, assignment and assumption agreement by and between Seller
and
Buyer in substantially the same form as Exhibit
A.
“BLAs”
is
defined in Section
4.32.
“Business”means
the
business operations of Seller conducted solely at the Totowa Property relating
to the performance by Seller of its obligations under the Existing Manufacturing
Agreement, including the furnishing of development services, process design
and
development, production and aseptic filling services for pharmaceutical
microparticles (including microspheres and liposomes) manufacturing services,
and other related services to customers therewith, and the goodwill appurtenant
to such business and assets, but in all cases excluding (i) the business
operations performed at the Princeton Property and (ii) the business operations
of Seller, wherever located, Related exclusively to customers of Seller
other
than Buyer.
“Business
Confidential Information”
means
the Confidential Information of Seller except that “Business
Confidential Information”
does
not include personnel information (other than that provided to Buyer pursuant
to
this Agreement), trade secrets, models, inventions,
discoveries, the DMF
numbered 16941 (Contract Manufacturing), advertising and marketing plans
or
systems, sales methods or systems, pricing lists and pricing formulae,
customer
and client lists, customer and client information (including principal
contacts,
addresses and telephone numbers) and related purchasing history, financial
information and all documentation related to the foregoing.
“Business
Documents, Systems and Information”means
(i)
all
written and electronic documentation Related to the Business including,
but not
limited to, the SOPs and all procedures, policies, manuals, methods, batch
records, and other information used for the operation of the Business,
(ii) all records with respect to distributors, suppliers and Buyer;
(iii)
all Information Technology, and (iv) all Business
Confidential Information.
“Business
Day”
means
any calendar day which is not a Saturday, Sunday or public holiday under
the
laws of the State of New Jersey.
“Buyer”
is
defined in the Introduction.
“Buyer
Officer’s Certificate”
is
defined in Section
9.1.
2
“CERCLA”
is
defined in Section
4.24.
“Change
Order”
means
the change order between the Parties pursuant to the Existing Manufacturing
Agreement, originally dated February 16, 2005 and as amended from time
to time.
“Change
Order No. 2”
means
the change order between the Parties pursuant to the Existing Manufacturing
Agreement, dated October 4, 2005.
“Charter
Documents”
means
an entity’s certificate or articles of incorporation or formation, certificate
defining the rights and preferences of securities, articles of organization,
general or limited Seller agreement, operating agreement, certificate
of limited
Seller, joint venture agreement or similar document governing the
entity.
“Claim
Notice”
is
defined in Section
10.3(a).
“Claim
Response”
is
defined in Section
10.3(a).
“Closing”
is
defined in Section
3.1.
“Closing
Consents”
is
defined in Section
8.3.
“Closing
Date”
is
defined in Section
3.1.
“Code”
means
the U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
“Commercially
Reasonable”
means,
with respect to arrangements made by, and performance of covenants of,
a Party
under this Agreement, means that such Party shall, if appropriate, incur
expenses in the nature of processing fees (including legal review),
administrative and other costs and expenses that are reasonable in amount,
but
such Party shall not be required to make any payment or offer or grant
any
financial accommodation or other benefit to any counterparty not otherwise
provided under any applicable agreement between such Party and such
counterparty, or release any claim or right under any such applicable
agreement.
“Confidential
Information”means
any
confidential or proprietary information of Seller Related to the Business,
including but not limited to, personnel information that Seller is not
permitted
to disclose pursuant to law and its existing privacy policies, correspondence
and communications between Seller and the FDA or other Governmental Body,
know-how, trade secrets, formulae, specifications, technical information,
processes, models, inventions,
discoveries, graphical and computer generated material,
manuals,
plans, designs, prototypes, drawings (including engineering and auto-cad
drawings), proprietary information, the DMF numbered 17159, blue prints,
data,
databases, software, source codes, advertising and marketing plans or
systems,
distribution and sales methods or systems, pricing lists and pricing
formulae,
customer and client lists, customer, client, dealer, distributor, wholesaler
and
supplier information (including principal contacts, addresses and telephone
numbers), purchasing history, financial information and all documentation
related to the foregoing. Notwithstanding the foregoing, Confidential
Information shall not include information (a) which was publicly known
prior to
the date of this Agreement or (b) that becomes publicly known
without any
act or omission by Seller.
“Confidentiality
Agreement”
is
defined in Section
13.1.
3
“Consent
to Assignment”
means
the Consent to Assignment and Assumption of Lease Agreement, by and between
Seller, as tenant, and Buyer, as assignee, Safeguard, as guarantor, and
consented to by the Landlord, substantially in the form of Exhibit
F
“Contingent
Claim”
is
defined in Section
10.8.
“Contract”
means
any written or oral contract, agreement, purchase order, lease, instrument
or
other document, commitment, arrangement, or undertaking that is binding
on any
Person or its property under applicable Law.
“Court
Order”
means
any judgment, decree, injunction, order or ruling of any federal, state,
local
or foreign court or governmental or regulatory body or authority that
is binding
on any Person or its property under applicable Law.
“Current
Renovations”
means
the construction and alterations activities being conducted at the Totowa
Property by Buyer pursuant to Change Order No. 2.
“Damages”
is
defined in Section
10.1(a).
“DAS
Agreement”
means
the Supply Agreement dated May 31, 2002 (the “Agreement”)
between Seller (as successor to Laureate Pharma L.P.) and DrugAbuse
Pharmaceuticals, Inc. (as successor to Drug Abuse Sciences, Inc.) (“DAS”),
including any subsequent agreements defining the relationship between
Seller and
DAS, including that certain Assignment, Amendment and Reaffirmation Agreement
dated June 17, 2004.
“Default”
means
(i) a breach, default or violation, (ii) the occurrence of an event that
with or
without the passage of time or the giving of notice, or both, would constitute
a
breach, default or violation or (iii) with respect to any Contract, the
occurrence of an event that with or without the passage of time or the
giving of
notice, or both, would give rise to a right of termination, renegotiation
or
acceleration.
“Disclosing
Party”
is
defined in Section
6.6(b).
“DMFs”
is
defined in Section
4.32.
“Drug
Establishment Registration”
means a
registration with the FDA under 21 C.F.R. Sec. 207.20 by an owner
or
operator of a drug establishment (as defined in 21 C.F.R. Sec.
207.3).
“Drug
Master File”
means a
drug master file as described in 21
C.F.R.
Sec. 314.420.
“Employee
Lease”
means
that certain agreement, dated December 3, 2004, between Seller and the
P.F.
Laboratories, Inc., a New Jersey corporation, relating to the lease by
Seller of
unionized employees at the Totowa Property.
“Employee
Compensation List”
is
defined in Section
4.16.
“Encumbrances”
means
any lien, mortgage, security interest, pledge, restriction on transferability,
defect of title or other claim, charge or encumbrance of any nature whatsoever
on any property or property interest.
“Environmental
Claims”
is
defined in Section
4.24(i).
“Environmental
Laws”
is
defined in Section
4.24(ii).
4
“Environmental
Liability”
means
any and all liabilities, claims, costs, damages, losses, expenses, penalties,
fines, attorneys’ fees, court costs and other costs incurred or imposed (a)
pursuant to any order, notice of responsibility, injunction, judgment
or similar
act (including settlements) by any Governmental Body to the extent arising
out
of (i) Seller’s violation of Environmental Laws occurring at any property owned
or operated by Seller prior to the Closing Date or (ii) the Previous
Owner’s
violation of Environmental Laws occurring at any property owned or operated
by
Previous Owner prior to December 3, 2004 or (b) pursuant to any claim
or cause
of action by a Governmental Body or other third Person for personal injury,
property damage, or remediation costs to the extent arising out of or
attributable to (i) Seller’s violation of, or Seller’s actions which result in a
remedial obligation under, any Environmental Law occurring prior to the
Closing
Date or (ii) the Previous Owner’s violation of, or the Previous Owner’s actions
which result in a remedial obligation under, any Environmental Law occurring
prior to December 3, 2004.
“Environmental
Permit”
is
defined in Section
4.24(iii).
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and
all
regulations and rules issued thereunder, or any successor law.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
“Excluded
Assets”
is
defined in Section
2.1(b).
“Excluded
Equipment”
is
defined in Section
2.1(b)(iii).
“Existing
Manufacturing Agreement”
means
the Technology Transfer and Manufacturing Agreement, dated October 3,
2003,
between the Parties, together with any amendments thereto following the
date
hereof.
“Expiration
Date”
is
defined in Section
10.4(b).
“FDA”
is
defined in Section
4.32.
“FDA
Documents”
is
defined in Section
4.32.
“FDA
Requirements”
is
defined in Section
4.32.
“FFDCA”
is
defined in Section
4.32.
“Fixed
Assets
is
defined in Section
4.28.
“GAAP”
means
generally accepted accounting principles in the United States, consistently
applied.
“Governmental
Body”
means
any United States (a) federal, state, commonwealth, county, municipality,
district or other jurisdiction of any nature, or any political subdivision
thereof, (b) federal, state, local, municipal or other government or
(c)
governmental or quasi-governmental authority of any nature (including
any
governmental division, department, agency, commission, instrumentality,
official, organization, regulatory body or other entity and any court,
arbitrator or other tribunal).
5
“Governmental
Permit”
means
any permit, license, registration, certificate of occupancy, approval,
privilege, franchise, variance, exemption, consent or other authorization
of any
nature whatsoever, granted, approved or allowed by any Governmental Body.
“Hazardous
Material”
is
defined in Section
4.24(iv).
“Indemnified
Buyer Party”
is
defined in Section
10.1.
“Indemnified
Party”
means
an Indemnified Buyer Party or an Indemnified Seller Party.
“Indemnified
Seller Party”
is
defined in Section
10.2.
“Indemnitor”
is
defined in Section
10.3(a).
“INDs”
is
defined in Section
4.32.
“Information
Technology”
means
all communications systems and computer systems used or held for use
in the
conduct of the Business by Seller including all hardware, software, and
URLs.
“Insurance
Claims List”
is
defined in Section
4.20.
“Inventory”
means
(i) all items purchased by Buyer and delivered to Seller under the Existing
Manufacturing Agreement, wherever located, and (ii) the items that shall
be the
subject of the Inventory Payment at Closing, in each case as listed on
Schedule
1.1,
which
shall be updated by mutual agreement immediately prior to the
Closing.
“Inventory
Payment”
means
the dollar amount payable for the items specified on Schedule
1.1.
“ISRA”
is
defined in Section
4.24.
“Knowledge
of Buyer”
means
the actual knowledge of Robert J. Capetola, Ph.D., Christopher J. Schaber,
Ph.D., John G. Cooper, David Lopez, Cynthia Davis and Jerry Orehostky,
in each
case, after reasonable investigation without any constructive or imputed
knowledge of Buyer or any of its directors, officers or employees or
owner.
“Knowledge
of Seller”
means
the actual knowledge of Robert J. Broeze, Mary-Joan Hampson-Carlin, Ernest
Tyler, John Morris, Steven J. Grenfell, Steven J. Feder and Christopher
J.
Davis, in each case, after reasonable investigation without any constructive
or
imputed knowledge of Seller or any of its directors, officers or employees
or
owner.
“Landlord”
means
Norwell Land Company, the landlord under the Totowa Lease.
“Law”
means
any statute, law, ordinance, regulation, order, code or rule of any United
States federal, state, or local governmental or regulatory body or authority,
including those covering biopharmaceuticals,
pharmaceuticals (including drugs, biologics, radiopharmaceuticals, and
controlled substances), environmental,
energy, safety, health, information technology, transportation, bribery,
record
keeping, zoning, antidiscrimination, antitrust, wage and hour, and price
and
wage control matters.
“Legal
Proceeding”
means
any action, lawsuit, litigation, arbitration, proceeding (including any
civil,
criminal, administrative, investigative, or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted,
or
heard by or before, or otherwise involving, any court or other Governmental
Body
or any arbitrator or arbitration panel.
6
“Liability”
means
any direct or indirect liability, indebtedness, obligation, expense,
debt,
claim, loss, damage, deficiency, guaranty or endorsement of any nature,
of or by
any Person, whether absolute or contingent, known or unknown, secured
or
unsecured, recourse or non-recourse, filed or unfiled, accrued or unaccrued,
due
or to become due, or liquidated or unliquidated.
“Liquidated
Claim Notice”
is
defined in Section
10.3(a).
“Litigation”
means
any action, lawsuit, arbitration, administrative or other proceeding
(including
any civil, criminal, investigative, or appellate proceeding), hearing,
criminal
prosecution or investigation or inquiry by any court or Governmental
Body.
“LNA”
is
defined in Section
6.15.
“Material
Adverse Effect”
means a
material adverse effect on the business, Assets (including the Purchased
Assets), operation or condition (financial or otherwise), results of
operations
of Seller as it Relates to the Business, consistent with past
practice.
“Milestone
Payments”
means
the milestone payments aggregating $636,000 (consisting of payments in
the
amounts of $530,000 and $106,000 under the Change Order) that were to
be paid
upon written agreement of the quality committee that the facility, quality
systems and Surfactant manufacturing process are ready for FDA re-inspection,
which payments shall accelerate and become due and owing at the
Closing.
“Minor
Contract”
means
(a) any Contract Relating to the Business that is terminable by a Party
on not
more than 30 days’ notice without any Liability, (b) any Contract Relating to
the Business (other than Off-the-Shelf Software) under which the obligation
of a
Party (fulfilled and to be fulfilled) involves an amount of less than
$5,000 and
any group of similar Contracts under which the obligation of a Party
(fulfilled
and to be fulfilled) involves an amount of less than $10,000, and
(c)
any
Off-the-Shelf Software.
“NDAs”
is
defined in Section
4.32.
“NJDEP”
means
the New Jersey Department of Environmental Protection.
“Non-Assignable
Contract”
is
defined in Section
2.4.
“Non-Offeree
Employee”
is
defined in Section
6.5.
“Non-Real
Estate Leases”
is
defined in Section
4.21.
“Offeree
Employee”
is
defined in Section
6.5.
“Off-the-Shelf
Software”
means
any
software license implied by the sale of a product and perpetual, paid-up
royalty
free and transferable license rights for “off-the-shelf” third party application
software licensed for use in the Business, in any individual case, under
a
license with a maximum payment obligation on the part of Seller of less
than
$3,000.
“Ordinary
course”
or
“ordinary
course of business”
means
the ordinary course of business that is consistent with past
practices.
“Parent
Guaranty”
means
the guaranty by Safeguard of the obligations of Seller under this Agreement,
in
substantially the form of Exhibit
E.
7
“Parties”
is
defined above in the Introduction.
“Permitted
Encumbrance”
means
(a) any Encumbrance disclosed on Schedule
1.2;
(b) any
liens of mechanics, materialmen and laborers for work or services performed
or
materials furnished in connection with the Totowa Property, in each instance,
which are not yet due and payable, including any such lien resulting
from the
activities being conducted by or for Buyer at the Totowa Property pursuant
to
Change Order No. 2 to the Existing Manufacturing Agreement prior to the
Closing;
(c) any rights reserved to or vested in any municipality or public authority
to
control or regulate the use of the Totowa Property or to use the Totowa
Property
in any manner; (d) any easements, rights-of-way, servitudes, restrictions
and
other minor defects, encumbrances and irregularities in title to the
Totowa
Property which could not, individually or in the aggregate, materially
and
adversely affect the value, condition, marketability or operation of
the Totowa
Property or the Totowa Lease or quiet enjoyment thereof; or (e) any
Encumbrance for Taxes, assessments and other governmental charges that
are not
yet due and payable.
“Person”
means
any natural person, corporation, Seller, proprietorship, association,
joint
venture, trust or other legal entity.
“PHSA”
is
defined in Section
4.32.
“Plans”
is
defined in Section
4.22(a).
“Previous
Owner”
means
Purdue Pharma L.P., a Delaware limited partnership.
“Prime
Rate”
means
the prime lending rate as reported in The Wall Street Journal from time
to time
as the base rate on corporate loans.
“Princeton
Property”
means
Seller’s facility located at 201 College Road East, Princeton, New Jersey.
“Purchased
Assets”
is
defined in Section
2.1(a).
“Purchase
Price”
is
defined in Section
2.2(a).
“Purchase
Price Cap”
is
defined in Section
10.4(a).
“Qualified
Offer”
is
defined in Section
6.5.
“Quality
Agreement”
means
an agreement to be entered into on the Closing Date between Seller and
Buyer,
substantially in the form of Exhibit
B-2
relating
to the arrangements of the supply of regulated products as set forth
in the
Transition Services Agreement.
“Real
Property”
means
all rights and interests of Seller in or to the Totowa Property.
“Related”
means
used or held for use in connection with the ownership, operation or maintenance
of, arising from, or related to.
“Response
Period”
is
defined in Section
10.3(a).
“Safeguard”
means
Safeguard Scientifics, Inc., a Pennsylvania corporation, of which Seller
is an
indirect wholly-owned subsidiary.
8
“SEC”
is
defined in Section
6.6(b).
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
“Seller
Contracts”
is
defined in Section
4.15(a).
“Seller
Insurance”
is
defined in Section
4.20.
“Seller
Officer’s Certificate”
is
defined in Section
8.1.
“Seller
Required Consent”
is
defined in Section
4.4.
“SOPs”
means
the methods, processes, reports and standard operating procedures (collectively,
the “SOPs”) of Seller used in the operation of the Business, including without
limitation those listed on Schedule
2.1(a)(iii).
“Structures”
means
all buildings, structures, fixtures, facilities and improvements to
any Real
Property.
“Taxes”
shall
mean all taxes, duties, charges, fees, levies or other assessment imposed
by any
taxing authority, including income, capital gains, gross revenue, profits,
gross
receipts, value-added, excise, withholding, personal property, real
estate,
sale, use, ad valorem, license, capital, lease, goods and services,
severance,
stamp, transfer, payroll, employment, customs, duties, alternative,
add-on
minimum, estimated and franchise taxes (including any interest, penalties
or
additions attributable to or imposed on or with respect to any such
assessment,
which shall be deemed to be Taxes for any taxable period with respect
to which
they shall arise, regardless of when they shall accrue or be
payable.).
“Tax
Returns”
means
any and all returns, reports, claims for refund, information returns,
or other
statements (including elections, declarations, disclosures, schedules,
estimates, and attachments), including estimates or amendments thereof,
required
to be filed by a Party with respect to any Taxes.
“Termination
Agreement”
means
the Termination Agreement, by and among Seller, Safeguard and The P.F.
Laboratories, Inc., in substantially the form attached as Exhibit
I.
“Termination
and Option Agreement”
means
that certain agreement, dated December 3, 2004, between Seller and
Norwell Land
Company relating to the parties’ respective rights and obligations under the
Totowa Lease and relating to the Totowa Property.
“Termination
Date”
is
defined in Section
11.1(b).
“Third-Party
Claim”
is
defined in Section
10.5(a).
“Threshold
Amount”
is
defined in Section
10.4(a).
“Totowa
Lease”
means
that certain lease, dated December 3, 2004, for the Totowa Property
between
Seller, as tenant, and the Norwell Land Company, as landlord.
“Totowa
Property”
means
the facility leased by Seller consisting of approximately 21,000 square
feet in
a building located at 710 Union Boulevard, Totowa, New Jersey.
9
“Trademarks”
means
any trademarks, service marks, brand names, certification marks,
trade names,
logos, trade dress, and all goodwill associated with the foregoing
throughout
the world and registrations in any jurisdictions of, and applications
in any
jurisdiction to register, the foregoing, including any extension,
modification
or renewal of any such registration or application.
“Transaction
Documents”
means
this Agreement, the Bill of Sale, Assignment and Assumption Agreement,
the
Transition Services Agreement, the Quality Agreement, the Consent
to Assignment,
the Assignment of Lease and Termination and Option Agreement, the
Parent
Guaranty, that certain letter agreement between the Parties, dated
the date
hereof, and any other certificate, instrument, agreement or document
required to
be delivered pursuant to the terms hereof and thereof.
“Transactions”
means
the purchase and sale of the Purchased Assets and the transfer and
assumption of
the Assumed Liabilities at the Closing and the other transactions
contemplated
by the Transaction Documents.
“Transferred
Employees”
is
defined in Section
6.5.
“Transition
Services Agreement”
means
an agreement to be entered into effective on the Closing Date between
Seller and
Buyer, substantially in the form of Exhibit
B-1,
relating to the provision by Seller of certain services following
the
Closing.
“Unassumed
Liability”
is
defined in Section
2.3(b).
“Unliquidated
Claim”
is
defined in Section
10.3(a).
“Union”
is
defined in Section
6.5(e).
“Union
Employees”
means
(i) employees of the Landlord who are members of the Union and provide
services
to Seller at the Totowa Property pursuant to the Employee Lease,
and (ii)
following the Closing, employees of Buyer who are members of the
Union and who
provide services to Buyer at the Totowa Property pursuant to an agreement
between Buyer and the Union, as provided in Section
6.5(e).
“US”
means
the United States of America.
“WARN
Act”
means
the Worker Adjustment and Retraining Notification Act, as amended.
2. Sale
and Purchase.
2.1 Agreement
to Sell and Purchase.
(a) Subject
to the satisfaction or waiver by the applicable Party prior to the
Closing of
the various conditions set forth in Section
8
and
Section
9
herein,
at the Closing, Seller shall grant, sell, convey, assign, transfer
and deliver
to Buyer, and Buyer shall purchase from Seller, all right, title
and interest of
Seller in and to all of the Assets (other than the Excluded Assets)
(the
“Purchased
Assets”),
free
and clear of all Encumbrances (other than Permitted Encumbrances)
as
follows:
(i) all
Inventory;
(ii) all
Fixed
Assets (including all Structures), furniture, fixtures, leasehold
improvements,
tooling, machinery and equipment;
10
(iii) all
Business Documents, Systems and Information, including without limitation
the
SOPs;
(iv) all
telephone numbers and facsimile numbers currently used in the Business
and
identified on Schedule
2.1(a)(iv);
(v) all
manufacturing, warehouse and office supplies Related to the
Business;
(vi) DMF
numbered 17159;
(vii) to
the
extent transferable, all Governmental Permits that are Related to
the Business
and have been issued to Seller or applied for by Seller and all rights
thereunder; and
(viii) all
Seller Contracts; and
(ix) an
assignment of Seller’s rights as tenant under the Totowa Lease and the
Termination and Option Agreement.
(b) Notwithstanding
the foregoing, the Purchased Assets shall not include any of the
following (the
“Excluded
Assets”):
(i) the
seals, Charter Documents, minute books, Tax Returns, books of account
or other
records having to do with the organization of Seller;
(ii) the
rights that accrue or will accrue to Seller under this Agreement;
(iii) the
equipment set forth on Schedule
2.1(b)(iii),
as such
Schedule may be modified from time to time (with the written consent
of Buyer
not to be unreasonably withheld) on or prior to the Closing Date
(the
“Excluded
Equipment”);
(iv) all
trade
names and abbreviations used by Seller whether or not in connection
with the
Business including “Laureate Pharma” and “Laureate”;
(v) claims,
demands, causes of action, choses in action, rights of recovery,
rights of
set-off, rights to refunds and similar rights in favor of Seller
or any
Affiliate of Seller of any kind to the extent Relating to (a) the
Excluded
Assets or the Unassumed Liabilities, (b) the Existing Manufacturing
Agreement or
(c) the ownership of the Assets, or operation of the Business, prior
to the
Closing Date;
(vi) DMF
numbered 16941;
(vii) all
motor
vehicles;
(viii) all
cash
and cash equivalents, including bank accounts, money market funds
and temporary
cash investments;
(ix) all
of
Seller’s and its Affiliates’ right, title and interest in and to all Accounts
Receivable and all notes, bonds, and other evidences of indebtedness
of and
rights to receive payments arising out of sales, services, rentals
and other
business activities of Seller and its Affiliates, including with
respect to the
Business, and including all rights with respect to any third party
collection
procedures or any other actions or proceedings in connection
therewith;
11
(x) all
rights to use SOPs included in Section
2.1(a)(ix)
that
also relate to the operation of Seller’s business at the Princeton Property, as
well as any SOP which was the basis for such an SOP or which was
derived from
such an SOP prior to the Closing Date;
(xi) any
and
all of Seller’s and its Affiliates’ rights arising under any outstanding
receivable or payable between Seller, on the one hand, and any Affiliate
of
Seller, on the other hand;
(xii) Assets
of
Seller or its Affiliates that are located at or used in connection
with Seller’s
business operations conducted at the Princeton Property;
(xiii) all
assets Related to any pension, profit sharing, stock bonus, stock
option, thrift
or other retirement plan, medical, hospitalization, dental, life,
disability,
vacation or other insurance or benefit plan, employee stock ownership
plan,
deferred compensation, stock ownership, stock purchase, bonus, benefit
or other
incentive plan, severance plan or other similar plan relating to
Seller, its
Affiliates or their respective employees;
(xiv) all
rights, titles, claims and interests of Seller or its Affiliates
under any
policy or agreement of insurance or under any bond;
(xv) (A)
all
Trademarks, (B) all rights to intellectual property owned by customers
of Seller
other than Buyer, and (C) all rights to intellectual property owned
or otherwise
used by Seller exclusively with respect to customers of Seller other
than
Buyer;
(xvi) all
rights Related to the prepaid expenses identified on Schedule
2.1(b)(xvi)
that
accrue or are paid by Seller prior to the Closing;
(xvii) all
rights or claims by any Seller or any Affiliate of any Seller to
(a) any Tax
refund relating to the period prior to the Closing Date;
(xviii) the
Employee Lease; and
(xix) the
Assets specified on Schedule
2.1(b)(xix).
2.2 Purchase
Price.
In
consideration of the grant, sale, conveyance, assignment, transfer
and delivery
of the Purchased Assets to Buyer and the assumption by Buyer of the
Assumed
Liabilities, Buyer shall pay a total amount (the “Purchase
Price”)
equal
to Sixteen Million Dollars ($16,000,000). Buyer shall pay the Purchase
Price at
the Closing by a wire transfer of immediately available funds, in
accordance
with written instructions provided by Seller to Buyer prior to the
Closing Date.
2.3 Assumption
of Liabilities.
(a) At
the
Closing, Buyer shall assume and agree to pay, discharge or perform,
as
appropriate, when due only the Liabilities of Seller specifically
identified
below in this subsection (a) (the “Assumed
Liabilities”):
(i) all
Liabilities set forth on Schedule
2.3(a),
to the
extent that such Liabilities accrue, are caused by, arise out of,
are associated
with, are in respect of, or are incurred, in each case, at any time
on and after
the Closing Date in connection with the Purchased Assets and the
ownership or
operation of the Purchased Assets after the Closing Date (to the
extent that
such Liabilities are
not
overdue or delinquent on the Closing Date, without regard to any
grace period
and without incurring any increase in the amounts due);
12
(ii) all
Liabilities expressly assumed by Buyer under Section
7.3
of this
Agreement; and
(iii) all
Liabilities relating to the ownership of the Purchased Assets from
and after the
Closing Date and the conduct by Buyer of its business after the Closing
Date.
(b) Notwithstanding
subsection (a) above or any other provision of this Agreement, Buyer
is not
assuming under this Agreement or any other Transaction Document,
and Seller
shall continue to be responsible for, any Liability (each, an “Unassumed
Liability”)
that
is not specifically identified as an Assumed Liability under subsection
(a)
above, including, without limitation, any of the following: (i) except
as may
otherwise be provided under the Existing Manufacturing Agreement,
any product or
service liability or similar claim for injury to any Person or property,
regardless of when made or asserted, that arises out of or is based
upon any
alleged action or failure to act by Seller or any express or implied
representation, warranty, agreement or guarantee made by Seller,
or alleged to
have been made by Seller, or that is imposed or asserted to be imposed
by
operation of law or otherwise in connection with any service performed
or
product sold or leased by or on behalf of Seller on or prior to the
Closing,
whether or not billed as of the Closing Date; (ii) (A) any Taxes
of Seller or
(B) except as otherwise provided in Section
7.3(c)
(relating to property Taxes), any Tax payable with respect to the
Business, the
Purchased Assets and the performance by Seller of its obligations
under the
Existing Manufacturing Agreement (except as may otherwise be provided
therein)
with respect to any period or portion thereof ending on or before
the Closing
Date; (iii) any Liabilities under or in connection with any Excluded
Assets;
(iv) any Liabilities of Seller arising or incurred in connection
with Seller’s
performance or failure to perform under any agreement with any customer
of
Seller other than Buyer; (v) any Liabilities arising prior to the
Closing Date
or as a result of the Closing relating to Seller’s employment of Persons,
including Liabilities, if any, with respect to any employee wages,
salaries,
benefits or withholding taxes, the Plans or other pension plan, supplemental
savings plan, any workers compensation claim or any other Liability
of Seller to
or with respect to its respective employees relating in any way to
their
employment by Seller; (vi) any Liabilities of Seller arising or incurred
in
connection with the negotiation, preparation and execution of this
Agreement and
the Transactions; (vii) any Environmental Liability arising prior
to the Closing
or relating to the conduct of the Business prior to the Closing;
(viii)
Liabilities arising from or related to governmental fines or penalties
arising
out of or based upon Seller’s actions or failure to act or the conduct of the
Business or otherwise incurred by Seller, in each case during any
period prior
to the Closing Date; (ix) any Liabilities for money borrowed or pursuant
to any
financing agreement or arrangement, whether direct or contingent;
(x) any
Liability of Seller owing to any of its Affiliates; (xi) any Liabilities
arising
prior to the Closing Date or as a result of Seller’s activities in connection
with the Closing relating to the infringement, misappropriation,
trademark
dilution or other violation of the confidential information, proprietary
information or intellectual property of any Person other than Buyer;
and (xii)
any other Liabilities (including any lease agreement) regardless
of when made or
asserted, that are not specifically assumed by Buyer under this
Agreement.
2.4 Consent
of Third Parties.
Nothing
in this Agreement shall be construed as an attempt by Seller to assign
to Buyer
pursuant to this Agreement any Seller Contract, permit, franchise,
claim or
Asset included in the Purchased Assets that is by its terms expressly
or
implicitly or by law nonassignable without the consent of any other
party or
parties, unless such consent or approval shall have been given, or
as to which
all the remedies for the enforcement thereof available to Seller
would not by
law pass to Buyer as an incident of the assignments provided for
by this
Agreement (a “Non-Assignable
Contract”).
To
the extent that any Seller Required Consent in respect of, or a novation
of, a
Non-Assignable Contract shall not have been obtained on or before
the Closing
Date, Seller shall at its sole expense continue to use its Commercially
Reasonable efforts to obtain any such Seller Required Consent or
novation after
the Closing Date until such time as it shall have been obtained,
and Seller
shall cooperate with Buyer in any Commercially Reasonable arrangement
to provide
that Buyer shall receive the interest of Seller in the benefits under
each such
Non-Assignable Contract, including performance, to the extent permitted
by
applicable Law, by Seller as agent if Commercially Reasonable; provided
that, so
long as Seller shall provide to Buyer substantially all the benefits
of each
such Non-Assignable Contracts, Buyer shall undertake to pay or satisfy
the
corresponding Liabilities under the terms of each such Non-Assignable
Contract
(or such lesser amount corresponding to the value of benefits actually
provided
to Buyer by Seller with respect to such Non-Assignable Contract)
to the extent
that Buyer would have been responsible therefor if such consent or
approval had
been obtained. Nothing contained in this Section
2.4
or
elsewhere in this Agreement shall be deemed a waiver by Buyer of
its right to
have received on the Closing Date an effective assignment of all
of the
Purchased Assets or of the covenant of Seller to obtain all of Seller
Required
Consents, nor shall this Section
2.4
or any
other provision of this Agreement be deemed to constitute an agreement
to
exclude from the Purchased Assets any Contracts as to which a Seller
Required
Consent may be necessary.
13
3. Closing.
3.1 Location;
Date.
The
closing for the Transactions (the “Closing”)
shall
be held at the offices of Morgan, Lewis & Bockius LLP in Philadelphia,
Pennsylvania, on a date which shall be no more than three Business
Days after
satisfaction or waiver of the conditions set forth in Section
8
and
Section
9,
or at
such other date and place as may be mutually agreed by the parties
(the
“Closing
Date”).
3.2 Deliveries.
At the
Closing, subject to the satisfaction of the conditions set forth
in Section
8
or
Section
9,
as
applicable,
(a) Seller
shall deliver, or cause to be delivered, to Buyer:
(i) duly
executed counterparts to the Transaction Documents to which each
of Seller,
Safeguard and the Landlord are parties;
(ii) true
and
complete copies of the duly executed Ancillary Agreements, certified
by an
executive officer of Seller;
(iii) an
updated Employee Compensation List, if necessary, to show changes
to the
information contained in the Employee Compensation List dated as
of December 27,
2005;
(iv) an
opinion of Seller’s Counsel in substantially the form set forth on Exhibit
D;
(v) a
non-foreign certification (in form and substance reasonably satisfactory
to
Buyer) that satisfies the requirements of Treasury Regulation section
1.1445-2(b)(2);
(vi) Closing
Consents in such forms as are reasonably acceptable to Buyer and
any other
Seller Required Consent that Seller receives on or prior to the Closing;
(vii) a
copy of
the duly executed Notice related to Drug Establishment Registrations
for Totowa
Property in substantially the form set forth on Exhibit
C-3
that
will be transmitted by Seller on the Closing Date for filing with
the FDA
pursuant to Section
7.4;
14
(viii) such
applications and notices (in such forms as are reasonably acceptable
to Buyer)
that will be filed by Seller on or, as may be reasonably practicable,
following
the Closing Date with respect to those Governmental Permits that
are being
transferred to Buyer pursuant to Section
2.1(a)(vii);
(ix) administrative
passwords for all Purchased Assets, as applicable;
(x) copies
of
all Business Documents, Systems and Information, including without
limitation,
the SOP’s;
(xi) termination
statements or other evidence (in a form reasonably acceptable to
Buyer) that any
liens identified on Schedule
4.11
have
been released;
(xii) if
in
Seller’s possession, the LNA with respect to the Transactions from the NJDEP;
and
(xiii) such
other instruments of conveyance and transfer, in form reasonably
satisfactory to
Buyer and its counsel, as shall be necessary and effective to transfer
and
assign to, and vest in, Buyer all of Seller’s right, title and interest in and
to the Purchased Assets.
With
respect to the items contemplated by clause (x) above, Buyer acknowledges
that
such items are maintained at the Totowa Property and, as such, shall
be deemed
delivered at the Closing.
(b) Buyer
shall deliver to Seller:
(i) duly
executed counterparts to the Transaction Documents to which it is
a party;
and
(ii) such
other documents, instruments, certificates and agreements as may
be reasonably
required by Seller to consummate and give effect to the
Transactions.
(c) Buyer
shall deliver the Purchase Price to Seller in accordance with Section
2.2.
(d) Buyer
shall deliver the Inventory Payment.
(e) Buyer
shall deliver the Milestone Payments.
(f) Buyer
shall deliver, if applicable, Buyer’s pro rated portion of any property tax
prepaid by Seller with respect to the period up to and including
the Closing
Date.
Each
of
the payments contemplated to be delivered at the Closing by Buyer
shall be made
by wire transfer of immediately available funds in accordance with
instructions
provided by Seller to Buyer prior to the Closing Date.
4. Representations
and Warranties of Seller.
Seller
hereby represents and warrants to Buyer as follows with respect to
the Purchased
Assets and the Business; provided, however, that the Parties acknowledge
and
agree that (i) only the provisions of the Existing Manufacturing
Agreement shall
govern the performance by Seller of its obligations under the Existing
Manufacturing Agreement, such that no right of indemnification under
this
Agreement shall arise in connection with any breach of any representation
or
warranty under the Existing Manufacturing Agreement or any Default
by Seller in
the performance of its obligations under the Existing Manufacturing
Agreement,
and (ii) nothing in this Agreement shall have the effect of expanding
or
otherwise modifying the rights and obligations of the Parties under
the Existing
Manufacturing Agreement.
15
4.1 Organization
and Standing.
Seller
is a corporation duly organized, validly existing and in good standing
under the
laws of the State of Delaware and is duly qualified to do business
as a foreign
corporation in the State of New Jersey, which is the only jurisdiction
where the
Business or the ownership of the Purchased Assets requires it to
be so
qualified, except for failures to be so qualified that would not
reasonably be
expected to have a Material Adverse Effect. During the four years
immediately
preceding the date of this Agreement, Seller has conducted business,
and its
Assets have been held, only under the names of Laureate Pharma, Inc.,
Bard
Biopharma, LP and Biopharma Acquisition Corp., each of which was
organized under
the laws of the State of Delaware.
4.2 [Reserved]
4.3 Authority
and Binding Effect.
Seller
has the full power and authority to (i) own the Purchased Assets,
(ii) carry on
the Business as presently conducted, (iii) execute and deliver each
Transaction
Document to which it is or will be a party, (iv) perform the Transactions
performed or to be performed by it pursuant to the terms of the Transaction
Documents and (v) satisfy or perform, as the case may be, its obligations
under
those Transaction Documents to which it is a party. The execution,
delivery and
performance by Seller of the Transaction Documents to which it is
a party have
been duly authorized by all necessary corporate action. Assuming
due
authorization, execution and delivery by Buyer, this Agreement constitutes
a
valid and binding obligation of Seller, enforceable against Seller
in accordance
with its terms.
4.4 Consents
and Approvals.
Except
for any notices, filings, consents, approvals, permits, licenses
or
authorization of, or registration, declaration or filing with, any
third party
or court or Governmental Body specified in Schedule
4.4
(the
“Seller
Required Consents”),
neither the execution and delivery by Seller of any of the Transaction
Documents
to which it is a party, nor the performance of the Transactions performed
or to
be performed by Seller under the Transaction Documents, require any
notice,
filing, consent, approval, permit, license or authorization of, or
registration,
declaration or filing with, or renegotiation with any third party
or court or
Governmental Body, constitute a Default under, cause any payment
obligation to
arise or give any Person the right to challenge any of the Transactions
under
(i) any Law or Court Order which is applicable to Seller, (ii) any
Contract,
Governmental Permit or other document to which Seller is a party
or by which the
properties or other assets of Seller, including the Purchased Assets,
may be
bound or (iii) except as have already been obtained, the Charter
Documents of
Seller.
4.5 [Reserved]
4.6 [Reserved]
4.7 Taxes.
(a) Seller
has filed all Tax Returns that it was required to file and all such
Tax Returns
are current and complete in all material respects. All material Taxes
owed by
Seller (whether or not shown on any Tax Return) have been paid. Seller
is not
currently the beneficiary of any extension of time within which to
file any Tax
Return. There are no ongoing examinations or claims against Seller
for Taxes
with respect to or affecting the Purchased Assets or the Business,
and no
written notice of any audit, examination or claim for Taxes or any
dispute with
respect to or affecting the Purchased Assets or the Business, whether
pending or
threatened, has been received by Seller.
16
(b) Seller
has withheld and paid over or will pay over to the proper taxing
authorities all
Taxes required to have been withheld and paid over with respect to
or affecting
the Purchased Assets and the Business, including, without limitation,
all
employer contributions and premiums, withholding taxes and social
security and
unemployment Taxes and premiums, required to be remitted to all taxing
authorities, and complied with all information reporting and backup
withholding
requirements, including maintenance of required records with respect
thereto.
(c) There
are
(and as of immediately before the Closing there will be) no Encumbrances
(other
than Permitted Encumbrances) on the Purchased Assets of Seller relating
to or
attributable to Taxes and no current Liability for any Taxes due
and payable in
connection with the Business and the Purchased Assets.
(d) Schedule
4.7(d)
lists
all federal, state, local, and foreign jurisdictions in which Seller
has filed
Tax Returns with respect the Business.
(e) No
written claim that remains unresolved has ever been made by any Governmental
Body in a jurisdiction where Seller does not file a Tax Return that
the Business
may be subject to taxation by that jurisdiction or that Tax Returns
must be
filed with regard to the Business in such jurisdiction. Seller has
not waived
any statute of limitations in respect of Taxes or agreed to any extension
of
time with respect to a Tax Assessment or deficiency.
(f) None
of
the Purchased Assets (i) is tax-exempt use property within the meaning
of
Section 168(h) of the Code, (ii) directly or indirectly secures any
debt, the
interest on which is exempt under Section 103(a) of the Code, or
(iii) is
property that is required to be treated as being owned by any Person
(other than
Seller) pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue
Code of 1954, as amended, and in effect immediately before the enactment
of the
Tax Reform Act of 1986.
(g) Seller
has not received any written notice of any special tax assessment
affecting the
Totowa Property or Seller’s obligations under the Totowa Lease and, to the
Knowledge of Seller, no such assessment is pending or threatened.
(h) Seller
has not made, and is not obligated to make, and is not a party to
any agreement
that under certain circumstances could obligate it to make, any payment
to any
Person involved in the Business that will not be deductible under
§280G of the
Code.
4.8 [Reserved]
4.9 [Reserved]
4.10 Inventory.
Except
as described in Schedule
4.10,
the
Inventory to be included in the Purchased Assets will consist of
items of good,
usable and merchantable quality usable in the ordinary course of
business. None
of the Inventory is damaged or obsolete. Seller has valued the Inventory
in
accordance with U.S. generally accepted accounting principles at
the lower of
cost, calculated on a first-in, first-out basis, or market value.
All Inventory
not owned by Buyer is owned by Seller and no Inventory has been consigned
to
Seller.
4.11 Title
to Purchased Assets and Related Matters.
Except
as otherwise set forth on Schedule
4.11,
Seller
has good and marketable title to, valid leasehold interest in or
valid licenses
to use, as applicable, all the Purchased Assets, free from any Encumbrances
(other than Permitted Encumbrances). The use of the Purchased Assets
is not
subject to any Encumbrances (other than Permitted Encumbrances),
and such use
does not encroach on the property or the rights of any Person.
17
4.12 Condition
of Purchased Assets.
Except
as set forth on Schedule
4.12,
the
equipment and all other tangible assets and properties which are
part of the
Purchased Assets are in good operating condition and repair, normal
wear and
tear excepted, and are usable in the ordinary course of the Business
and conform
in all material respects to all applicable Laws relating to their
use and
operation as such Purchased Assets are currently used in the conduct
of the
Business. Except for Purchased Assets held pursuant to the Non-Real
Estate
Leases described on Schedule
4.21
and the
Excluded Equipment, no Person other than Laureate owns any Fixed
Assets or other
tangible Assets situated on the Totowa Property. Seller confirms
that there are
no Assets of Seller located at the Totowa Property that are not Purchased
Assets. Except for (i) the Excluded Assets, (ii) the services provided
by the
Union Employees under the Employee Lease and the Non-Offeree Employees,
(iii)
the services to be provided by Seller after the Closing pursuant
to the
Transition Services Agreement and assuming the replenishment of Inventory
in the
ordinary course of the Business, the Purchased Assets are sufficient
to enable
Buyer to conduct its operations after the Closing in all respects
as Seller
conducted its operations of the Business prior to commencement of
the Current
Renovations.
4.13 Real
Property.
The
Totowa Property is in good condition, ordinary wear and tear excepted.
Seller
has peaceful, undisturbed and exclusive possession of the leasehold
estate
created under the Totowa Lease, and other than the Termination and
Option
Agreement and the Employee Lease, there are no leases, subleases,
licenses,
concessions, or other Contracts granting to any other Person the
right to use or
occupy the Totowa Property. Seller has not mortgaged or otherwise
encumbered the
Totowa Lease and, to the Knowledge of Seller, there are no Encumbrances
that
would adversely affect the use and occupancy of the Totowa Property.
Except as
set forth on Schedule
4.13,
the
Totowa Lease is valid and in full force and effect and, other than
with respect
to the 483 Letter received January 21, 2005 and related correspondence,
copies
of which have been provided to Buyer, (i) Seller is not, and to the
Knowledge of
Seller, the Landlord is not, in Default under the Totowa Lease or
any Contract
or Law with respect to the occupancy, maintenance or use of the Totowa
Property,
(ii) no notice or threat from any landlord, Governmental Body or
other Person
has been received by Seller or served upon the Totowa Property claiming
any
Default or obligation under the Totowa Lease or any Contract or Law,
or
requiring or calling attention to the need for any work, repairs,
construction,
alteration, installations or environmental remediation, or otherwise
indicating
that there is pending or anticipated any action of the landlord,
such
Governmental Body or other Person that would adversely affect the
Totowa
Property or the ability of Buyer to conduct its manufacturing activities
following the Closing, (iii) there does not exist any event or condition
that is
likely to result in a Default under the Totowa Lease by Seller or,
to the
Knowledge of Seller, by the Landlord, and (iv) all security deposits
required to
be made by Seller under the Totowa Lease have been made by Seller
and no portion
of such security deposits has been applied to cure any prior Default
by Seller
under the Totowa Lease. The Totowa Lease has not been assigned, modified,
supplemented or amended. To the Knowledge of Seller, no Legal Proceedings
are
pending which would affect the zoning or use of the Totowa Property.
No portion
of the Totowa Property is within an identified flood plain or other
designated
flood hazard area as established under any Law or otherwise by any
governmental
authority. The Totowa Property has direct legal access to, abuts,
and is served
by a publicly maintained road, which road does and shall provide
a valid means
of ingress and egress thereto and therefrom, without additional expense.
All
utilities, including water, gas, telephone, electricity, sanitary
and storm
sewers, are currently available to the Totowa Property at normal
and customary
rates, and are adequate to serve the Business as currently conducted
and
Seller’s current use of the Totowa Property. There are no claims or Legal
Proceedings which are pending against Seller, or, to the Knowledge
of Seller,
pending or threatened against the Landlord or the owner of the Totowa
Property,
which could reasonably be expected to affect the continued use of
the Totowa
Property in substantially the same manner as presently used by
Seller.
18
4.14 Intellectual
Property.
(a) Contracts.
(i) Schedule
4.14(a)(i)(A)
contains
a complete and accurate list of all Contracts relating to the Confidential
Information in
written form, except for Minor Contracts. Except as specified on
Schedule
4.14(a)(i)(B),
Seller
is
not currently engaged in any dispute or disagreement with respect
to any such
Contract nor,
to the
Knowledge of Seller,
are
there any
threatened disputes or disagreements with respect to any such Contracts.
Except
for any rights under written
licenses or written Contracts
set
forth in Schedule
4.14(a)(i)(C),
no
current or former employee of Seller (including any current or former
Union
Employee under the Employee Lease) owns or has any interest in any
Business
Confidential Information or Information Technology.
(ii) To
the
Knowledge of Seller, Schedule
4.14(a)(ii)(A)
contains
a complete and accurate list of all Contracts relating to the Confidential
Information that are not in written form, except for Minor Contracts,
and an
accurate summary description of all material terms of all such Contracts.
Except
as specified on Schedule
4.14(a)(ii)(B),
Seller
is not currently engaged in any dispute or disagreement
with respect to any such Contract nor,
to the
Knowledge of Seller, are
there
any threatened
disputes or disagreements with respect to any such non-written
Contracts.
(b) Seller
has made available to Buyer complete and correct copies of all written
Contracts, together with all amendments, supplements or modifications
thereto,
as required to be set forth on Schedule
4.14(a)(i)A.
(c) Business
Confidential Information.
(i) The
Business Confidential Information constitutes all of the Confidential
Information that has been used or held for use, or relied upon by
Seller in the
Business. Seller has not transferred ownership of, nor granted any
exclusive
license with respect to, any Business Confidential Information to
any other
Person. Except as set forth on Schedule
4.14(c)(i)(A),
Seller
is the owner of all right, title and interest in and to, or has licensed,
with
full power to transfer and assign to Buyer,
free and
clear of any Encumbrances, each item comprising the Business Confidential
Information and has the right to bring actions for infringement,
misappropriation or other violation thereof. Schedule
4.14(c)(i)(B)
contains
a complete and accurate list of all payments due to a third party
for any
licensed Business Confidential Information. All Business Confidential
Information is fully transferable and alienable to Buyer without
payment of any
kind to any other Person; however, all Business Confidential Information
described in those Contracts listed on Schedule
4.4,
is
fully transferable and alienable to Buyer without payment of any
kind to any
other Person in accordance with its terms. The documentation relating
to all
Business Confidential Information is current, accurate, and sufficient
in detail
and content to identify and explain it to an individual having appropriate
education and experience and to allow its full and proper use by
an
individual having appropriate education and experience without
reliance on the knowledge or memory of any other
individual.
Seller has used reasonable efforts to maintain the confidentiality
of its
Confidential Information. Except
as
set forth in Schedule
4.14(c)(i)(C),
all
Business
Confidential Information is not part of the public knowledge or literature,
and,
has not been used, divulged, or appropriated by Seller to the detriment
of the
Business. Seller
is
not currently engaged in any dispute or disagreement with respect
to
any Business
Confidential Information nor,
to
the
Knowledge of Seller, are there any
threatened disputes or disagreements
regarding the
Business Confidential Information.
(ii) No
Business Confidential Information is, to the Knowledge of Seller,
subject to any
proceeding or outstanding order or stipulation, (other than any license
agreement to Seller), restricting in any manner the use, transfer,
assignment or
licensing thereof to Buyer, or which may adversely affect the validity,
use or
enforceability of such Business Confidential Information. Each item
of Business
Confidential Information is valid, subsisting, and enforceable and
any
maintenance and renewal fees due in connection with such Business
Confidential
Information have been made.
19
(iii) Except
as
set forth in Schedule
4.14(c)(iii)(A),
the
Business, including, without limitation, the business processes of
the Business,
does not, and, to the Knowledge of Seller, has not been alleged to,
infringe
upon, misappropriate, dilute (with respect to trademarks only), or
otherwise
violate any confidential or proprietary information or intellectual
property
owned by any other Person. Except as set forth in Schedule
4.14(c)(iii)(B),
no
written notice or claim has been received by Seller asserting that
the Business,
including, without limitation, the business processes of the Business,
infringes
upon, misappropriates or otherwise violates any confidential information,
proprietary information, or any intellectual property owned or controlled
by any
other Person.
(iv) Except
as
specified on Schedule
4.14(c)(iv)(A),
Seller
has not been informed in writing that any Person is infringing, misappropriating
or otherwise violating or challenging or threatening in any way,
any Business
Confidential Information. To the Knowledge of Seller, Seller has
not received
any unwritten or verbal notification that any Person is infringing,
misappropriating or otherwise violating or challenging or threatening
in any
way, any Business Confidential Information. Except as specified on
Schedule
4.14(c)(iv)(B),
Seller
has not given any indemnification rights, other than those provided
under the
Uniform Commercial Code or any equivalent thereof, to any other Person
against
infringement, misappropriation or other violation of any confidential
information of a third party.
(v) All
Information Technology necessary to the present operation of the
Business is
owned by Seller, free and clear of any Encumbrances, or is leased
or licensed by
Seller, with full power to transfer and assign such Information Technology
to
Buyer.
(vi) All
Off-the-Shelf Software necessary to the operation of the Business
as of the
Closing have been licensed (including shrink-wrap and click-wrap
licenses) by
Seller.
4.15 Contracts.
(a) Schedule
4.15
lists
all Contracts Related to the Business to which Seller is a party
or by which it
is bound, whether written or oral, except for (i) Minor Contracts,
(ii)
Contracts that are Excluded Assets and (iii) Contracts that relate
to Unassumed
Liabilities. The Contracts listed in Schedule
4.15
and the
Minor Contracts excluded from Schedule
4.15
are
referred to in this Agreement as the “Seller
Contracts.”
(b) Except
as
described on Schedule
4.15,
Seller
has made available to Buyer complete and correct copies of all written
Seller
Contracts, together with all amendments, supplements or modifications
thereto,
and accurate summary descriptions of all material terms of all oral
Seller
Contracts (other than Minor Contracts), as set forth or required
to be set forth
on Schedule
4.15.
(c) The
Seller Contracts (as such may be modified through the Closing) constitute
all of
the Purchased Assets that are Contracts. Each of the Seller Contracts
is legal,
valid and binding upon Seller, enforceable against Seller in accordance
with its
terms. Seller is not in Default under any Seller Contracts (including
any Seller
Contracts that are leases). Seller has not received any communication
from, or
given any communication to, any other party indicating that Seller
or such other
party, as the case may be, is in Default under any Seller Contract.
To the
Knowledge of Seller, (i) none of the other parties to any such Seller
Contract
is in Default thereunder and (ii) each such Seller Contract is enforceable
against any other parties thereto in accordance with the terms thereof.
There
are no renegotiations of (x) any amounts paid or payable to Seller
under any
current Seller Contract or (y) any material term or condition of
any current
Seller Contract, in each case, with any Person having the contractual
or
statutory right to demand or require such renegotiation and, to the
Knowledge of
Seller, no such Person has made any demand for such negotiation.
Seller has not
received written notice that any party to any Seller Contract intends
to cancel
or terminate any Seller Contract.
20
4.16 Employees/Independent
Contractors.
Except
as
set forth on Schedule
4.16,
Seller
is not (a) a party to, involved in or, to the Knowledge of Seller,
threatened
by, any labor dispute,
strike, work stoppage
or
unfair labor practice charge
or other employment-related claim (other than normal benefit claims
under
Seller’s health and welfare Plans
in the ordinary course of business)
affecting the Totowa Property or the Business,
(b)
currently negotiating any collective bargaining agreement, or (c)
currently a
party to any collective bargaining agreement. Seller has furnished
Buyer with a
complete and correct list as of December 27, 2005 of the
names, job titles, 2004 year end bonuses, year-to-date base pay,
year-to-date
overtime, accrued
and
unused sick and vacation days, Accrued Bonus, 401(k)
employer match percentages, severance plan eligibility, tuition reimbursements
paid and gym reimbursements paid for each current employee of Seller
engaged in
performing services for Seller at the Totowa Property
(the
“Employee
Compensation List”).
On
the date of this Agreement, there
are seven active employees of Seller at the Totowa Property and no
such
employee
is on authorized leave, medical or otherwise.
The
Employee Compensation List is true, complete and correct as of the
date hereof
and the Employee Compensation List, as updated pursuant to Section
6.4, shall be
true, complete and correct as of Seller’s most recent regular pay-roll date
prior to the Closing Date. Seller has furnished Buyer with a complete
and
correct list of the names of any Persons (other than as contemplated
by Section
4.26) who will have a right to receive any cash consideration or
other economic
benefit as a result of the consummation of any of the Transactions
and the
nature and amount of such consideration or benefit. Seller
has not violated the WARN Act or any New Jersey state Law relating
to plant
closings or mass layoffs with respect to the Totowa Property. During
the 90 days
prior to the date of
this Agreement,
Seller
has not terminated any employees at the Totowa Property (one person
has left).
4.17 Governmental
Permits.
Schedule
4.17
sets
forth a complete list of all material Governmental Permits which
Seller owns,
possesses, uses or holds for use in connection with the Business
or otherwise
applied for or held by Seller. Except as otherwise noted on Schedule
4.17,
Seller
owns, possesses or lawfully uses in the operation of its Business
all material
Governmental Permits which are necessary (a) to conduct the Business
as now
conducted or (b) to the ownership of the Purchased Assets, free and
clear of all
Encumbrances. Except as set forth on Schedule
4.17,
no
present or former officer, employee (including
any current or former Union Employee under the Employee Lease) or
representative of Seller, or any other Person owns or has any proprietary,
financial or other interest (direct or indirect) in any material
Governmental
Permit which Seller owns, possesses, uses or holds for use in connection
with
the Business. Each Governmental Permit listed on Schedule 4.17 that
is issued in
the name of Seller is in good standing and in effect in accordance
with its
terms.
4.18 Compliance
with Law and Court Orders.
Seller
has complied with all, and is not in violation or Default of any,
applicable
Laws and Governmental Permits (except as otherwise stated in Section
4.32,
and
other than Laws and Governmental Permits pertaining to environmental
matters and
FDA Requirements, which are addressed exclusively by Section
4.24
and
Section
4.32,
respectively) and with all Court Orders listed on Schedule
4.18
affecting Seller’s Assets, the operation of the Business or the Purchased
Assets, which are all of the Court Orders to which Seller is a party
or, to the
Knowledge of Seller, to which it, the Business or the Purchased Assets
are
subject. Seller has made available to Buyer full and complete copies
of all
Court Orders (including all related correspondence and documentation)
listed on
Schedule
4.18.
Neither
Seller nor, to the Knowledge of Seller, any officer, employee or
agent of Seller
(a) has used any corporate funds of Seller to make any payment to
any officer or
employee of any government, or to any political party or official
thereof, where
such payment either (i) was, at the time, unlawful under Laws applicable
thereto; or (ii) was, at the time, unlawful under the Foreign Corrupt
Practices
Act of 1977, as amended; or (b) has made or received an illegal payment,
remuneration, direct or indirect, bribe, kickback, political contribution
or
other similar questionable illegal payment in connection with the
operation of
the Business. Seller
has not received any written, or, to the Knowledge of Seller, other
notices or
communications from any Governmental Body or other Person regarding
any actual,
alleged, threatened, possible, or potential violation of, or failure
to comply
with, any Law, Governmental Permit or Court Order. No material capital
expenditures are anticipated or required for Seller to comply with
any Law,
Governmental Permit or Courts Order.
21
4.19 Claims.
(a) Except
as
disclosed in Schedule
4.19:
(i)
there is no Legal Proceeding pending or, to the Knowledge of Seller,
threatened
against Seller, the Business or the Purchased Assets; and (ii) there
is no
dispute or disagreement pending or threatened in writing between
Seller and any
of its customers, suppliers, employees or consultants, and, to the
Knowledge of
Seller, there is no set of facts or circumstances that, with the
passage of time
or otherwise, could give rise to any such dispute or disagreement;
and
(iii)
there is no Legal Proceeding that has been commenced by Seller that
could
reasonably be expected to have a Material Adverse Effect.
(b) There
is
no Litigation pending or, to the Knowledge of Seller, threatened
against Seller
that challenges the legality, validity or enforceability of this
Agreement, the
other Transaction Documents or the Transactions or that could be
reasonably
expected to materially adversely affect the ability of Seller to
complete the
Transactions or have a Material Adverse Effect.
4.20 Insurance.
Schedule
4.20
lists
all insurance coverage purchased by Seller currently in effect to
which Seller
is a party, a named insured or otherwise the beneficiary of insurance
coverage
(“Seller
Insurance”).
Copies of policies or binders evidencing Seller Insurance, to the
extent
available, have been made available for review by Buyer. All Seller
Insurance is
in full force and effect, and Seller is not in Default thereunder
and any and
all premiums that are due and payable with respect to any Seller
Insurance have
been paid in full. Except as described in Schedule
4.20,
no
written notice of cancellation that has not been rescinded has been
received by
Seller with respect to the Seller Insurance. Prior to the date hereof,
Seller
has delivered to Buyer a list of all insurance claims (other than
any individual
claims of less than $5,000 that do not exceed $30,000 in the aggregate)
made by
Seller during its ownership and operation of the Business (the “Insurance
Claims List”).
The
Insurance Claims List is true, complete and correct. Except as set
forth on
Schedule
4.20,
there
are no claims (other than any individual claims of less than $5,000
that do not
exceed $30,000 in the aggregate) made by Seller currently outstanding
under any
of the Seller Insurance.
4.21 Non-Real
Estate Leases.
Schedule
4.21
lists
all Purchased Assets used in the Business (other than Real Property)
that are
possessed by Seller under an existing lease, including all trucks,
automobiles,
forklifts, machinery, equipment, furniture and computers. Schedule
4.21
also
lists the leases under which such Assets listed in Schedule
4.21
are
possessed. All of such leases are referred to herein as the “Non-Real
Estate Leases.”
All
Purchased Assets under a Non-Real Estate Lease are in good condition,
ordinary
wear and tear excepted, and are sufficient for the current operations
of the
Business. Seller is not in Default under any Non-Real Estate Lease.
4.22 Employee
Benefit Plans.
(a) Attached
hereto as Schedule
4.22
is a
list of all employee benefit plans, all employee welfare benefit
plans, all
employee pension benefit plans, all multiemployer plans and all multiple
employer welfare arrangements (as defined in Sections
3(3),
(1),
(2),
(37)
and
(40)
respectively of ERISA) (collectively, the “Plans”,
and
individually, each a “Plan”),
which
are currently maintained and sponsored by Seller with respect to
employees
located at the Totowa Property, or to which Seller currently contributes,
or
currently existing Plans under which Seller will have an obligation
to
contribute in the future,
or
under
which compensation or benefits are otherwise provided to employees
of Seller
located at the Totowa Property.
Seller
confirms that, under the terms of the Plans as in effect on the date
of this
Agreement and the Closing Date, the value of unused sick days and
personal days
are paid out to each non-exempt employee at the end of each calendar
year, but
vacation days may be carried over beyond the calendar year in which
they are
accrued.
22
(b) The
Purchased Assets will not be subject to any Encumbrance (including
any statutory
Encumbrance) to secure payment of any Liability to the Pension Benefit
Guaranty
Corporation under Title IV of ERISA or to the Internal Revenue Service
for any
excise tax or penalty or otherwise with respect to any such Plan.
(c) All
obligations of any nature under any Plan will constitute an Unassumed
Liability
and Buyer shall have no obligation or duty with respect to any Plan
identified
on Schedule
4.22
or other
benefit made available by Seller to employees of Seller located at
the Totowa
Property. Seller shall continue to be responsible for the obligations
and
administration of all Plans and Seller’s employee benefits after the
Closing.
4.23 [Reserved]
4.24 Environmental
Matters.
In
addition to the representations and warranties in Section
4.18,
hereof
and not in limitation thereof, and except as disclosed on Schedule
4.24
hereto,
(a) no releases of Hazardous Materials have occurred at or from the
Totowa
Property during the period it was owned or leased by Seller or, to
the Knowledge
of Seller, at any other time, (b) there are no past, pending, or,
to the
Knowledge of Seller, threatened Environmental Claims against Seller,
(c) there
are no underground storage tanks owned by Seller, or located at the
Totowa
Property, (d) there are no facts, circumstances, or conditions that
could
reasonably be expected to restrict, under any Environmental Law or
Environmental
Permit in effect prior to or at the Closing Date, the ownership,
occupancy, use
or transferability of the Totowa Property, or to give rise to any
material legal
Liability under the Environmental Laws pertaining to the Totowa Property,
(e)
none of Seller nor its Affiliates has received a request under any
of the
Environmental Laws for information relating to the Totowa Property,
(f) there
are no unsatisfied financial assurance or closure requirements under
the
Environmental Laws pertaining to the Totowa Property on account of
Seller’s use
or ownership of such property, (g) any contaminant levels resulting
from any
releases of Hazardous Materials at or from the Totowa Property meet
applicable
remediation standards under applicable Environmental Law, (h) to
the Knowledge
of Seller, the Totowa Property is not now nor has in the past been
listed on the
National Priorities List of sites under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. §9601 et seq.)
(“CERCLA”),
the
CERCLA Information System, or any comparable state or local environmental
database, (i) to the Knowledge of Seller, there is no asbestos-containing
material, lead-based paint or equipment containing polychlorinated
biphenyls
located at the Totowa Property, (j) Seller has not provided information
to any
governmental authority of any actual, threatened or suspected releases
of
Hazardous Materials or any violation of any Environmental Permit
or
Environmental Law and (k) there is no Liability with respect to the
cleanup or
investigation at the Totowa Property resulting from the disposal
or treatment
(with a transporter or otherwise) of Hazardous Materials by Seller
or, with
respect to any Hazardous Materials generated by Seller, by any other
party
(Seller has made available to Buyer the Phase I Environmental Study
conducted by
Urban Engineers, Inc. on the Totowa Property in October 2004),
(l) to
the extent that the Totowa Property is a “Major Facility”as
that
term is defined in N.J.S.A. 58:10-23.11b,
Seller
has
furnished the New Jersey Department of Environmental Protection with
all the
information required by N.J.S.A. 58:10-23.11d1 through 11d17
inclusive, (m)
to the Knowledge of Seller, no lien has been attached to any revenues
or any
real or any personal property owned by Seller and located in New
Jersey,
including the Totowa Property, as a result of the administrator of
the New
Jersey Spill Compensation Fund expending monies from such fund to
pay for
“Damages,” as that term is defined in N.J.S.A. 58:10-23.11g, and/or
“Clean
up and Removal Costs,” as that term is defined in N.J.S.A. 58:10-23.11b,
arising from an intentional or unintentional action or omission by
Seller or any
previous owner and/or operator of the Totowa Property resulting in
the
releasing, spilling, pumping, pouring, emitting, emptying or dumping
of any
Hazardous Materials into the waters of New Jersey or onto land from
which it
might flow or drain into such waters or into waters outside the jurisdiction
of
New Jersey where damage may have resulted to the lands, waters, fish,
shellfish,
wildlife, biota, air and other resources owned, managed, held in
trust or
otherwise controlled by New Jersey. As used in this Agreement:
23
(i) “Environmental
Claims”
means
any and all administrative or judicial actions, suits, orders, claims,
liens,
notices, investigations, violations or proceedings related to any
applicable
Environmental Law or any Environmental Permit brought, issued or
asserted by a
Governmental Body or third party for compliance, damages, penalties,
removal,
response, remedial or other action pursuant to any applicable Environmental
Law
or for personal injury or property damage resulting from the release
of a
Hazardous Material at, to or from the Totowa Property or any facility
or
property at which Seller disposed or arranged for the disposal or
treatment
(with a transporter or otherwise) of Hazardous Materials from the
Totowa
Property, including Seller employees seeking damages for exposure
to Hazardous
Materials;
(ii) “Environmental
Laws”
means
all federal, state and local Laws related to protection of the environment,
natural resources, safety or health or the handling, use, recycle,
generation,
treatment, storage, transportation or disposal of Hazardous Materials,
and any
common Law cause of action relating to the environment, natural resources,
safety, health or the management of or exposure to Hazardous Materials,
including without limitation, (i) the CERCLA; (ii) the Resource Conservation
and
Recovery Act of 1976, as amended, 42 U.S.C. 6901 et seq.
(“RCRA”),
(iii) the New Jersey Industrial Site Recovery Act, as amended,
N.J.S.A.
13:1K-6 et seq.
(“ISRA”);
(iv)
the New Jersey Spill Compensation and Control Act, as amended, N.J.S.A.
58:10-23.11 et seq.
(“Spill
Act”);
and
(v) the New Jersey Leaking Underground Storage Tank Act, as amended,
N.J.S.A.
58:10A-21 et seq.,
as the
same may be amended or supplemented from time to time. Any terms
mentioned in
this Section
4.24
which
are defined in any Environmental Law shall have the meanings ascribed
to such
terms in said laws; provided, however, that if any of such laws are
amended so
as to broaden any term defined therein, such broader meaning shall
apply
subsequent to the effective date of such amendment;
(iii) “Environmental
Permit”
means
all permits, licenses, approvals, authorizations or consents required
by any
Governmental Body under any applicable Environmental Law and includes
any and
all orders, consent orders or binding agreements issued or entered
into by a
Governmental Body under any applicable Environmental Law; and
(iv) “Hazardous
Material”
means
any hazardous, toxic or radioactive substance, material or waste
which is
regulated as of the Closing Date by any state or local Governmental
Body or the
US, including any material or substance that is: (A) defined as a
“hazardous
substance,”“regulated
substance”
or
“hazardous
waste”
under
applicable state law, (B) petroleum, petroleum products or wastes,
(C) asbestos,
(D) designated as a “hazardous
substance”
pursuant to section 311 of the Federal Water Pollution Control Act,
as amended,
33 U.S.C. §1251 et seq. (33 U.S.C. § 1321), (E) defined as a “hazardous
waste”
pursuant to section 1004 of the RCRA, (F) defined as a “hazardous
substance”
pursuant to section 101 of the CERCLA, (G) defined as a “regulated
substance”
pursuant to section 9001 of the RCRA or (H) otherwise regulated
under the
Toxic Substances Control Act, as amended, 15 U.S.C. §2601 et seq., the Clean Air
Act, as amended, 42 U.S.C. §7401 et seq., the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. §1801 et seq., or the Federal Insecticide, Fungicide
and Rodenticide Act, as amended, 7 U.S.C. §136 et seq., the Emergency Planning
and Community Right-to-Know Act, as amended, 42 U.S.C. §11001 et seq., the Safe
Drinking Water Act, as amended, 42 U.S.C. §300(f) et seq., and the Occupational
Safety and Health Act, as amended, 29 U.S.C. §651 et seq.
24
4.25 [Reserved]
4.26 Broker’s
or Finder’s Fee.
No
agent, broker, Person or firm acting on behalf of Seller or its Affiliates
is,
or will be, entitled to any commission or broker’s or finder’s fees from Seller
or from any of its Affiliates in connection with this Agreement or
any of the
Transactions.
4.27 [Reserved]
4.28 Certain
Personal Property.
Schedule
4.28
is a
complete schedule of all fixed assets and tangible personal property
included in
the Purchased Assets (the “Fixed
Assets”).
Except for those items subject to the Non-Real Estate Leases described
in
Section
4.21
and the
Excluded Equipment, no Person other than Seller owns any vehicles,
equipment or
other tangible assets located on the Totowa Property and comprising
the Fixed
Assets. The Purchased Assets that are personalty are suitable for
the purposes
for which such Assets are currently used or are held for use, and
are in good
working condition, subject to normal wear and tear. The Fixed Assets
are in
compliance with all material Laws.
4.29 [Reserved]
4.30 [Reserved]
4.31 Solvency.
Seller
is not now insolvent and will not be rendered insolvent by any of
the
Transactions. As used in this Section, “insolvent” means that the sum of the
debts and other probable Liabilities of Seller exceeds the present
fair saleable
value of Seller’s assets. Immediately after giving effect to the consummation of
the Transactions: (a) Seller will be able to pay its Liabilities
as they become
due in the usual course of its business; (b) Seller will not have
unreasonably
small capital with which to conduct its present or proposed business;
(c) Seller
will have assets (calculated at fair market value) that exceed its
Liabilities;
and (d) taking into account all pending and threatened litigation,
final
judgments against Seller in actions for money damages are not reasonably
anticipated to be rendered at a time when, or in amounts such that,
Seller will
be unable to satisfy any such judgments promptly in accordance with
their terms
(taking into account the maximum probable amount of such judgments
in any such
actions and the earliest reasonable time at which such judgments
might be
rendered) as well as all other obligations of Seller. The cash available
to
Seller, after taking into account all other anticipated uses of the
cash, will
be sufficient to pay all such debts and judgments promptly in accordance
with
their terms.
4.32 FDA.
Except
as
otherwise indicated
on Schedule
4.32,
the
Business is in compliance
with all
applicable requirements of the Federal Food, Drug, and Cosmetic Act
(“FFDCA”),
the
Public Health Service Act (“PHSA”),
and
the regulations promulgated thereunder by the US Food and Drug Administration
(the “FDA”),
Related to the Business (collectively the “FDA
Requirements”).
Except
as otherwise indicated on
Schedule
4.32
or the
FDA Documents, Seller has not received any written notice or,
to
the Knowledge of Seller, other communication from the FDA or other
Governmental
Body alleging any violation of the FDA Requirements. Seller has provided
or made
available to Buyer all documents and communications in its possession
concerning
communications from, and to, the FDA and any other Governmental Body
or prepared
by the FDA or any other Governmental Body that bear in any material
respect on
compliance by the Business with the FDA Requirements (as listed on
Schedule
4.32,
the
“FDA
Documents”).
Seller has filed with the FDA DMFs bearing DMF numbers 16941 and
17159 and has
maintained and kept current such DMFs. With respect to the Business,
Seller is
not directly engaged in any testing involving human subjects or human
specimens,
and has not filed investigational new drug applications (“INDs”),
new
drug applications (“NDAs”),
supplemental NDAs, biologics license applications (“BLAs”)
or
submitted any other marketing application to the FDA; provided,
however,
Buyer
hereby acknowledges that third parties are engaged in such testing
of products
manufactured or otherwise handled at the Totowa Property, and Seller
disclaims
any and all representations and warranties regarding or relating
to any such
testings, any such products, and any such INDs, NDAs and BLAs, as
applicable. To
the Knowledge of Seller, neither Seller, nor any officer, employee,
or agent of
Seller has made an untrue statement of a material fact or fraudulent
statement
to the FDA or other Governmental Body or knowingly failed to disclose
a material
fact required to be disclosed to the FDA or other Governmental Body
Related
to the
Totowa Property or products manufactured at the Totowa Property.
Neither
Seller, nor, to the Knowledge of Seller, any officer or employee
of
Seller,
has been
or is subject to debarment, temporary denial of approval or suspension
under 21
U.S.C. §§335a(a) or (b).
25
4.33 Statements
and Other Documents Not Misleading.
(a) Neither
this Agreement, including all schedules and exhibits, nor any financial
statement, document or other instrument specifically referred to
herein or
delivered pursuant hereto furnished by Seller to Buyer pursuant hereto
in
connection with the Transactions contains or will contain any untrue
statement
of any material fact or omits or will omit to state any material
fact required
to be stated in order to make such statement, document or other instrument
not
misleading.
(b) THE
EXPRESS INTENTION OF SELLER AND BUYER IS THAT BUYER SHALL PURCHASE
THE PURCHASED
ASSETS AND ASSUME THE ASSUMED LIABILITIES FROM SELLER WITHOUT ANY
REPRESENTATIONS, WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED, FROM
OR OF SELLER
OTHER THAN OTHERWISE SET FORTH HEREIN. BUYER HEREBY WAIVES AND RELINQUISHES
ALL
RIGHTS AND PRIVILEGES ARISING OUT OF, OR WITH RESPECT OR IN RELATION
TO, ANY
REPRESENTATIONS, WARRANTIES, AND COVENANTS, WHETHER EXPRESS OR IMPLIED,
WHICH
MAY HAVE BEEN MADE OR GIVEN, OR WHICH MAY BE DEEMED TO HAVE BEEN
MADE OR GIVEN,
BY SELLER, OTHER THAN AS SET FORTH HEREIN.
5. Representations
and Warranties of Buyer.
Buyer
hereby represents and warrants to Seller as follows:
5.1 Organization
and Standing.
Buyer
is a corporation duly organized, validly existing and in good standing
under the
laws of the State of Delaware, having all requisite corporate power
and
authority to perform its obligations under this Agreement.
5.2 Authority
and Binding Effect.
Buyer
has full power and authority to execute, deliver and perform this
Agreement and
the other Transaction Documents to which it is a party and has taken
all actions
necessary to secure all approvals required in connection therewith.
The
execution, delivery and performance of this Agreement and the consummation
of
the Transactions by Buyer have been duly authorized by all necessary
corporation
action. Assuming due authorization, execution and delivery by Seller,
this
Agreement constitutes the legal, valid and binding obligation of
Buyer,
enforceable against it in accordance with its terms.
5.3 Validity
of Contemplated Transactions.
Neither
the execution and delivery by Buyer of any of the Transaction Documents
to which
it is a party, nor the performance of the Transactions performed
or to be
performed by Buyer under the Transaction Documents, require any notice,
filing,
consent, renegotiation or approval, constitute a Default, cause any
payment
obligation to arise or give any Person the right to challenge any
of the
Transactions under (a) any Law or Court Order which is applicable
to Buyer, (b)
any Contract, Governmental Permit or other document to which Buyer
is a party or
by which the properties or other assets of Buyer may be bound or
(c) except as
have already been obtained, the Charter Documents of Buyer.
26
5.4 Broker’s
or Finder’s Fee.
No
agent, broker, Person or firm acting on behalf of Buyer is, or will
be, entitled
to any commission or broker’s or finder’s fees from any of the Parties or from
any of their Affiliates in connection with this Agreement or any
of the
Transactions.
5.5 Availability
of Funds.
Buyer
has, or will have, cash or credit facilities available that are sufficient
to
enable it to make payment of the Purchase Price at Closing without
the necessity
of securing additional third-party financing.
5.6 Claims.
There
is no Litigation pending or, to the Knowledge of Buyer, threatened
against Buyer
that challenges the legality, validity or enforceability of this
Agreement, the
other Transaction Documents or the Transactions or that materially
would
adversely affect the ability of Buyer to complete the Transactions.
5.7 FDA.
To the
knowledge of Buyer, neither Buyer, nor any officer, employee, or
agent of Buyer
has made an untrue statement of a material fact or fraudulent statement
to the
FDA or other Governmental Body or failed to disclose a material fact
required to
be disclosed to the FDA or other Governmental Body pertaining
to the Totowa Property or product manufactured at the Totowa
Property.
Neither
Buyer, nor, to the knowledge of Buyer, any officer or employee of
Buyer, has
been or is subject to debarment, temporary denial of approval or
suspension
under 21 U.S.C. §§335a(a) or (b).
6. Pre-Closing
Covenants.
6.1 Access.
From the
date of this Agreement to the Closing Date, Seller shall give Buyer
and its
counsel, accountants and other representatives access during normal
business
hours to the premises of the Business, personnel, counsel, books
and records,
accounts and other representatives of Seller and furnish to Buyer
and such
representatives all such additional documents and information with
respect to
the Business as Buyer may from time to time reasonably request, subject
to
applicable confidentiality requirements and Seller’s existing obligations to its
other customers, to permit Buyer to promptly complete its business,
legal,
accounting and financial due diligence investigation of the Purchased
Assets and
the Business prior to the Closing. Without limiting the foregoing,
Seller shall
provide Buyer copies of such documents and information or such access
and
introductions, and in each case, within the time periods, set forth
on
Schedule
6.1.
Any
visits shall be conducted in a manner so as to minimize disruptions
to the
operations of Seller. Seller shall promptly introduce Buyer to such
of Seller’s
employees, distributors and suppliers as Buyer may request. Seller
agrees that
no investigation by Buyer or its representatives shall affect or
limit the scope
of the representations and warranties of Seller herein or limit the
liability of
Seller for any breach of such representations and warranties.
6.2 [Reserved]
6.3 Operation
of the Business.
Except
as set forth on Schedule
6.3
or as
otherwise expressly permitted or required by this Agreement, between
the date of
this Agreement and the Closing Date Seller acknowledges that solely
with respect
to the Totowa Property:
(a) Seller
shall conduct the Business in the ordinary course in accordance with
its past
practice under the Existing Manufacturing Agreement, except that,
without the
written consent of Buyer, Seller shall not undertake any capital
improvement or
make any commitment for capital expenditures in excess of $15,000
in the
aggregate. Seller
shall maintain and service the Purchased Assets consistent with past
practice
and preserve intact the Business as it is currently operated;
27
(b) For
the
avoidance of doubt, the Parties acknowledge and agree that (i) the
DAS Agreement
is not a Purchased Asset or an Assumed Liability, (ii) Buyer shall
have no
obligation with respect to
the
DAS Agreement, either before or after the Closing, and (iii) Seller
shall be
solely responsible for the performance of its obligations under the
DAS
Agreement;
(c) Seller
will use its Commercially Reasonable efforts to obtain in writing
as promptly as
possible all Seller Required Consents and all of the Closing Consents,
which
consents shall be in a form reasonably acceptable to Buyer and its
counsel and
shall not be subject to the satisfaction of any condition that has
not been
satisfied or waived;
(d) Seller
shall not: (i) incur any Liability that would be an Assumed Liability
other than
in the ordinary course of business; (ii) without the consent of Buyer,
enter
into, amend, modify, terminate (partially or completely), grant any
waiver under
or give any consent with respect to any Seller Contract or incur
any Liability
Related to the Business other than in the ordinary course of business;
(iii) Default under, or take or fail to take any action that
(with or
without notice or lapse of time or both) would constitute a Default
under any
term or provision of any Seller Contract; or (iv) create or permit
any
Encumbrance (other than Permitted Encumbrances) on any of the Purchased
Assets;
(e) Seller
shall comply in all material respects with all applicable Laws; and
(f) Seller
shall not (i) hire any new employee at the Totowa Property or enter
into any
employment contract, or, (ii) except in the ordinary course of business
consistent with past practice, increase the rate of compensation
payable or to
become payable by it to any personnel at the Totowa Property, or
(iii) amend,
modify or increase the benefits available to employees at the Totowa
Property
under any Plan, or (iv) introduce any new Plan or benefit to such
employees.
6.4 Update
of Schedules.
Prior
to the Closing, Seller shall, after obtaining Knowledge thereof,
as promptly as
practicable disclose to Buyer in writing any information set forth
in the
Schedules hereto which has become inaccurate and any information
of the nature
of that set forth in the Schedules which arises after the date hereof
and which
would have been required to be included in the Schedules if such
information had
existed on the date hereof. Such disclosure shall not limit or affect
any of
Buyer’s rights hereunder for or with respect to any misrepresentation or
breach
of warranty by Seller or Seller’s failure to fulfill any covenant, agreement or
condition contained in this Agreement. At or prior to the Closing,
Seller shall
(i) update the Insurance Claims List to reflect any insurance claims
made by
Seller prior to the Closing and since the last such claim identified
on the
Insurance Claims List originally delivered in accordance with Section
4.20,
and
(ii) update as of Seller’s most recent regular payroll date prior to the Closing
Date the Employee Compensation List to reflect changes, if any, to
the
compensation and benefits reflected on the Employee Compensation
List originally
delivered in accordance with Section
4.16.
6.5 Employees
and Business Relations.
(a) From
the
date hereof and up to and including the Closing Date, (i) Seller
shall use its
Commercially Reasonable efforts (but shall not be required to increase
wages or
benefits) to keep available the services of the current employees
and agents of
the Business, and (ii) Seller shall use Commercially Reasonable efforts
to
maintain the relations and goodwill with the suppliers, distributors
of the
Business. Buyer shall make an offer of employment to at least five
of the seven
active employees of Seller dedicated to the Totowa Property (the
“Offeree
Employees”).
Any
employee who does not receive such an offer of employment is referred
to herein
as a “Non-Offeree
Employee.”
For
purposes hereof, an employee shall be considered “active” if such employee is in
good standing on the Closing Date, including any such employee who
is on an
authorized leave, medical or other, on the Closing Date. Buyer shall
provide
Seller with a list of the Non-Offeree Employees no more than five
Business Days
after the date of this Agreement. Each offer of employment to an
Offeree
Employee shall include salary and cash incentive compensation (excluding,
for
this purpose, payments under any severance plan or arrangement) that,
in the
aggregate, is substantially comparable to that provided to such employee
by
Seller, and benefits comparable to Buyer’s health, welfare and other benefit
plans made available to Buyer’s current employees, provided, that Buyer shall
credit each Offeree Employee with up to an aggregate of ten vacation
and sick
days that have been accrued as of the Closing Date but not taken
by such Offeree
Employee under Seller’s vacation and sick day policies (each such offer, a
“Qualified
Offer”).
Each
Qualified Offer shall comply in all material respects with all applicable
Laws,
including all employment Laws dealing with discrimination. In the
event an
Offeree Employee accepts a Qualified Offer and is hired by Buyer
(each a
“Transferred
Employee”),
such
Transferred Employee’s employment with Buyer shall be effective the first
business day following the Closing Date. In
crediting such Transferred Employees with accrued sick and vacation
days, Buyer
shall be entitled to rely on the Employee Compensation List, as updated
by
Seller through the Closing Date pursuant to Section
6.4.
28
(b) Seller
shall not provide any offer of continued employment to any Offeree
Employee or
otherwise attempt to dissuade or discourage any Offeree Employee
from accepting
a Qualified Offer. On or before the Closing Date, Seller shall pay
to each
Transferred Employee identified on Schedule
6.5(b)
the
annual bonus accrued through the Closing Date (“Accrued
Bonus”)
in the
amount set forth opposite such Transferred Employee’s on the Employee
Compensation List, and shall be responsible for all costs related
thereto.
(c) On
or
before the Closing Date, Seller shall pay to each Transferred Employee,
if
applicable, an amount equal to the number of days’ pay that equals the number of
accrued sick and vacation days in excess of ten that such Transferred
Employee
shall have accrued as of the Closing Date, and shall be responsible
for all
costs related thereto.
(d) Buyer
shall have no obligation under this Agreement to continue the employment
of any
Transferred Employee, to continue to pay any specified salary or
bonus
compensation to any such Transferred Employee or, except as provided
in
Section
6.5(a)
with
respect to credits for accrued sick and vacation days, to provide
to any such
Transferred Employee any specific health, welfare or other plan benefits
or
perquisites. Following the Closing, Buyer shall be entitled to manage
its staff
levels and administer its human resources policies and benefit plans
in such
manner as it, in its sole discretion, may deem appropriate.
(e) From
the
date hereof and up to and including the Closing Date, without the
written
consent of Buyer, Seller shall not take any action under the Employee
Lease to
(i) increase or decrease the number of Union Employees, or (ii) substitute
any
Union Employees for any other Union Employees. Notwithstanding the
foregoing,
(A) Seller shall use its Commercially Reasonable efforts to assist
Buyer in
negotiating with the Lessor and the Labor Union representing the
employees
provided to Seller under the Employee Lease to achieve a replacement
agreement
(in a form acceptable to Buyer) between Buyer and Local 825, International
Chemical Workers Union Council of the United Food and Commercial
Workers
International Union (the “Union”)
and
(B) on or before the Closing, Seller and the other parties thereto
shall enter
into the Termination Agreement.
29
6.6 Confidentiality.
(a) If
the
Transactions are not consummated, each Party shall treat all information
obtained in its investigation of another Party or any Affiliate thereof
as
confidential in accordance with the terms of the Confidentiality
Agreement.
(b) Each
Party agrees that it will not file the Schedules to this Agreement
with the U.S.
Securities and Exchange Commission (the “SEC”)
pursuant to Item 601(b)(2) of Regulation S-K; provided,
that,
if the
SEC requests a copy of any Schedule so omitted from a Party (for
this purpose,
the “Disclosing
Party”),
the
Disclosing Party shall furnish such requested Schedule to the SEC
supplementally, with a request that the SEC return the Schedules
pursuant to
Rule 418(b) of the Securities Act or Rule 12b-4 of the Exchange Act;
provided,
further, that if after reviewing any Schedule furnished pursuant
to the
preceding proviso, the SEC determines that the Disclosing Party is
required to
file such Schedule, then the Disclosing Party shall file such Schedule
or
otherwise comply with any request of the SEC. If the Disclosing Party
determines, in its sole discretion, that it must file any of the
Exhibits to
this Agreement with the SEC or any other Governmental Body or securities
exchange pursuant to applicable Law, then the Disclosing Party agrees
to consult
with the other Party to determine if any of the information contained
in such
Exhibits is appropriate for confidential treatment. If the Disclosing
Party, in
its sole discretion, determines after such consultation that any
information in
such Exhibits is appropriate for confidential treatment, the Disclosing
Party
shall redact such information from the version of the Exhibit that
is filed with
the SEC and shall submit a confidential treatment request relating
to such
information. Notwithstanding the foregoing, nothing contained in
this Agreement
shall in any way affect the right of a Party to take, or refrain
from taking,
any actions that such Party, in its sole discretion, determines are
necessary or
advisable to in order to comply with (i) all applicable Laws or (ii)
any request
from the SEC or any other Governmental Body or securities exchange.
6.7 Related
Parties.
Each
Party shall use its commercially reasonable efforts to cause its
Affiliates to
take or refrain from taking any action that may be necessary to carry
out the
Transactions.
6.8 Transfer
of Purchased Assets and Business.
Subject
to the satisfaction of or waiver by the applicable Party of the conditions
set
forth in Section
8
or
Section
9,
as
applicable, on and prior to the Closing Date, Seller shall take such
reasonable
steps as may be necessary or appropriate, in the judgment of Buyer,
such that at
and after the Closing Buyer shall be placed in actual possession
and control of
all of the Purchased Assets and the Business. In furtherance thereof,
Seller
shall execute and deliver such additional instruments of conveyance
and transfer
as Buyer may reasonably require, in the judgment of Buyer, in order
to more
effectively vest in it, and put it in possession of, the Purchased
Assets.
6.9 Fulfillment
of Closing Conditions.
(a) At
and prior to the Closing, each Party shall use Commercially Reasonable
efforts
to fulfill, and to cause each other to fulfill, as soon as practicable
before
the Termination Date the conditions specified in Section
8
and
Section
9
to the
extent that the fulfillment of such conditions is within its control.
In
connection with the foregoing, each Party will (i) refrain from any
actions that
would cause any of its representations and warranties to be inaccurate
as of the
Closing, and take any reasonable actions within its control that
would be
necessary to prevent its representations and warranties from being
inaccurate as
of the Closing, (ii) execute and deliver the applicable agreements
and other
documents referred to in Section
8
and
Section
9,
(iii)
comply with all applicable Laws in connection with its execution,
delivery and
performance of this Agreement, the other Transaction Documents to
which it is a
party and the Transactions, (iv) use commercially reasonable efforts
to obtain
in a timely manner all necessary waivers, consents and approvals
required under
any Laws, Contracts or otherwise, including the Closing Consents
and the Seller
Required Consents in the case of Seller, and (v) use commercially
reasonable efforts to take, or cause to be taken, all other actions
and to do,
or cause to be done, all other things reasonably necessary, proper
or advisable
to consummate and make effective as promptly as practicable the
Transactions.
30
6.10 DMF.
On
or
prior to the Closing Date, Seller shall have provided to Buyer full
and complete
copies of DMF numbered 17159 and all related documentation.
6.11 [Reserved]
6.12 [Reserved]
6.13 [Reserved]
6.14 Environmental.
Within
five Business Days following the date of this Agreement, Seller shall
file with
the NJDEP (with copies to Buyer) an application (including all supporting
documentation) requesting NJDEP issue a letter stating that ISRA,
including the
regulations promulgated thereunder, is not applicable to the transaction
contemplated by this Agreement (the “LNA”).
Seller shall use its commercially reasonable efforts to obtain the
LNA prior to
Closing but the Closing shall not be conditioned upon such
issuance.
6.15 Further
Assurances.
Consistent with the terms and conditions hereof, each Party hereto
shall use its
best efforts to execute and deliver such other documents and take
such other
actions as reasonably requested by the other Party to fulfill the
conditions
precedent to the obligation of the other Party to consummate the
purchase and
sale of the Business, or as the other Party hereto may reasonably
request in
order to carry out this Agreement and the Transactions contemplated
hereby.
7. Post-Closing
Covenants.
7.1 Transition
Period.
For a
period of 12 months after the Closing Date, Seller and its Affiliates
shall
forward to Buyer all mail, remittance, receipts or other mailings
received by
any of them relating to the Business other than the Excluded Assets
and the
Unassumed Liabilities.
7.2 Employees.
(a) Buyer
shall be solely responsible for all Liabilities arising out of or
related to the
actual or constructive termination of employment occurring after
the Closing
Date of any Transferred Employee. Seller
will be responsible for providing COBRA continuation coverage as
required by Law
to all Employees of Seller that are not Transferred Employees, and
their
eligible dependents covered under the health plans in which Seller
participates.
Seller shall provide COBRA continuation coverage at Buyer’s expense to
Transferred Employees until such time as such Transferred Employees
are eligible
for benefits under Buyer’s health and welfare plans. In order to receive COBRA
continuation coverage, such individuals must properly elect to receive
such
coverage, and make prompt and timely payment of all premiums due
in respect of
such COBRA continuation coverage. Seller acknowledges that Buyer
will offer
Transferred Employees and their eligible dependents coverage under
Buyer’s
health plan effective on the first day of the month following completion
of 30
days of employment with Buyer.
Seller
shall
be
solely responsible for reasonable severance payments to
not more than
two Non-Offeree Employees
identified by Buyer pursuant to Section
6.5
and
to any
Offeree Employees who do not accept a Qualified Offer from Buyer,
provided that, if Buyer shall have failed to make
a Qualified Offer
to at
least five employees
of
Seller, Buyer shall be solely responsible for reimbursing Seller
for severance
payments in accordance with Seller’s existing policy to all but two Non-Offeree
Employees.
31
(b) For
purposes of the WARN Act and applicable state Law, (i) Transferred
Employees
hired by Buyer shall become employees of Buyer on the first business
day
following the Closing Date and (ii) Buyer shall assume all responsibility
for
any 60-day advance WARN Act notice with regard to any layoffs by
Buyer following
the Closing.
(c) Seller
shall make all distributions and payments required under the terms
of the Plans
and take all necessary and appropriate actions to maintain,
distribute
or rollover any benefits to which each Transferred Employee may
be entitled
under the Plans.
(d) For
a
period of two years following the Closing Date, neither Seller
nor its
Affiliates shall,
directly or indirectly at any time, solicit, induce or encourage
or participate
in soliciting, inducing or encouraging any Transferred Employee
to terminate his
or her employment with Buyer or to work for Seller, a competitor
of Seller or a
competitor of Buyer; provided,
however,
neither
Seller nor its Affiliates shall be prohibited from (i) conducting
general
solicitations for employees in the ordinary course of business
through the use
of media advertisements or recruiting agencies (provided that such
recruiting
agencies are instructed not to target Buyer) or hiring Transferred
Employees who
independently respond to such general solicitations without prior
contact by
Seller or any agent or representative of Seller, or (ii) hiring
a Transferred
Employee at any time after the end of the sixth calendar month
following the
termination of such Transferred Employee’s employment with Buyer.
(e) Buyer
will fully perform its obligations to make payments pursuant to
the terms of
Article 22, Section 11 of that certain Memorandum of Agreement
dated December
22, 2005 between Buyer and the Union.
7.3 Tax
Matters.
(a) After
the
Closing Date, Buyer and Seller shall (i) provide, or cause to be
provided, to
each other’s respective subsidiaries, officers, partners, employees,
representatives and Affiliates such assistance as may reasonably
be requested by
any of them in connection with the preparation of any Tax Return
or any audit
which relates to the Business in respect of which Buyer or Seller
are
responsible hereunder and (ii) retain, or cause to be retained,
for so long as
any such taxable years or audits shall remain open for adjustments,
any records
or information which may be relevant to any such Tax Returns or
audits. The
assistance provided for in this subsection (a) shall include each
of Buyer and
Seller (x) making their agents and employees and the agents and
employees of
their respective Affiliates available to each other on a mutually
convenient
basis to provide such assistance as might reasonably be expected
to be of use in
connection with any such Tax Returns or audits and (y) providing,
or causing to
be provided, such information as might reasonably be expected to
be of use in
connection with any such Tax Returns or audits, including records,
returns,
schedules, documents, work papers, opinions, letters or memoranda,
or other
relevant materials relating thereto.
(b) All
transfer, documentary, sales, use, stamp, registration and other
such Taxes and
fees (including any penalties and interest) incurred in connection
with this
Agreement, shall be paid by Seller when due, and Seller shall,
at its own
expense, file all necessary Tax Returns and other documentation
with respect to
all such transfer, documentary, sales, use, stamp, registration
and other Taxes
and fees, and, if required by applicable Law, Buyer shall, and
shall cause its
Affiliates to, join in the execution of any such Tax Returns and
other
documentation.
(c) Seller
and Buyer agree that in the case of property Taxes that are payable
with respect
to a taxable period that begins before the Closing Date and ends
after the
Closing Date, (i) Seller shall be liable for and shall pay the
portion of any
such Taxes that is allocable to the portion of the period ending
on the Closing
Date, which shall be deemed to be the amount of such Taxes for
the entire period
multiplied by a fraction, the numerator of which is the number
of calendar days
in the period ending on the Closing Date and the denominator of
which is the
number of calendar days in the entire period and (ii) Buyer
shall be liable
for and shall pay the remaining portion of such property or similar
Taxes that
is allocable to the portion of the period commencing after the
Closing Date. To
the extent that Seller has paid or caused to have been paid all
or a portion of
such Taxes payable by Buyer pursuant to the preceding sentence,
Buyer shall
reimburse Seller for such Taxes payable by Buyer at the Closing.
To the extent
that Buyer has paid or caused to have been paid all or a portion
of such Taxes
payable by Seller pursuant to this Section
7.3(c),
Seller
shall reimburse Buyer for such amount within seven calendar days
after the date
on which Buyer notifies Seller that such Taxes have been paid by
or on behalf of
Buyer. For purposes of Section
2.3(b)(ii)
with
respect to Taxes imposed on a periodic basis which are payable
for a period that
includes, but does not end on, the Closing Date, such Taxes shall
be allocated
ratably on a daily basis.
32
(d) On
or
before the Closing, Buyer and Seller shall endeavor in good faith
to agree on an
allocation of the Purchase Price (together with the Assumed Liabilities)
among
the Purchased Assets in accordance with the rules of section 1060
of the Code
and the regulations thereunder as attached hereto as Schedule
7.3(d)
(the
“Allocation”).
If
Buyer and Seller disagree about any aspect of the Allocation after
negotiating
in good faith, then any disputed issues relating to the Allocation
will be
finally and conclusively determined by an independent accounting
firm of
recognized national standing (the “Allocation
Arbiter”)
selected by Buyer and Seller, which firm shall not be the regular
accounting
firm of either Buyer or Seller. The Allocation Arbiter will determine
(based
solely on presentations by Buyer and Seller and not by independent
review) only
those matters in dispute and will render a written report as to
the disputed
matters and the resulting allocation of Purchase Price (together
with the
Assumed Liabilities), which report shall be conclusive and binding
upon the
parties. Buyer and Seller shall not, subject to the requirements
of any
applicable tax law or election, file any Tax Returns and reports
or take any
positions before any Governmental Body inconsistent with the Allocation.
Buyer
and Seller shall cooperate in the preparation and filing of IRS
Form 8594 (as
amended) and any required exhibits thereto with the IRS (and any
comparable
forms with the appropriate authorities) in a manner consistent
with the
Allocation.
7.4 Governmental
Permits.
a)
On the
Closing Date, each Party shall file or transmit, as applicable,
such notices,
letters, instruments and the like with or to the FDA relating to
the
Transactions as may required to comply with all applicable Laws,
and in
furtherance thereof,
(i) Buyer
shall transmit to the FDA:
(1) the
notices relating to the Drug Establishment Registrations for the
Totowa Property
in the form set forth in Exhibit
C-1
for the
purpose of informing the FDA, in compliance with 21 C.F.R. Sec.
207.26,
of the change in ownership of the Totowa Property resulting from
the
Transactions and notice of this transaction as it relates to Buyer’s NDA;
and
(2) the
letters of acceptance relating to the transfer of the DMF numbered
17159 for the
Totowa Property in the form set forth in Exhibit
C-2,
for the
purpose of informing the FDA, in compliance with Part VII.E in
the Guidelines
for Drug Master Files, as published by the FDA, of Buyer’s acceptance of the
transfer of the DMF for the Totowa Property; and
(ii) Seller
shall transmit to the FDA the letters of transfer relating to the
transfer of
the DMF numbered 17159 for the Totowa Property in the form set
forth in
Exhibit
C-3,
for the
purpose of informing the FDA, in compliance with Part VII.E in
the Guidelines
for Drug Master Files, as published by the FDA, of the transfer
of the DMF for
the Totowa Property.
33
(b) On
the
Closing Date, each Party shall file or transmit, as applicable,
such
applications, notices, letters, instruments and the like to effect
the transfer,
re-issuance or cancellation and issuance of the Governmental Permits
to and in
the name of Buyer.
7.5 Existing
Seller Clients.
Buyer
acknowledges that Seller is presently in discussions with DAS regarding
the
obligations of Seller under the DAS Agreement. To the extent permissible,
Seller
shall notify Buyer of the non-economic terms of any resolution
of such
discussions. Under no circumstances will Buyer be responsible for
any obligation
or Liability of Seller under the DAS Agreement.
7.6 DMF.
Through
the date of termination of the Transition Services Agreement, Seller
shall continue to maintain and keep current DMF numbered 16941
(Contract
Manufacturing) and permit Buyer to cross-reference Seller’s DMF numbered 16941
in Buyer’s own IND and NDA filings after the Closing.
7.7 Insurance.
For
three years after the Closing, Seller shall, at its own expense,
maintain
liability insurance coverage for claims relating to its business
operations for
incidents that occurred prior to the Closing (on a claims-made
basis), with
responsible companies and comparable in amount, scope and coverage
to that in
effect on December 1, 2005, to the extent that such insurance can
be purchased
on substantially comparable terms to those policies in effect on
such date;
provided that Seller shall be entitled to reduce its Manufacturer's
Liability
policy limit to $5 million after the Closing.
7.8 Totowa
Property Signage.
Following the Closing, Seller shall cooperate with Buyer to secure
the removal
of all of Seller’s signage at the Totowa Property.
8. Conditions
Precedent to Obligations of Buyer.
All
obligations of Buyer to consummate the Transactions are subject
to the
satisfaction (or waiver by Buyer) prior thereto of each of the
following
conditions:
8.1 Representations
and Warranties; Performance of Obligations.
All of
the representations and warranties of Seller contained in this
Agreement shall
have been when made on the date of this Agreement and shall be
on and as of the
Closing Date, with the same effect as though such representations
and warranties
had been made on and as of such date, true, correct and complete
in all material
respects (except in the case of representations and warranties
that are
qualified by materiality or Material Adverse Effect, which representations
and
warranties shall have been when made, and shall be on and as of
the Closing
Date, true, correct and complete); all of the terms, covenants,
agreements and
conditions of this Agreement to be complied with, performed or
satisfied by
Seller on or before the Closing Date shall have been duly complied
with,
performed or satisfied; and Buyer shall have received a certificate
dated the
Closing Date and signed by an executive officer of Seller to the
foregoing
effects (the “Seller
Officer’s Certificate”).
8.2 Closing
Documents.
Buyer
shall have received from each party thereto, other than Buyer,
executed original
counterparts (or, in lieu thereof, certified, facsimile or photostatic
copies,
the authenticity of which are reasonably acceptable to Buyer) of
the respective
Transaction Documents and the Deliverables identified in Section
3.2(a),
including without limitation certified copies of the Ancillary
Agreements (it
being understood that the receipt of the LNA from NJDEP shall not
be required
prior to Closing).
8.3 Closing
Consents.
Buyer
shall have received (in such forms as are reasonably acceptable
to Buyer)
originals of (a) all of Seller Required Consents set forth on Schedule
8.3
(the
“Closing
Consents”)
and
(b) any other Seller Required Consents, or in lieu thereof waivers,
obtained
prior to the Closing without any modification that Buyer deems
unacceptable in
the exercise of its reasonable discretion (it being understood
that the receipt
of the LNA from NJDEP shall not be required prior to Closing).
34
8.4 [Reserved]
8.5 [Reserved]
8.6 Legal
Matters.
No
claim, action, suit, arbitration or other proceeding shall be pending
or shall
have been brought or threatened against Seller which seeks to restrain
or
questions the validity or legality of the Transactions. No Law
or Court Order
shall have been enacted, entered, promulgated or enforced by any
Governmental
Body that is in effect and has the effect of making the purchase
and sale of the
Purchased Assets illegal or otherwise prohibiting the consummation
of such
purchase and sale.
8.7 Opinion
of Seller’s Counsel.
Buyer
shall have received an opinion of Seller’s counsel in substantially the form set
forth on Exhibit
D.
9. Conditions
Precedent to Obligations of Seller.
All
obligations of Seller to consummate the Transactions are subject
to the
satisfaction (or waiver by Seller to which the condition relates)
prior thereto
of each of the following conditions:
9.1 Representations
and Warranties; Performance of Obligations.
All of
the representations and warranties of Buyer contained in this Agreement
shall
have been when made on the date of this Agreement and shall be
on and as of the
Closing Date, with the same effect as though such representations
and warranties
had been made on and as of such date, true, correct and complete
in all material
respects (except in the case of representations and warranties
that are
qualified by materiality or Material Adverse Effect, which representations
and
warranties shall have been when made, and shall be on and as of
the Closing
Date, true, correct and complete); all of the terms, covenants,
agreements and
conditions of this Agreement to be complied with, performed or
satisfied by
Buyer on or before the Closing Date shall have been duly complied
with,
performed or satisfied; and Seller shall have received a certificate
dated the
Closing Date and signed by an executive officer of Buyer to the
foregoing
effects (the “Buyer
Officer’s Certificate”).
9.2 Legal
Matters.
No
claim, action, suit, arbitration, investigation or other proceeding
shall be
pending or shall have been brought or threatened against Buyer
which seeks to
restrain or questions the validity or legality of the Transactions.
No Law or
Court Order shall have been enacted, entered, promulgated or enforced
by any
Governmental Body that is in effect and has the effect of making
the purchase
and sale of the Purchased Assets illegal or otherwise prohibiting
the
consummation of such purchase and sale.
9.3 Consents.
Seller
shall have received consents in a form reasonably satisfactory
to Seller
effectuating the transfer of Seller’s obligations under the Totowa Property
Lease.
10. Indemnification.
10.1 By
Seller. To the extent provided in this Section
10,
Seller
shall indemnify and hold Buyer and its Affiliates and their respective
successors and assigns, and their respective officers, directors,
employees,
stockholders, agents, (each, an “Indemnified
Buyer Party”)
harmless from and against:
(a) any
Liabilities, claims, demands, judgments, losses, costs, damages
or expenses
whatsoever (including reasonable attorneys’ and other professional fees and
disbursements of every kind, nature and description incurred by
such Indemnified
Buyer Party in connection therewith) (collectively, “Damages”)
that
such Indemnified Buyer Party may sustain, suffer or incur and that
result from,
arise out of or relate to:
35
(i) any
inaccuracy of any representation or warranty made by Seller in
this Agreement,
the other Transaction Documents to which it is a party or any certificate
or
other writing delivered by or on behalf of either of it in connection
herewith
or therewith (for purposes of calculating the amount of Damages
incurred in
connection with any breach of any representation or warranty, any
and all
references to materiality or Material Adverse Effect contained
in such
representation or warranty shall be disregarded);
(ii) any
nonfulfillment of any covenant or agreement on the part of Seller
or Safeguard
set forth in the Totowa Lease, the Termination and Option Agreement,
this
Agreement or any other Transaction Document to which either is
a party, other
than the Transition Services Agreement;
(iii) any
Unassumed Liability;
(iv) any
commissions, fees and expenses of any brokers or finders retained
by or on
behalf Seller or its Affiliates in connection with the
Transactions;
(v) any
agreement, relationship or arrangement between Seller and any customer
of Seller
other than Buyer, including, but not limited to, the DAS Agreement;
provided,
however, that notwithstanding anything to the contrary herein,
Buyer shall not
be entitled to recover Damages under this Agreement resulting from
or arising
out of a Default by Seller in the performance of its obligations
under the
Existing Manufacturing Agreement, which shall be governed solely
by the terms of
the Existing Manufacturing Agreement; and
(b) any
and
all actions, suits, claims, proceedings, investigations, allegations,
demands,
assessments, audits, fines, judgments, costs and other expenses
(including
reasonable attorneys’ fees and expenses) incident to any of the foregoing or to
the enforcement of this Section
10.1.
10.2 By
Buyer.
To the
extent provided in this Section
10,
Buyer
shall indemnify and hold Seller, its Affiliates and their respective
successors
and assigns, and their respective officers, directors, employees,
partners,
agents (each, an “Indemnified
Seller Party”)
harmless from and against:
(a) any
Damages that such Indemnified Seller Party may sustain, suffer
or incur and that
result from, arise out of or relate to:
(i) any
inaccuracy of any representation or warranty made by Buyer in this
Agreement,
the Transaction Documents or any certificate or other writing delivered
by or on
behalf of it in connection herewith or therewith (for purposes
of calculating
the amount of Damages incurred in connection with any breach of
any
representation or warranty, any and all references to materiality
or Material
Adverse Effect contained in such representation or warranty shall
be
disregarded);
(ii) any
nonfulfillment of any covenant or agreement on the part of Buyer
set forth in
this Agreement or any Transaction Document, other than the Transition
Services
Agreement;
(iii) any
Assumed Liability;
36
(iv) any
commissions, fees and expenses of any brokers or finders retained
by or on
behalf of Buyer or its Affiliates in connection with the Transactions;
and
(v) except
as
may be provided in the Transition Services Agreement, the operation
of Buyer’s
business following the Closing.
(b) any
and
all actions, suits, claims, proceedings, investigations, allegations,
demands,
assessments, audits, fines, judgments, costs and other expenses
(including
reasonable attorneys’ fees and expenses) incident to any of the foregoing or to
the enforcement of this Section
10.2.
10.3 Procedure
for Claims.
(a) An
Indemnified Party that desires to seek indemnification under
any part of this
Section
10
shall
give notice (a “Claim
Notice”)
to
each party responsible or alleged to be responsible for indemnification
hereunder (an “Indemnitor”)
prior
to any applicable Expiration Date specified below. Such notice
shall briefly
explain the nature of the claim and the parties known to be involved,
and shall
specify the amount thereof. If the matter to which a claim relates
shall not
have been resolved as of the date of the Claim Notice, the Indemnified
Party
shall estimate the amount of the claim in the Claim Notice, but
also specify
therein that the claim has not yet been liquidated (an “Unliquidated
Claim”).
If an
Indemnified Party gives a Claim Notice for an Unliquidated Claim,
the
Indemnified Party shall also give a second Claim Notice (the
“Liquidated
Claim Notice”)
within
60 days after the matter giving rise to the claim becomes finally
resolved, and
the Liquidated Claim Notice shall specify the amount of the claim.
Each
Indemnitor to which a Claim Notice is given shall respond to
any Indemnified
Party that has given a Claim Notice (a “Claim
Response”)
within
20 days (the “Response
Period”)
after
the later of (i) the date that the Claim Notice is given
and (ii) if a
Claim Notice is first given with respect to an Unliquidated Claim,
the date on
which the Liquidated Claim Notice is given. Any Claim Notice
or Claim Response
shall be given in accordance with the notice requirements hereunder,
and any
Claim Response shall specify whether or not the Indemnitor giving
the Claim
Response disputes the claim described in the Claim Notice. If
any Indemnitor
fails to give a Claim Response within the Response Period, such
Indemnitor shall
be deemed not to dispute the claim described in the related Claim
Notice. If any
Indemnitor elects not to dispute a claim described in a Claim
Notice, whether by
failing to give a timely Claim Response or otherwise, then the
amount of such
claim shall be conclusively deemed to be an obligation of such
Indemnitor.
(b) If
any
Indemnitor shall be obligated to indemnify an Indemnified Party
under this
Section
10,
such
Indemnitor shall pay to such Indemnified Party within 30 days
after the last day
of the Response Period the amount to which such Indemnified Party
shall be
entitled. If there shall be a dispute as to the amount or manner
of
indemnification under this Section
10,
the
Indemnified Party may pursue whatever legal remedies may be available
for
recovery of the Damages claimed from any Indemnitor, but any
dispute shall be
resolved in accordance with Section
13.5
to the
extent that it may be applicable. If any Indemnitor fails to
pay all or part of
any indemnification obligation when due, then such Indemnitor
shall also be
obligated to pay to the applicable Indemnified Party interest
on the unpaid
amount for each day during which the obligation remains unpaid
at an annual rate
equal to the Prime Rate, and the Prime Rate in effect on the
first Business Day
of each calendar quarter shall apply to the amount of the unpaid
obligation
during such calendar quarter.
10.4 Limitations
on Liability.
37
(a) Notwithstanding
any other provision of this Section
10,
an
Indemnified Buyer Party shall be entitled to indemnification
with respect to
claims under Section
10.1(a)(i)
hereunder only when the aggregate of all Damages to all Indemnified
Buyer
Parties exceeds $75,000 (the “Threshold
Amount”)
and
then the Indemnified Buyer Parties shall be entitled to indemnification
for all
Damages incurred in the
aggregate in excess
of
$20,000
(the “Deductible
Amount”).
Except as otherwise expressly provided in
this
Section
10.4,
Seller’s obligation to indemnify the Indemnified Buyer Parties under
Section
10.1(a)(i)
shall not exceed in the aggregate
an
amount equal to the Purchase Price (the “Purchase
Price Cap”);
provided, further,
that Seller’s obligation to indemnify the Indemnified Buyer Parties under
Section
10.1(a)(i)
with respect to Sections 4.1,
4.4,
4.10,
4.12,
4.14
(except Sections 4.14(c)(i),
4.14(c)(iii)
and 4.14(c)(v)),
4.15
(except with respect to the Totowa Lease and the Termination
and Option
Agreement), 4.17,
4.18,
4.19,
4.20,
4.21,
4.28
and 4.33
shall not exceed, in the aggregate, an amount equal to 33% of
the Purchase Price
(the “33%
Cap”).
For
the avoidance of doubt, any payments made to an Indemnified Buyer
Party that are
subject to the 33% Cap pursuant to this Section
10.4(a)
shall
also be applied against the Purchase Price Cap. The
Purchase Price Cap, but none of
the
Threshold Amount,
the
Deductible
Amount or the 33% Cap,
shall
apply to the representations and
warranties set forth in Sections 4.3,
4.13,
4.14(c)(i),
4.14(c)(iii),
4.14(c)(v),
4.15
(solely
with respect to the Totowa Lease
and the Termination and Option Agreement)
and
4.16.
The Purchase Price Cap, the
Threshold Amount and the Deductible
Amount but not the 33% Cap
shall
apply to the representations and
warranties set forth in Sections 4.31
and
4.32.
Notwithstanding anything in this Section
10.4
to the contrary, none of the Threshold Amount, the Deductible
Amount, the
Purchase Price Cap or the 33% Cap shall apply to the representations
and
warranties set forth in Sections
4.7,
4.11,
4.13, 4.15
(solely
with respect to the Totowa Lease and the Termination and Option
Agreement),
4.22,
4.24
and 4.26.
For the
avoidance of doubt, none of the foregoing limitations shall apply
with respect
to Seller’s obligation to indemnify the Indemnified Buyer Parties under
Sections
10.1(a)(ii),
(a)(iii),
(a)(iv)
and
(a)(v).
In
addition, except as expressly provided to the contrary herein,
in the case of a
claim for Damages that may be made based on items set forth in
more than one of
clauses (a)(i) through (a)(iv) of Section
10.1(a),
an
Indemnified Buyer Party make may such claim based on any one
of the clauses in
Section
10.1(a),
except
to the extent that such claim is based solely on only one of
such clauses.
(b) Any
claim
for indemnification under this Section
10
shall be
made by giving a Claim Notice under Section
10.3
on or
before the applicable “Expiration Date” specified below in this Section
10.4(b),
or the
claim under this Section shall be invalid. “Expiration
Date”
means:
(i) 60
days
after the date on which the applicable statute of limitations
expires (with
extensions) with respect to any claim for Damages related to
(A) the inaccuracy
of a representation or warranty set forth in Sections
4.7,
4.14(c)(i),
4.14(c)(iii), 4.14(c)(v),
4.16
or
4.22,
or (B)
the inaccuracy of any representations or warranties of Seller
or Buyer that were
untrue when made with an intent to mislead or defraud;
(ii) eighteen
months following the Closing Date, with respect to any claim
for Damages related
to (A) any breach of a representation or warranty set forth in
Sections
4.15
(other
than with respect to the matters addressed by Section
10.4(b)(iii)
below),
4.17,
4.18,
4.31,
4.33
or (B)
Sections
10.1(a)(ii) or 10.2(a)(ii);
provided, however, in the event that any covenant or agreement
is required to be
performed beyond such date pursuant to the terms of the Transaction
Documents,
claims for indemnification under Sections
10.1(a)(ii) or 10.2(a)(ii)
for
breach of such covenant or agreement shall be made before the
expiration of the
120 calendar day period commencing on the date established for
completion of
performance of such covenant or agreement;
(iii) with
respect to any Claim arising in connection with the Totowa Lease
and the
Termination and Option Agreement, 60 days after the earlier of
the termination
of the Totowa Lease or the expiration of the initial term of
the Totowa Lease,
without regard to any extension thereto.
38
(iv) in
perpetuity, with respect to any claim for Damages related to
(A) any breach of a
representation or warranty set forth in Sections
4.3,
4.4,
4.11,
4.24,
4.26 or
5.2
or (B)
Sections 10.1(a)(iii),
(a)(iv)
or (a)(v)
or 10.2(a)(iii),
(a)(iv)
or
(a)(v);
and
(v) one
year
following the Closing Date for all other claims;
provided, however, in the event that the current term of any
Seller Contract
ends on a date beyond such date, claims for indemnification with
respect to such
Seller Contract shall be made before the expiration of the 120
calendar day
period commencing on the last day of the current term of such
Seller
Contract.
(vi) in
the
event that a claim for Damages may be made based on items to
which more than one
of clauses (b)(i) through (b)(v) of this Section
10.4
shall
apply, an Indemnified Buyer Party may make such claim on or before
the later of
the applicable Expiration Dates provided hereunder.
So
long
as an Indemnified Party gives a Claim Notice for an Unliquidated
Claim on or
before the applicable Expiration Date, such Indemnified Party
shall be entitled
to pursue its rights to indemnification regardless of the date
on which such
Indemnified Buyer Party gives the related Liquidated Claim Notice.
(c) Except
to
the extent specifically contemplated to the contrary herein,
for purposes of
this Section
10,
“Damages” shall include incidental damages, but shall not include indirect
and
consequential damages (including lost profits) punitive, exemplary
or special
damages, except to the extent paid to a third party.
(d) For
purposes of this Section
10,
“Damages” shall be net of any insurance recoveries paid to the Indemnified
Party
in connection with the matter giving rise to the right of indemnification;
provided, however, that except as described below, no Party shall
have any
obligation to obtain insurance coverage. Each Indemnified Party
shall use
commercially reasonable efforts to exercise its rights under
insurance carried
by such Indemnified Party from which recoveries may be obtained
in connection
with the matter giving rise to the right of indemnification;
provided, however,
that the exercise of commercially reasonable efforts in this
regard shall not
include having to litigate to obtain a recovery from an insurance
provider.
(e) Seller
shall have no Liability to Buyer as a result of any termination
of, delay in, or
failure to achieve, regulatory approval of Buyer’s NDA that may be due to the
pendency of, or otherwise caused by, the Transactions.
10.5 Third
Party Claims.
(a) An
Indemnified Party that desires to seek indemnification under
any part of this
Section
10
with
respect to any actions, suits or other administrative or judicial
proceedings
(each, an “Action”)
that
may be instituted by a third party (a “Third-Party
Claim”)
shall
give each Indemnitor prompt written notice of a third party’s institution of
such Action. After such notice, any Indemnitor shall be entitled
to participate
in such Action or assume the defense thereof with counsel chosen
by the
Indemnitor, which counsel shall be reasonably satisfactory to
such Indemnified
Party. Any failure to give prompt notice under this Section
10.5
shall
not bar an Indemnified Party’s right to claim indemnification under this
Section
10,
except
to the extent that an Indemnitor shall have been materially prejudiced
as a
result of such failure. The Indemnified Party shall cooperate
in all reasonable
aspects with the Indemnitor’s defense of any such Action.
39
(b) After
assumption of the defense of such Third-Party Claim by the Indemnitor,
the
Indemnitor shall not, so long as it diligently conducts such
defense, be liable
to the Indemnified Party under this Section
10
for any
fees of other counsel or any other expenses with respect to the
defense of such
Third-Party Claim, in each case subsequently incurred by the
Indemnified Party
in connection with the defense of such Third-Party Claim, other
than costs
incurred by the Indemnified Party prior to such assumption by
the
Indemnitor,
except that, in the event the Indemnified Party shall have received
an opinion
of counsel to the effect that the interests of the Indemnitor
and the
Indemnified Party in the Third Party Claim are adverse and require
that the
Parties be separately represented, the Indemnitor shall pay the
reasonable costs
and counsel fees of one separate counsel to represent the Indemnified
Party.
If the
Indemnitor assumes the defense of a Third-Party Claim, (i) such
assumption will
conclusively establish for purposes of this Agreement that the
claims made in
that Third-Party Claim are within the scope of and subject to
indemnification
pursuant to this Section
10,
and
(ii) the Indemnitor shall have the sole right to compromise and
settle such
Action; provided that, the Indemnitor shall obtain the written
consent of the
Indemnified Party, prior to ceasing to defend, settling or otherwise
disposing
of any such Action if as a result thereof (i) the Indemnified
Party would become
subject to injunctive or other equitable relief or any remedy
other than the
payment of money by the Indemnitor, or (ii) the business of the
Indemnified
Party would be adversely affected (including, without limitation,
any admission
of liability). Notwithstanding the assumption by the Indemnitor
of the defense
of any Third-Party Claim as provided in this Section
10.5,
the
Indemnified Party shall have the right to participate at its
own expense in the
defense of such Action.
10.6 Right
of Offset.
An
Indemnified Party shall be entitled, at its sole discretion,
to recover any
Damages payable by the Indemnitor which are not subject to a
defense or dispute
raised in good faith by Indemnitor through a reduction of amounts
due from the
Indemnified Party to the Indemnitor to the extent any amounts
are then or will
in the future become payable by the Indemnified Party to the
Indemnitor;
provided,
however,
that,
except for claims brought by a Buyer Indemnified Party under
Sections
10.1(a)(i)
(solely
with respect to Sections
4.3,
4.4,
4.7,
4.11,
4.22
and
4.24),
10.1(a)(ii),
(a)(iii),
(a)(iv)
and
(a)(v),
no such
amounts shall be offset against payments due Seller under the
Transition
Services Agreement. The right of offset provided to Indemnified
Parties under
this Section 10.6 shall not, in any event, have the effect of
modifying,
extending, restructuring or otherwise deferring the obligations
of an Indemnitor
to pay when due the amounts provided under this Article 10.
10.7 Effect
of Investigation or Knowledge.
Any
claim by an Indemnified Party for indemnification shall not be
adversely
affected by any investigation by or opportunity to investigate
afforded to the
Indemnified Party, nor shall such a claim be adversely affected
by Buyer’s
knowledge on or before the Closing Date of any breach of the
type specified in
Section
10.1
or of
any state of facts that may give rise to such a breach; any such
claim shall
survive the Closing until the applicable Expiration Date. The
waiver of any
condition based on the accuracy of any representation or warranty,
or on the
performance of or compliance with any covenant or obligation,
will not adversely
affect the right to indemnification, payment of Damages or other
remedy based on
such representations, warranties, covenants or obligations.
10.8 Contingent
Claims. Nothing herein shall be deemed to prevent an Indemnified
Party from
making a claim hereunder for potential or contingent claims or
demands (a
“Contingent
Claim”);
provided that the Claim Notice sets forth the specific basis
for any such
Contingent Claim to the extent then feasible and the Indemnified
Party has
reasonable grounds to believe that such a claim may be made.
11. Termination.
11.1 Grounds
for Termination.
The
Parties may terminate this Agreement at any time before the Closing
as provided
below:
(a) by
mutual
written consent of each of the Parties;
40
(b) by
any
Party, if the Closing shall not have been consummated on or
before December 31,
2005 (the “Termination
Date”);
provided, however, that the right to terminate this Agreement
under this
Section
11.1(b)
shall
not be available to any Party whose failure to fulfill any
obligation under this
Agreement has been the cause of, or resulted in, the failure
of the Closing to
occur on or before the Termination Date;
(c) by
any
Party, if a Governmental Body shall have issued a Court Order
(which Court Order
the Parties shall use commercially reasonable efforts to lift)
that permanently
restrains, enjoins or otherwise prohibits the Transactions,
and such Court Order
shall have become final and nonappealable;
(d) by
Buyer,
if Seller shall have breached, or failed to comply with, any
of their
obligations under this Agreement or any representation or warranty
made by
Seller shall have been incorrect when made, and such breach,
failure or
misrepresentation is not cured within 20 days after notice
thereof, and in
either case, any such breaches, failures or misrepresentations,
individually or
in the aggregate, results or would reasonably be expected to
result in a
Material Adverse Effect on the Business; or
(e) by
Seller, if Buyer shall have breached, or failed to comply with
any of its
obligations under this Agreement or any representation or warranty
made by Buyer
shall have been incorrect when made, and such breach, failure
or
misrepresentation is not cured within 20 days after notice
thereof, and in
either case, any such breaches, failures or misrepresentations,
individually or
in the aggregate, results or would reasonably be expected to
affect materially
and adversely the benefits to be received by Seller hereunder.
11.2 Effect
of Termination.
If this
Agreement is terminated pursuant to this Section
11,
the
agreements contained in Section
13.6
shall
survive the termination hereof and any Party may pursue any
legal or equitable
remedies that may be available if such termination is based
on a breach of
another Party.
12. Other
Matters.
12.1 Public
Announcements.
Except
as and to the extent Parties may be required by applicable
Law or any applicable
stock exchange regulations, without the prior written consent
of the other
Party, neither Party will, and each will direct and cause its
officers,
directors, employees, attorneys, accountants and other agents
and
representatives not to, directly or indirectly, make any public
disclosure of or
statement concerning this Agreement and the Transactions.
12.2 Reasonable
Best Efforts.
Between
the date of this Agreement and the Closing Date, Seller will
use its reasonable
best efforts to cause the conditions in Sections
8
to be
satisfied.
12.3 Nondisparagement.
Buyer
and
Seller each agree not to communicate, directly or indirectly,
any untrue,
inaccurate or negative or disparaging comments or information
about each other
(including, as appropriate, any of the current or former officers,
directors,
managers, supervisors, employees or representatives of Buyer
or Seller or any of
their related entities) concerning the reputation or status
of the other party's
professional abilities, business or financial condition.
13. Miscellaneous.
13.1 Contents
of Agreement.
This
Agreement, together with the other Transaction Documents, that
certain
Confidentiality Agreement dated February 10, 2003 between the
Parties
(“Confidentiality
Agreement”),
and
the Existing Manufacturing Agreement sets forth the entire
understanding of the
parties hereto with respect to the Transactions and supersedes
all prior
agreements or understandings among the Parties regarding those
matters. In
clarification of the foregoing, nothing herein shall serve
to limit in any
respect the existing rights and obligations of the Parties
under the Existing
Manufacturing Agreement as of the Closing. Furthermore, the
Parties agree that
the Existing Manufacturing Agreement, including, without limitation,
the Change
Order and Change Order No. 2 and any obligation of Buyer to
pay a success fee to
Seller, shall terminate as of the Closing and, except for such
provisions
therein that by their terms survive such termination, Seller
shall have no
further obligations thereunder; provided, however, that, except
as otherwise
provided in this Agreement, neither Buyer nor Seller shall
be relieved of any of
its obligations thereunder relating to periods prior to the
Closing.
41
13.2 Amendment,
Parties in Interest, Assignment, Etc.
This
Agreement may be amended, modified or supplemented only by
a written instrument
duly executed by each of the Parties. If any provision of this
Agreement shall
for any reason be held to be invalid, illegal, or unenforceable
in any respect,
such invalidity, illegality, or unenforceability shall not
affect any other
provision hereof, and this Agreement shall be construed as
if such invalid,
illegal or unenforceable provision had never been contained
herein. This
Agreement shall be binding upon and inure to the benefit of
and be enforceable
by the respective heirs, legal representatives, successors
and permitted assigns
of the Parties. No Party shall assign this Agreement or any
right, benefit or
obligation hereunder, except that Buyer shall be entitled to
assign its rights
and obligations hereunder to one or more Persons (an “Assignee”)
provided (a) the Assignee executes and delivers to Seller a
document by which
the Assignee agrees to be bound by the terms and conditions
applicable to Buyer
under this Agreement, and (b) Buyer shall remain obligated
to purchase the
Assets to be purchased by an Assignee hereunder and to fulfill
the Assignee’s
other obligations hereunder to the extent that the Assignee
fails to do so
hereunder. Any term or provision of this Agreement may be waived
at any time by
the Party entitled to the benefit thereof by a written instrument
duly executed
by such Party. The Parties shall execute and deliver any and
all documents and
take any and all other actions that may be deemed reasonably
necessary by their
respective counsel to complete the Transactions.
13.3 Interpretation.
Unless
the context of this Agreement clearly requires otherwise, (a)
references to the
plural include the singular, the singular the plural, the part
the whole, (b)
references to any gender include all genders, (c) “or” has the inclusive meaning
frequently identified with the phrase “and/or,” (d) “including” has the
inclusive meaning frequently identified with the phrase “but not limited to,”
and (e) references to “hereunder” or “herein” relate to this Agreement. The
section and other headings contained in this Agreement are
for reference
purposes only and shall not control or affect the construction
of this Agreement
or the interpretation thereof in any respect. Section, subsection,
schedule and
exhibit references are to this Agreement unless otherwise specified.
Each
accounting term used herein that is not specifically defined
herein shall have
the meaning given to it under GAAP.
13.4 Sole
Remedy.
The
Parties acknowledge that the remedies provided for in this
Agreement shall be
the Parties’ sole and exclusive remedy with respect to breaches of the
representations and warranties contained in this Agreement.
Notwithstanding any
other provision in this Agreement, either Party shall have
the right to seek
specific performance or injunctive relief to enforce another
Party’s performance
of any obligations expressly set forth in this Agreement.
13.5 Dispute
Resolution.
(a) Good-Faith
Negotiations.
Except
as otherwise set forth in this Agreement, if after the Closing
any dispute
arises under this Agreement with respect to a claim for Damages
that is not
settled promptly in the ordinary course of business, the Parties
shall seek to
resolve any such dispute between them, first, by negotiating
promptly with each
other in good faith in face-to-face negotiations. These face-to-face
negotiations shall be conducted by the respective designated
senior management
representatives of Buyer and Seller. If the Parties are unable
to resolve such
dispute between them within 20 Business Days (or such period
as the Parties
shall otherwise agree) through these face-to-face negotiations,
then any such
dispute shall be resolved in the manner set forth in this Section.
42
(b) Resolution
of Disputes.
Except
as otherwise set forth in this Agreement, any controversy or
claim shall be
settled by arbitration conducted on a confidential basis, under
the US
Arbitration Act, if applicable, and the then current Commercial
Arbitration
Rules of the American Arbitration Association (the “Association”)
strictly in accordance with the terms of this Agreement and
the substantive law
of the State of New Jersey. The arbitration shall be conducted
at the
Association’s regional office located in Philadelphia, Pennsylvania by
three
arbitrators, at least one of whom shall be knowledgeable in
the bioprocessing
industry, one of whom shall be an attorney and one of whom
shall be a member of
an accounting firm familiar with businesses engaged in bioprocessing.
Judgment
upon the arbitrators’ award may be entered and enforced in any court of
competent jurisdiction. No Party shall institute a proceeding
hereunder unless
at least 60 days prior thereto such Party shall have given
written notice to the
other Parties of its intent to do so. No Party shall be precluded
hereby from
securing equitable remedies in courts of any jurisdiction,
including temporary
restraining orders and preliminary injunctions to protect its
rights and
interests, but neither Party shall seek any such equitable
remedies as a means
to avoid or stay arbitration.
13.6 Expenses.
Except
as otherwise set forth herein, the Parties shall pay their
own expenses
incidental to the preparation of this Agreement, the carrying
out of the
provisions of this Agreement and the consummation of the
Transactions.
13.7 Bulk
Sales.
The
Parties hereby waive compliance with the bulk sales Laws, sales
and use tax laws
and any other similar Laws in any applicable jurisdiction in
respect of the sale
and purchase by Seller and Purchaser, respectively, of the
Purchased Assets as
contemplated hereby; provided,
however,
that
Seller shall pay and discharge when due all claims of creditors
asserted against
Buyer or the Purchased Assets by reason of such noncompliance
and all sales,
use, and other Taxes assessed against or sought to be collected
from Buyer by
any Governmental Body as a result of such noncompliance and
Seller promptly
shall take all necessary actions required to remove any Encumbrance
which may be
placed upon any of the Purchased Assets by reason of such noncompliance.
In
accordance with the provisions of Section
10,
Seller
shall indemnify and hold Buyer and the Buyer Indemnified Parties
harmless from
and against any and all Taxes and Damages resulting from or
arising out of any
noncompliance or alleged noncompliance with bulk sales Laws,
sales and use tax
laws and any other similar Laws in any applicable jurisdiction
in respect of the
sale and purchase by Seller and Purchaser, respectively, of
the Purchased Assets
as contemplated hereby.
13.8 Notices.
All
notices that are required or permitted hereunder shall be in
writing and shall
be sufficient if personally delivered or sent by mail, facsimile
message or by a
nationally recognized overnight delivery courier. Any notices
shall be deemed
given upon the earlier of the date when received at, or the
third day after the
date when sent by registered or certified mail or the day after
the date when
sent by overnight delivery courier to, the address or fax number
set forth
below, unless such address or fax number is changed by notice
to the other party
hereto:
43
If
to
Seller:
Laureate
Pharma, Inc.
201
College Road East
Princeton,
New Jersey 08540
FAX:
(609) 520-3963
Attention:
Dr. Robert J. Broeze
and
with
a required copy to:
Morgan,
Lewis & Bockius LLP
1701
Market Street
Philadelphia,
Pennsylvania 19103
FAX:
(215) 963-5001
Attention:
Richard B. Aldridge
and
with
a required copy to:
Safeguard
Scientifics, Inc.
800
The
Safeguard Building
435
Devon
Park Drive
Wayne,
Pennsylvania 19087
FAX:
(610) 975-0261
Attn:
General Counsel
If
to
Buyer:
Discovery
Laboratories, Inc.
2600
Kelly Road
Suite
100
Warrington,
PA 18976-3646
FAX:
215-488-9557
Attention:
David L. Lopez, Esq., SVP & General Counsel
and
with
a required copy to:
Taylor,
Colicchio & Silverman, LLP
502
Carnegie Center
Suite
103
Princeton,
New Jersey 08540
FAX:
609-987-0070
Attention:
Thomas P. Wild, Esq.
13.9 Governing
Law.
This
Agreement shall be construed and interpreted in accordance
with the laws of the
State of New Jersey without regard to its provisions concerning
conflict of
laws.
13.10 Counterparts.
This
Agreement may be executed in two or more counterparts and by
facsimile, each of
which shall be binding as of the date first written above,
and all of which
shall constitute one and the same instrument. Each such copy
shall be deemed an
original, and it shall not be necessary in making proof of
this Agreement to
produce or account for more than one such counterpart.
44
[Remainder
of the page intentionally left blank]
45
IN
WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of
the day and year first written above.
|
LAUREATE
PHARMA, INC.
By:
/s/
Christopher J. Davis
Name:
Christopher J. Davis
Title:
Vice President and Treasurer
|
|
|
DISCOVERY
LABORATORIES, INC.
By:
/s/
Robert J. Capetola
Name:
Robert J. Capetola, Ph.D.
Title:
President and Chief Executive Officer
|
|
Exhibit
99.1
Discovery
Labs to Acquire Laureate Pharma’s Manufacturing Operation in Totowa,
N.J.
Represents
strategic decision to control manufacturing of
Surfaxinâ
and SRT pipeline
Warrington,
PA — December 28, 2005 — Discovery Laboratories, Inc. (Nasdaq: DSCO)
has
entered into an agreement to acquire the manufacturing operations of Laureate
Pharma, Inc. (a wholly-owned subsidiary of Safeguard Scientifics, Inc.) in
Totowa, New Jersey for $16 million. The acquisition is intended to provide
Discovery with operational control and improved economics for the potential
commercial and clinical production of Discovery’s lead product,
Surfaxin®,
and its
pipeline of precision-engineered Surfactant Replacement Therapy (SRT) products.
The transaction is expected to close by year end, subject to customary closing
conditions, and the acquired manufacturing operations will thereafter be
dedicated to Discovery’s programs.
Discovery
will host a conference call next week, on Wednesday, January 4, 2006 at 10:00
AM
EST, to discuss this strategic transaction and other Company updates. The
call-in number is 866-332-5218.
Robert
J.
Capetola, Ph.D., President and Chief Executive Officer of Discovery, commented,
“We are preparing our organization for the anticipated approval of Surfaxin
in
April 2006 and its commercial launch in the second quarter. We believe our
Surfactant Replacement Therapy pipeline, with Surfaxin as the cornerstone,
holds
the promise to revolutionize the treatment of respiratory diseases and it is
strategically important to control key operations of a pharmaceutical business
-
from the conduct of clinical trials to the quality of manufacturing to
commercializing our products. We have an established development, clinical
and
regulatory infrastructure and we expect to complete the build of our United
States commercial sales organization by the second quarter of 2006. With this
manufacturing acquisition, we believe we will have secured the key strategic
operations for Discovery to become a fully-integrated biotechnology
company.
“During
2005, the Laureate Totowa facility was essentially a dedicated Surfaxin
operation. Together with Laureate, we have invested in resources, facilities
and
quality systems to prepare a cGMP-compliant operation for the anticipated FDA
approval of Surfaxin. Discovery’s management has a thorough understanding of the
facility’s operations and believes the transition to a Discovery-owned and
dedicated facility will be accomplished in a timely, effective manner. So,
this
acquisition was a logical way to implement our long-term manufacturing strategy.
Importantly, for the continued development of our SRT portfolio, specifically
life cycle management of Surfaxin for new indications, potential formulation
enhancements, and expansion of our aerosol SRT products beginning with
Aerosurf™, we believe we gain flexibility and improved economics by managing our
own operations.”
Laureate’s
Totowa, NJ operation is located in approximately 21,000 square feet of leased
pharmaceutical manufacturing and development space that is specifically designed
for the production of sterile pharmaceuticals in compliance with current Good
Manufacturing Practice (cGMP) requirements. There are approximately 25 personnel
that are qualified in sterile pharmaceutical manufacturing and currently
employed at the operations. Since 1997, over $20 million has been invested
into
the development of this sterile manufacturing facility including specialized
engineering enhancements and equipment. In October 2003, Discovery and Laureate
entered into a contract manufacturing arrangement, whereby Discovery’s Surfaxin
manufacturing know-how and dedicated equipment was transferred to this facility.
Transfer of the Surfaxin manufacturing process was completed in 2004 and, since
that time, the facility has been predominantly dedicated to Surfaxin and the
support of regulatory compliance requirements for Discovery’s manufacturing
operations. In January 2005, as part of the review of the Surfaxin New Drug
Application, the FDA issued a Form 483 to Laureate, citing inspectional
observations related to basic quality controls, process assurances and
documentation requirements that support the commercial production process
necessary to comply with cGMPs. To address the inspectional observations,
Discovery and Laureate have implemented improved quality systems and
documentation controls believed to support the FDA’s regulatory requirements for
the approval of Surfaxin.
Effective
December 27, 2005, Discovery and Laureate Pharma, Inc. entered into an asset
purchase agreement that provides for Discovery’s purchase of Laureate’s Totowa
operations. Certain key terms and items related to the transaction
include:
| · |
Discovery
will pay Laureate $16 million in cash at closing.
|
| · |
The
approximately 21,000 square foot facility is currently leased by Laureate,
and Discovery will receive an assignment of the existing lease, with
a
lease term expiring in December 2014. The lease is subject to customary
terms and conditions and contains an early termination option, first
beginning in December 2009. The early termination option can only be
exercised by the landlord upon a minimum of two years prior notice
and
payment of significant early termination amounts to
Discovery.
|
| · |
At
closing, Discovery will employ a majority of the approximately 25
personnel that are qualified in sterile pharmaceutical manufacturing
and
currently employed at the operations.
|
| · |
Related
to the payment of the purchase price and other costs and expenses
associated with the transaction, Discovery anticipates taking an estimated
$17 million charge to research and development expense for the fourth
quarter of 2005.
|
| · |
To
provide for additional formulation and aerosol development capabilities
related to its future SRT pipeline plans, Discovery intends in 2006
to
make additional investments of approximately $5 million in the
manufacturing operations.
|
| · |
At
closing, the Totowa manufacturing operations will be managed by Mr.
Charles F. Katzer, Discovery’s newly appointed Senior Vice President,
Manufacturing Operations and the site quality operations will be managed
by Mr. Gerald J. Orehostky, recently appointed Vice President of Quality
Operations for Discovery. A separate press release announcing these
appointments was issued on December 28,
2005.
|
Discovery’s
lead product, Surfaxin, for the prevention of Respiratory Distress Syndrome
(RDS) in premature infants, has received an Approvable Letter from the FDA
and
is under review for approval in Europe by the EMEA. The FDA has established
April 2006 as its target timeframe to complete its review of the Surfaxin New
Drug Application. Additionally, Discovery is conducting a Phase 2 clinical
trial
of Surfaxin for the prevention of Chronic Lung Disease in premature infants,
a
Phase 2 clinical trial of its SRT to address Acute Respiratory Distress Syndrome
in adults, and is preparing to conduct multiple Phase 2 pilot studies of
Aerosurf ™, aerosolized SRT for the treatment of neonatal respiratory
failure.
Conference
Call Details
Discovery
Labs will hold a conference call Wednesday, January 4, 2006 at 10:00 AM EST
to
further discuss in greater detail the foregoing. The call in number is
866-332-5218. The international call in number is 706-679-3237. This audio
webcast will be available to shareholders and interested parties through a
live
broadcast on the Internet at http://audioevent.mshow.com/2825631
and
www.discoverylabs.com.
It is
recommended that participants log onto one of these sites at least 15 minutes
prior to the call. The Internet broadcast will be available for up to 30 days
after the call at both website addresses. The replay number to hear the
conference call is 800-642-1687 or 706-645-9291. The passcode is
3819377.
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology company developing its proprietary
surfactant technology as Surfactant Replacement Therapies (SRT) for respiratory
diseases. Surfactants are produced naturally in the lungs and are essential
for
breathing. Discovery Lab’s technology produces a precision-engineered surfactant
that is designed to closely mimic the essential properties of natural human
lung
surfactant. Discovery Labs believes that through its technology, pulmonary
surfactants have the potential, for the first time, to address respiratory
diseases where there are few or no approved therapies available.
Discovery
Lab’s SRT pipeline is initially focused on the most significant respiratory
conditions prevalent in the neonatal intensive care unit. The Company’s lead
product, Surfaxin®,
for the
prevention of Respiratory Distress Syndrome (RDS) in premature infants, has
received an Approvable Letter from the FDA and is under review for approval
in
Europe by the EMEA. Surfaxin is also being developed for the prevention and
treatment of Chronic Lung Disease (CLD) in premature infants. Discovery Labs
is
preparing to conduct multiple Phase 2 pilot studies with Aerosurf™, aerosolized
SRT administered through nasal continuous positive airway pressure (nCPAP),
for
the treatment of neonatal respiratory failure.
To
address the various respiratory conditions affecting pediatric, young adult
and
adult patients in the critical care and other hospital settings, Discovery
Labs
is conducting a Phase 2 clinical trial to address Acute Respiratory Distress
Syndrome (ARDS) in adults, and is also developing aerosol formulations of SRT
to
address Acute Lung Injury (ALI), asthma, COPD, and other respiratory
conditions.
For
more
information, please visit our corporate website at www.Discoverylabs.com.
To
the extent that statements in this press release are not strictly historical,
including statements as to business strategy, outlook, objectives, future
milestones, plans, intentions, goals, future financial conditions, future
collaboration agreements, the success of Discovery’s product development, events
conditioned on stockholder or other approval, or otherwise as to future events,
all such statements are forward-looking, and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from the statements made. Among
the factors which could affect Discovery’s actual results and could cause
results to differ from those contained in these forward-looking statements
are
the risk that financial conditions may change, risks relating to the progress
of
Discovery’s research and development, the risk that Discovery will not be able
to raise additional capital or enter into additional collaboration agreements
(including strategic alliances for aerosol and Surfactant Replacement
Therapies), risk that Discovery will not be able to develop a successful sales
and marketing organization in a timely manner, if at all, risk that Discovery’s
internal sales and marketing organization will not succeed in developing market
awareness of Discovery’s products, risk that Discovery’s internal sales and
marketing organization will not be able to attract or maintain qualified
personnel, risk of delay in the FDA’s or other health regulatory authorities’
approval of any applications filed by Discovery, risks that any such regulatory
authority will not approve the marketing and sale of a drug product even after
acceptance of an application filed by Discovery for any such drug product,
risks
relating to the ability of Discovery’s third party contract manufacturers and
development partners to provide Discovery with adequate supplies of drug
substance, drug products and expertise for completion of any of Discovery’s
clinical studies, risks relating to drug manufacturing by Discovery, risks
relating to the integration of manufacturing operations into Discovery’s
existing operations, other risks relating to the lack of adequate supplies
of
drug substance and drug product for completion of any of Discovery’s clinical
studies, risks relating to the ability of the Company and its collaborators
to
develop and successfully commercialize products that will combine our drug
products with innovative aerosolization technologies, risks relating to the
significant, time-consuming and costly research, development, pre-clinical
studies, clinical testing and regulatory approval for any products that we
may
develop independently or in connection with our collaboration arrangements,
and
risks relating to the development of competing therapies and/or technologies
by
other companies. Companies in the pharmaceutical and biotechnology industries
have suffered significant setbacks in advanced clinical trials, even after
obtaining promising earlier trial results. Data obtained from tests are
susceptible to varying interpretations, which may delay, limit or prevent
regulatory approval. Those associated risks and others are further described
in
Discovery’s filings with the Securities and Exchange Commission including the
most recent reports on Forms 10-K, 10-Q and 8-K, and any amendments
thereto.
Company
Contacts:
John
G.
Cooper, EVP and CFO
215-488-9490
Lisa
Caperelli, Manager, Investor Relations
215-488-9413