ASSET PURCHASE AGREEMENT
by and between
CEP HOLDINGS, INC.
as the Buyer
and
VIROTEX CORPORATION
as the Seller
As of July 10, 1997
2
TABLE OF CONTENTS
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PAGE
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PREAMBLE.....................................................................1
ARTICLE I. PURCHASE AND SALE OF ASSETS......................................1
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1.1. Purchase and Sale of Assets..........................................1
1.2. Assumed Liabilities..................................................3
1.3. Excluded Liabilities and Obligations.................................3
ARTICLE II. CONSIDERATION FOR TRANSFER......................................5
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2.1. Consideration........................................................5
2.2. Allocation...........................................................7
ARTICLE III. THE CLOSING AND TRANSFER OF ASSETS.............................7
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3.1. Closing..............................................................7
3.2. Deliveries by the Buyer..............................................7
3.3. Deliveries by the Seller.............................................8
3.4. Closing Agreements...................................................9
3.5 Post-Closing Obligation..............................................9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE
----------- SELLER.........................................................9
4.1. Organization and Qualification.......................................9
4.2 Authorization........................................................9
4.3 No Violation........................................................10
4.4. Consents and Approvals..............................................10
3
4.5. Inventory...........................................................10
4.6. Litigation..........................................................10
4.7. Title to Assets.....................................................11
4.8. Material Contracts..................................................11
4.9. Permits.............................................................12
4.10. Broker's Fees and Commissions.......................................12
4.11. Proprietary Rights..................................................12
4.12. Regulatory Reports..................................................13
4.13. Agreements with Regulatory Agencies.................................13
4.14. Customers...........................................................13
4.15. Consumer Complaints.................................................13
4.16. Disclosure..........................................................14
4.17. Knowledge of the Seller, Etc........................................14
4.18. Copies of Documents.................................................14
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER...................14
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5.1. Organization and Qualification......................................14
5.2. Authorization.......................................................14
5.3. No Violation........................................................15
5.4. Litigation..........................................................15
5.5. Broker's Fees and Commissions.......................................15
5.6. Disclosure..........................................................15
5.7. Knowledge of the Buyer, Etc.........................................15
4
ARTICLE VI. COVENANTS OF THE SELLER........................................16
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6.1. Interim Conduct of the Viractin Product Line........................16
6.2. Cooperation; Access.................................................16
6.3. Transfer of Inventory...............................................16
6.4 Foreign Patent and Trademark Assignments............................16
6.5. Promotional Allowance, Product Returns and Customer Complaints......16
6.6 Confidentiality.....................................................16
6.7. Best Efforts........................................................17
6.8. Further Assurances..................................................17
ARTICLE VII. COVENANTS OF THE BUYER........................................17
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7.1. Confidentiality.....................................................17
7.2. Best Efforts........................................................18
7.3. Further Assurances..................................................18
ARTICLE VIII. RIGHT OF FIRST OFFER.........................................18
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8.1. Right of First Offer................................................18
8.2. Procedure of Right of First Offer...................................18
ARTICLE IX. CLOSING CONDITIONS.............................................19
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9.1. Conditions to Each Party's Obligations Under this Agreement.........19
9.2. Conditions to the Obligations of the Buyer under this Agreement.....19
9.3. Conditions to the Obligations of the Seller under this Agreement....19
5
ARTICLE X. TERMINATION AND ABANDONMENT.....................................20
10.1 Termination.........................................................20
10.2. Procedure and Effect of Termination.................................20
ARTICLE XI. SURVIVAL AND INDEMNIFICATION...................................21
11.1. Survival............................................................21
11.2. Indemnification of the Buyer........................................22
11.3. Indemnification of the Seller.......................................22
11.4. Limitations on Indemnification......................................23
11.5. Indemnification Procedure for Third Party Claims Against
Indemnified Parties.................................................23
11.6. Failure to Give Timely Third Party Indemnification Notice...........25
11.7. Notice of Claims....................................................25
ARTICLE XII. NON-COMPETITION...............................................26
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12.1. Non-Competition.....................................................26
12.2. Injunctive Relief...................................................26
ARTICLE XIII. MISCELLANEOUS PROVISIONS.....................................26
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13.1. Waiver..............................................................26
13.2. Amendment; Modification.............................................27
13.3. Invalidity..........................................................27
13.4. Parties in Interest.................................................27
13.5. Expenses............................................................27
13.6. Notices.............................................................27
6
13.7. Governing Law; Forum................................................29
13.8. Counterparts........................................................29
13.9. Headings............................................................29
13.10. Entire Agreement....................................................29
13.11. Assignment..........................................................30
13.12. Publicity...........................................................30
OTHER
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Definitions.........................................................Appendix A
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") dated as of July 10,
1997 by and between CEP HOLDINGS, INC., a Delaware corporation (the "Buyer"),
and VIROTEX CORPORATION, a Delaware corporation (the "Seller").
WHEREAS, the Seller is the owner of the registered trademark
Viractin(R), the product formulations for the Viractin products (the "Products")
marketed by Schering-Plough HealthCare Products, Inc. ("Seller's Licensee"),
including the patents covering such formulations, and other assets, both
tangible and intangible, related thereto (the "Viractin Product Line"); and
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer the assets constituting the Viractin Product Line;
and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets. At the Closing (as hereinafter
defined), the Seller shall sell, transfer, assign and deliver to the Buyer, and
the Buyer shall purchase, accept, assume and receive, all of the Seller's right,
title and interest in, to or arising from the assets owned by the Seller
comprising the Viractin Product Line, including, without limitation, the
following assets (all such assets being the "Purchased Assets"),
(a) All of the Seller's rights of any kind or nature under that
certain License Agreement, dated as of April 17, 1996, as amended on
October 24, 1996, by and between the Seller and the Seller's Licensee
(the "Seller's Licensee Agreement") and under that certain Termination
Agreement, dated as of July 2, 1997, by and between the Seller and the
Seller's Licensee (the "Termination Agreement"), except for the
Seller's rights to receive royalties under Section 9 of the
Termination Agreement;
(b) The trademarks "Viractin," and "Lip Design," and all other
trademarks and trademark applications, including the trademarks and
trademark applications set forth in Section 4.11(a) of the Disclosure
Schedule and all other trade dress, trade names, brand names, service
marks, logos, logotypes, packaging style and symbols, which are or
have been used in respect of the Products or the Viractin Product
Line, together with the goodwill associated therewith, any
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registrations associated therewith, including any renewals,
modifications or extensions (collectively, the "Trademarks");
(c) All patents and patent applications, including the patents
and patent applications set forth in Section 4.11(a) of the Disclosure
Schedule, which are or have been used in respect of the Products or
the Viractin Product Line, together with the goodwill associated
therewith, any registrations associated therewith, including any
renewals, modifications or extensions (collectively, the "Patents");
(d) All copyrights and slogans, and any registrations associated
therewith, which are or have been used, or are under development, in
the manufacture, promotion, sale or commercial exploitation of the
Products or relating to the Viractin Product Line (collectively, the
"Copyrights");
(e) All information and technical data of a proprietary, trade
secret or confidential nature relating to the design, formulation,
processing, manufacture, storing, handling, transporting, testing and
use of the Products or relating to the Viractin Product Line (the
"Technology");
(f) The addresses of the internet website relating to the
Products and the Viractin Product Line;
(g) All existing files pertaining to the manufacturing,
production, promotion, advertising, distribution and sale of the
Products or relating to the Viractin Product Line, in whatever format
(written or machine readable, or in computer data bases or other
media), including, without limitation, research and development files
and studies, market studies (including studies in respect of
competitors' brands), copies of consumer complaint files, sale
histories, quality control histories, files relating to the
Technology, and any and all other business records relating to the
Products;
(h) All marketing materials and rights relating to the promotion,
marketing and advertisement of the Products, including slogans,
jingles, marketing campaigns, promotional materials (including trade
show booths and displays), art mechanical and artwork for the
production of packaging components, television and radio masters, film
or video clips, sound recordings, photographs, and similar materials,
any Registrations associated therewith that have been used by the
Seller, any affiliate or predecessor owner, or are under development,
in the manufacture, promotion, sale or commercial exploitation of the
Products or relating to the Viractin Product Line, whether of the
Seller or received by the Seller from the Seller's Licensee;
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(i) All claims, causes of action and other rights that the Seller
may have against others relating to the Purchased Assets;
(j) All existing lists of suppliers, customers and distributors,
whether of the Seller or received by the Seller from the Seller's
Licensee;
(k) All rights under any open purchase orders from customers of
the Seller or the Seller's Licensee for the Products, which orders,
together with the terms and conditions thereof, are set forth in
Section 1.1(k) of the Disclosure Schedule;
(l) The finished product inventory which is to be purchased from
the Seller's Licensee pursuant to the Termination Agreement (the
"Inventory"); and
(m) To the extent assignable, all permits, governmental licenses,
filings, authorizations, approvals and indicia of authority (and
pending applications for any thereof) related to the Viractin Product
Line.
1.2. Assumed Liabilities. At the Closing, the Buyer shall assume, and
shall be solely and exclusively liable with respect to, the liabilities and
obligations of the Seller (other than the Excluded Liabilities and Obligations
specified in Section 1.3, hereof) under the Seller's Licensee Agreement and
under the Termination Agreement (which obligations are referred to herein as the
"Assumed Liabilities").
1.3. Excluded Liabilities and Obligations. Except as expressly set
forth in Section 1.2 above, the Buyer shall not assume and shall not be liable
or responsible for any debt, obligation or liability of the Seller, the Seller's
Licensee or any affiliate of either, or any claim against any of the foregoing,
of any kind, whether known or unknown, contingent, absolute or otherwise,
whether or not relating to the Viractin Product Line (the "Excluded Liabilities
and Obligations"). Without limiting the foregoing, the Buyer shall not assume,
undertake or accept, and shall have no responsibility with respect to, the
following liabilities or obligations (which shall also constitute Excluded
Liabilities and Obligations):
(a) Liabilities and obligations related to or arising from
transactions with any affiliate of the Seller or Seller's Licensee,
including interdivisional, intracompany or intercompany payables,
obligations or agreements, if any, pending at Closing, or arising
after Closing, based on acts, omissions or events occurring prior to
Closing;
(b) For taxes of any kind, howsoever denominated, including
federal, state and local taxes on income, sales and use, ad valorem
duties and assessments, worker's compensation, unemployment taxes,
excise taxes, FICA contributions,
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payroll taxes and profit sharing deductions and all taxes and charges
related to or arising from the transfers contemplated hereby;
(c) Liabilities and obligations of the Seller or Seller's
Licensee with respect to litigations, actions, proceedings,
investigations, or legal, administrative, arbitration, or other method
of settling disputes or disagreements, or any governmental
investigations, if any, pending at the Closing or threatened on or
prior to the Closing, or arising after Closing based on acts,
omissions or events occurring prior to Closing;
(d) Any liability of the Seller as a result of any act, omission
or event occurring prior to the Closing Date, whether or not the
related cause of action or damage occurred after the Closing Date,
including, but not limited to, any indemnification obligation of the
Seller to the Seller's Licensee and any liabilities or obligations to
any person or entity ("Third Party") that claims the Proprietary
Rights (as defined in Section 4.11(a) hereof) infringe upon the rights
of such Third Party;
(e) Any liability of the Seller's Licensee as a result of any
act, omission or event occurring prior to the Transition Date, as
defined in the Termination Agreement (the "Transition Date"), whether
or not the related cause of action or damage occurred after the
Transition Date, including, but not limited to, any liabilities or
obligations to any Third Party that claims the Proprietary Rights
infringe upon the rights of such Third Party;
(f) Any liability of the Seller or Seller's Licensee relating to
use, storage, release, discharge, disposal or shipment of Hazardous
Substances, or the violation of Environmental Laws (as such terms are
defined in Schedule 1.3(f) hereto), or any environmental liability of
any nature or kind whatsoever, if any, pending at Closing, or arising
after Closing, based on acts, omissions or events occurring prior to
Closing; and
(g) Any undisclosed liabilities, or any pension plan withdrawal
liability, funding deficiency or other liability, including, without
limitation, any liability under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code
of 1986, as amended, or otherwise with respect to any employee benefit
plan as defined in Section 3(3) of ERISA, if any, any liabilities for
accrued compensation, benefits, sick pay, vacation pay, medical costs
or severance in any such case in respect of employees of the Seller,
which arise on or prior to the Closing Date or by virtue of the
transactions contemplated hereby.
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After the Closing, the Seller shall discharge and satisfy in full when
due all of Seller's liabilities which are not specifically assumed by the Buyer
pursuant to Section 1.2; provided, however, that nothing herein shall be deemed
to prevent or limit the Seller's right to contest with Third Parties any claim
that the Seller is liable for any such liability, or the amount thereof.
ARTICLE II.
CONSIDERATION FOR TRANSFER
2.1. Consideration. The aggregate consideration for the Viractin
Product Line and the Purchased Assets (the "Purchase Price") shall be as
follows:
(a) An amount equal to Four Million Five Hundred Thousand Dollars
($4,500,000) plus the book value of the Inventory (the "Cash
Consideration"). For purposes of this Section 2.1(a), the book value
of the Inventory shall be determined in accordance with the
Termination Agreement. The Inventory will be purchased directly from
Seller's Licensee by the Buyer pursuant to assignment of such right
under the Assignment and Assumption Agreement; and
(b) (i) Additional payments (the "Additional Consideration
Payments"), to be paid to the Seller quarterly for the five (5) years
following the Closing Date for (except as set forth in this Section
2.1(b)(i) the calendar quarters ending September 30, December 31,
March 31 and June 30 (each of such quarters, a "Quarter Period"). The
first Quarter Period shall begin on the first day following the
Transition Date and end September 30, 1997. The first Additional
Consideration Payment shall be made no later than February 15, 1998
for the first Quarter Period and the second Quarter Period ending
December 31, 1997. The final Additional Consideration Payment shall be
made no later than forty-five (45) days after the fifth anniversary of
the Transition Date for the last Quarter Period which shall begin on
July 1, 2002 and end on the fifth anniversary of the Transition Date.
Except as set forth above, the payments shall be due forty-five (45)
days after the end of each Quarter Period. At the time of each
payment, the Buyer shall send to the Seller a statement calculating
Net Sales (as defined below). Additional Consideration Payments shall
be paid in U.S. Dollars by wire transfer of immediately available
funds to an account designated by the Seller or in such other form and
at such other place as the Seller may hereafter designate by notice.
(ii) The Additional Consideration Payments shall represent
an amount equal to the sum of (A) ten percent (10%) of Net Sales (as
defined below) for the relevant Quarter Period of any products
developed and sold by the Buyer which use the Viractin formulation or
which are covered by a valid claim in the
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U.S. patents included in the Patents; and (B) ten percent (10%) of Net
Sales for the relevant Quarter Period of any products marketed by the
Buyer as substitute treatment products for either of the two (2)
Viractin Cold Sore and Fever Blister Treatment products existing as of
the date of this Agreement, if such substitute products are marketed
under the Viractin(R) brand name (The products referred to in
subparagraph (ii) hereof are collectively referred to as the "Covered
Products.");
(iii) For purposes of calculating Additional Consideration
Payments, "Net Sales" shall mean the invoiced price received by the
Buyer for the Covered Products sold to third parties during each
Quarter Period less (A) cash discounts or accruals actually allowed;
(B) credits and/or cash refunds or accruals actually allowed for
damaged or returned products; (C) trade discounts and allowances
actually paid or allowed (with respect to (A), (B) and (C), in each
case, as long as such discounts and allowances are for the purpose of
enhancing sales of the Covered Products); and (D) sales or use taxes
(other than income taxes);
(iv) For purposes of calculating Additional Consideration
Payments, with respect to sales of the Covered Products in foreign
countries, the Seller shall calculate Net Sales in each such country
on a monthly basis and convert such amount into U.S. Dollars based
upon the exchange rate as reported in The Wall Street Journal on the
last business day of the month. Such monthly figures shall be included
in the statement reflecting the Net Sales calculations as provided
herein;
(v) As set forth above, each Additional Consideration
Payment shall be accompanied by a statement of Net Sales in sufficient
detail to permit confirmation of the accuracy of the Additional
Consideration Payment made, including without limitation, the number
of Covered Products sold by the Buyer from the Viractin Product Line,
the gross sales and Net Sales by the Buyer from the Viractin Product
Line, the Additional Consideration Payment, in U.S. dollars, payable,
the method used to calculate the Additional Consideration Payment and
the exchange rates used;
(vi) In the event that any Additional Consideration Payment
due hereunder is not made when due, such Additional Consideration
Payment shall accrue interest from the date due at the rate of one
percent (1%) per month; provided, however, that in no event shall such
rate exceed the maximum legal annual interest rate. The payment of
such interest shall not limit Seller from exercising any other rights
it may have as a consequence of the lateness of any payment;
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(vii) For a period of one (1) year from the date upon which
an Additional Consideration Payment is made, the Buyer shall keep
complete and accurate records pertaining to the sale or other
disposition of Covered Products sold by the Buyer from the Viractin
Product Line in sufficient detail to permit the Seller to confirm the
accuracy of such Additional Consideration Payment. The Seller shall
have the right to review such records to confirm Net Sales and
Additional Consideration Payments for the preceding calendar year (the
"Seller's Audit"). The Seller's Audit may be exercised during normal
business hours not more than once a year upon at least thirty (30)
working days' prior written notice to the Buyer. The Seller shall bear
the full cost of the Seller's Audit.
(viii) If after completion of the Seller's Audit, the Seller
disagrees with the accuracy of the Additional Consideration Payments,
the Seller shall notify the Buyer of such disagreement and its reasons
for so disagreeing, in which case the Seller and the Buyer shall
attempt to resolve the disagreement. If within ten (10) days after the
Buyer's receipt of the notice, the Seller and the Buyer are unable to
resolve the disagreement, they shall submit the records pertaining to
the sale or other disposition of Covered Products to an independent,
certified public accountant (the "Accountant") reasonably acceptable
to both parties for a binding and nonappealable determination
regarding Net Sales and Additional Consideration Payments (the
"Accountant's Audit"). Such determination shall be rendered within
thirty (30) days after submission to the Accountant. The Seller shall
bear the full cost of the Accountant's Audit unless such Accountant's
Audit discloses an amount owed the Seller of more than five percent
(5%) from the amount actually paid to the Seller as Additional
Consideration Payments for the period of such audit. In such case, the
Buyer shall bear the full cost of the Accountant's Audit.
2.2. Allocation. The Purchase Price shall be allocated to the Viractin
Product Line and the Purchased Assets, and such allocation shall be used for all
purposes, including the preparation and filing of Internal Revenue Service Form
8594 with respect to the transactions contemplated hereby.
ARTICLE III.
THE CLOSING AND TRANSFER OF ASSETS
3.1. Closing. The transfer of assets contemplated by this Agreement
(the "Closing") shall occur at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Four Stamford
Plaza, Stamford, Connecticut, at 10:00 a.m., Eastern Standard Time, on July
[10], 1997, or such other date as the parties shall mutually agree (the "Closing
Date"). The effective time of the Closing shall be 12:01 a.m., or such other
time as the parties shall mutually agree, on the Closing Date .
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3.2. Deliveries by the Buyer. At the Closing, the Buyer shall deliver
the following:
(a) A Guaranty by ▇.▇. ▇▇▇▇▇▇▇▇ Holdings, Inc. (the "Guaranty")
of the payment obligations of the Buyer hereunder, in the form
attached hereto as Exhibit 3.2(a);
(b) A License Agreement (the "License Agreement") in the form
attached hereto as Exhibit 3.2(b), duly executed by the Buyer;
(c) An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Buyer, in
the form attached hereto as Exhibit 3.2(c);
(d) An Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement"), in the form attached hereto as Exhibit 3.2(d),
duly executed by the Buyer; and
(e) Such other instruments or documents as may be necessary or
appropriate to carry out the transactions contemplated hereby.
3.3. Deliveries by the Seller. At or prior to the Closing, the Seller
shall deliver the following:
(a) A General Assignment and ▇▇▇▇ of Sale (the "▇▇▇▇ of Sale")
for the Purchased Assets in the form attached hereto as Exhibit
3.3(a), duly executed by the Seller;
(b) The Assignment and Assumption Agreement, duly executed by the
Seller;
(c) The License Agreement, duly executed by the Seller;
(d) Trademark and patent assignments contemplated by this
Agreement, in a form appropriate for filing with the United States
Patent and Trademark Office and the patent and/or trademark offices of
any foreign country in which patent and/or trademark applications have
been filed or are pending;
(e) A certified copy of resolutions of the Board of Directors of
the Seller providing authority for the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby;
(f) An opinion of Seller's counsel, in the form attached hereto
as Exhibit 3.3(f); and
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(g) Such other instruments or documents as may be necessary or
appropriate to carry out the transactions contemplated hereby.
3.4. Closing Agreements. At the Closing, the parties shall execute,
acknowledge and deliver such instruments or documents as may be necessary or
appropriate to carry out the transactions contemplated by this Agreement and to
comply with the terms hereof.
3.5. Post-Closing Obligation. On the Transition Date, the Buyer will
deliver the Cash Consideration, less an amount equal to Five Hundred Thousand
Dollars ($500,000) previously paid by the Buyer to the Seller (the "Deposit")
pursuant to that certain Letter of Intent between Buyer and Seller dated May 23,
1997 and any interest accrued thereon (which Deposit, including any applicable
interest shall become the property of Seller as part of the Purchase Price).
Such amount shall be paid in U.S. Dollars by wire transfer of immediately
available funds to an account designated by the Seller or in such other form and
at such other place as the Seller may hereafter designate by notice
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as of the date hereof
as follows:
4.1. Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority and,
except for the rights granted the Seller's Licensee, which rights will terminate
on the Transition Date, has a legal right to own, operate and carry on the
Viractin Product Line. The Seller is duly qualified to do business and is in
good standing in every jurisdiction where Seller's conduct of the business of
the Viractin Product Line requires such qualification, except in such
jurisdictions where the failure to so qualify would not have a material adverse
effect on the business, revenues, financial condition, properties, assets or
prospects of the Viractin Product Line.
4.2. Authorization. The Seller has full corporate power, authority and
legal right to execute and deliver and, except for the rights granted the
Seller's Licensee, which rights will terminate on the Transition Date, to
perform its obligations under this Agreement. The execution and delivery of this
Agreement by the Seller and the performance by the Seller of its obligations
hereunder have been duly authorized by all requisite corporate action,
including, without limitation, by its Board of Directors and stockholders. No
other action on the part of the Seller is necessary to authorize the execution
and delivery of this Agreement or the performance of the Seller's obligations
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hereunder. This Agreement has been duly and validly executed and delivered by
the Seller and constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except to the
extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally.
4.3. No Violation. Neither the execution and delivery of this
Agreement by the Seller, the consummation of the transactions contemplated
hereby, nor the performance by the Seller of its obligations hereunder will:
(a) Violate or result in any breach of any provision of the
Certificate of Incorporation and/or By-laws of the Seller;
(b) Violate, conflict with or result in a breach of, or
constitute a default (with or without due notice or lapse of time or
both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate any obligation
under, or result in the loss of any benefit from, any material
contract, agreement or arrangement, whether written or oral, formal or
informal;
(c) Result in the imposition or creation of any pledges, security
interests, liens, mortgages, claims, debts, charges, or other
encumbrances or restrictions on transfer of any kind whatsoever (each,
an "Encumbrance") upon any of the Purchased Assets; or
(d) Violate any order, writ, judgment, injunction, decree,
statute, law, rule, regulation or ordinance of any court or
governmental, quasi-governmental or regulatory department or authority
("Governmental Authority") applicable to the Seller, the Viractin
Product Line or the Purchased Assets.
4.4. Consents and Approvals. Other than the consents and approvals of
or filings or registrations with the governmental, quasi-governmental or
regulatory departments and authorities listed on Section 4.4 of the Disclosure
Schedule, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any governmental, quasi-governmental or
regulatory department or authority is necessary for the execution and delivery
of this Agreement or the consummation of the purchase and sale of the Viractin
Product Line.
4.5. Inventory. To the Seller's Knowledge, all finished goods in
Inventory (i) are of good merchantable quality and are suitable for retail sale
in the ordinary course of business, (ii) have been manufactured in accordance
with good manufacturing practices, as defined by the Federal Food, Drug and
Cosmetic Act, as amended (the "FDA Act") and (iii) have not been adulterated or
misbranded within the meaning of the FDA Act, or the rules and regulations
promulgated thereunder.
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4.6. Litigation. Except as set forth in Section 4.6 of the Disclosure
Schedule, there is no action, suit, inquiry, judicial or administrative
proceeding, arbitration or investigation (collectively referred to as "Claims")
relating to the Viractin Product Line or the Purchased Assets, including,
without limitation, Claims relating to product liability or consumer safety,
pending or threatened against the Seller or, to the Seller's Knowledge, the
Seller's Licensee, before any court, arbitrator or administrative or
governmental body, nor is there any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against, and unsatisfied by, the Seller or, to the
Seller's knowledge, the Seller's Licensee, relating to the Viractin Product Line
or the Purchased Assets (any of the foregoing being herein referred to as
"Existing Litigation"), nor does the Seller know of any fact, event or condition
which could reasonably be expected to serve as a basis for the assertion of any
Claim. Without limiting the generality of the foregoing, there are no
investigations or proceedings currently existing or threatened relating to the
Viractin Product Line or the Purchased Assets before the Food and Drug
Administration (the "FDA") or any similar agency (whether federal or state), and
all such investigations or proceedings during the last five (5) years are fully
set forth in Section 4.6 of the Disclosure Schedule.
4.7. Title to Assets. Except for the rights granted the Seller's
Licensee which rights will terminate on the Transition Date, the Seller has good
and marketable title to all of the Purchased Assets, free and clear of any and
all Encumbrances, and the Purchased Assets are all of the properties and assets
that are, individually or in the aggregate, material to the Viractin Product
Line.
4.8. Material Contracts.
(a) Other than the Seller's Licensee Agreement, as modified by
the Termination Agreement, and the Termination Agreement, true and
correct copies of which are attached hereto as Exhibit 4.8(a)(i) and
4.8(a)(ii), respectively, there are no contracts, agreements or
arrangements, whether written or oral, formal or informal, which are
material to the Viractin Product Line to which the Seller is a party
or, to the Seller's Knowledge, which will survive the Closing Date and
which would adversely impact the Buyer's ability to exercise its
ownership rights to the Viractin Product Line or the Purchased Assets.
(b) The execution, delivery and performance of each of the
Seller's Licensee Agreement and the Termination Agreement has been
duly authorized by all requisite corporate action and each such
agreement is in full force and effect (with regard to the Seller's
Licensee Agreement, as such agreement was modified by the Termination
Agreement). Neither the Seller nor, to the Seller's Knowledge, the
Seller's Licensee has breached either of such agreements. There exists
no event, occurrence or act (including the execution of this Agreement
and the consummation
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of the transactions contemplated hereby) which, with the giving of
notice or the lapse of time, or both, could reasonably become a
default by the Seller under either of such agreements.
(c) Section 4.8(c) to the Disclosure Schedule describes all
commitments and obligations with respect to trade promotions
(including coop advertising), refunds and similar promotional
campaigns and all consumer promotions, such as coupons, rebates,
refunds and similar promotional campaigns, relating to the Viractin
Product Line, which are known by Seller.
4.9. Permits. Section 4.9 of the Disclosure Schedule sets forth all of
the licenses, franchises, permits, consents and authorizations necessary for the
lawful conduct of the business of the Viractin Product Line.
4.10. Broker's Fees and Commissions. Neither the Seller nor any of its
directors, officers, employees or agents has employed any investment banker,
broker, finder or intermediary, and no fee or other commission is owed to any
third party, in connection with the transactions contemplated herein.
4.11. Proprietary Rights.
(a) Set forth in Section 4.11(a) of the Disclosure Schedule is a
list of all of the Trademarks, Patents and Copyrights included in the
Purchased Assets (hereinafter, together with the Technology, referred
to as the "Proprietary Rights"). Except for certain rights granted to
the Seller's Licensee, which rights will revert back to the Seller on
the Transition Date, the Seller is the sole and exclusive owner of the
Proprietary Rights, and has the sole and exclusive right to use,
license, sublicense, assign or sell the Proprietary Rights without
liability to, or consent of, any person or entity;
(b) Except for the rights granted to Seller's Licensee, which
rights will terminate on the Transition Date, the ownership and use of
the Proprietary Rights by the Buyer will not infringe upon the rights
of any person or entity, whether or not registered, patented or
copyrighted. The Seller has not received any notice of a claim of any
infringement nor were any such claims the subject of any action, suit
or proceeding involving the Seller, or to the best of Seller's
knowledge, the Seller's Licensee;
(c) The Seller has no knowledge of any infringement or improper
use by any third party of the Proprietary Rights, nor has the Seller,
nor, to the Seller's Knowledge, the Seller's Licensee or any affiliate
of either instituted any action, suit or proceeding in which an act
constituting an infringement of any of the Proprietary Rights was
alleged to have been committed by a third party;
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(d) Except as set forth in Section 4.11(d) of the Disclosure
Schedule, there are no licenses, sublicenses or agreements relating to
(i) the use by third parties of the Proprietary Rights or (ii) the use
by the Seller of the Proprietary Rights, and there is no prior right
of any other party or other impediment which would invalidate or
adversely affect any of the Proprietary Rights.
(e) Set forth in Section 4.11(e) of the Disclosure Schedule is a
list of all license, royalty or similar agreements entitling the
Seller to use any Trademarks or Copyrights of third parties.
4.12. Regulatory Reports. The Seller has, and to the Seller's
Knowledge, the Seller's Licensee has filed all material reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file in respect of the Viractin Product Line
in the last five (5) year period with any federal, state, local or foreign
governmental, quasi-governmental or regulatory department, authority or agency,
including, without limitation, the FDA or the Federal Trade Commission
(hereinafter sometimes collectively, the "Regulatory Agencies"), and has paid
all fees or assessments due and payable in connection therewith. Except for
normal periodic examinations conducted by the applicable Regulatory Agency in
the regular course of the Viractin Product Line, to the Seller's Knowledge, no
Regulatory Agency has initiated any proceeding or investigation into the
business or operations of the Viractin Product Line in the last five (5) year
period, nor has the Seller or the Seller's Licensee initiated any such
proceeding. To the Seller's Knowledge, there is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any report or
statement relating to an examination of the Viractin Product Line.
4.13. Agreements with Regulatory Agencies. Except as set forth in
Section 4.13 of the Disclosure Schedule, the Seller is not subject to any
cease-and-desist or other order issued by, or a party to any written agreement
or memorandum of understanding with, any Regulatory Agency that materially
restricts or may adversely impact the conduct of the Viractin Product Line.
4.14. Customers. Section 4.14 of the Disclosure Schedule contains a
list of the customers of the Seller's Licensee known to Seller relating to the
Viractin Product Line during the last twelve months. To the Seller's Knowledge,
the Seller's Licensee's relationships with such customers are good and the
Seller does not know of any fact, condition or event (including, without
limitation, the consummation of the transactions contemplated herein) which
would adversely affect the business relationships with such customers. Seller is
not aware that any of such customers, the sales of any of the Products to which
comprise five percent (5%) or more of the gross sales of such Products, intends
to curtail or terminate its relationship with the Viractin Product Line.
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4.15. Consumer Complaints. The Seller has provided to the Buyer a copy
of the consumer complaints and/or inquiries file it received from Seller's
Licensee, which file covers the period ending May 2, 1997 (the "Initial File").
The Seller shall provide to the Buyer copies of any additional consumer
complaints and/or inquiries it receives. Any consumer complaints and/or
inquiries received by the Seller or Seller's Licensee or provided to the Buyer
subsequent to the Initial File prior to Closing shall not be materially
different in scope or nature from the complaints and/or inquiries contained in
the Initial File.
4.16. Disclosure. No representation or warranty as to the Seller, the
Purchased Assets or the Viractin Product Line contained in this Agreement and no
statement contained in the Disclosure Schedule or any document, instrument or
agreement delivered pursuant hereto or in connection herewith contains any
untrue statement of a material fact, or omits to state any material fact
necessary, in light of the circumstances under which it was made, to make the
statement herein or therein not misleading.
4.17. Knowledge of the Seller, Etc. To the extent that the Seller
represents and warrants itself to have had knowledge or belief as to any event,
fact, condition or other matter set forth in this Agreement, Seller's
"Knowledge" (or similar words) shall mean the knowledge or belief of the
officers and directors of the Seller.
4.18. Copies of Documents. The Seller has caused to be made available
for inspection and copying by the Buyer and its advisers true, complete and
correct copies of all documents referred to in any Section of the Disclosure
Schedule.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as of the date hereof
as follows:
5.1. Organization and Qualification. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
organization, with all requisite power and authority to own, operate and lease
its properties and assets and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the ownership or leasing of property by it or the
conduct of its business requires such licensing or qualification, except in such
jurisdictions wherein the failure to so qualify would not have a material
adverse effect on the ability of the Buyer to consummate the transactions
contemplated hereby.
5.2. Authorization. The Buyer has full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
herein. The
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execution and delivery of this Agreement by the Buyer and the performance by the
Buyer of its obligations hereunder have been duly authorized by its Board of
Directors. This Agreement has been duly and validly executed and delivered by
the Buyer, and constitutes a legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, except to the extent
that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and remedies generally.
5.3. No Violation. Neither the execution and delivery of this
Agreement by the Buyer, the consummation of the transactions contemplated
hereby, nor the performance by the Buyer of its obligations hereunder, will:
(a) Violate or result in any breach of any provision of the
Certificate of Incorporation and/or By-laws of the Buyer;
(b) Violate, conflict with or result in a breach of, or
constitute a default (with or without due notice or lapse of time or
both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate any obligation
under, or result in the loss of any benefit from any contract,
agreement or arrangement, whether written or oral, formal or informal,
nor
(c) Violate any order, writ, judgment, injunction, decree,
statute, law, rule, regulation or ordinance of any Governmental
Authority applicable to the Buyer, the Viractin Product Line or the
Purchased Assets.
5.4. Litigation. There are no pending Claims that have been commenced
against the Buyer that challenge, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the transactions
contemplated hereunder. To the best the Buyer's knowledge, no such Claims have
been threatened.
5.5. Broker's Fees and Commissions. Neither the Buyer nor any of its
shareholders, directors, officers, employees or agents has employed any
investment banker, broker, finder or intermediary, and no such fee or other
commission is owed to any third party, in connection with the transactions
contemplated herein.
5.6. Disclosure. No representation or warranty as to the Buyer
contained in this Agreement and no statement made by the Buyer in the Disclosure
Schedule contains any untrue statement of a material fact, or omits to state any
material fact necessary, in light of the circumstances under which it was made,
to make the statement herein or therein not misleading.
5.7. Knowledge of the Buyer, Etc. The Buyer has no knowledge of any
fact, condition or circumstance concerning the Buyer which constitutes a
material breach
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of any representation, warranty or covenant contained in this Agreement, or any
document, instrument or agreement delivered pursuant hereto or in connection
herewith which is not properly disclosed herein, therein or in the Disclosure
Schedule.
ARTICLE VI.
COVENANTS OF THE SELLER
The Seller hereby agrees to keep, perform and fully discharge the
following covenants and agreements:
6.1. Interim Conduct of the Viractin Product Line. From the date
hereof until the Transition Date, the Seller shall use its best efforts to
preserve, protect and maintain the Viractin Product Line and the Purchased
Assets, and shall promptly notify the Buyer of any material change in the normal
course of business or prospects of the Viractin Product Line of which the Seller
becomes aware and shall keep the Buyer fully informed of such events.
6.2. Cooperation; Access. From the date hereof through the Transition
Date, the Seller shall cooperate fully in assisting the Buyer in the planning
and implementation of a transitional plan for the transfer of the Viractin
Product Line.
6.3. Transfer of Inventory. Title to the Purchased Assets shall pass
to Buyer effective as of the Closing Date, with the exception of the Inventory,
which will be transferred to the Buyer in accordance with the Termination
Agreement. The Seller will cooperate with the Buyer and use its best efforts to
ensure that fifty percent (50%) of the finished goods in Inventory are delivered
to the Buyer prior to the Transition Date.
6.4. Foreign Patent and Trademark Assignments. The Seller shall use
its best efforts to obtain and record all appropriate assignments for any
foreign patents, trademarks or applications therefor which relate to the Patents
and Trademarks assigned pursuant to this Agreement.
6.5. Promotional Allowances, Product Returns and Consumer Complaints.
The Seller shall cooperate with the Buyer and shall take all reasonable actions
necessary to facilitate the transfer from the Seller to the Buyer all of
Seller's rights under the Termination Agreement pertaining to promotional
allowances, product returns and consumer complaints.
6.6. Confidentiality. Following the Closing, the Seller will not use,
publish or disclose any information relating to the Viractin Product Line or any
information of the Buyer or its affiliates which is proprietary, a trade secret
or of a confidential nature (collectively, the "Buyer Confidential Information")
to any Third Party
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or use any Buyer Confidential Information for its own benefit except as
expressly permitted hereunder. The Seller will limit access to Buyer
Confidential Information to those of its employees and consultants who have a
need to know such information in order to perform the Seller's obligations under
this Agreement. The Seller will require that its employees and consultants
maintain said information in confidence in accordance with the terms of this
Agreement. Buyer Confidential Information shall not include any information
which: (i) is or becomes generally available to the public through no breach of
this Agreement, (ii) was received by a party to this Agreement from a Person who
is under no apparent obligation to maintain such information in confidence, or
(iii) was already known by a party to this Agreement on a nonconfidential basis
prior to its disclosure by the other party to this Agreement or its
representative. The Seller acknowledges that there is not an adequate remedy at
law for the breach of this Section 6.5 and that, in addition to any other
remedies available, injunctive relief may be granted for any such breach.
Notwithstanding the foregoing, the Seller may disclose the information regarding
the Viractin Product Line if otherwise permitted by the License Agreement and to
the extent such disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation or complying with
applicable governmental regulations; provided, however, that if the Seller is
required to make any such disclosure, it will to the extent practicable give
reasonable advance notice to the Buyer of such disclosure requirement and will
use its best efforts to secure confidential treatment of such information
required to be disclosed.
6.7. Best Efforts. The Seller shall use its best efforts to consummate
the transactions contemplated by this Agreement.
6.8. Further Assurances. Following the Closing, the Seller shall take
all action reasonably requested by the Buyer to confirm, facilitate or perfect
the transfer of the Purchased Assets.
ARTICLE VII.
COVENANTS OF THE BUYER
The Buyer hereby agrees to keep, perform and fully discharge the
following covenants and agreements:
7.1. Confidentiality. Following the Closing, the Buyer will not use,
publish or disclose any information of the Seller which is proprietary, a trade
secret or of a confidential nature (the "Seller Confidential Information") to
any Third Party or use any Seller Confidential Information for its own benefit
except as expressly permitted hereunder. The Buyer will limit access to Seller
Confidential Information to those of its employees and consultants who have a
need to know such information in order to perform
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the Buyer's obligations under this Agreement. The Buyer will require that its
employees and consultants maintain said information in confidence in accordance
with the terms of this Agreement. Seller Confidential Information shall not
include any information which: (i) is or becomes generally available to the
public through no breach of this Agreement, (ii) was received by a party to this
Agreement from a Person who is under no apparent obligation to maintain such
information in confidence, (iii) was already known by a party to this Agreement
on a nonconfidential basis prior to its disclosure by the other party to this
Agreement or its representative, or (iv) relates to the Viractin Product Line.
The Buyer acknowledges that there is not an adequate remedy at law for the
breach of this Section 7.1 and that, in addition to any other remedies
available, injunctive relief may be granted for any such breach.
7.2. Best Efforts. The Buyer shall use its best efforts to consummate
the transactions contemplated by this Agreement.
7.3. Further Assurances. Following the Closing, the Buyer shall take
all action reasonably requested by the Seller to confirm, facilitate or perfect
the transfer of the Purchased Assets.
ARTICLE VIII.
RIGHT OF FIRST OFFER
8.1. Right of First Offer. The Seller agrees that, for a period of
three (3) years following the Closing, if the Seller develops any products that
are intended to be sold to consumers at product launch without a doctor's
prescription ("Over-the-Counter Products") which it wants to license or sell to
a third party, then the Buyer shall have the first right to offer to license or
purchase such products from the Seller.
8.2. Procedure of Right of First Offer.
(a) The Seller shall notify the Buyer in writing of its
intentions regarding the license or sale of the Over-the-Counter
Product(s);
(b) Within thirty (30) days after receipt of such notice, the
Buyer shall submit a proposal in writing to the Seller setting forth
the terms and conditions pursuant to which it is willing to license or
purchase the product(s);
(c) Seller shall have thirty (30) days after receipt of Buyer's
proposal to reject such proposal, which it may do at its sole
discretion. Such rejection must be delivered to the Buyer in writing.
Failure to deliver such notice within the thirty (30) day period shall
be deemed an acceptance by the Seller of the Buyer's
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proposed terms and conditions. If the Seller rejects the Buyer's
proposal, the Seller can license or sell such product(s) to a third
party provided the material terms of such license or sale are no less
favorable to the Seller as those proposed by the Buyer.
ARTICLE IX.
CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations Under this Agreement. The
respective obligations of each party under Articles I and II of this Agreement
shall be subject to the satisfaction, or the waiver by such party hereto, at or
prior to the Closing, of the condition precedent that no injunction, restraining
order or other ruling or order issued by any court of competent jurisdiction or
governmental, quasi-governmental or regulatory department or authority or other
law, rule, regulation, legal restraint or prohibition preventing the purchase
and sale of the Viractin Product Line and the Purchased Assets, and no
investigation by any governmental, quasi-governmental or regulatory department
or authority, shall be in effect as of or shall have commenced on or prior to
the Closing Date, and no action, suit or proceeding brought by any governmental,
quasi-governmental or regulatory department or authority shall be pending or
threatened as of the Closing Date which seeks any injunction, restraining order
or other order which would prohibit the purchase and sale of the Viractin
Product Line or the Purchased Assets or materially impair the ability of the
Buyer to own and operate the business related to the Viractin Product Line after
the Closing.
9.2. Conditions to the Obligations of the Buyer under this Agreement.
The obligations of the Buyer under Articles I and II of this Agreement shall be
further subject to the satisfaction, or to the waiver by the Buyer, at or prior
to the Closing, of the following conditions precedent:
(a) Each of the obligations of the Seller required to be
performed by the Seller at or prior to the Closing pursuant to this
Agreement, including, without limitation, delivery of the items
required to be delivered by the Seller under Section 3.3 hereof, shall
have been duly performed and complied with in all material respects;
each of the representations and warranties of the Seller contained in
this Agreement shall be true and correct in all material respects as
of the date of this Agreement (except as to any representation or
warranty which specifically relates to another date); and
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(b) Any and all consents, waivers, clearances, approvals and
authorizations from Third Parties required to be obtained prior to the
Closing shall have been obtained at no cost to the Buyer.
9.3. Conditions to the Obligations of the Seller under this Agreement.
The obligations of the Seller under Articles I and II of this Agreement shall be
further subject to the satisfaction, or to the waiver by the Seller, at or prior
to the Closing, of the condition precedent that each of the obligations of the
Buyer required to be performed by it at or prior to the Closing pursuant to the
terms of this Agreement, including, without limitation, delivery of the items
required to be delivered by the Buyer under Section 3.2, hereof, shall have been
duly performed and complied with in all material respects, and the
representations and warranties of the Buyer contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
(except as to any representation or warranty which specifically relates to
another date).
ARTICLE X.
TERMINATION AND ABANDONMENT
10.1. Termination. This Agreement may be terminated and the purchase
and sale of the Purchased Assets contemplated hereby may be abandoned at any
time prior to the Closing:
(a) By the mutual written consent of the Buyer and the Seller; or
(b) By either the Buyer or the Seller:
(i) upon or after the breach of any material provision of
this Agreement by the other party if the breaching party has not
cured such breach within fifteen (15) days after written notice
thereof by the other party;
(ii) if a court of competent jurisdiction or a
governmental, quasi-governmental, regulatory or administrative
department, agency, commission or authority shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or action the parties hereto shall use their best
efforts to lift or dissolve), in each case restraining, enjoining
or otherwise prohibiting the purchase and sale of the Purchased
Assets or the other transactions contemplated hereby or
attempting to do the same; or
(iii) if the Closing shall not have occurred on or before
July 31, 1997; provided, however, that the right to terminate
this Agreement shall not be available to any party (A) whose
material breach of this Agreement,
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or (B) whose failure to have satisfied the conditions to the
other party's obligations under Section 9.2 (in the case of the
Seller) or 9.3 (in the case of the Buyer), has been the cause of,
or resulted in, the failure of the Closing to occur on or before
such date.
10.2. Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the purchase and sale of
the Purchased Assets pursuant to Section 10.1 hereof, written notice thereof
shall forthwith be given to the other party to this Agreement and this Agreement
shall terminate and the purchase and sale of the Purchased Assets shall be
abandoned, without any further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) Upon request therefor, each party will redeliver all
documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party
furnishing the same; and
(b) No party hereto shall have any liability or further
obligation to any other party to this Agreement resulting from
such termination, except (i) that the provisions of this Section
10.2 shall remain in full force and effect, and (ii) to the
extent that any such termination results from a breach by such
party of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or any failure to satisfy
the conditions to the other party's obligations under Section 9.2
(in the case of Seller) or 9.3 (in the case of Buyer), the other
party may recover its out-of-pocket costs in connection with the
preparation and negotiation of this Agreement, and all other
related transactional expenses incurred by such other party.
ARTICLE XI.
SURVIVAL AND INDEMNIFICATION
11.1. Survival. All representations, warranties, covenants and
agreements contained in this Agreement, and in any certificate, schedule,
document or other writing delivered pursuant hereto or in connection with the
transactions contemplated herein shall be in all cases deemed to have been
relied upon by the parties hereto, and shall survive the Closing; provided that
any such representations, warranties, covenants and agreements shall be fully
effective and enforceable only for a period of one (1) year after the Closing
Date, and shall thereafter be of no further force or effect, except that the
obligation to make the Additional Consideration Payments shall be fully
effective and enforceable until payment of the last Additional Consideration
Payment as set forth in Section 2.1(b) hereof and the representations and
warranties pertaining to the Proprietary Rights, set forth in
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Section 4.11 shall be effective and enforceable up to one (1) year after the
date upon which the last Additional Consideration Payment would be required to
be paid, and the confidentiality provisions and the indemnification obligations
in respect of the Excluded Liabilities and Obligations shall survive
indefinitely. Additionally, the parties agree that the indemnification
obligations set forth in this Article XI shall survive with respect to any
claims made within the applicable survival period until finally resolved or
judicially determined, including any appeal thereof and the non-competition
provisions set forth in Article XII hereof shall be fully effective and
enforceable for a period of five (5) years after the Closing Date. The
representations, warranties, covenants and agreements contained in this
Agreement or any certificate, schedule, document or other writing delivered
pursuant hereto shall not be affected by any investigation, verification or
examination by any party hereto or by any person acting on behalf of any such
party.
11.2. Indemnification of the Buyer. From and after the Closing, the
Seller agrees to indemnify, defend and save the Buyer and its directors,
officers, employees, owners, agents and affiliates and their successors and
assigns or heirs and personal representatives, as the case may be (each a "Buyer
Indemnified Party"), forever harmless from and against, and to promptly pay to a
Buyer Indemnified Party or reimburse a Buyer Indemnified Party for any and all
losses, damages, expenses (including, without limitation, court costs, amounts
paid in settlement, judgments, reasonable attorneys' fees or other expenses for
investigating and defending, including, without limitation, those arising out of
the enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities or obligations (collectively, the "Losses") sustained or incurred by
such Buyer Indemnified Party relating to, caused by or resulting directly or
indirectly from:
(a) Any misrepresentation or breach of warranty, or failure to
fulfill or satisfy any covenant or agreement made by the Seller
contained herein or in any certificate, schedule, document or other
writing delivered by the Seller pursuant hereto;
(b) Any liability of the Buyer for causes of action arising in
connection with the Viractin Product Line, the Purchased Assets or the
Assumed Liabilities based, in whole or in part, upon acts, omissions
or events which occurred on or prior to the Transition Date, or
relating to the period prior to the Transition Date, except as set
forth in the Assignment and Assumption Agreement;
(c) The Excluded Liabilities and Obligations; and
(d) The non-compliance of Seller with the provisions of any
applicable bulk sales act governing the purchase and sale of the
Purchased Assets.
11.3. Indemnification of the Seller. From and after the Closing, the
Buyer agrees to indemnify, defend and save the Seller and its directors,
officers, employees,
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owners, agents and affiliates and their successors and assigns or heirs and
personal representatives, as the case may be (each, a "Seller Indemnified
Party") forever harmless from and against, and to promptly pay to a Seller
Indemnified Party or reimburse a Seller Indemnified Party for, any and all
Losses sustained or incurred by such Seller Indemnified Party relating to,
caused by or resulting directly or indirectly from:
(a) Any misrepresentation or breach of warranty, the Assumed
Liabilities or failure to fulfill or satisfy any covenant or agreement
made by the Buyer contained herein or in any certificate, schedule,
document or other writing delivered by the Buyer pursuant hereto; and
(b) Any liability of the Seller for causes of action arising in
connection with the Viractin Product Line or the Purchased Assets
(including, but not limited to, Inventory, promotional allowances,
product returns, product liability for any products manufactured by
the Buyer, and Seller's Licensee's advertising, display and
promotional materials and customer lists) based upon acts, omissions
or events which occurred following the Transition Date, or relating to
the period following the Transition Date.
11.4. Limitations on Indemnification. Notwithstanding anything in
Sections 11.2 and 11.3 to the contrary:
(a) Neither the Seller nor the Buyer shall be entitled to recover
any Losses for indemnification under this Article XI unless and until
the aggregate Losses entitled to be recovered by such party exceed
Fifty Thousand Dollars ($50,000), at which time the appropriate party
shall be entitled to recover Losses that are in excess of Fifty
Thousand Dollars ($50,000);
(b) In no event shall either party's indemnification obligations
exceed an aggregate amount equal to the amount of the Purchase Price;
and
(c) The limitations of Sections 11.4(a) and (b) shall not apply
to any claim for Losses that are determined by a court of competent
jurisdiction in a proceeding from which no further appeal is permitted
to be taken to have been primarily caused by fraud, intentional
misrepresentation or intentional breach.
11.5. Indemnification Procedure for Third Party Claims Against
Indemnified Parties.
(a) In the event that subsequent to the Closing any Buyer
Indemnified Party or Seller Indemnified Party (each, an "Indemnified
Party") receives notice of the assertion of any claim or of the
commencement of any action, suit or proceeding by any entity which is
not a party to this Agreement (including, without
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limitation, any governmental, quasi-governmental or regulatory
agencies) (a "Third Party Claim") against such Indemnified Party, with
respect to which the Buyer or the Seller (the "Indemnifying Party"),
as the case may be, are required to provide indemnification under this
Agreement, the Indemnified Party shall promptly give written notice,
together with a statement of any available information regarding such
claim (collectively, the "Third Party Indemnification Notice"), to the
Indemnifying Party within thirty (30) days after learning of such
claim (or within such shorter time as may be necessary to give the
Indemnifying Party a reasonable opportunity to respond to such claim).
The Indemnifying Party shall have the right, upon delivering written
notice to the Indemnified Party (the "Defense Notice") within thirty
(30) days after receipt from an Indemnified Party of a Third Party
Indemnification Notice, to conduct, at the Indemnifying Party's sole
cost and expense, the defense against such Third Party Claim in the
Indemnifying Party's own name, or, if necessary, in the name of the
Indemnified Party; provided, however, that the Indemnified Party shall
have the right to reasonably approve the defense counsel representing
the Indemnifying Party, which approval shall not be unreasonably
withheld, and in the event that the Indemnifying Party and the
Indemnified Party cannot agree upon such counsel within ten (10) days
after the Defense Notice is provided, then the Indemnifying Party
shall propose an alternate defense counsel, which shall be subject
again to the Indemnified Party's reasonable approval in accordance
with the terms hereof.
(b) In the event that the Indemnifying Party shall fail to give
the Defense Notice within the time and as prescribed by Section
11.5(a) hereof, then in any such event the Indemnified Party shall
have the right to conduct such defense in good faith with counsel
reasonably acceptable to the Indemnifying Party, but the Indemnified
Party shall be prohibited from compromising or settling any such claim
without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld and shall be deemed given
in the absence of providing the Indemnified Party with a written
response within ten (10) days of any request therefor. If the
Indemnified Party fails to diligently defend such claim with counsel
reasonably satisfactory to the Indemnifying Party, or settles any such
claim without the Indemnifying Party's prior written consent, or
otherwise breaches this Article XI, the Indemnified Party will be
liable for all costs, expenses, settlement amounts or other Losses
paid or incurred in connection therewith and the Indemnifying Party
shall have no obligation to indemnify the Indemnified Party with
respect to such claim.
(c) In the event that the Indemnifying Party does deliver a
Defense Notice and thereby elects to conduct the defense of the
subject Third Party Claim, the Indemnified Party will cooperate with
and make available to the Indemnifying Party such assistance and
materials as the Indemnifying Party may reasonably
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request, all at the sole cost and expense of the Indemnifying Party.
Regardless of which party defends such claim, the other party hereto
shall have the right at its own cost and expense to participate in the
defense assisted by counsel of its own choosing. The Indemnifying
Party shall not enter into any settlement of any Third Party Claim
without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. If a firm decision is made
to settle a Third Party Claim, which offer the Indemnifying Party is
permitted to settle under this Section 11.5(c), and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying
Party will give at least five (5) days' prior written notice to the
Indemnified Party to that effect, setting forth in reasonable detail
the terms and conditions of any such settlement (the "Settlement
Notice"). If the Indemnified Party objects to such firm offer within
ten (10) calendar days after its receipt of such Settlement Notice,
the Indemnified Party may continue to contest or defend such Third
Party Claim and, in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will not exceed the
amount of such settlement offer described in the Settlement Notice,
plus costs and expenses paid or incurred by the Indemnified Party up
to the point such Settlement Notice had been delivered. If an
Indemnified Party settles any Third Party Claim without the prior
written consent of the Indemnifying Party, the Indemnifying Party
shall have no obligation to indemnify the Indemnified Party under this
Article XI with respect to such Third Party Claim.
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and
shall be conclusively deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder,
subject to the Indemnifying Party's right to appeal an appealable
judgment or order. Such indemnification shall be required to be made
no later than the tenth (10th) day following the expiration of any
period in which an appeal may be taken, and shall be satisfied by
payment of the amount thereof in cash.
11.6. Failure to Give Timely Third Party Indemnification Notice. Any
failure by an Indemnified Party to give a timely, complete or accurate Third
Party Indemnification Notice as provided in this Article XI will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party entitled to receive such Third Party
Indemnification Notice was deprived of its right to recover any payment under
its applicable insurance coverage or was otherwise adversely affected or damaged
as a result of such failure to give a timely, complete and accurate Third Party
Indemnification Notice.
11.7. Notice of Claims. In the case of a claim for indemnification
under Section 11.2 or Section 11.3 hereof, upon determination by a Buyer
Indemnified Party or a
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Seller Indemnified Party, as the case may be, that it has a claim for
indemnification, the Indemnified Party shall deliver notice of such claim to the
Indemnifying Party, setting forth in reasonable detail the basis of such claim
for indemnification (each, an "Indemnification Notice"). Upon the
Indemnification Notice having been received by the Indemnifying Party, the
Indemnifying Party shall have thirty (30) days in which to notify the
Indemnified Party in writing (the "Dispute Notice") that the amount of the claim
for indemnification is in dispute, setting forth in reasonable detail the basis
of such dispute. In the event that a Dispute Notice is not given to the
Indemnified Party within the required thirty (30) day period, the Indemnifying
Party shall be obligated to pay to the Indemnified Party the amount set forth in
the Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been received by the Indemnifying Party.
In the event that a Dispute Notice is timely given to an Indemnified
Party, the parties hereto shall have thirty (30) days to resolve any such
dispute. In the event that such dispute is not resolved by such parties within
such period, the parties shall have the right to pursue all available legal
remedies to resolve such dispute.
ARTICLE XII.
NON-COMPETITION
12.1. Non-Competition. Commencing on the Closing Date and ending five
(5) years thereafter (the "Covered Period"), the Seller agrees not to engage in
any Competitive Activity (as hereinafter defined). For purposes of this
Agreement, the term "Competitive Activity" shall mean directly or indirectly
engaging in the business of licensing, manufacturing, distributing and/or
selling any products and researching and developing any Over-the-Counter
Products for the treatment of cold sores and fever blisters.
12.2. Injunctive Relief. The Seller acknowledges and agrees that the
Buyer is engaged in a highly competitive business and that the protections of
the Buyer set forth in this Article XII are fair and reasonable and are of vital
concern to the Buyer. Further, the Seller acknowledges and agrees that monetary
damages for any violation of this Article XII will not adequately compensate the
Buyer with respect to any such violation. Therefore, in the event of a breach by
the Seller of this Article XII, the Buyer shall be entitled to institute legal
proceedings to obtain damages for any such breach and/or to enforce the specific
performance of this Article XII by the Seller and to enjoin the Seller from any
further violations.
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ARTICLE XIII.
MISCELLANEOUS PROVISIONS
13.1. Waiver. No provision of this Agreement will be waived or
discharged by any act, omission or knowledge of a party or its agents or
employees, except by a written instrument expressly waiving or discharging such
provision signed by a duly authorized representative of the waiving party. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
13.2. Amendment; Modification. No amendment, modification or
supplement of any provision of this Agreement will be valid or effective unless
made in writing and signed by an authorized representative of each party.
13.3. Invalidity. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or invalid
to any extent, the remainder of this Agreement shall not be affected thereby,
and this Agreement shall be construed to the fullest extent possible to give
effect to the intentions of the provision found unenforceable or invalid.
13.4. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
13.5. Expenses. Except as otherwise specifically provided for herein,
each party hereto shall bear all expenses incurred by it in connection with this
Agreement including, without limitation, the charges of its counsel, accountants
and other experts.
13.6. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered to each party hereto by
hand or sent by reputable overnight courier, with receipt verified, or by
facsimile, with receipt verified, or by registered or certified mail, return
receipt requested, addressed as follows:
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(a) If to the Buyer:
CEP Holdings, Inc.
C/O Puglisi & Associates
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇.▇. ▇▇▇▇▇▇▇▇ Company, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four Stamford Plaza
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(a) If to the Seller:
ViroTex Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective when the
same shall be deposited, postage prepaid, in the mail and/or when the same shall
have been delivered by hand or overnight courier, and/or upon facsimile
transmission, as the case may be.
13.7. Governing Law; Forum. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
New York without regard to its conflicts of law principles. The parties hereto
do hereby consent and submit to the venue and jurisdiction of the State or
Federal Courts sitting in New York as the sole and exclusive forum for such
matters of dispute, and further agree that, in the event of any action or suit
as to any matters of dispute between the parties, service of any process may be
made upon the other party by mailing a copy of the summons and/or complaint to
the other party at the address set forth herein and a party's refusal to accept
any such notice shall be equivalent to service.
13.8. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same instrument.
13.9. Headings. All headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of any provision or provisions of this Agreement.
13.10. Entire Agreement. This Agreement, and the documents to be
delivered in connection herewith, and the exhibits and schedules hereto, set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersede all prior and contemporaneous agreements,
promises, covenants, arrangements, understandings, communications,
representations or warranties, whether oral or written, by any officer, partner,
employee or representative of any party hereto. Any prior agreement of the
parties hereto in respect of the subject matter contained herein is hereby
terminated
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and cancelled. No agreements or representations, whether written, oral, express
or implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement and the other documents
to be delivered in connection herewith and therewith.
13.11. Assignment. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligation hereunder be assigned or transferred by either party without the
prior written consent of the other party; provided, however, that either party
may, without such consent, assign this Agreement and its rights and obligations
hereunder (a) in connection with the transfer or sale of all or substantially
all of its business, if such assets include substantially all of the assets
relating to its performance of its respective obligations hereunder, (b) to a
wholly owned subsidiary provided it guarantees the obligations of such
subsidiary or (c) in the event of its merger or consolidation with another
company at any time during the term of this Agreement. The Buyer may assign all
or any part of its rights and obligations hereunder to a person or entity who
directly or indirectly controls, is controlled by or is under common control
with the Buyer (in each case by ownership of at least fifty percent (50%) of the
outstanding voting securities of a corporation or comparable equity interest in
any other type of entity, or by contract or other arrangement). Any purported
assignment in violation of this Section 13.11 shall be void. The rights and
obligations of the parties under this Agreement will be binding upon the heirs,
successors and permitted assigns of the parties and the name of a party
appearing herein will be deemed to include the names of such party's successors
and permitted assigns to the extent necessary to carry out the intent of this
Agreement.
13.12. Publicity. No party shall issue any press release or public
announcement of any kind concerning the transactions contemplated by this
Agreement without the prior written consent of the other parties hereto, except
as may be required by law or by the rules of any stock exchange, and if so
required, the parties shall, to the extent that it is reasonably practicable,
consult with each other prior to such publicity. The parties agree to issue an
announcement following the Closing in form and content satisfactory to all of
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
CEP HOLDINGS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
VIROTEX CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive
Officer
Asset Purchase Agreement
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APPENDIX A
----------
DEFINITIONS
-----------
Section
-------
Accountant.........................................................2.1(b)(viii)
Accountant's Audit.................................................2.1(b)(viii)
Additional Consideration Payments.....................................2.1(b)(i)
Agreement..............................................................Preamble
Assignment and Assumption Agreement......................................3.2(d)
Assumed Liabilities.........................................................1.2
▇▇▇▇ of Sale.............................................................3.3(a)
Buyer..................................................................Preamble
Buyer Confidential Information..............................................6.6
Buyer Indemnified Party....................................................11.2
Cash Consideration.......................................................2.1(a)
Claims......................................................................4.6
Closing.....................................................................3.1
Closing Date................................................................3.1
Competitive Activity.......................................................12.1
Copyrights...............................................................1.1(d)
Covered Period.............................................................12.1
Covered Products.....................................................2.1(b)(ii)
Defense Notice..........................................................11.5(a)
Deposit.....................................................................3.5
Dispute Notice.............................................................11.7
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Encumbrance..............................................................4.3(c)
ERISA....................................................................1.3(g)
Excluded Liabilities and Obligations........................................1.3
Existing Litigation.........................................................4.6
FDA.........................................................................4.6
FDA Act.....................................................................4.5
Governmental Authority...................................................4.3(d)
Guaranty.................................................................3.2(a)
Indemnification Notice.....................................................11.7
Indemnified Party.......................................................11.5(a)
Indemnifying Party......................................................11.5(a)
Initial File...............................................................4.15
Inventory................................................................1.1(l)
Knowledge..................................................................4.17
License Agreement........................................................3.2(b)
Losses.....................................................................11.2
Over-the-Counter Products...................................................8.1
Patents..................................................................1.1(c)
Products...............................................................Preamble
Proprietary Rights......................................................4.11(a)
Purchase Price..............................................................2.1
Purchased Assets............................................................1.1
Quarter Period........................................................2.1(b)(i)
Regulatory Agencies........................................................4.12
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Seller.................................................................Preamble
Seller Confidential Information.............................................7.1
Seller Indemnified Party...................................................11.3
Seller's Audit......................................................2.1(b)(vii)
Seller's Licensee......................................................Preamble
Seller's Licensee Agreement..............................................1.1(a)
Settlement Notice.......................................................11.5(c)
Technology...............................................................1.1(e)
Termination Agreement....................................................1.1(a)
Third Party..............................................................1.3(d)
Third Party Claim.......................................................11.5(a)
Third Party Indemnification Notice......................................11.5(a)
Trademarks...............................................................1.1(b)
Transition Date..........................................................1.3(e)
Viractin Product Line..................................................Preamble