EXHIBIT 10-Z
AGREEMENT OF PURCHASE AND SALE OF ASSETS
BY AND AMONG
BLAIREX LABORATORIES,
ZILA PHARMACEUTICALS, INC.
AND
ZILA, INC.
JUNE 27, 2005
TABLE OF CONTENTS
PAGE
ARTICLE 1 OVERVIEW................................................................................... 1
ARTICLE 2 THE TRANSACTION............................................................................ 1
2.1 Acquired Assets................................................................................ 1
2.2 Assets Not Being Acquired...................................................................... 2
2.3 Assumed Liabilities............................................................................ 2
2.4 Excluded Liabilities........................................................................... 3
2.5 Purchase Price................................................................................. 3
2.6 Allocation of Purchase Price................................................................... 4
2.7 Transfer Fees and Taxes; Prorations............................................................ 4
ARTICLE 3 THE PARTIES' OBLIGATIONS AT THE CLOSING.................................................... 4
3.1 The Closing.................................................................................... 4
3.2 Seller's and the Seller Shareholder's Obligations.............................................. 4
3.3 Buyer's Obligations............................................................................ 5
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION............................................ 5
4.1 Representations of Seller and Seller Shareholder Relating to the Division Business............. 5
4.2 Representations of Buyer....................................................................... 5
4.3 Survival....................................................................................... 5
4.4 Indemnification by Seller and the Seller Shareholder........................................... 5
4.5 Indemnification by Buyer....................................................................... 6
4.6 Procedure for Indemnification.................................................................. 6
ARTICLE 5 ADDITIONAL AGREEMENTS...................................................................... 6
5.1 Termination.................................................................................... 6
5.2 Effect of Termination.......................................................................... 7
5.3 Books and Records.............................................................................. 7
5.4 Transaction Expenses........................................................................... 7
5.5 Notices........................................................................................ 7
5.6 Governing Law; Attorneys' Fees................................................................. 8
5.7 Assignment..................................................................................... 8
5.8 Intent to be Binding; Entire Agreement......................................................... 8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.9 Waiver of Provisions........................................................................... 9
5.10 Arbitration.................................................................................... 9
5.11 Covenant not to Compete........................................................................ 9
5.12 Right to Use.................................................................................. 10
Exhibit A Definitions
Exhibit B Representations and Warranties of Seller and Shareholders
Exhibit C Representations and Warranties of Buyer
Exhibit D Procedure for Indemnification
Exhibit E Form of ▇▇▇▇ of Sale
Exhibit F Form of Assignment and Assumption of Contracts
Exhibit G Form of Assignment of Intellectual Property
Schedule A - Registered Servicemarks and Trademarks
Schedule B - Registered & Pending Patents
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AGREEMENT OF PURCHASE AND SALE OF ASSETS
This Agreement is made of as of June 27, 2005, by and among the following
parties:
- Blairex Laboratories, Inc., an Indiana corporation (the
"BUYER"); and
- Zila Pharmaceuticals, Inc., a Nevada corporation (the
"SELLER"); and
- Zila, Inc., a Delaware corporation (the "SELLER SHAREHOLDER").
ARTICLE 1
OVERVIEW
Seller engages in the business of manufacturing, marketing and selling
preventative healthcare technologies and products.
By this Agreement, Buyer is purchasing substantially all of the assets of
Seller with respect to the Division (the "DIVISION BUSINESS") in return for
cash.
For purposes of this Agreement, certain capitalized terms have the
meanings ascribed to them in Exhibit A. Other terms are defined in the body of
this Agreement.
ARTICLE 2
THE TRANSACTION
2.1 Acquired Assets. At the Closing, Seller agrees to sell and deliver to
Buyer all the right, title and interest that Seller possesses and has the right
to transfer in and to all of the assets constituting the Division (the "ACQUIRED
ASSETS"), which includes the following:
- all products and inventories, tangible or intangible and in
whatever medium, and whether raw materials, work-in-progress,
samples, prototypes or finished goods provided that all
finished goods shall have a minimum of fifteen (15) months
until the expiration date thereof (the "INVENTORY");
- to the extent assignable, all governmental or administrative
licenses, certificates, permits, approvals, and registrations
(the "PERMITS");
- all intellectual property, and in each case, the goodwill
associated therewith, including all trademarks, service marks,
trade names, including, without limitation, the name
"ZILACTIN" (and derivatives), copyrights, know-how, patents,
trade secrets, internet domain names, and telephone numbers
(the "INTELLECTUAL PROPERTY");
- all formulae, manufacturing instructions, batch formulations,
technologies, analytical methods, trade secrets, know-how, and
product specifications pertaining to products (hereinafter
collectively referred to as the "TECHNICAL INFORMATION") and
all notebooks, records reports, databases (regarding stability
results, release results and assay results) and other written
documentation which contain or embody the Technical
Information;
- all rights of Seller under or pursuant to all warranties,
representations and guarantees or otherwise from or against
manufacturers to the extent relating to the Business Division
or the products or affecting the Acquired Assets;
- all credits, prepaid expenses, deferred charges, security
deposits and prepaid items listed in Schedule 2.1;
- all unshipped orders as of the Closing Date;
- the customer, supplier and other contracts listed on Schedule
2.1 (together with the licenses to Intellectual Property
referenced above, the "ASSUMED AGREEMENTS"); and
- any other tangible or intangible property used or owned by
Seller related to the Division Business, including, for
example, customer orders, customer lists, distribution lists,
price lists, operating manuals, books, records, mailing lists,
advertising materials, purchasing materials and records,
research and development files, litigation files and
telephone, fax and data line numbers and goodwill.
Schedule 2.1 sets forth a list of all Inventory, Permits, Intellectual
Property (noting what is licensed and what is owned) and Assumed Agreements, by
category.
2.2 Assets Not Being Acquired. The following assets are expressly excluded
from the assets to be delivered to Buyer (the "EXCLUDED ASSETS"):
- the minute books, corporate tax returns, and other documents
relating to the organizational existence of Seller as a
corporation;
- any cash of Seller;
- all notes and accounts receivable;
- all of Seller's assets and properties unrelated to the
Division Business; and
- the other items specified on Schedule 2.2.
2.3 Assumed Liabilities. Buyer assumes only the following liabilities of
Seller (the "ASSUMED LIABILITIES"):
- the obligations under the Assumed Agreements related to events
or circumstances occurring after the Closing Date; and
- those liabilities specified on Schedule 2.3 and accepted by
Buyer at or prior to the Closing Date.
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Seller and Buyer will cooperate in order to consummate any unfulfilled
assignments of the Assumed Agreements and Permits. However, the Assumed
Agreements and Permits will not be deemed transferred or assigned to Buyer if
the attempted transfer or assignment thereof would be ineffective or would
constitute a breach of such contracts or rights. To the extent any required
consent or approval has not been obtained, the Parties will use reasonable
commercial efforts to obtain such approvals or consents, or new grants in favor
of Buyer following the Closing. For as long as any assignment is ineffective or
in the event a new grant cannot be obtained, then Seller hereby grants to Buyer
an exclusive sublease, sublicense or other rights, as appropriate, under such
Assumed Agreements and Permits as may be necessary or appropriate for Buyer to
continue the Division Business as heretofore conducted.
2.4 Excluded Liabilities.
Other than the Assumed Liabilities, Seller expressly acknowledges that
Buyer will not be liable for any obligations or liabilities of Seller of any
kind or nature whether actual or contingent, matured or unmatured, liquidated or
unliquidated, known or unknown, related to the Division Business or the Acquired
Assets, and to circumstances or events existing on or before the Closing Date,
including, without limitation:
- any liability or obligation to or in respect of any former or
existing shareholder, officer, director, employee or agent of
Seller whether under any plan, policy, agreement, law, charter
provision, or otherwise;
- any liability or obligation of Seller in respect of any Income
Tax;
- any claim, litigation, arbitration or other proceeding,
whether based on negligence, breach of warranty, breach of
contract, strict liability, enterprise liability or otherwise,
and whether now pending or threatened;
- any liability or obligation for violation by Seller of any
Applicable Law;
- any liability or obligation arising out of or relating to
products or services of Seller to the extent manufactured,
sold or rendered on or prior to the Closing Date;
- except as otherwise provided herein, any liability or
obligation arising as a result of Seller's operation of any
continuing business following the Closing Date;
- any liability or obligation for finished goods inventory
returns for a period of ninety (90) days following the Closing
Date.
Seller will timely and fully discharge all of its debts, obligations and
liabilities as they come due before and after Closing Date.
2.5 Purchase Price. Buyer will pay $10,300,000.00 in U.S. dollars to
Seller for the Acquired Assets and assume the Assumed Liabilities listed in
Section 2.3. In addition, Buyer
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will pay Seller at the Closing an amount equal to the value of the Inventory (at
cost) as determined by the Parties immediately prior to the Closing. The total
amount payable pursuant to the first two sentences of this Section 2.5 shall be
referred to as the "PURCHASE PRICE."
2.6 Allocation of Purchase Price. Promptly following the Closing, Seller
and Buyer will determine the manner in which the Purchase Price will be
allocated among the Acquired Assets, which allocation shall be binding upon the
parties. Seller and Buyer agree to report this transaction for Income Tax
purposes in accordance with that allocation, including on Internal Revenue
Service Form 8594, which they will file with their respective federal income tax
returns for the tax year that includes the Closing Date.
2.7 Transfer Fees and Taxes; Prorations.
(a) Buyer will pay all transfer and assumption fees and expenses and
sales, use, value added or similar taxes arising out of the transfer of
the Acquired Assets.
(b) Seller will pay its portion, prorated as of the Closing Date, of
real and personal property taxes relating to the Acquired Assets. Seller
will also be responsible for any other tax in respect of the Division
Business or the Acquired Assets related to any period prior to the Closing
Date. Seller shall be responsible for the payment of all rent, water, gas,
electricity and other utilities and periodic charges payable with respect
to the Division Business or the Acquired Assets related to any period on
or prior to the Closing.
ARTICLE 3
THE PARTIES' OBLIGATIONS AT THE CLOSING
3.1 The Closing. The closing ("CLOSING") of these transactions will occur
on June 27, 2005 (the "CLOSING DATE") at the offices of the Seller.
3.2 Seller's and the Seller Shareholder's Obligations. At the Closing,
Seller and/or the Seller Shareholder will deliver or accomplish the following:
- physical possession of the Acquired Assets;
- executed assignments of all Permits;
- releases of any liens, encumbrances, and security interests in
respect of the Acquired Assets;
- all needed third-party or governmental consents;
- an executed ▇▇▇▇ of Sale, attached as Exhibit E, which conveys
to Buyer legal title to all of the Acquired Assets;
- an executed Assignment and Assumption of Contracts relating to
the Assumed Agreements, attached as Exhibit F; and
- an executed assignment of Intellectual Property, attached as
Exhibit G.
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Seller and the Seller Shareholder further agree that, at any time before or
after the Closing Date, they will execute and deliver any further documents and
instruments of transfer reasonably requested by Buyer, and will take any other
action reasonably requested by Buyer consistent with the terms of this
Agreement, for the purpose of transferring and conveying to Buyer, all property
and rights to be transferred and conveyed by this Agreement.
3.3 Buyer's Obligations. At the Closing, Buyer will deliver the following:
- wire transfer in the amount of the Purchase Price; and
- an executed counterpart of the:
- Assignment and Assumption of Contracts; and
- Assignment of Intellectual Property.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
4.1 Representations of Seller and Seller Shareholder Relating to the
Division Business. Concurrently with the signing of this Agreement, Seller and
the Seller Shareholder have prepared a Disclosure Letter that discloses certain
information to Buyer (the "DISCLOSURE LETTER"). Seller and the Seller
Shareholder acknowledge that Buyer is relying on the accuracy of the
representations and warranties contained in Exhibit B. Accordingly, Seller and
the Seller Shareholder warrant to Buyer that each of the representations and
warranties contained in Exhibit B, as modified by the Disclosure Letter, are
true and correct.
4.2 Representations of Buyer. Buyer acknowledges that Seller is relying on
the accuracy of the representations and warranties contained in Exhibit C.
Accordingly, Buyer warrants to Seller and the Seller Shareholder that each of
the representations and warranties contained in Exhibit C are true and correct.
4.3 Survival. If the Closing occurs, Seller and the Seller Shareholder
will have liability (for indemnification or otherwise) with respect to any
breach of any representation or warranty or any other obligations or covenants,
except for the Covenant not to Compete, contained in this Agreement or other
document or certificate delivered pursuant to this Agreement only if on or
before the date one (1) year after the Closing Date, Buyer notifies Seller and
the Seller Shareholder of a claim specifying the factual basis of the claim in
reasonable detail to the extent then known by Buyer. The limitations on survival
shall not apply to the Covenant not to Compete.
4.4 Indemnification by Seller and the Seller Shareholder. Seller and the
Seller Shareholder agree to indemnify and hold Buyer and its representatives
harmless from and against any Loss (excluding any Loss Buyer may suffer after
the end of any applicable survival period) caused by them in connection with or
resulting from the following:
(a) a breach by Seller or the Seller Shareholder of any
representation or warranty made pursuant to Section 4.1 above within the
survival period or otherwise in this Agreement or other document or
certificate delivered pursuant to this Agreement;
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(b) a breach by Seller or the Seller Shareholder of any of its other
obligations or covenants contained in this Agreement or other document
delivered in connection with this Agreement; or
(c) Seller's failure to discharge the Excluded Liabilities;
provided, however, that neither Seller nor the Seller Shareholder shall have any
obligation to indemnify Buyer from and against any Loss caused by the breach of
any representation or warranty of Seller and the Seller Shareholder contained in
Exhibit B (A) until Buyer has suffered any Loss by reason of all such breaches
in excess of a $500,000 aggregate deductible (after which point the Indemnifying
Party will be obligated only to indemnify Buyer from and against further such
Loss) or (B) to the extent any Loss Buyer has suffered by reason of all such
breaches exceeds a $4,000,000 aggregate ceiling (after which point neither
Seller nor the Seller Shareholder will have an obligation to indemnify Buyer
from and against further such Loss).
4.5 Indemnification by Buyer. Buyer agrees to indemnify and hold Seller
and the Seller Shareholder and their representatives harmless from and against
any Loss incurred by Seller and the Seller Shareholder in connection with or
alleged to result from the following:
(a) a breach by Buyer of any representation or warranty made
pursuant to Section 4.2 above or otherwise in this Agreement or other document
or certificate delivered pursuant to this Agreement;
(b) a breach by Buyer of any of its obligations or covenants
contained in this Agreement or other document delivered in connection with this
Agreement; or
(c) Buyer's failure to discharge the Assumed Liabilities arising
after the Closing Date.
4.6 Procedure for Indemnification. The party that is entitled to be
indemnified hereunder shall follow the procedures set forth in Exhibit D. The
rights of the Parties for indemnification relating to this Agreement for the
transactions contemplated hereby shall be strictly limited to those contained in
this Article 4, and such indemnification rights shall be the exclusive remedies
of the Parties for money damages subsequent to the Closing Date with respect to
any matter in any way related to this Agreement or arising in connection
herewith.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller by giving written notice to the other
party if the other party (in the case of Seller, including the Seller
Shareholder) breaches any of its material representations, warranties, or
covenants contained in this Agreement and, if the
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breach is curable, the breach is not cured within ten (10) business days
after such notice; or
(c) by either Buyer or Seller if the Closing does not occur on or
before June 30, 2005 (except that no party shall have the right to
terminate this Agreement unilaterally if the event giving rise to the
non-occurrence of the Closing is primarily attributable to that party or
to any affiliated party).
5.2 Effect of Termination. If this Agreement is terminated as provided
above, this Agreement will become void and none of the parties or their
representatives will have any further liability or obligation except as set
forth in this Agreement, and except for liability arising from a breach of this
Agreement.
5.3 Books and Records. The parties will make reasonably available to one
another any records or documents that they maintain with respect to Seller, the
Acquired Assets or the Division Business for purposes of compliance with
applicable tax laws or in defending any third-party litigation arising in
respect of this Agreement. Seller will make available to Buyer, at Buyer's
request and expense, all books and records of Seller relating to the Division
Business which are reasonably necessary with respect to Buyer's ongoing
operations for inspection or copying by Buyer at any reasonable time for a one
(1) year period after the Closing Date.
5.4 Transaction Expenses. Each party, the Seller Shareholder and Seller on
the one hand and Buyer on the other hand shall be responsible for all of their
legal fees and expenses relating to the proposed transactions. Notwithstanding
the foregoing, all transfer, documentary, sales, use, stamp, registration and
other such taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement, shall be paid
by Buyer when due, and Buyer will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such taxes, fees and
charges, and, if required by Applicable Law, the Parties will, and will cause
their Affiliates to, join in the execution of any such Tax Returns and other
documentation.
5.5 Notices. All notices, and other communications hereunder will be in
writing and deemed to have been given when (i) delivered by hand, (ii) sent by
telecopier (with receipt confirmed), (iii) sent by email, or (iv) when actually
received by the addressee, in each case to the following:
If to Buyer: Blairex Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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With a copy to: ▇▇▇▇, ▇▇▇▇▇▇▇▇ & Dalmbert
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
If to Seller: Zila Pharmaceuticals, Inc.
c/o Zila, Inc.
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
5.6 Governing Law; Attorneys' Fees. The validity, construction, and
enforceability of this Agreement shall be governed in all respects by the laws
of the State of Arizona, without regard to its conflict of laws rules. If any
legal action or any arbitration or other proceeding is brought in connection
with this Agreement, the prevailing party will be entitled to recover reasonable
attorneys' fees, accounting fees, and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
5.7 Assignment. This Agreement will not be assigned by operation of law or
otherwise, except that Buyer may assign all or any portion of its rights under
this Agreement to any wholly owned subsidiary, but no such assignment will
relieve Buyer of its obligations hereunder, and except that this Agreement may
be assigned by operation of law to any corporation or entity with or into which
Buyer may be merged or consolidated or to which Buyer transfers all or
substantially all of its assets, and such corporation or entity assumes this
Agreement and all obligations and undertakings of Buyer hereunder.
5.8 Intent to be Binding; Entire Agreement. The Schedules and Exhibits
referred to herein are incorporated herein by reference as if fully set forth in
the text of this Agreement. This Agreement may be executed in any number of
counterparts, and each counterpart constitutes an original instrument, but all
such separate counterparts constitute one and the same agreement. This Agreement
may not be amended except by an instrument in writing approved by Buyer, Seller,
and the Seller Shareholder. If any term, provision, covenant, or restriction of
this Agreement is held by a court to be invalid or unenforceable, the remainder
of the terms, provisions, covenants, and restrictions of this Agreement will
remain in full force and effect and will in no way be affected or invalidated
and the court will modify this Agreement or, in the
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absence thereof, the parties agree to negotiate in good faith to modify this
Agreement to preserve each party's anticipated benefits under this Agreement.
5.9 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
5.10 Arbitration. Any controversy relating to this Agreement or relating
to the breach hereof shall be settled by arbitration conducted in Phoenix,
Arizona in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The award rendered by the arbitrator(s)
shall be final and judgment upon the award rendered by the arbitrator(s) may be
entered upon it in any court having jurisdiction thereof. The arbitrator(s)
shall possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. The expenses of the arbitration shall be borne
by the losing party unless otherwise allocated by the arbitrator(s). The
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. During the continuance of any arbitration proceedings, the
parties shall continue to perform their respective obligations under this
Agreement.
5.11 Covenant not to Compete. For five (5) years from and after the
Closing Date, neither Seller, Seller Shareholder, nor any subsidiaries or
affiliates of Seller or Seller Shareholder shall, in any country in which Seller
and Seller Shareholder are doing business as of the Closing Date or in any
country in which Seller and Seller Shareholder have registered Servicemarks,
Trademarks, Patents or have Patents pending, (which Countries are more
specifically described in Schedules A and B attached to this Agreement of
Purchase and Sale of Assets) directly or indirectly, own, manage, or operate, or
join, control, or participate in the ownership, management, operation or control
of any business whether in corporate, proprietorship or partnership form or
otherwise, which engages in the development, manufacture, sale, promotion, or
marketing of any products which are directly competitive with the Division
products listed in Exhibit A attached to this Agreement of Purchase and Sale of
Assets under the definition of "Division."
The parties hereto specifically acknowledge and agree that the remedy at
law for any breach of the forgoing will be inadequate and that Buyer, in
addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage. In
the event that the provision of this Covenant not to Compete should ever be
deemed to exceed the limitation provided by applicable law, then the parties
hereto agree that such provisions shall be reformed to set forth the maximum
limitations permitted. If any of the provision of this Covenant not to Compete
shall for any reason be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed, by
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limiting and reducing it, so as to be enforceable to the extent compatible with
the applicable law as it shall then appear.
5.12 Right to Use. Buyer shall have the right to sell the inventory and
all packaging materials existing as of the Closing Date using the name of Seller
Shareholder and the UPC codes of Seller until all such inventory shall have been
disposed of by the Buyer. Nothwithstanding the foregoing, Buyer shall use its
reasonable best efforts to cause all such inventory and packaging materials to
be disposed of within twelve (12) months following the Closing Date and in all
cases within fifteen (15) months following the Closing Date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Buyer, Seller, and the Seller Shareholder have executed this Agreement on
the date first written above.
"BUYER"
BLAIREX LABORATORIES, INC., an Indiana
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
"SELLER"
ZILA PHARMACEUTICALS, INC., a Nevada
corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
"SELLER SHAREHOLDER"
ZILA, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
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EXHIBIT A
DEFINITIONS
For purposes of this Agreement and the Schedules and Exhibits thereto, the
following terms have the following meanings.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"APPLICABLE LAWS" means all laws, regulations, ordinances and other
restrictions of foreign, federal, state, and local governments and agencies
regulating or otherwise affecting the Division Business or the Acquired Assets,
including, without limitation, employee health and safety, the discharge of
pollutants or wastes, and employee benefit plans.
"ASSUMED AGREEMENTS" has the meaning set forth in Section 2.1.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.
"BUYER" has the meaning set forth in the preface of this Agreement.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"DISCLOSURE LETTER" has the meaning set forth in Section 4.1.
"DIVISION" means that portion of Seller's business which is engaged in the
manufacture and sale of Seller's Zilactin brand of products for the treatment of
aphthous ulcers, herpetic lesions and other mouth sores, and includes the
following over-the-counter, non-prescription products:
- Zilactin(R) Cold Sore Gel;
- Zilactin(R)-L Cold Sore Liquid;
- Zilactin(R)-B Mouth Sore Gel;
- Zilactin(R) Tooth and Gum Swabs;
- Zilactin(R) Cold Sore Gel (single use packets);
- Zilactin(R) Mouth Sore Gel (single use packets);
- Zilactin(R) Baby Teething Gel;
- Zilactin(R) Lip-Balm (all formulations);
- Zilactin(R) Baby Teething Swabs (discontinued);
- Zilactin(R) Dermaflex; and
- Formulation/Feasibility Studies regarding next generation
products.
"DIVISION BUSINESS" has the meaning set forth in the recitals.
A-1
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"FINANCIAL STATEMENTS" has the meaning set forth in Item 5 of Exhibit B.
"INCOME TAX" means any federal, state, local, or foreign tax based on or
measured by reference to net income including any interest, penalty, or addition
thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 2.1.
"INVENTORY" has the meaning set forth in Section 2.1.
"KNOWLEDGE" means actual knowledge without independent investigation.
"LOSS" or "LOSSES" means any and all claims, liabilities, obligations,
losses, fines, costs, royalties, proceedings, deficiencies or damages.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any effect or
change that would be materially adverse to the Acquired Assets or Division
Business, taken as a whole; provided that none of the following shall be deemed
to constitute, and none of the following shall be taken into account in
determining whether there has been, a Material Adverse Effect or Material
Adverse Change: (a) any adverse change, event, development, or effect arising
from or relating to (1) general business or economic conditions affecting the
industry in which Division operates, including such conditions related to the
business of Division, (2) national or international political or social
conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon the United States, or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (3)
financial, banking, or securities markets (including any disruption thereof and
any decline in the price of any security or any market index), (4) changes in
United States generally accepted accounting principles, (5) changes in laws,
rules, regulations, orders, or other binding directives issued by any
governmental entity or (6) the taking of any action contemplated by this
Agreement and the other agreements contemplated hereby, (b) any existing event,
occurrence, or circumstance with respect to which Buyer has Knowledge as of the
date hereof, and (c) any adverse change in or effect on the Division Business
that is cured by Seller before the Closing Date.
"PERMITS" has the meaning set forth in Section 2.1.
"PURCHASE PRICE" has the meaning set forth in Section 2.5.
"SELLER" has the meaning set forth in the preface above.
"SELLER SHAREHOLDER" has the meaning set forth in the preface of this
Agreement.
A-2
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to taxes, including any schedule or
attachment thereto, and including any amendment thereof.
A-3
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF SELLER
AND SELLER SHAREHOLDERS
Each of Seller and the Seller Shareholder represent and warrant to Buyer
as follows:
1. Organization and Qualification. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the state of Nevada,
and has the requisite corporate power and authority to own and operate its
respective properties and to carry on its respective business as now conducted.
2. Authority Relative to this Agreement. The Seller has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Seller
and the consummation by Seller of these transactions has been duly authorized by
the Board of Directors of Seller and has been duly approved by the Seller
Shareholder, and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement and such transactions. This Agreement has
been duly executed and delivered by Seller and the Seller Shareholder, and
constitutes a valid and binding obligation of Seller and the Seller Shareholder,
enforceable in accordance with its terms.
3. No Conflicts. Neither the Seller nor the Seller Shareholder are subject
to, or obligated under, any provision of (a) their Articles of Incorporation,
Bylaws, or other organizational documents, (b) any agreement, arrangement, or
understanding, (c) any license, franchise, or Permit, or (d) any Applicable Law
which would be breached or violated, or in respect of which a right of
termination or acceleration would arise, or pursuant to which any encumbrance on
any of the Acquired Assets would be created, by its execution, delivery, and
performance of this Agreement and the consummation by them of the transactions
contemplated hereby, except where the violation, conflict, breach, default,
acceleration, termination, modification, failure to give notice would not have a
Material Adverse Effect.
4. No Consents. Except as set forth in the Disclosure Letter, no
authorization, consent, or approval of, or filing with, any public body, court,
or authority is necessary on the part of Seller or the Seller Shareholder for
the consummation by Seller and the Seller Shareholder of the transactions
contemplated by this Agreement, except where the failure to file, or to obtain
any authorization, consent, or approval would not have a Material Adverse
Effect.
5. Financial Statements. The balance sheet and income statement of the
Division Business as of and for the year ended July 31, 2004 and as of and for
the nine (9) months ended April 30, 2005 (collectively, the "FINANCIAL
STATEMENTS") are attached to the Disclosure Letter. The Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved and fairly present the financial position of the
Division Business as of the dates thereof and the results of its operations for
the periods then ended; provided, however, that such Financial Statements are
subject to normal year-end adjustments and lack footnotes and other presentation
items.
6. Title to the Acquired Assets. The Seller has good title to, or a valid
leasehold interest in, the material tangible assets used regularly in the
conduct of the Division Business.
B-1
7. Other Contracts. The Disclosure Letter sets forth the material terms of
all written contracts and other written agreements to which Seller is a party
and the performance of which will involve consideration in excess of $10,000.
Seller has delivered to Buyer a correct and complete copy of each contract or
other agreement listed in the Disclosure Letter.
8. Tax Matters. Seller has filed all Income Tax Returns that it was
required to file, and has paid all Income Taxes shown thereon as owing, except
where the failure to file Income Tax Returns or to pay Income Taxes would not
have a Material Adverse Effect. Except as set forth in the Disclosure Letter, no
action, suit, proceeding or audit is pending against or with respect to Seller
regarding taxes.
9. Litigation. Except as set forth in the Disclosure Letter, there are no
suits, claims, actions, arbitrations, investigations, or proceedings entered
against, now pending, or to the Knowledge of Seller threatened against Seller
before any court, arbitration, administrative or regulatory body, or any
governmental agency which may result in any judgment, order, award, decree,
liability, or other determination which will or could reasonably be expected to
have a Material Adverse Effect. Seller is not subject to any continuing court or
administrative order, writ, injunction, or decree applicable to it or the
Division Business, or to its property or employees, and to the Knowledge of
Seller, Seller is not in default with respect to any order, writ, injunction, or
decree of any court or federal, state, municipal, or other governmental
department, commission, board, agency, or instrumentality.
10. Brokers' Fees. Neither Seller nor any Affiliate has dealt with any
broker, finder, or other person or entity entitled to any brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement.
11. Disclaimer of Other Representations and Warranties. Except as
expressly set forth in this Exhibit B, Seller makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Buyer hereby acknowledges and agrees
that, except to the extent specifically set forth in this Exhibit B, Buyer is
purchasing the Acquired Assets on an "as-is, where-is" basis. Without limiting
the generality of the foregoing, Seller makes no representation or warranty
regarding any assets other than the Acquired Assets or any liabilities other
than the Assumed Liabilities, and none shall be implied at law or in equity.
B-2
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and the Seller Shareholder each of
the following:
1. Organization and Qualification. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Indiana,
and has the requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted in each jurisdiction
where the failure to do so would have a material adverse effect on its business,
properties, or ability to conduct the business currently conducted by it.
2. Authority Relative to this Agreement. Buyer has the requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby have been duly
authorized by Buyer, and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement and such transactions. This Agreement has
been duly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
3. No Conflicts. Buyer is not subject to, or obligated under, any
provision of (a) its Articles of Incorporation or Bylaws, (b) any agreement,
arrangement, or understanding, (c) any license, franchise, or Permit, or (d) any
law, regulation, order, judgment, or decree, which would be breached or violated
by its execution, delivery, and performance of this Agreement and the
consummation by it of the transactions contemplated hereby.
4. No Consents. No authorization, consent, or approval of, or filing with,
any public body, court, or authority is necessary on the part of Buyer for the
consummation by Buyer of the transactions contemplated by this Agreement.
5. Financial Capacity. Buyer has the financial capacity to consummate the
transaction contemplated hereby.
C-1
EXHIBIT D
PROCEDURE FOR INDEMNIFICATION
The Indemnified Party will promptly give notice hereunder to the
Indemnifying Party after obtaining notice of any claim as to which recovery may
be sought against the Indemnifying Party. However, the right to indemnification
hereunder will not be affected by any delay in or failure of an Indemnified
Party to give any notice, unless, and then only to the extent that, the rights
and remedies of the Indemnifying Party will have been prejudiced as a result of
the failure to give, or delay in giving, notice.
If the indemnity claim arises from the claim of a third-party, the
Indemnified Party will permit the Indemnifying Party to assume the defense of
any such claim and any litigation resulting from such claim. If the Indemnifying
Party fails to notify an Indemnified Party of its election to defend any such
claim or action by a third party with respect to which it has the option to
defend within 30 days after the Indemnifying Party receives notice of such claim
or action, then the Indemnifying Party will be deemed to have waived its right
to defend such claim or action. If the Indemnifying Party assumes the defense of
a third-party claim, the obligations of the Indemnifying Party as to such claim
will include taking all steps necessary in the defense or settlement of such
claim or litigation and holding the Indemnified Party harmless from and against
any and all damages caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment in connection with such claim or litigation.
The Indemnifying Party shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) except with the written consent of the
Indemnified Party, or enter into any settlement (except with the written consent
of the Indemnified Party) which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party a
release from all liability in respect of such claim or litigation. The
non-defending party may, with counsel of its choice and at its expense,
participate in the defense of any such claim or litigation.
If the Indemnifying Party does not assume the defense of any such claim or
litigation by a third-party, the Indemnified Party may defend against such claim
or litigation in such manner as it deems appropriate. The Indemnified Party may
not settle such claim or litigation without the consent of Indemnifying Party,
which consent may not be unreasonably withheld. The Indemnifying Party will
promptly pay or reimburse the Indemnified Party for all expenses in defending
any claim, for the amount of any settlement, and for all damages incurred by the
Indemnified Party in connection with any such claim or litigation.
D-1
EXHIBIT E
▇▇▇▇ OF SALE
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Zila Pharmaceuticals, Inc. ("SELLER"), does hereby grant,
bargain, transfer, sell, assign, convey and deliver to Blairex Laboratories,
Inc., an Indiana corporation ("BUYER"), all right, title and interest in and to
the Acquired Assets as such term is defined in the Agreement of Purchase and
Sale of Assets dated as of June 27, 2005 by and among Buyer, Seller and the
Seller Shareholder (the "AGREEMENT"). Seller, for itself, its Affiliates, its
successors and assigns, hereby covenants and agrees that, at any time and from
time to time forthwith upon the written request of Buyer, it will do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, each and all of such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required by
Buyer in order to assign, transfer, set over, convey, assure and confirm unto
and vest in Buyer, its successors and assigns, title to the assets sold,
conveyed, transferred and delivered by this ▇▇▇▇ of Sale.
This ▇▇▇▇ of Sale is being executed and delivered by Seller as of the date
set forth below pursuant to the terms of the Agreement.
Dated this 27th day of June, 2005.
"SELLER"
ZILA PHARMACEUTICALS, INC., a Nevada
corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
E-1
EXHIBIT F
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
Pursuant to the Agreement of Purchase and Sale of Assets, dated as of June
27, 2005 (the "PURCHASE AGREEMENT"), by and among Blairex Laboratories, Inc., an
Indiana corporation ("BUYER"), Zila Pharmaceuticals, Inc. (the "SELLER") and
Zila, Inc., for good and valuable consideration, the receipt and adequacy of
which are acknowledged, Seller hereby assigns, and Buyer hereby assumes the
"Assumed Agreements" listed on Schedule 2.1 attached thereto; provided, however,
that Buyer assumes obligations under the Assumed Agreements.
Dated this 27th day of June, 2005.
"SELLER"
Zila Pharmaceuticals, Inc., a Nevada
corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
"BUYER"
Blairex Laboratories, Inc., an Indiana
corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
F-1
EXHIBIT G
ASSIGNMENT OF INTELLECTUAL PROPERTY
This Assignment of Intellectual Property is being made pursuant to the
Agreement of Purchase and Sale of Assets, dated as of June 27, 2005 (the
"AGREEMENT"), by and among Blairex Laboratories, Inc., an Indiana corporation
("BUYER"), Zila Pharmaceuticals, Inc., a Nevada corporation ("SELLER") and Zila,
Inc., a Delaware corporation.
RECITAL
Seller has agreed, pursuant to the Agreement, to transfer and assign to
Buyer, and Buyer desires to accept the transfer and assignment of, all of
Seller's worldwide right, title and interest in, to and under Seller's (a)
registered and unregistered domestic and foreign servicemarks, trademarks,
trademark applications and trade names, including without limitation the
servicemarks, trademarks, servicemark and trademark applications and trade names
listed on Schedule A annexed hereto and incorporated herein by this reference
(the "MARKS"), and (b) registered and unregistered domestic and foreign patents
and patent applications including without limitation the patents and patent
applications listed on Schedule B attached hereto and incorporated herein by
this reference (the "PATENTS").
ASSIGNMENT
Seller, for and in exchange for the payment of the consideration set forth
in the Agreement, the receipt and adequacy of which is hereby acknowledged, does
hereby transfer and assign to Buyer, and Buyer hereby accepts the transfer and
assignment of, all of Seller's worldwide right, title and interest in, to and
under the Marks and Patents, together with the goodwill of the business
associated therewith and which is symbolized thereby, all rights to ▇▇▇ for
infringement of any ▇▇▇▇ or Patent whether arising prior to or subsequent to the
date of this Assignment of Intellectual Property, and any and all renewals and
extensions thereof that may hereafter be secured under the laws now or hereafter
in effect in the United States, Canada, and in any other jurisdiction, the same
to be held and enjoyed by the said Buyer, its successors and assigns from and
after the date hereof as fully and entirely as the same would have been held and
enjoyed by Seller had this Assignment of Intellectual Property not been made.
Except to the extent that federal law preempts state law with respect to
the matters covered hereby, this Assignment of Intellectual Property shall be
governed by and construed in accordance with the laws of the State of Arizona
without giving effect to the principles of conflicts of laws thereof.
G-1
Dated this 27th day of June, 2005.
"SELLER"
ZILA PHARMACEUTICALS, INC., a Nevada
corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
G-2
State of Arizona )
) ss.:
County of Maricopa )
On this 27th day of June, 2005, before me, _____________________,
personally appeared ________________________, _______________________ of Zila
Pharmaceuticals, Inc., personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
__________________________________
Notary Public
G-3
SCHEDULE A
REGISTERED SERVICEMARKS AND TRADEMARKS
Servicemark or Trademark U.S. or Canadian Registration No. Registration Date
ZILACTIN USA 1347149 5/14/1984
ZILACTIN Canada TMA399208 4/25/1991
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 11/24/2003
SCHEDULE B
REGISTERED & PENDING PATENTS
REGISTERED PATENTS
PATENT REGISTRATION NUMBER ISSUED DATE EXPIRATION DATE
Zilactin P-6 USA 5,081,158 1/14/92 1/14/09
Zilactin ▇-▇ ▇▇▇ 5,081,157 1/14/92 1/14/09
Zilactin P-8 Australia 614,179 12/16/91 7/24/09
Canada 1,337,396 10/24/95 7/25/06
China 90101988 2/21/98 4/10/05
Columbia 24.269 2/4/94 8/27/05
Denmark 175653 01/03/05 07/24/09
Greece 1,001,331 7/18/90 7/18/10
Mexico 178,116 5/24/95 7/23/10
New Zealand 232,625 2/21/90 2/21/06
Norway 180618 5/21/97 7/24/09
S. Korea 8,743 5/12/95 12/3/09
Spain 2020655/0 6/26/91 7/24/10
PCT/US89/03216 (not published)
Zilactin P-16 Australia 768,693 10/19/98 10/19/18
▇▇▇/▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇ ▇▇/▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 04/11/05 11/19/18
Zilactin P-28 PCT/US00/01135 Publication No. WO 01/50994
PATENT PENDING APPLICATIONS
PATENT APPLICATION NUMBER
Zilactin P-16 Canada 2,306,486
China 98813904.9
Europe 98954998.5
Israel 135,164
Japan 2000-576800
Mexico 2000003491
USA 09/509,237
Zilactin P-28 Canada 2,366,411
Europe
Japan 2001 551418
Norway 2001 4444
USA 09/936,800