EXHIBIT XII
ASSET AND EQUITY PURCHASE AGREEMENT
Dated as of October 10, 2002
among
ADVANCED TISSUE SCIENCES, INC.,
ATS DERMAGRAFT, INC.,
ATS ORTHOPEDICS, INC.,
▇▇▇▇▇ & NEPHEW SNATS, INC.
and
▇. ▇. ▇▇▇▇▇ & NEPHEW LIMITED
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ..................................................... 2
1.1. Definitions .................................................. 2
ARTICLE II PURCHASE AND SALE .............................................. 11
2.1. Purchase and Sale of Equity Interests ........................ 11
2.2. Purchased Assets ............................................. 11
2.3. Excluded Assets .............................................. 13
2.4. Assumed Liabilities .......................................... 14
2.5. Excluded Liabilities ......................................... 15
2.6. Assignments; Cure Amounts .................................... 15
2.7. Assignment to Buyer Affiliates ............................... 15
ARTICLE III PURCHASE PRICE ................................................ 15
3.1. Purchase Price ............................................... 15
3.2. Allocation of Purchase Price ................................. 17
ARTICLE IV CLOSING ........................................................ 17
4.1. Closing Date ................................................. 17
4.2. Payment on the Closing Date .................................. 17
4.3. Buyer's Additional Deliveries ................................ 18
4.4. Seller's Deliveries .......................................... 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS ....................... 21
5.1. Organization of Sellers; Subsidiaries ........................ 21
5.2. Equity Interests ............................................. 21
5.3. Authority of Sellers ......................................... 21
5.4. Financial Information ........................................ 22
5.5. Absence of Certain Changes or Events ......................... 23
5.6. Availability of Assets ....................................... 23
5.7. Governmental Permits and Compliance .......................... 24
5.8. Leased Real Property ......................................... 24
5.9. Personal Property ............................................ 25
5.10. Intellectual Property ....................................... 25
5.11. Title to Property ........................................... 27
5.12. Employees and Related Agreements ............................ 27
5.13. Employee Relations .......................................... 27
5.14. ERISA and Related Matters ................................... 27
5.15. Contracts ................................................... 28
5.16. Status of Contracts ......................................... 29
5.17. No Litigation or Regulatory Action .......................... 30
5.18. Environmental Matters ....................................... 30
5.19. Suppliers ...............................................................32
5.20. Product Liabilities .....................................................32
5.21. Taxes ...................................................................32
5.22. Regulatory Matters ......................................................33
5.23. No Finder ...............................................................33
5.24. Closing Date ............................................................33
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER AND TJS&N .........................34
6.1. Organization of Buyer and TJS&N .........................................34
6.2. Authority of Buyer and TJS&N ............................................34
6.3. No Finder ...............................................................35
ARTICLE VII ACTION PRIOR TO THE CLOSING DATE .........................................35
7.1. Investigation of the Business by Buyer ..................................35
7.2. Preserve Accuracy of Representations and Warranties .....................35
7.3. Consents of Third Parties; No Seller Defaults; Governmental Approvals ...36
7.4. Operations Prior to the Closing Date ....................................37
7.5. Notification of Certain Matters .........................................37
7.6. Insurance ...............................................................37
7.7. New Contracts and Other Assets ..........................................38
7.8. Ethicon Agreement .......................................................38
7.9. Bankruptcy Court Approvals ..............................................38
7.10. Delivery of Disclosure Schedule .........................................38
7.11. Agreements Relating to DermEquip Loan ...................................38
7.12. Efforts to Agree to Certain Contracts ...................................39
7.13. Termination of Current Agreements .......................................40
7.14. Dermagraft JV Loan to ATS ...............................................41
7.15. Cessation of Operations of the SNATS Partnership ........................41
7.16. Real Property Lease .....................................................42
ARTICLE VIII ADDITIONAL AGREEMENTS ...................................................42
8.1. Covenant Not to Compete or Solicit Business .............................42
8.2. Taxes ...................................................................43
8.3. Discharge of Liabilities ................................................44
8.4. Employees and Employee Benefit Plans ....................................44
8.5. Reimbursed Expenses .....................................................46
8.6. Administrative Claims ...................................................47
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER ..............................47
9.1. No Misrepresentation or Breach of Covenants and Warranties ..............47
9.2. No Changes or Destruction of Property ...................................47
9.3. No Restraint or Litigation ..............................................47
9.4. Bankruptcy Court Order ..................................................47
9.5. Necessary Governmental Approvals ........................................48
9.6. Necessary Consents ......................................................48
9.7. Deliveries ..............................................................48
9.8. Disclosure Schedule .....................................................48
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9.9. Real Property Lease .....................................................48
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS .............................48
10.1. No Misrepresentation or Breach of Covenants and Warranties ..............48
10.2. No Restraint or Litigation ..............................................49
10.3. Bankruptcy Court Order ..................................................49
10.4. Necessary Governmental Approvals ........................................49
10.5. Deliveries ..............................................................49
10.6. Real Property Lease Termination .........................................49
ARTICLE XI TERMINATION ...............................................................49
11.1. Termination .............................................................49
11.2. Notice of Termination ...................................................50
11.3. Effect of Termination ...................................................50
ARTICLE XII GENERAL PROVISIONS .......................................................50
12.1. Survival of Obligations; Indemnity ......................................50
12.2. Confidential Nature of Information ......................................51
12.3. No Public Announcement ..................................................51
12.4. Notices .................................................................51
12.5. Successors and Assigns; No Third Party Beneficiaries ....................52
12.6. Access to Records after Closing .........................................53
12.7. Entire Agreement; Amendments; Disclosure Schedule .......................53
12.8. Interpretation ..........................................................53
12.9. Waivers .................................................................54
12.10. Expenses ................................................................54
12.11. Partial Invalidity ......................................................54
12.12. Execution in Counterparts ...............................................54
12.13. Further Assurances ......................................................54
12.14. Governing Law ...........................................................55
12.15. Resolution of Disputes ..................................................55
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SECTIONS TO THE DISCLOSURE SCHEDULE
1.1(a) Sellers' Knowledge
2.2(b) Personal Property
2.2(c) Contracts
2.2(d) Personal Property Leases
2.2(e) Lease Agreements
2.2(f) Governmental Permits
2.2(g) Intellectual Property
2.2(i) Software and Related Contracts
2.2(A) Cartilage Assets
2.2(B) Certain ▇▇▇▇▇▇ ▇▇▇▇▇ Assets
5.1 Organization of Sellers; Subsidiaries
5.2 Equity Interests
5.3 Authority of Sellers
5.4 Financial Information
5.5 Absence of Certain Changes or Events
5.6 Availability of Assets
5.7 Governmental Permits and Compliance
5.8 Leased Real Property
5.9 Personal Property
5.10 Intellectual Property
5.11 Title to Property
5.12 Employees and Related Agreements
5.13 Employee Relations
5.14 ERISA and Related Matters
5.15 Contracts
5.16 Status of Contracts
5.17 No Litigation or Regulatory Action
5.18 Environmental Matters
5.19 Suppliers
5.20 Product Liabilities
5.21 Taxes
5.22 Regulatory Matters
5.24 Buyer's Knowledge
7.4 Certain Employees
8.4(a) Offeree Employees
EXHIBITS
Exhibit A Bidding Procedures
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ASSET AND EQUITY PURCHASE AGREEMENT
ASSET AND EQUITY PURCHASE AGREEMENT, dated as of October 10, 2002
(this "Agreement"), among Advanced Tissue Sciences, Inc., a Delaware corporation
("Parent"), ATS Dermagraft, Inc., a California corporation ("ATS Dermagraft"),
ATS Orthopedics, Inc., a California corporation ("ATS Orthopedics" and, together
with Parent and ATS Dermagraft, "Sellers"), ▇▇▇▇▇ & Nephew SNATS, Inc., a
Delaware corporation ("Buyer"), and ▇. ▇. ▇▇▇▇▇ & Nephew Limited, a United
Kingdom company ("TJS&N").
WHEREAS, Buyer and ATS Dermagraft are (i) the only two partners or
equity participants in Dermagraft Joint Venture, a Delaware general partnership
("Dermagraft JV"), and (ii) the only two members or equity participants in
DermEquip, L.L.C., a Delaware limited liability company ("DermEquip");
WHEREAS, Buyer and Parent and certain of Parent's Affiliates are
engaged, through Dermagraft JV and DermEquip, in the business of developing,
manufacturing, marketing and selling Dermagraft(R), TransCyte(R) and other
products developed from the same technology for the medical care and treatment
of skin tissue wounds on humans, including diabetic foot ulcers, pressure
ulcers, venous ulcers, ▇▇▇▇▇ (partial thickness and full thickness), cosmetic
surgery for skin tissue defects or post-surgical skin tissue or post-trauma skin
tissue rehabilitation (but not cosmetic surgery for the enhancement of normal
skin tissue (e.g., chemical peels and laser resurfacing)) and ostomy
applications (the "Business");
WHEREAS, Buyer and ATS Orthopedics are the only two partners or
equity participants in Advanced Tissue Sciences - ▇▇▇▇▇ & Nephew, a Delaware
general partnership ("SNATS Partnership");
WHEREAS, Buyer and Parent and certain of Parent's Affiliates are
engaged, through SNATS Partnership, in the business of developing, and
potentially manufacturing, marketing and selling cartilage based tissue
modification, repair or replacement products for use in the repair or
replacement of tissue attached to and/or part of the musculoskeletal system (the
"Cartilage Business");
WHEREAS, Parent and certain of its Affiliates intend to file
voluntary petitions for relief with the Bankruptcy Court under Chapter 11 of the
Bankruptcy Code (the "Filing");
WHEREAS, Sellers desire to sell or cause to be sold to Buyer, and
Buyer desires to purchase, subject to the approval of the Bankruptcy Court
pursuant to Section 363 of the Bankruptcy Code, all of ATS Dermagraft's and any
of its Affiliates' interests in the Dermagraft JV, all of ATS Dermagraft's and
any of its Affiliates' membership interests in DermEquip, certain of the assets
used or held for use in the Cartilage Business and substantially all of the
other assets used in or held for use in or related to the Business, together
with Buyer assuming certain liabilities related thereto, all on the terms and
subject to the conditions set forth herein; and
WHEREAS, Buyer and Sellers have executed the Loan Agreement,
pursuant to which Buyer will lend up to $5,000,000 to Parent, as
debtor-in-possession, subject to the conditions set forth in and in accordance
with the terms of the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Sellers, ATS
Orthopedics, Buyer and TJS&N as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"Action" means any legal action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affected Employee" has the meaning specified in Section 8.4(e).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is under common
control with such Person.
"Agreement" has the meaning specified in the first paragraph.
"Allocation Schedule" has the meaning specified in Section 3.2.
"Ancillary Documents" means the Loan Agreement, Instrument of
Assignment, Instrument of Assumption, Disclosure Schedule, Assignment of
Patents, Assignment of Trademarks, Manufacturing and Supply Agreement, ATS
Intellectual Property License Agreement, ATS Primary Assets Agreement, Business
Primary Assets Agreement, Termination Agreement Relating to Current Agreements,
Waiver and Release Agreement, SNATS Revised Agreement, Contribution Termination
Agreement, Dermagraft JV Loan Termination Documentation, Business Intellectual
Property License Agreement and Transition Services Agreement.
"Assignment of Patents" has the meaning specified in Section
4.4(p).
"Assignment of Trademarks" has the meaning specified in Section
4.4(p).
"Assumed Liabilities" has the meaning specified in Section 2.4.
"ATS Business" means any business engaged in by Sellers or their
Affiliates on or prior to the date hereof other than the Business and the
Cartilage Business.
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"ATS Dermagraft" has the meaning specified in the first
paragraph.
"ATS Dermagraft Loan" has the meaning specified in Section 7.14.
"ATS Intellectual Property License Agreement" has the meaning
specified in Section 7.12(b).
"ATS Orthopedics" has the meaning specified in the first
paragraph.
"ATS Primary Assets" means any assets (other than Intellectual
Property) primarily used or held for use in or related to the ATS Business that
are also used or held for use in or related to the Business.
"ATS Primary Assets Agreement" has the meaning specified in
Section 7.12(d).
"Auction" means the auction conducted pursuant to the Sale
Procedures Order.
"Award" shall have the meaning specified in Section 12.15.
"Bank" has the meaning specified in Section 7.11.
"Bankruptcy Code" means 11 U.S.C.(S)(S) 101 et seq.
"Bankruptcy Court" means the United States Bankruptcy Court for
the Southern District of California or any other court of competent
jurisdiction agreed to by Buyer and Sellers.
"Bankruptcy Court Order" means a final, non-appealable order
of the Bankruptcy Court, in form and substance reasonably satisfactory to Buyer,
approving this Agreement and the Ancillary Documents, and authorizing, pursuant
to all applicable sections of the Bankruptcy Code, all of the transactions and
agreements contemplated hereby and thereby, which order shall not have been
stayed, vacated or otherwise rendered ineffective, and with respect to which no
appeal shall be pending and all applicable periods for appeal shall have
expired, and which includes the following provisions:
(i) a finding that the Equity Interests and the Purchased Assets
are property of Sellers' estates within the meaning of Section 541 of the
Bankruptcy Code;
(ii) a finding that all parties in interest, including each
person or entity known to Sellers to have any ownership interest in or lien on
the Equity Interests or the Purchased Assets, have been given proper and
adequate notice of the motion seeking entry of the Bankruptcy Court Order and of
the hearing on the motion;
(iii) approval of each Seller's assumption and assignment to
Buyer of the Seller Agreements, and Buyer's assumption of the Assumed
Liabilities, in accordance with Section 365 of the Bankruptcy Code;
(iv) a provision that authorizes the sale of (A) the Purchased
Assets to Buyer free and clear of all Encumbrances and Interests (other than
Permitted Encumbrances and
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Assumed Liabilities) and (B) the Equity Interests to Buyer free and clear of all
Encumbrances and Interests; and
(v) a finding that Buyer has acted in good faith within the
meaning of Section 363(m) of the Bankruptcy Code.
"Bankruptcy Proceedings" means the proceedings in the
Bankruptcy Court involving Sellers.
"Bidding Procedures" means the bidding procedures set forth in
Exhibit A.
"Budget" has the meaning specified in Section 5.4.
"Business" has the meaning specified in the second recital.
"Business Intellectual Property License Agreement" has the meaning
specified Section 7.12(c).
"Business Primary Assets" means any assets (other than
Intellectual Property) primarily used or held for use in or relating to the
Business that are also used or held for use in or related to the ATS Business.
"Business Primary Assets Agreement" has the meaning specified
in Section 7.12(e).
"Buyer" has the meaning specified in the first paragraph.
"Buyer Group Member" means Buyer and its Affiliates and their
respective successors and assigns.
"Buyer Parent" has the meaning specified in Section 7.11.
"Cartilage Assets" means (i) all of the machinery, equipment,
appliances, tools, spare parts, accessories, furniture and other personal
property and (ii) Intellectual Property, in each case of Sellers (and their
Affiliates, as the case may be) used or held for use in or relating to the
Cartilage Business, wherever located and as the same shall exist on the Closing
Date, including those listed or referred to in Section 2.2(A) of the Disclosure
Schedule; provided that if the net book value of the assets described in clause
(i) exceeds $100,000, then Parent and Buyer shall agree as to the appropriate
consideration, if any, for such excess assets or make other mutually acceptable
arrangements.
"Cartilage Business" has the meaning specified in the fourth
recital.
"Cash Consideration" has the meaning specified in Section
3.1(a)(i).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.(S)(S) 9601 et seq.
"Closing" means the closing of the transactions contemplated
by this Agreement.
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"Closing Date" has the meaning specified in Section 4.1.
"Closing Inventory Value" has the meaning specified in Section 3.1(c)(iv).
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Code" means the Internal Revenue Code of 1986.
"Contracts" means all contracts, agreements, leases, subleases, licenses,
sublicenses, permits, evidences of indebtedness, mortgages, indentures, notes,
bonds, concessions, franchises, security agreements, joint settlement
agreements, commitments, indemnities, assignments, understandings and
arrangements, whether written or oral.
"Contribution Termination Agreement" has the meaning specified in Section
7.11.
"Copyrights" means United States and foreign copyrights, copyrightable
works mask works, whether registered or unregistered, and pending applications
to register the same.
"Court Order" means any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Current Lease" has the meaning specified in Section 7.16.
"Dermagraft JV" has the meaning specified in the first recital.
"Dermagraft JV Interests" means any and all partnership, equity, economic
or other rights or interests in or to Dermagraft JV held or owned, of record or
beneficially, by ATS Dermagraft or any of its Affiliates.
"Dermagraft JV Loan Termination Documentation" has the meaning specified in
Section 7.14.
"DermEquip" has the meaning specified in the first recital.
"DermEquip Interests" means any membership, equity, economic or other
rights or interests in or to DermEquip held or owned, of record or beneficially,
by ATS Dermagraft or any of its Affiliates.
"Disclosure Schedule" means the written information responsive or required
pursuant to each Section of this Agreement which references the "Disclosure
Schedule".
"Dispute" has the meaning specified in Section 12.15.
"Domain Names" is any alphanumeric designation registered with or assigned
by a domain name registrar, registry, or domain name registration authority as
part of an electronic address on the Internet. A Domain Name may or may not also
be a Trademark.
"Employee" has the meaning specified in Section 5.12(a).
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"Encumbrance" means any lien (statutory or other), claim, charge, security
interest, mortgage, deed of trust, pledge, hypothecation, assignment, license,
conditional sale or other title retention agreement, preference, priority or
other security agreement or preferential arrangement of any kind or nature, and
any easement, charges, encroachment, covenant, restriction, right of way, defect
in title or other encumbrance of any kind.
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Authority for (i) any liability under any Environmental Law, or
(ii) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of Hazardous Materials into the
environment.
"Environmental Law" means all Requirements of Law derived from or relating
to all federal, state and local laws or regulations relating to or addressing
the environment, health or safety, including CERCLA, OSHA and RCRA and any state
equivalent thereof.
"Equity Interests" means the Dermagraft JV Interests and the DermEquip
Interests.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any entity which is treated as a single employer
with Sellers pursuant to Section 414 of the Code.
"Ethicon" has the meaning specified in Section 7.8.
"Ethicon Agreement" has the meaning specified in Section 7.8.
"Excluded Assets" has the meaning specified in Section 2.3.
"Excluded Liabilities" has the meaning specified in Section 2.5.
"Facilities" means any plant, building, facility, structure, underground
storage tank, equipment or unit, or other assets owned, leased or operated by
any Seller or any of their respective Affiliates and used in the conduct of the
Business.
"FDA" means the United States Food and Drug Administration.
"Filing" has the meaning specified in the fifth recital.
"Governmental Authority" means any foreign, federal, state, local or other
government, governmental, statutory or administrative authority, regulatory body
or commission or any court, tribunal, or judicial or arbitral body, including
the FDA.
"Governmental Permits" has the meaning specified in Section 5.7(a).
"Guaranty" has the meaning specified in Section 7.11.
"Hazardous Materials" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum-based substance or waste, special waste or any
constituent of any
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such substance or waste, as the same are defined in, or for which standards of
care are imposed pursuant to, Environmental Laws.
"Instrument of Assignment" means the Instrument of Assignment in form and
substance reasonably acceptable to each of Buyer and Parent.
"Instrument of Assumption" means the Instrument of Assumption in form and
substance reasonably acceptable to each of Buyer and Parent.
"Intellectual Property" means Copyrights, Patents, Trademarks, Trade
Secrets and Domain Names and all Contracts that relate or pertain to any of the
foregoing.
"Interest" means any claim defined in Section 101(5) of the Bankruptcy
Code, as well as any other claim, judgment, demand, confidentiality restriction,
option, right of first refusal, right to any equitable remedy and restrictions
of any kind or nature.
"Inventory" has the meaning specified in Section 2.2(a).
"Inventory Amount" has the meaning specified in Section 3.1(c)(iv).
"IRS" means the Internal Revenue Service.
"knowledge" means, with respect to Sellers, as to a particular matter, the
actual knowledge of the Persons set forth on Section1.1(a) of the Disclosure
Schedule after reasonable investigation.
"Lease Agreement" has the meaning specified in Section 7.16.
"Lease Amount" has the meaning specified in Section 3.1(b)(iv).
"Leased Real Property" has the meaning specified in Section 5.8.
"Lease Termination Agreement" has the meaning specified in Section 7.16.
"Lessor" has the meaning specified in Section 7.16.
"Loan Agreement" means that certain Loan and Security Agreement, by and
between Buyer and Sellers, dated as of the date hereof, including all exhibits,
schedules and appendices thereto.
"Manufacturing and Supply Agreement" has the meaning specified in Section
7.12(a).
"Material Adverse Effect" means any fact, condition, change or event that
could reasonably be expected to, individually or in the aggregate, materially
and adversely affect the Equity Interests, the Purchased Assets or the
operations, financial condition or prospects of the Business, taken as a whole,
except to the extent that any such fact, condition, change or event results from
or arises out of (i) changes in general economic conditions or (ii) changes
affecting the industry in which the Business operates generally.
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"Medical Product Regulatory Authority" means any Governmental Authority
that is concerned with the safety, efficacy, reliability, manufacture, sale or
marketing of medical products, including the FDA.
"Milestone Payments" has the meaning as defined in that certain U.S.
License Agreement, dated as of April 29, 1996, between ATS Dermagraft and
Dermagraft JV (as the successor in interest to Dermagraft U.S.) and that certain
International License Agreement, dated as of April 29, 1996, among ATS
Dermagraft, TJS&N and Dermagraft JV (as the successor in interest to Dermagraft
International), including any amendments or modifications to such license
agreements or other agreements related thereto, as well as any payments related
thereto or of a similar nature pursuant to any other agreement.
"MIT" means the Massachusetts Institute of Technology, a corporation duly
organized and existing under the laws of the Commonwealth of Massachusetts.
"MIT Licenses" means (i) that certain Massachusetts Institute of Technology
License Agreement dated as of July 24, 1992 by and between MIT and Parent and
(ii) that certain Massachusetts Institute of Technology License Agreement dated
as of February 15, 1994 by and between MIT and Parent, each as amended or
supplemented from time to time.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.(s)(s) 651 et
seq.
"Owned Software" has the meaning specified in Section 5.10(g).
"Parent" has the meaning specified in the first paragraph.
"Patents" means United States and foreign patents, patent applications,
provisional applications, continuations, continuations-in-part, divisions,
reissues, patent disclosures, inventions (whether or not patentable or reduced
to practice) or improvements thereto (such patent disclosures, inventions and
improvements include only those made prior to the Closing Date).
"Permitted Encumbrances" means (a) liens for Taxes and other governmental
charges and assessments arising in the ordinary course of the Business that are
not yet due and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of the Business for sums not yet due and payable, and (c) other
non-monetary liens, restrictions, covenants, easements, rights of way or
imperfections on property that do not interfere with, and are not violated by,
the consummation of the transactions contemplated by this Agreement, and that do
not in any manner impair the marketability of, or detract from the value of or
impair the existing use of the property affected by such lien or imperfection.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Authority.
"Purchase Price" has the meaning specified in Section 3.1(a).
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"Purchased Assets" has the meaning specified in Section 2.2.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C.(s)(s) 6901 et seq.
"Reimbursed Expenses" has the meaning specified in Section 8.5(a).
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of Hazardous
Materials into the indoor or outdoor environment or into or out of any of the
Facilities, including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or Facilities.
"Remedial Action" means actions required to (a) clean up, remove, treat or
in any other way address Hazardous Materials in the indoor or outdoor
environment; (b) prevent the Release or threatened Release or minimize the
further Release of Hazardous Materials; or (c) investigate and determine if a
remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"Representatives" means with respect to any Person such Person and its
officers, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives.
"Requirements of Law" means any foreign, federal, state and local laws,
statutes, regulations, rules, codes, ordinances or requirements enacted,
adopted, issued or promulgated by any Governmental Authority (including those
pertaining to electrical, building, zoning, subdivision, land use, environmental
and occupational safety and health requirements), or common law.
"Retained Patent" has the meaning specified in Section 2.2(g).
"Sale Approval Order" has the meaning specified in the Bidding Procedures.
"Sale Motion" means a motion filed with the Bankruptcy Court seeking entry
of the Sale Procedures Order.
"Sale Procedures Order" means a final, non-appealable order entered by the
Bankruptcy Court setting forth the procedures for the sale of the Equity
Interests and the Purchased Assets and making provision for the payment of the
Reimbursed Expenses substantially similar to the provisions of the Bidding
Procedures; provided, however, that the amount of Reimbursed Expenses provided
for in such order shall not exceed $300,000 and shall be paid in accordance with
the Sale Procedures Order or this Agreement, as applicable.
"Sellers" has the meaning specified in the first paragraph.
"Seller Agreements" means each of the Contracts referred to in Sections
2.2(c), 2.2(d), 2.2(e), 2.2(g) and 2.2(i), excluding any such Contracts that are
excluded pursuant to the final paragraph of Section 2.2.
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"Sellers' Benefit Plans" has the meaning specified in Section 5.14(b).
"Seller Group Member" means Sellers and their Affiliates and their
respective successors and assigns.
"Settlement Amount" has the meaning specified in Section 3.1(c)(iv).
"SNATS Partnership" has the meaning specified in the third recital.
"SNATS Partnership Agreement" has the meaning specified in Section
7.15.
"SNATS Revised Agreement" has the meaning specified in Section 7.15.
"Software" means computer software programs and software systems,
including all databases, compilations, tool sets, compilers, higher level or
"proprietary" languages, related documentation, technical manuals and materials,
whether in source code, object code or human readable form and any licenses or
rights with respect to the foregoing.
"Successful Bidder" has the meaning specified in Section 8.5(a)(i).
"Tax" means (i) any federal, state, local or foreign net income,
alternative or add-on minimum, ad valorem, value-added, gross income, gross
receipts, windfall profits, severance, production, environmental, property,
sales, use, transfer, stamp, gains, license, excise, employment, payroll,
withholding or minimum tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Authority; and
(ii) any liability of any Seller for the payment of amounts of a type described
in clause (i) as a result of being a member of an affiliated, consolidated,
combined or unitary group, or as a result of any obligation of any Seller under
any Tax sharing arrangement or Tax indemnity agreement.
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Taxes (including any attached schedules), including
any information return, claim for refund, amended return or declaration of
estimated Tax.
"Termination Agreement Relating to Current Agreements" has the meaning
specified in Section 7.13.
"TJS&N" has the meaning specified in the first paragraph.
"Trade Secrets" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans, product specifications, supplier lists or other
proprietary information.
"Trademarks" means United States, state and foreign trademarks,
service marks, logos, trade dress, trade names and Domain Names (including all
assumed or fictitious names under which the Business has been conducted),
whether registered or unregistered and pending applications to register the
foregoing.
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"Transfer Taxes" has the meaning specified in Section 8.2(b).
"Transferred Employees" has the meaning specified in Section 8.4(a).
"Transition Services Agreement" has the meaning specified in Section
7.12(f).
"Waiver and Release Agreement" has the meaning specified in Section
7.12(g).
"WARN Act" has the meaning specified in Section 8.4(e).
ARTICLE II
PURCHASE AND SALE
2.1. Purchase and Sale of Equity Interests. Upon the terms and subject to
the conditions of this Agreement, on the Closing Date, Sellers shall sell,
transfer, assign, convey and deliver, or cause to be sold, transferred,
assigned, conveyed and delivered, to Buyer, and Buyer shall purchase, free and
clear of all Encumbrances and Interests, all right, title and interest of
Sellers (and their Affiliates, as the case may be) in, to, and under the Equity
Interests.
2.2. Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Sellers shall sell, transfer, assign, convey and
deliver, or cause to be sold, transferred, assigned, conveyed and delivered, to
Buyer, and Buyer shall purchase, free and clear of all Encumbrances and
Interests (except for Permitted Encumbrances and Assumed Liabilities), the
Cartilage Assets and all of the assets of Sellers (and their Affiliates, as the
case may be) of every kind and description, wherever located, personal or mixed,
tangible or intangible, used or held for use in or relating to the Business as
the same shall exist on the Closing Date (other than the Excluded Assets)
(herein collectively called the "Purchased Assets"), including all right, title
and interest of Sellers (and their Affiliates, as the case may be) in, to and
under:
(a) all raw materials, sub-assemblies, supplies, work-in-process,
master cell banks, working cell banks and other cell banks, finished goods,
packaging materials, samples, and other materials included in the inventory of
the Business wherever located, excluding those exclusively related to collagen
and NouriCel and collagen and NouriCel products (the "Inventory");
(b) all of the machinery, equipment, appliances, vehicles, tools,
spare parts, accessories, furniture and other personal property used or held for
use in or relating to the Business, including those listed or referred to in
Section 2.2(b) of the Disclosure Schedule;
(c) all Contracts used or held for use in or relating to the Business,
including those listed in Section 2.2(c) of the Disclosure Schedule;
(d) all personal property leases used or held for use in or relating
to the Business, including those listed in Section 2.2(d) of the Disclosure
Schedule;
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(e) all lease agreements and leasehold improvements used or held for
use in or relating to the Business, including those listed or described in
Section 2.2(e) of the Disclosure Schedule;
(f) all Governmental Permits used or held for use in or relating to
the Business, including those listed in Section 2.2(f) of the Disclosure
Schedule;
(g) all Intellectual Property used or held for use in or relating to
the Business (including all goodwill associated therewith), including the
Intellectual Property listed in Section 2.2(g) of the Disclosure Schedule (other
than U.S. Patent Number 4,963,489 and all foreign counterparts thereof (pending
or in full force and effect) Docket No. 008, the "Retained Patent");
(h) all products in development for use in or relating to the
Business;
(i) all Software and the Contracts related thereto exclusively used or
held for use in or relating to the Business and all Business Primary Assets
which constitute Software and the Contracts related thereto, including those
listed in Section 2.2(i) of the Disclosure Schedule;
(j) all books, records, files, invoices, Inventory records, medical
vigilance records, product specifications, advertising and promotional
materials, customer lists, cost and pricing information, supplier lists,
business plans, catalogs, customer literature, artworks, quality control records
and manuals, research and development files, records and laboratory books and
credit records of customers (including all data and other information stored on
discs, tapes or other media) to the extent used or held for use in or relating
to the assets, properties, business or operations of the Business, the Equity
Interests, the Purchased Assets or the Assumed Liabilities; provided, that
Sellers may provide Buyer with copies of any such items to the extent they
relate to the ATS Business;
(k) all telephone, telex and telephone facsimile numbers and other
directory listings used in or relating to the Business;
(l) all refundable security deposits, and all benefits and rights
arising from prepaid expenses and prepaid rent for or relating to the Purchased
Assets or the Business;
(m) all of Sellers' and their Affiliate's rights, claims or causes of
action against third parties relating to the Business, the Purchased Assets or
the Equity Interests arising out of transactions occurring prior to the Closing
Date;
(n) all minute books and all other books and records, including Tax
Returns, relating to Dermagraft JV or DermEquip; and
(o) all Business Primary Assets;
provided that notwithstanding anything to the contrary contained in this Section
2.2, with respect to Software and the Contracts related thereto, only that
Software and the Contracts related thereto which are exclusively or primarily
used or held for use in or relating to the Business shall be included in the
Purchased Assets; and provided, further, that notwithstanding the provisions
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of subsection (g) of this Section 2.2, Sellers shall sell, transfer, assign,
convey and deliver, or cause to be sold, transferred, assigned, conveyed and
delivered, to TJS&N, and TJS&N shall purchase, free and clear of all
Encumbrances and Interests (except for Permitted Encumbrances and Assumed
Liabilities), all Intellectual Property (including all goodwill associated
therewith) that is used or held for use in or relating to the Business as
conducted outside of the United States, other than the Retained Patent.
Notwithstanding anything to the contrary contained in this Section 2.2, the
parties hereto agree that all of the personal property and tangible assets
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at the
date hereof constitute and shall be included in the Purchased Assets, other than
(i) those exclusively related to collagen and NouriCel, (ii) fixed assets and
personal property exclusively related to research and development within the
scope of the ATS Business and (iii) a reasonable amount of computer equipment
required for the operation of the ATS Business subsequent to the Closing in each
case as set forth in Section 2.2(B) of the Disclosure Schedule.
At any time at least five days prior to the Closing, Buyer in its
discretion by written notice to Sellers may exclude any Contracts referred to in
Sections 2.2(c), 2.2(d), 2.2(e), 2.2(g) and 2.2(i) from being assigned
hereunder, and such Contracts shall not constitute Seller Agreements, and Buyer
shall not acquire any rights or assume any liabilities with respect thereto.
Upon Buyer's reasonable request, Sellers shall provide additional detailed
information as to the obligations under such Contracts sufficient for Buyer to
make an informed assessment whether to accept an assignment and assumption of
such Contracts hereunder.
2.3. Excluded Assets. Notwithstanding the provisions of Section 2.2, the
Purchased Assets shall not include the following (herein referred to as the
"Excluded Assets"):
(a) all corporate minute books and stock transfer books and the
corporate seals of Sellers and their Affiliates (other than Dermagraft JV and
DermEquip) and all other books and records which Sellers and their Affiliates
(other than Dermagraft JV and DermEquip), as the case may be, may be required by
law to retain or which do not relate to the Equity Interests or the Purchased
Assets, the Business or the Assumed Liabilities, provided that Buyer shall be
entitled to receive copies of any such books and records to the extent they
relate to the Business, the Purchased Assets, the Equity Interests or the
Assumed Liabilities and to the extent that the provision of such copies is not
otherwise prohibited by law;
(b) any and all prepaid workers' compensation premiums (other than the
portion relating to the Transferred Employees);
(c) the capital stock or other equity interests of any subsidiaries of
Sellers or any subsidiaries of their Affiliates (excluding the Equity
Interests);
(d) any claims that Sellers may have against any of their respective
current or former Representatives;
(e) all cash and cash equivalents of Sellers (but excluding cash and
cash equivalents owned or held by Dermagraft JV and DermEquip);
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(f) any books, records, files, customer lists, research and
development files, records and laboratory books and credit records of customers
(including all data and other information stored on discs, tapes or other media)
if and to the extent Sellers or their Affiliates (other than Dermagraft JV and
DermEquip) are required by law to retain such books, records, files or lists;
provided that Buyer shall be entitled to receive copies of any such items to the
extent they relate to the Business, the Equity Interests or the Purchased Assets
or the Assumed Liabilities and to the extent that the provision of such copies
is not otherwise prohibited by law;
(g) any intercompany receivable of Sellers or any of their Affiliates
(except as otherwise expressly contemplated herein with respect to Dermagraft JV
or DermEquip);
(h) the Sellers' Benefit Plans and any assets related thereto;
(i) all contracts of insurance held by Sellers;
(j) the Retained Patent;
(k) any Software which is not exclusively or primarily used or held
for use in or relating to the Business;
(l) any Contracts that are excluded pursuant to the final paragraph of
Section 2.2;
(m) any Intellectual Property which is not used or held for use in or
relating to the Business in any respect and which is not included in the
Cartilage Assets; and
(n) any ATS Primary Assets.
2.4. Assumed Liabilities. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date, Buyer shall deliver to Sellers the
Instrument of Assumption pursuant to which Buyer shall assume and agree to
discharge the following obligations and liabilities of Sellers in accordance
with their respective terms and subject to the respective conditions thereof
(the "Assumed Liabilities"):
(i) all obligations and liabilities of Sellers or any of their
Affiliates under the Seller Agreements arising after the Closing Date, but
excluding any such obligations or liabilities to the extent that such
obligations or liabilities, but for a breach or nonperformance by Sellers
or their Affiliates, would have been paid, performed or otherwise
discharged prior to the Closing Date or to the extent the same arise out of
any such breach or nonperformance;
(ii) all liabilities in respect of Transferred Employees for which
Buyer is liable pursuant to Section 8.4 (but no other liabilities in
respect of any employees of Sellers or their Affiliates, including any
employee benefit plan, agreement or arrangement); and
(iii) all liabilities in respect of Taxes for which Buyer is liable
pursuant to Section 8.2.
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2.5. Excluded Liabilities. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge any liability or obligation of Sellers or any of
their Affiliates, direct or indirect, known or unknown, absolute or contingent,
that are not expressly assumed by Buyer pursuant to the Instrument of Assumption
(all such liabilities and obligations not being assumed being herein called the
"Excluded Liabilities").
2.6. Assignments; Cure Amounts. Sellers shall assume and assign all Seller
Agreements to Buyer as of the Closing Date pursuant to Section 365 of the
Bankruptcy Code and the Bankruptcy Court Order. In connection with such
assumption and assignment, Sellers shall provide for cure of all monetary and
non-monetary defaults arising under such Seller Agreements to the extent
required by Section 365(b) of the Bankruptcy Code. At Sellers' written request,
Buyer shall provide funds at Closing to pay any such cure amount, and the amount
of the funds so provided shall be applied at Closing as a credit to Buyer
against the Purchase Price. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any of the
Purchased Assets to Buyer if an attempted assignment thereof without the consent
of a third Person (whose consent is neither obtained nor obviated by the
Bankruptcy Court Order) would constitute a breach thereof. The cure amount under
any Seller Agreement shall be an amount determined by Sellers based upon their
books and records; provided, however, if any non-debtor party to such Seller
Agreement disputes such amount, the cure amount for such Seller Agreement shall
be the amount determined by the Bankruptcy Court.
2.7. Assignment to Buyer Affiliates. Each of the parties hereto
acknowledges and agrees that, at any time on or prior to the Closing, each of
Buyer and TJS&N may assign any of its rights and obligations hereunder with
respect to any Equity Interest, Purchased Asset or Assumed Liability to be sold,
transferred, assigned, conveyed or delivered to, or assumed by, Buyer or TJS&N
pursuant to Article II to any of their Affiliates (including to each other), to
Dermagraft JV or to DermEquip.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. (a) The purchase price, as adjusted pursuant to
Section 3.1(c) (the "Purchase Price"), for the Purchased Assets and the Equity
Interests shall consist of:
(i) a cash payment at Closing in the amount of $10,000,000, as
reduced in accordance with Section 3.1(b) (the "Cash Consideration"); and
(ii) the assumption by Buyer of the Assumed Liabilities; and
(iii) the release of Parent from all of its obligations under the
Guaranty, pursuant to the terms of Section 7.11; and
(iv) the release of Parent from all of its obligations to pay the ATS
Dermagraft Loan, pursuant to the terms of Section 7.14.
(b) The Cash Consideration payable by Buyer at Closing shall be
reduced dollar-for-dollar by the following:
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(i) any cure amounts funded by Buyer at Closing pursuant to Section
2.6; plus
(ii) any Milestone Payment made by Dermagraft JV, Buyer or any of its
Affiliates to Sellers on or after the date hereof; plus
(iii) any outstanding Liabilities (as defined in the Loan Agreement)
under the Loan Agreement as of the Closing; plus
(iv) the aggregate amount of (A) any amounts Buyer in its discretion
pays under the Current Lease prior to Closing, including in order to avoid
or cure any default of Parent thereunder and (B) the sum of any amounts due
and owing by Parent on the Closing Date under the Current Lease for
outstanding obligations (the "Lease Amount"), which Lease Amount shall be
paid by Buyer to the lessor under the Current Lease at the Closing.
(c) The parties agree that the Purchase Price shall be adjusted
following the Closing as follows:
(i) The Purchase Price shall be increased by the amount, if any,
that the Closing Inventory Value is greater than $6,330,000.
(ii) The Purchase Price shall be reduced by the amount, if any, that
the Closing Inventory Value is less than $6,330,000.
(iii) The Purchase Price shall be increased by the Settlement Amount
(if a positive amount) or reduced by the Settlement Amount (if a negative
amount).
(iv) Sellers and Buyer shall cooperate with each other in good faith
to determine jointly the Inventory Amount and the Settlement Amount no
later than five days after the Closing Date. Sellers and Buyer shall
provide to each other all such information as is reasonably necessary in
order to determine such calculations. The "Inventory Amount" means the
dollar value of the Inventory (owned by Sellers and excluding any owned by
Dermagraft JV) on the Closing Date at standard cost before reserves based
upon the books and records of Parent or its Affiliates, as the case may be
("Closing Inventory Value"). The "Settlement Amount" (which may be a
positive or negative amount) shall be calculated as (A) all amounts owed by
Dermagraft JV to Sellers or their Affiliates as of the Closing Date
(prorated as appropriate), including any indebtedness, trade payables,
royalties, rents, interest, reimbursements or other obligations, but
excluding any Milestone Payments (whether due, owed, accrued or
contingent), minus (B) all amounts owed by Sellers or their Affiliates to
Dermagraft JV as of the Closing Date (prorated as appropriate), including
any indebtedness, trade payables, royalties, rents, interest,
reimbursements, obligations to fund or contribute capital or other
obligations. The failure of the parties to jointly calculate the Inventory
Amount or the Settlement Amount within five days after the Closing Date
shall constitute a Dispute under this Agreement.
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(v) If the net effect of clauses (i), (ii) and (iii) above (A) results
in an increase in the Purchase Price, Buyer shall pay the amount of such
net increase by wire transfer within two business days after the Inventory
Amount and the Settlement Amount have been finally determined in accordance
with clause (iv) above to an account specified in writing by Sellers or (B)
results in a decrease in the Purchase Price, Sellers shall pay the amount
of such net decrease by wire transfer within two business days after the
Inventory Amount and the Settlement Amount have been finally determined in
accordance with clause (iv) above to an account specified in writing by
Buyer.
(d) Notwithstanding anything in this Agreement to the contrary, the
parties hereto agree that from and after the Closing Date, no Milestone Payments
shall be required to be paid under any circumstances, and all such Milestone
Payments (whether due, owed, accrued or contingent) are deemed waived and any
Person required to make any such Milestone Payments is hereby released from any
obligation or liability relating thereto.
(e) Any obligation of Sellers to Buyer pursuant to this Agreement,
including the obligations set forth in Section 12.1(b), shall constitute
administrative expenses of Sellers under Sections 503(b) and 507(a)(1) of the
Bankruptcy Code.
3.2. Allocation of Purchase Price. Within 30 days following the Closing
Date, Buyer shall deliver to Parent for Parent's review and approval an
allocation schedule (the "Allocation Schedule") allocating the Purchase Price
(to the extent constituting consideration for federal income Tax purposes) on a
dollar basis among the Purchased Assets, the Equity Interests and the covenants
of Sellers in Section 8.1. The Allocation Schedule shall be reasonable and shall
be prepared in accordance with Section 1060 of the Code and the regulations
thereunder. Parent agrees that, following its approval of the Allocation
Schedule, it shall promptly sign the Allocation Schedule and return an executed
copy thereof to Buyer within ten days after receiving the Allocation Schedule
from Buyer. Buyer and Sellers each agree to file IRS Form 8594 and all Tax
Returns, each in accordance with the Allocation Schedule. Buyer and Sellers each
agree to provide the other promptly with any other information required to
complete IRS Form 8594.
ARTICLE IV
CLOSING
4.1. Closing Date. The Closing shall be consummated at 10:00 A.M., local
time, on the third business day after the conditions set forth in Articles IX
and X have been satisfied, or such later date as may be agreed upon by Buyer and
Sellers, at the offices of ▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place or at such other
time as shall be agreed upon by Buyer and Sellers. The time and date on which
the Closing is actually held are sometimes referred to herein as the "Closing
Date." The consummation of the transactions contemplated hereby, including the
transfer of the Equity Interests and the Purchased Assets, shall be deemed to
occur simultaneously on the Closing Date.
4.2. Payment on the Closing Date. Subject to fulfillment or waiver (if
permissible) of the conditions set forth in Article IX, at Closing Buyer shall
pay Sellers an amount equal to the Cash Consideration (as reduced pursuant to
Section 3.1(b)) by wire transfer of immediately
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available funds to the account in the United States specified by Sellers in
writing to Buyer at least three business days prior to the Closing.
4.3. Buyer's Additional Deliveries. Subject to fulfillment or waiver (if
permissible) of the conditions set forth in Article IX, at Closing Buyer (or its
assignee or Affiliate, as appropriate) shall deliver to Sellers all the
following:
(a) Copies of Buyer's Certificate of Incorporation, certified as of a
recent date by the Secretary of State of the State of Delaware;
(b) Certificate of good standing of Buyer issued as of a recent date
by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to
Sellers, as to (i) no amendments to the Certificate of Incorporation of Buyer
since a specified date; (ii) the Bylaws of Buyer; (iii) the resolutions of the
Board of Directors of Buyer authorizing the execution and performance of this
Agreement and the Ancillary Documents to which Buyer is a party and the
transactions contemplated hereby and thereby; and (iv) incumbency and signatures
of the officers of Buyer executing this Agreement and such Ancillary Documents;
(d) The Instrument of Assumption duly executed by Buyer (or its
Affiliates, as the case may be);
(e) The Manufacturing and Supply Agreement duly executed by Buyer;
(f) The SNATS Revised Agreement duly executed by Buyer;
(g) The ATS Intellectual Property License Agreement duly executed by
Buyer (or its Affiliates, as the case may be);
(h) The ATS Primary Assets Agreement duly executed by Buyer (or its
Affiliates, as the case may be);
(i) The Business Intellectual Property License Agreement duly executed
by Buyer (or its Affiliates, as the case may be);
(j) The Business Primary Assets Agreement duly executed by Buyer (or
its Affiliates, as the case may be);
(k) The Termination Agreement Relating to Current Agreements duly
executed by Buyer and Buyer Parent (or their respective Affiliates, as the case
may be);
(l) The Waiver and Release Agreement duly executed by Buyer and Buyer
Parent;
(m) The Transition Services Agreement duly executed by Buyer (or its
Affiliates, as the case may be);
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(n) The Contribution Termination Agreement duly executed by Buyer and
Buyer Parent;
(o) The Dermagraft JV Loan Termination Documentation duly executed by
Buyer as a general partner of the Dermagraft JV; and
(p) The certificate contemplated by Section 10.1, duly executed by the
President or any Vice President of Buyer.
4.4. Seller's Deliveries. Subject to fulfillment or waiver (if permissible)
of the conditions set forth in Article X, at Closing Sellers shall deliver to
Buyer all the following:
(a) Copies of the charter (or similar governing instrument) of each
Seller, certified as of a recent date by the secretary of state of the state of
incorporation or organization;
(b) Certificate of good standing of each Seller issued as of a recent
date by the secretary of state of the state of incorporation or organization;
(c) Certificate of the secretary or an assistant secretary of each
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, as to (i) no amendments to the charter (or similar governing instrument)
of such Seller since a specified date; (ii) the Bylaws (or similar governing
document) of such Seller; (iii) the resolutions of the Board of Directors (or
similar governing body) of such Seller authorizing the execution and performance
of this Agreement, and the Ancillary Documents to which such Seller is a party
and the transactions contemplated hereby and thereby; and (iv) incumbency and
signatures of the officers of such Seller executing this Agreement and the
Ancillary Documents;
(d) The Instrument of Assignment duly executed by Sellers (and each of
their Affiliates, as the case may be);
(e) The Manufacturing and Supply Agreement duly executed by Parent;
(f) The SNATS Revised Agreement duly executed by ATS Orthopedics;
(g) The ATS Intellectual Property License Agreement duly executed by
Parent (and each of its Affiliates, as the case may be);
(h) The ATS Primary Assets Agreement duly executed by Parent and ATS
Dermagraft (and each of their Affiliates, as the case may be);
(i) The Business Intellectual Property License Agreement duly executed
by Parent and ATS Dermagraft (and each of their Affiliates, as the case may be);
(j) The Business Primary Assets Agreement duly executed by Parent and
ATS Dermagraft (and each of their Affiliates, as the case may be);
(k) The Termination Agreement Relating to Current Agreements duly
executed by Parent, ATS Dermagraft and ATS Orthopedics;
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(l) The Waiver and Release Agreement duly executed by Parent, ATS
Dermagraft and ATS Orthopedics;
(m) The Transition Services Agreement duly executed by Parent and ATS
Dermagraft (and each of their Affiliates, as the case may be);
(n) The Contribution Termination Agreement duly executed by Parent;
(o) Certificates of title or origin (or like documents) with respect
to any vehicles or other equipment included in the Purchased Assets for which a
certificate of title or origin is required or customary in order to transfer
title;
(p) Instruments of assignment of the Patents (the "Assignment of
Patents") and Trademarks (the "Assignment of Trademarks") that are included in
the Purchased Assets, duly executed by Sellers (and each of their Affiliates, as
the case may be), in form for recordation with the appropriate Governmental
Authorities, and any other assignments or instruments with respect to any
Intellectual Property included in the Purchased Assets for which an assignment
or instrument is required to assign, transfer and convey such assets to Buyer;
(q) Instruments of assignment from the authors of all Software (who
were not employees of Sellers or their Affiliates at the time the work was
authored) that is included in the Purchased Assets in order to vest full right,
title and interest therein to Buyer;
(r) All estoppel certificates or similar assurances pursuant to
Section 7.3(c);
(s) The certificates contemplated by Sections 9.1 and 9.2 duly
executed by the President of each Seller;
(t) Written evidence deemed adequate by Buyer of the sale, assignment,
transfer, conveyance and delivery of the Equity Interests to Buyer and such
other bills of sale, assignments and other instruments of transfer or conveyance
as Buyer may reasonably request or as may be otherwise necessary to evidence and
effect the sale, assignment, transfer, conveyance and delivery of the Purchased
Assets or the Equity Interests to Buyer;
(u) Such lien releases and termination statements or other reasonable
evidence as Buyer may require relating to the release of any Encumbrances or
Interests (other than Permitted Encumbrances) which may exist with respect to
any Purchased Assets and any Encumbrances or Interests which may exist with
respect to the Equity Interests;
(v) Certified copy of the Bankruptcy Court Order accompanied by a
signed statement of the President of each Seller that such Bankruptcy Court
Order is in full force and effect and not subject to any stay;
(w) The Dermagraft JV Loan Termination Documentation duly executed by
Parent and by ATS Dermagraft as a general partner of the Dermagraft JV; and
(x) Complete copies of the Seller Agreements.
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In addition to the above deliveries, Sellers shall take all steps and
actions as Buyer may reasonably request or as may otherwise be necessary to put
Buyer in actual possession or control of the Purchased Assets and to transfer to
Buyer all right, title and interest in or to the Equity Interests.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of this Article V, the term "Affiliate" shall be deemed
to include Dermagraft JV and DermEquip, except as otherwise noted. As an
inducement to Buyer and TJS&N to enter into this Agreement and to consummate the
transactions contemplated hereby, Sellers represent and warrant to Buyer and
TJS&N and agree as follows:
5.1. Organization of Sellers; Subsidiaries. (a) Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and is duly qualified to transact business
as a foreign corporation and is in good standing in each of the jurisdictions in
which the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where failure to so qualify or be in good
standing would not have a Material Adverse Effect. Each of Parent and ATS
Dermagraft has full corporate power and authority to own or lease and to operate
and use the Purchased Assets owned, leased, operated or used by it and to carry
on the Business as now conducted by it. ATS Orthopedics has full corporate power
and authority to own or lease and to operate and use its properties and to carry
on its business as now conducted. True and complete copies of the charter and
bylaws, each as amended to date, of each Seller have been delivered to Buyer.
(b) Except as set forth in Section 5.1 of the Disclosure Schedule,
neither Sellers nor any of their Affiliates, directly or indirectly, owns, of
record or beneficially, any outstanding voting securities or other equity
interests in any Person or otherwise controls any Person that is involved in, or
relates to, or holds assets used in or held for use in or related to the
Business.
5.2. Equity Interests. All partnership, equity, economic and other rights
and interests in or to Dermagraft JV and DermEquip held or owned, of record or
beneficially, are as set forth on Section 5.2 of the Disclosure Schedule and no
other Person (other than Buyer), including any Affiliates of Sellers, owns any
interest in Dermagraft JV or DermEquip. Upon the consummation of the
transactions contemplated by this Agreement, Buyer will own all of the
partnership, equity, economic and other rights and interests in or to Dermagraft
JV and all of the membership, equity, economic or other rights or interests in
or to DermEquip free and clear of all Encumbrances. There are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments relating to the Equity Interests, except as set forth in Section 5.2
of the Disclosure Schedule.
5.3. Authority of Sellers. (a) Sellers have full power and authority to
execute, deliver and, subject to the entry of the Bankruptcy Court Order,
perform this Agreement and each of the Ancillary Documents to which it will be a
party. The execution, delivery and performance of this Agreement and such
Ancillary Documents by Sellers have been duly authorized and
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approved by the board of directors of each Seller, are in accordance with the
Bankruptcy Code and do not require any further authorization or consent of
Sellers or their respective shareholders. This Agreement has been duly
authorized, executed and delivered by each Seller and, subject to the entry of
the Bankruptcy Court Order, is the legal, valid and binding obligation of each
Seller enforceable in accordance with its terms, and each Ancillary Document to
which any Seller is or will be a party has been duly authorized by such Seller,
as applicable, and upon execution and delivery by such Seller, as applicable,
and subject to the entry of the Bankruptcy Court Order, will be a legal, valid
and binding obligation of such Seller, as applicable, enforceable in accordance
with its terms.
(b) Except as set forth in Section 5.3 of the Disclosure Schedule or
as triggered by the Filing, and subject to the entry of the Bankruptcy Court
Order, neither the execution and delivery of this Agreement or any of such
Ancillary Documents or the consummation of any of the transactions contemplated
hereby or thereby nor compliance with or fulfillment of the terms, conditions
and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon the Equity Interests or any of the Purchased Assets, under (1) the
charter or bylaws of any Seller, (2) any material Seller Agreements, (3)
any Governmental Permits, (4) any other note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization, right,
restriction or obligation to which any Seller is a party or any of the
Equity Interests or the Purchased Assets is subject or by which any Seller
is bound, (5) any Court Order to which any Seller is a party or the Equity
Interests or any of the Purchased Assets is subject or by which any Seller
is bound, or (6) any Requirements of Law affecting any Seller, the Equity
Interests or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of, or
the making by any Seller of any declaration, filing or registration with,
any Person except as required by the Bankruptcy Code or Bankruptcy Court.
(c) Except to the extent that the requisite consent of a Person is
obviated by the Bankruptcy Court Order, Section 5.3 of the Disclosure Schedule
lists all Persons that are parties to the Seller Agreements or the Governmental
Permits, whose consent is required for the consummation of the transactions
contemplated hereunder.
5.4. Financial Information. Section 5.4 of the Disclosure Schedule contains
(i) the unaudited balance sheet of Parent as of September 30, 2002 and (ii) the
budget of Parent reflecting on a line-item basis the anticipated cash receipts
and expenditures for the seventy-five day period commencing on the date hereof
(the "Budget"). Except as set forth therein, such balance sheet has been
prepared in conformity with generally accepted accounting principals and
presents fairly the financial position of Parent as of its date. The Budget has
been prepared in good faith with reasonable assumptions and estimates
(consistent with past practices) of the expenses to be incurred by Parent and
its Affiliates in connection with the Business for the seventy-five day period.
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5.5. Absence of Certain Changes or Events. (a) Except as set forth in
Section 5.5 of the Disclosure Schedule and other than actions taken in
connection with this Agreement, the Filing and the Bankruptcy Proceedings, since
June 30, 2002, there has been:
(i) no Material Adverse Effect or, to the knowledge of Sellers, no
fact or condition exists or has been threatened that might reasonably be
expected to cause a Material Adverse Effect in the future; and
(ii) no material damage, destruction, or casualty loss, whether or
not covered by insurance, or condemnation or other taking adversely
affecting any of the Purchased Assets or the Business, taken as a whole,
other than any damage or wear or tear incurred in the ordinary course of
the operation of the Business in conformity with past practice.
(b) Except as set forth in Section 5.5 of the Disclosure Schedule
and other than actions taken in connection with this Agreement, the Filing and
the Bankruptcy Proceedings, since June 30, 2002, Sellers (and their Affiliates,
as the case may be) have conducted the Business only in the ordinary course and
in conformity with past practice. Without limiting the generality of the
foregoing, since June 30, 2002, except as set forth in such Schedule, Sellers
(and their Affiliates, as the case may be) have not:
(i) delayed or accelerated payment of any account payable or
other liability of the Business beyond or in advance of its due date except
in the ordinary course of the Business consistent with past practice;
(ii) allowed the levels of raw materials, supplies, work-in-process
or other materials included in the inventory of the Business to vary in any
material respect from the levels customarily maintained in the Business;
(iii) with respect to the Employees, entered into or amended
employment agreements, instituted any increase in any compensation payable
to any such Employee or established or amended any of Sellers' Benefit
Plans or any other profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability, welfare or
other benefits made available to Employees other than as required by law;
or
(iv) created, imposed or suffered to exist any Encumbrance on any
Equity Interest.
5.6. Availability of Assets. Sellers or their Affiliates, as the case may
be, own or have the right to use all of the Purchased Assets currently used in
the Business. Except as set forth in Section 5.6 of the Disclosure Schedule and
except for Contracts that are not Seller Agreements, and assuming that all
defaults with respect to the Seller Agreements to be assumed by Buyer hereunder
are cured on or prior to the Closing Date, to the knowledge of Sellers, Buyer
will have the right after the Closing to use all services provided by third
parties currently provided to Sellers or their Affiliates pursuant to the Seller
Agreements or on terms no less favorable than those available to Sellers or
their Affiliates. All of the equipment, machinery, tooling, computers, computer
programs and data processing systems included in the Purchased Assets have been
maintained in accordance with Sellers' historical practice, are in good
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operating condition and repair (subject to normal wear and tear), are suitable
for the purposes for which they are currently used and, to the knowledge of
Sellers, are free from material defects (patent and latent). Except for the
Excluded Assets, the Employees and Contracts that are not assigned to Buyer at
the Closing pursuant to the final paragraph of Section 2.2 and except as set
forth in Section 5.6 of the Disclosure Schedule, the Purchased Assets constitute
all assets that are owned, leased or licensed by Sellers or their Affiliates and
used in or held for use in or related to the Business as currently conducted.
5.7. Governmental Permits and Compliance. (a) Sellers or their Affiliates
are in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals,
clearances, and orders of any Governmental Authority which are necessary or
customary for Sellers or their Affiliates to own, lease and operate its
properties used or held for use in the Business or to carry on the Business as
it is now being conducted, including any investigational device exemptions, FDA
pre-market approvals, FDA device establishment registrations and listings,
owner/operator registrations with the FDA and any similar exemptions, approvals,
registrations or listings with any state or foreign Governmental Authority (the
"Governmental Permits"), and no suspension or cancellation of any of the
Governmental Permits is pending or, to the knowledge of Sellers, threatened.
Sellers or their Affiliates have made all material filings with, or
notifications to, all Governmental Authorities (including Medical Product
Regulatory Authorities) required pursuant to Requirements of Law.
(b) Except as set forth in Section 5.7 of the Disclosure Schedule,
(i) Sellers or their Affiliates have fulfilled and performed their obligations
under the Governmental Permits, and no event has occurred or condition or state
of facts exists that constitutes or, after notice or lapse of time or both,
would constitute a material breach or default under any such Governmental Permit
or that permits or, after notice or lapse of time or both, would permit
revocation or termination of any such Governmental Permit, or that would
adversely affect the rights of Sellers (or their Affiliates, as the case may be)
under any such Governmental Permit; (ii) no notice of cancellation, of default
or of any dispute concerning any Governmental Permit, or of any event, condition
or state of facts described in the preceding clause, has been received by, or is
known to, Sellers or any of their Affiliates; and (iii) to the knowledge of
Sellers, each of the Governmental Permits is valid, subsisting and in full force
and effect and may be assigned and transferred to Buyer in accordance with this
Agreement and will continue in full force and effect upon such assignment and
transfer, in each case without (x) the occurrence of any breach, default or
forfeiture of rights thereunder, or (y) subject to the Bankruptcy Court Order or
the obtaining of any consents set forth in Section 5.3 of the Disclosure
Schedule, the consent, approval, or act of, or the making of any filing with,
any Governmental Authority.
(c) Neither Sellers nor any of their Affiliates has violated, or is
currently violating, (i) any Requirements of Law in any material respect or (ii)
any order, decree or judgment of any Governmental Authority having jurisdiction
over Sellers or any of their Affiliates in respect of the Business.
5.8. Leased Real Property. Section 5.8 of the Disclosure Schedule sets
forth all leases of real property used in connection with the Business (the
"Leased Real Property"), and no other real property is used in connection with
the Business. None of such Leased Real Property
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is subject to any pending suit for condemnation or other taking by any public
authority, and to the knowledge of Sellers, no such condemnation or other taking
has been threatened.
5.9. Personal Property. (a) Section 5.9 of the Disclosure Schedule
contains a list of each lease or other agreement or right, whether written or
oral (including in each case, the expiration date thereof and a brief
description of the property covered) under which either Seller (or any of their
Affiliates, as the case may be) is lessee of, or holds or operates, any
machinery, equipment, vehicle or other tangible personal property owned by a
third Person and used, or held for use in, or otherwise relating to the
Business.
(a) Section 5.9 of the Disclosure Schedule contains a list of all
machinery, equipment, vehicles, furniture and other personal property owned by
Sellers (or any of their Affiliates, as the case may be) having a fair market
value or book value of $10,000 or more and used in or relating to the Business.
5.10. Intellectual Property. (a) Section 5.10 of the Disclosure Schedule
contains a list of all registered Copyrights, Patents, Trademarks and Domain
Names owned or used by Sellers or any of their Affiliates that are material to
the conduct of the Business as it is currently being operated.
(b) Section 5.10 of the Disclosure Schedule contains a list (showing
in each case any owner, licensor or licensee) of all Software owned by, licensed
to or used by Sellers (or any of their Affiliates, as the case may be) that are
material to the conduct of the Business as it is currently being operated,
provided that Section 5.10 of the Disclosure Schedule does not list Software
licensed to Sellers (or any of their Affiliates, as the case may be) that is
available in consumer retail stores or subject to "shrink-wrap" license
agreements.
(c) Section 5.10 of the Disclosure Schedule contains a list of all
Contracts for the sale, license or assignment of (i) any registered Copyrights,
Patents, Trademarks or Domain Names listed in Section 5.10 of the Disclosure
Schedule, (ii) any Trade Secrets owned by, licensed to or used by Sellers (or
any of their Affiliates, as the case may be) that are material to the conduct of
the Business as it is currently being operated, excluding any reports, data and
customer lists, or (iii) any Software listed in Section 5.10 of the Disclosure
Schedule.
(d) Except as disclosed in Section 5.10 of the Disclosure Schedule
Sellers or their Affiliates either: (i) own the entire right, title and interest
in and to the Intellectual Property and Software included in the Purchased
Assets, free and clear of any Encumbrance; or (ii) to the knowledge of Sellers,
have the right to use the same.
(e) Except as disclosed in Section 5.10 of the Disclosure Schedule:
(i) all Copyrights, Patents, Trademarks and Domain Names identified in Section
5.10 of the Disclosure Schedule as being owned by Sellers or any of their
Affiliates are valid and in force, and all pending applications for any
Copyrights, Patents, Trademarks and Domain Names so identified are in good
standing; (ii) the Intellectual Property identified in Section 5.10 of the
Disclosure Schedule as being owned by Sellers or any of their Affiliates is
valid and enforceable; and (iii) Sellers or their Affiliates have the right to
bring actions for infringement or unauthorized use of the Intellectual Property
and Software identified in Section 5.10 of the Disclosure Schedule as
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being owned by Sellers or their Affiliates and included in the Purchased Assets,
and to the knowledge of Sellers, there is no basis for any such action. Correct
and complete copies of: (x) registrations for all registered Copyrights,
Patents, Trademarks and Domain Names identified in Section 5.10 of the
Disclosure Schedule as being owned by Sellers or their Affiliates; and (y) all
pending applications to register unregistered Copyrights, Patents or Trademarks
identified in Section 5.10 of the Disclosure Schedule as being owned by Sellers
or their Affiliates (together with any subsequent filings relating to the
pending applications) have heretofore been made available to Buyer by Sellers.
(e) Except as set forth in Section 5.10 of the Disclosure Schedule,
neither Sellers nor any of their Affiliates has had notice of any claim against
Sellers or any of their Affiliates that the operations, activities, products,
software, equipment, machinery or processes of the Business infringe any
Intellectual Property right of any other Person and, to the knowledge of
Sellers, no infringement of any Intellectual Property right of any other Person
has occurred or results in any way from the operations of the Business.
(f) Except as disclosed in Section 5.10 of the Disclosure Schedule,
(i) the Software included in the Purchased Assets is not subject to any transfer
or assignment limitations; (ii) Sellers or their Affiliates have maintained and
protected the Software included in the Purchased Assets that they own (the
"Owned Software") (including all source code and system specifications) with
appropriate proprietary notices (including the notice of copyright in accordance
with the requirements of 17 U.S.C. ss. 401), confidentiality and non-disclosure
agreements and such other measures as are reasonably necessary to protect the
proprietary, trade secret or confidential information contained therein; (iii)
the Owned Software has been registered or is eligible for protection and
registration under applicable copyright law and has not been forfeited to the
public domain; (iv) Sellers or their Affiliates have copies of all releases or
separate versions of the Owned Software so that the same may be subject to
registration in the United States Copyright Office; (v) Sellers or their
Affiliates have complete and exclusive right, title and interest in and to the
Owned Software; (vi) any Owned Software includes any or all of the following:
the source code, system documentation, statements of principles of operation and
schematics, as well as any pertinent commentary, explanation, program (including
compilers), workbenches, tools, and higher level (or "proprietary") language
used for the development, maintenance, implementation and use thereof, so that a
trained computer programmer could develop, maintain, support, compile and use
all releases or separate versions of the same that are currently subject to
maintenance obligations by Sellers or their Affiliates; and (vii) there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Owned Software by any other Person.
(g) Except as disclosed in Section 5.10 of the Disclosure Schedule,
all employees, agents, consultants or contractors who have contributed to or
participated in the creation or development of any material protected by
Copyrights, Patents or Trade Secrets that are material to the conduct of the
Business as it is currently being operated by Sellers (or their Affiliates, as
the case may be) either: (i) is a party to a "work-for-hire" agreement under
which Sellers (or their Affiliates, as the case may be) is deemed to be the
original owner/author of all property rights therein; or (ii) has executed an
assignment or an agreement to assign in favor of Sellers (or their Affiliates,
as the case may be) (or such predecessor in interest, as applicable) of all
right, title and interest in such material.
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5.11. Title to Property. Sellers or their Affiliates have good and
marketable title to all of the Purchased Assets, free and clear of all
Encumbrances other than Permitted Encumbrances and Assumed Liabilities, except
as set forth in Section 5.11 of the Disclosure Schedule. Upon delivery to Buyer
on the Closing Date of the instruments of transfer contemplated by Section 4.4,
Sellers will thereby transfer to Buyer good and marketable title to the
Purchased Assets, subject to no Encumbrances, except for Permitted Encumbrances
and the Assumed Liabilities.
5.12. Employees and Related Agreements. (a) Section 5.12 of the Disclosure
Schedule contains a true and full list of the names of all the current employees
of Sellers, to the extent employed with respect to the Business (the
"Employees"), which list includes each Employee's salary or wage rate, date of
hire and, with respect to each inactive employee, the reason for his or her
absence and expected return date. Except as set forth in Section 5.12 of the
Disclosure Schedule, no such employee is entitled to compensation on termination
of his or her employment by Sellers (or their Affiliates, as the case may be),
nor is any such employee entitled to special or additional compensation or other
payment or acceleration of vesting in connection with Buyer's acquisition of the
Business and the Purchased Assets or the consummation of the transactions
contemplated hereunder.
(a) Except as set forth in Section 5.12 of the Disclosure
Schedule, Sellers (or their Affiliates, as the case may be) are not a party
to or bound by any:
(i) employee collective bargaining agreement, employment
agreement, consulting, advisory or service agreement, deferred compensation
agreement, independent contractor agreement, retention agreement,
confidentiality agreement with any Employee or covenant not to compete
(other than pursuant to Section 8.1), in each case relating to the
Business;
(ii) contract or agreement with any officer, director or employee
(other than employment agreements disclosed in response to clause (i)
above), agent or attorney-in-fact of Sellers, in each case relating to the
Business; or
(iii) stock option, stock purchase, bonus or other incentive plan or
agreement, in each case relating to the Business.
5.13. Employee Relations. Except as set forth in Section 5.13 of the
Disclosure Schedule, Sellers (and their Affiliates, as the case may be) have
complied in all material respects with all applicable Requirements of Law that
relate to prices, wages, hours, discrimination in employment and collective
bargaining and is not liable for any arrears of wages (other than normal
accruals reflected in the books and records of the Business) or any taxes or
penalties for failure to comply with any of the foregoing. Except as set forth
in Section 5.13 of the Disclosure Schedule, Sellers are not a party to, and the
Business is not affected by or, to the knowledge of Sellers, threatened with,
any dispute or controversy with a union or with respect to unionization or
collective bargaining involving the employees listed in Section 5.12 of the
Disclosure Schedule.
5.14. ERISA and Related Matters. (a) Except as set forth in Section 5.14 of
the Disclosure Schedule, Sellers (or their ERISA Affiliates, as the case may be)
have no liability,
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with respect to the Business, whether direct, indirect, contingent or otherwise
(i) for any violation of the health care requirements of Part 6 Title I of ERISA
or Section 4980B of the Code, (ii) under Sections 502(i) or 502(l) of ERISA or
Section 4975 of the Code, (iii) under Section 302 of ERISA or Section 412 of the
Code or (iv) under Title IV of ERISA.
(a) Section 5.14 of the Disclosure Schedule lists each of Sellers'
Benefit Plans. Neither Sellers nor any of their ERISA Affiliates has ever
maintained, contributed to, or had any liability whatsoever (whether direct,
indirect, contingent or otherwise) with respect to any multiemployer plan (as
such term is defined in Section 3(37) of ERISA). Each of the Sellers' Benefit
Plans, which is intended to qualify under Section 401(a) of the Code, has
received a favorable determination letter from the IRS, and no event has
occurred that would cause any such plan to cease being so qualified. Except as
set forth in Section 5.14 of the Disclosure Schedule, each of Sellers' Benefit
Plans complies in form and has been administered in accordance with the
requirements of ERISA and, where applicable, the Code. Sellers (or their ERISA
Affiliates, as the case may be) have made all required contributions to each of
the Sellers' Benefit Plans, including remittance of all participants' 401(k)
contributions. "Sellers' Benefit Plans" shall include each deferred
compensation, profit-sharing, retirement, pension, and each bonus or other
incentive compensation, stock purchase, stock option, fringe benefit, and other
equity compensation plan, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the meaning of Section 3(1) of ERISA);
each profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); each employment, consulting,
retention, termination or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, whether oral or written, formal
or informal and whether or not subject to ERISA, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
Sellers or any of their ERISA Affiliates with respect to current or former
employees of Parent or any of its Affiliates.
(b) Sellers have delivered or made available to Buyer, with respect
to each of Sellers' Benefit Plans, correct and complete copies of (i) all plan
documents and amendments, trust agreements and insurance contracts, (ii) the
most recent IRS determination letter, (iii) the most recent Annual Report (Form
5500 Series) and accompanying schedules, as filed, (iv) the current and, to the
extent available, the prior summary plan description, (v) the most recent
financial statements and (vi) the most recent actuarial report.
(c) There is no pending or, to the knowledge of Sellers, threatened
claim that alleges any violation of ERISA or any other law (i) by or on behalf
of any of Sellers' Benefit Plans or (ii) by any employee of Sellers (or their
Affiliates, as the case may be) or any plan participant or beneficiary against
any such plan other than routine claims for benefits.
5.15. Contracts. Except as set forth in Sections 5.10 and 5.15 of the
Disclosure Schedule, neither Sellers nor any of their Affiliates, as the case
may be, are, with respect to the Business, a party to or bound by:
(i) any Contract for the purchase or sale of real property;
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(ii) any Contract for the purchase of raw materials by Sellers or
any of their Affiliates that involved the payment of more than $50,000 in
2001, that Sellers reasonably anticipate will involve the payment of more
than $50,000 in 2002 or that extends beyond December 31, 2003;
(iii) any Contract for the sale of goods or services by Sellers or
any of their Affiliates that involved the payment of more than $50,000 in
2001, that Sellers reasonably anticipate will involve the payment of more
than $50,000 in 2002 or that extends beyond December 31, 2003;
(iv) any Contract for the purchase, licensing or development of
Software to be used by the Business which is material to the continued
operation of the Business;
(v) any consignment, distributor, dealer, manufacturers'
representative, sales agency, advertising representative or advertising or
public relations Contract that involved the payment of more than $50,000 in
2001, that Sellers reasonably anticipate will involve the payment of more
than $50,000 in 2002 or that extends beyond December 31, 2003;
(vi) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
(vii) any Contract that provides for, or relates to, the incurrence
by the Business of indebtedness for borrowed money (including any interest
rate or foreign currency swap, cap, collar, hedge or insurance agreements,
or options or forwards on such agreements, or other similar agreements for
the purpose of managing the interest rate and/or foreign exchange risk
associated with its financing);
(viii) any Contracts of Sellers or any of their Affiliates having
terms or conditions that would have a Material Adverse Effect on the
Purchased Assets or the Business or that have covenants not to compete that
materially impair the ability of Sellers or any of their Affiliates to
conduct the Business as currently conducted or would reasonably be expected
to materially impair Buyer's ability to conduct the Business as currently
conducted;
(ix) any Contract not made in the ordinary course and either (i)
the consequences of a default or termination thereunder would have a
Material Adverse Effect or (ii) the performance of which involves
consideration in excess of $50,000; or
(x) any other Contract, agreement, commitment, understanding or
instrument that is material to the Business.
5.16. Status of Contracts. Except as set forth in Section 5.16 of the
Disclosure Schedule and for events of default arising as a result of the Filing,
each of the Seller Agreements (i) to the knowledge of Sellers, constitutes a
valid and binding obligation of the parties thereto and (ii) is in full force
and effect and, subject to the cure of defaults pursuant to Section 2.6 and
except for those Seller Agreements that by their terms will expire prior to the
Closing Date or are otherwise terminated prior to the Closing Date in accordance
with the provisions hereof, may be
-29-
transferred to Buyer pursuant to this Agreement and will continue in full force
and effect upon such transfer, in each case without breaching the terms thereof
or resulting in the forfeiture or impairment of any rights thereunder and,
except for the Bankruptcy Court Order and the obtaining of any consents set
forth in Section 5.3 of the Disclosure Schedule, without the consent, approval
or act of, or the making of any filing with, any other party. Sellers or their
Affiliates have fulfilled and performed their respective obligations under each
of the Seller Agreements, and except for events of default arising as a result
of the Filing, Sellers or their Affiliates are not in, or, to the knowledge of
Sellers, alleged to be in, breach or default under, nor is there or, to the
knowledge of Sellers, is there alleged to be any basis for termination of, any
of the Seller Agreements, and, to the knowledge of Sellers, no other party to
any of the Seller Agreements has breached or defaulted thereunder, and no event
has occurred and no condition or state of facts exists that, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by Sellers or any of their Affiliates or, to the knowledge of Sellers, by any
such other party. Neither Sellers nor any of their Affiliates are currently
renegotiating any of the Seller Agreements or paying liquidated damages in lieu
of performance thereunder. Sellers have made available to Buyer true and correct
copies of each of the Seller Agreements.
5.17. No Litigation or Regulatory Action. Except as set forth in Section
5.17 of the Disclosure Schedule and for the Filing:
(i) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of Sellers, threatened against
or affecting Sellers or their Affiliates as the case may be) in respect of
the Equity Interests, the Purchased Assets or the Business nor, to the
knowledge of Sellers, is there any basis for any of the same, and there are
no lawsuits, suits or proceedings pending in which Sellers or any of their
Affiliates is the plaintiff or claimant and that relate to the Equity
Interests, the Purchased Assets or the Business;
(ii) there is no action, suit or proceeding pending or, to the
knowledge of Sellers, threatened that questions the legality or propriety
of the transactions contemplated by this Agreement;
(iii) to the knowledge of Sellers, no legislative or regulatory
proposal or other proposal for the change in any Requirements of Law or the
interpretation thereof has been adopted or pending that could constitute a
Material Adverse Effect; and
(iv) neither Sellers nor any of their Affiliates are in receipt of
notice of any adverse inspection, finding of deficiency, finding of
non-compliance, compelled or voluntary recall, investigation, penalty,
fine, sanction, assessment, request for corrective or remedial action or
other compliance or enforcement action, in each case relating to the
Business or the products of the Business, by any Medical Product Regulatory
Authority or any other Governmental Authority.
5.18. Environmental Matters. Except as set forth in Section 5.18 of the
Disclosure Schedule:
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(i) neither Sellers nor any of their Affiliates have received
notice to the effect that the operations of the Business fail or have
failed at any time to comply with applicable Environmental Laws and, to the
knowledge of Sellers, the operations of the Business comply and have
complied in all material respects with all applicable Environmental Laws;
(ii) Sellers or their Affiliates have obtained all environmental,
health and safety Governmental Permits necessary for the operation of the
Business, and all such Governmental Permits are in full force and effect
and Sellers and their Affiliates are in compliance in all material respects
with all terms and conditions of such permits;
(iii) none of Sellers, any of their Affiliates or the operations of
the Business, is subject to any on-going investigation by, notice by, order
from or agreement with any Person (including any prior owner or operator of
the Facilities that are Purchased Assets), or any judicial or
administrative proceeding, judgment, decree or settlement, respecting (i)
any Environmental Law, (ii) any Remedial Action or (iii) any claim arising
from the Release or threatened Release of Hazardous Materials into the
environment;
(iv) neither Sellers nor any of their Affiliates has with respect
to the Business filed any notice under any applicable Environmental Law
reporting a violation of any applicable Environmental Law;
(v) there is not now, nor to the knowledge of Sellers has there
ever been, on or in any of the Facilities:
(a) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 C.F.R. Part 261 or
any state equivalent, that requires or required a Governmental
Permit pursuant to Section 3005 of RCRA; or
(b) any underground storage tank or surface impoundment or
landfill or waste pile.
(vi) to the knowledge of Sellers, there is not now on or in any of
the Facilities that are Purchased Assets any polychlorinated biphenyls
(PCB) used in pigments, hydraulic oils, electrical transformers or other
equipment;
(vii) neither Sellers nor any of their Affiliates has received any
notice or claim under CERCLA or any comparable state law to the effect that
it is or may be liable to any Person as a result of the Release or
threatened Release of Hazardous Materials and, to the knowledge of Sellers,
there are no facts or conditions relating to the operation the Business
that could reasonably be expected to give rise to any such notice or claim;
(viii) no Environmental Encumbrance has attached to any of the
Facilities that are Purchased Assets;
(ix) neither Sellers nor any of their Affiliates have received a
notice or claim to the effect that any asbestos-containing material that is
on or part of any of the Facilities
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that are Purchased Assets are not in good repair according to the current
standards and practices governing such material or that its presence or
condition violates any currently applicable Environmental Law and, to the
knowledge of Sellers, there are no facts or conditions relating to the
operations of the Business that could reasonably be expected to give rise
to any such notice or claim; and
(x) none of the products Sellers or their Affiliates develop
manufacture, produce, distribute or sell in connection with the Business,
now or in the past, contains asbestos or asbestos-containing material.
5.19. Suppliers. Except as set forth in Section 5.19 of the Disclosure
Schedule, there exists no actual or, to the knowledge of Sellers, threatened,
termination, cancellation or limitation of, or any modification or change in,
the business relationship with any supplier or group of suppliers of the
Business where such cancellation, limitation, modification or change would have
a Material Adverse Effect on the Business.
5.20. Product Liabilities. Except as set forth in Section 5.20 of the
Disclosure Schedule, neither Sellers nor any of their Affiliates has received a
claim related to the Business for or based upon breach of product warranty
(other than warranty service and repair claims in the ordinary course of
business not material in amount or significance), strict liability in tort,
negligent manufacture of product, negligent provision of services or any other
allegation of liability, including or resulting in product recalls, arising from
the materials, design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of its products or from the provision of
services; and, to the knowledge of Sellers, there is no basis for any such
claim. Except as set forth in Section 5.20 of the Disclosure Schedule, the
products sold or delivered or services rendered by the Business comply with all
contractual requirements, warranties or covenants applicable thereto and are not
subject to any material term, condition, guaranty, warranty or other indemnity
beyond the applicable standard terms and conditions of sale for such products
and services.
5.21. Taxes. Except as set forth in Section 5.21 of the Disclosure
Schedule, (i) Sellers have, in respect of the Equity Interests, the Business and
the Purchased Assets, filed all Tax Returns (other than with respect to federal
Taxes) required to be filed and have paid all Taxes shown to be due on such Tax
Returns or pursuant to any assessment which has become payable; (ii) all such
Tax Returns are complete and accurate and disclose all Taxes required to be paid
in respect of the Equity Interests, the Business and the Purchased Assets; (iii)
no Seller is currently the beneficiary of any extension of time within which to
file any Tax Return (other than with respect to federal Taxes) associated with
the Equity Interests, the Business or the Purchased Assets; (iv) there is no
action, suit, investigation, audit, claim or assessment pending or, to the
knowledge of Sellers, proposed or threatened with respect to Taxes associated
with the Equity Interests, the Business or the Purchased Assets; (v) Sellers
have not waived or been requested to waive any statute of limitations in respect
of Taxes associated with the Equity Interests, the Business or the Purchased
Assets, which waiver is currently in effect; (vi) all amounts required to be
withheld by Sellers (including from Employees for income Taxes and social
security and other payroll Taxes) have been collected or withheld, and either
paid to the respective taxing authorities, set aside in accounts for such
purpose, or accrued, reserved against and entered upon the books of the
Business; (viii) none of the Purchased Assets is properly treated as owned by
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Persons other than Sellers for income Tax purposes; and (ix) none of the
Purchased Assets is "tax-exempt use property" within the meaning of Section
168(h) of the Code.
5.22. Regulatory Matters. Except as set forth in Section 5.22 of the
Disclosure Schedule:
(a) (i) to the knowledge of Sellers, Sellers and their Affiliates
are in compliance in all material respects with all current applicable statutes,
regulations or rules enacted, adopted, issued, promulgated or administered by
the FDA or comparable foreign Governmental Body with respect to or relating to
the Business and (ii) neither Sellers nor any of their Affiliates have received
any notice alleging any failure by Sellers or their Affiliates to so comply;
(b) (i) to the knowledge of Sellers, the devices sold, marketed
or distributed by the Business in the United States been cleared for marketing
under valid pre-market notifications (510(k)(s)) or pre-market approvals, where
required and (ii) neither Sellers nor any of their Affiliates have received any
notice of any failure to receive or revocation of any such clearance;
(c) Sellers or their Affiliates have obtained all necessary
approvals, registrations and authorizations from any other foreign regulatory
authority or agency related to the marketing, distribution and sale by the
Business of devices in the respective foreign jurisdictions in which such
devices are sold, marketed or distributed;
(d) to the knowledge of Sellers, there is no false information or
significant omission in any product application or product-related submission
made by Sellers or any of their Affiliates in connection with the Business to
the FDA or comparable foreign Governmental Body;
(e) to the knowledge of Sellers, there is no reasonable basis for
any warning letters or other regulatory action from the FDA or any comparable
foreign Governmental Body in each case, with respect to the Business; and
(f) there have been no recalls, field notifications, alerts,
seizures or other compliance or enforcement action requested or threatened
relating to the products of the Business.
5.23. No Finder. Neither Sellers nor any Person acting on their behalf,
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement and Sellers shall hold harmless and indemnify Buyer Group Members from
any claims with respect to any such fees or commissions.
5.24. Closing Date. The representations and warranties of Sellers
contained in this Article V and elsewhere in this Agreement and all information
contained in any Exhibit, Schedule or attachment hereto, including the
Disclosure Schedule, or in any certificate or other writing delivered by, or on
behalf of, Sellers to Buyer are true and correct as of the date of Sellers'
delivery of the Disclosure Schedule to Buyer and shall be true and correct in
all respects on the Closing Date as though then made, except as affected by the
transactions expressly
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contemplated by this Agreement. The parties agree that Sellers shall not be
deemed to be in breach of any of its representations or warranties contained in
this Article V or elsewhere in this Agreement to the extent that any of the
individuals listed in Section 5.24 of the Disclosure Schedule (which individuals
have been agreed to by the parties) had actual knowledge of any information
which caused such individual to believe that such representation or warranty was
not true and correct in all material respects as of the date of delivery of the
Disclosure Schedule pursuant to the terms of Section 7.10.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND TJS&N
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer and TJS&N hereby
represent and warrant to Sellers and agree as follows:
6.1. Organization of Buyer and TJS&N. Each of Buyer and TJS&N is a
corporation duly organized, validly existing and in good standing under its
jurisdiction of organization and is duly qualified to transact business as a
foreign corporation and is in good standing in each of the jurisdictions in
which the ownership or leasing of its properties or the conduct of its business
requires such qualification. Each of Buyer and TJS&N has full corporate power
and authority to own or lease and to operate and use its properties and assets
and to carry on its business as now conducted.
6.2. Authority of Buyer and TJS&N. (a) Each of Buyer and TJS&N has full
power and authority to execute, deliver and perform this Agreement and all of
the Ancillary Documents to which it will be a party. The execution, delivery and
performance of this Agreement and such Ancillary Documents by Buyer and TJS&N
have been duly authorized and approved by the boards of directors of Buyer and
TJS&N and do not require any further authorization or consent of Buyer, TJS&N or
their respective shareholders. This Agreement has been duly authorized, executed
and delivered by Buyer and TJS&N and is the legal, valid and binding obligation
of Buyer and TJS&N enforceable in accordance with its terms, and each Ancillary
Document to which Buyer or TJS&N is or will be a party has been duly authorized
by Buyer or TJS&N, as the case may be, and upon execution and delivery by Buyer
or TJS&N, as the case may be, will be a legal, valid and binding obligation of
Buyer or TJS&N, as the case may be, enforceable in accordance with its terms.
(b) Subject to the entry of the Bankruptcy Court Order, neither the
execution and delivery of this Agreement or any of such Ancillary Documents or
the consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under (1) the charter, bylaws or other similar organizational
documents of Buyer or TJS&N, (2) any material note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization, right,
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restriction or obligation to which Buyer or TJS&N is a party or any of its
properties is subject or by which Buyer or TJS&N is bound, (3) any Court
Order to which Buyer or TJS&N is a party or by which either of them is
bound, or (4) any Requirements of Law affecting Buyer or TJS&N; or
(ii) require the approval, consent, authorization or act of, or
the making by Buyer or TJS&N of any declaration, filing or registration
with, any Person.
6.3. No Finder. None of Buyer, TJS&N or any Person acting on behalf of
either Buyer or TJS&N has paid or become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement, and Buyer and TJS&N shall hold harmless and
indemnify Seller Group Members from any claims with respect to any such fees or
commissions.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
7.1. Investigation of the Business by Buyer. (a) Sellers shall afford and
cause the Business to afford to the officers, employees and authorized
Representatives of Buyer access during normal business hours to the offices,
properties, Employees and business and financial records (including computer
files, retrieval programs and similar documentation) with respect to the
Business, the Equity Interests and Purchased Assets to the extent Buyer shall
deem necessary or desirable, and shall furnish to Buyer or its authorized
Representatives such additional information concerning the Equity Interests, the
Purchased Assets, the Business and the operations of the Business as shall be
reasonably requested, including all such information as shall be necessary to
enable Buyer or its Representatives to (i) verify the accuracy of Sellers'
representations and warranties contained in this Agreement, (ii) verify that the
covenants of Sellers contained in this Agreement have been complied with, (iii)
determine whether the conditions set forth in Article IX have been satisfied and
(iv) verify the information contained in and the accuracy of the Disclosure
Schedule. No investigation made or discussion had by Buyer or its
Representatives hereunder shall affect the representations and warranties of
Sellers hereunder.
(b) To the extent permitted by applicable law, as requested by
Buyer from time to time, Sellers shall use their reasonable best efforts to
cooperate with Buyer in connection with Buyer and Sellers contacting suppliers
and customers of the Business.
7.2. Preserve Accuracy of Representations and Warranties. Each of the
parties hereto shall use their reasonable best efforts to refrain from taking
any action that would render any representation or warranty contained in Article
V or VI of this Agreement inaccurate as of the Closing Date or which would
require an amendment to the Disclosure Schedule had it been delivered as of the
date of this Agreement. Each party shall promptly notify the other of any
action, suit or proceeding that shall be instituted or threatened against such
party to restrain,
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prohibit or otherwise challenge the legality of any transaction contemplated by
this Agreement. Sellers shall promptly notify Buyer of any lawsuit, claim,
proceeding or investigation that may be threatened, brought, asserted or
commenced against Sellers, any of their Affiliates, Dermagraft JV or DermEquip
of which either Seller obtains knowledge and that would have been listed in
Section 5.17 of the Disclosure Schedule if such lawsuit, claim, proceeding or
investigation had arisen prior to the date hereof.
7.3. Consents of Third Parties; No Seller Defaults; Governmental
Approvals. (a) Sellers will act diligently and reasonably to secure, before the
Closing Date, the consent, approval or waiver, in form and substance reasonably
satisfactory to Buyer, from any party to any Seller Agreement or from any
licensor of any Intellectual Property or Software required to be obtained to
assign or transfer any such Seller Agreements, Intellectual Property or Software
to Buyer or to otherwise satisfy the conditions set forth in Article IX, in each
case as necessary to the extent such consents, approvals or waivers are not
provided for or satisfied by the Bankruptcy Court Order; provided that neither
Sellers nor Buyer shall have any obligation to offer or pay any consideration in
order to obtain any such consents or approvals except for such amounts as
Sellers shall be obligated to pay as condition to any such assumption and
assignment (including cure amounts) pursuant to Section 365(b) of the Bankruptcy
Code; and provided, further, that Sellers shall not make any agreement or
understanding affecting the Equity Interests, the Purchased Assets or the
Business as a condition for obtaining any such consents or waivers, except with
the prior written consent of Buyer. During the period prior to the Closing Date,
Buyer shall act diligently and reasonably to cooperate with Sellers to obtain
the consents, approvals and waivers contemplated by this Section 7.3(a).
(a) During the period prior to the Closing Date, Sellers and
Buyer shall act diligently and reasonably, and shall cooperate with each other,
to secure any consents and approvals of any Governmental Authority required to
be obtained by them in order to assign or transfer any Governmental Permits to
Buyer, to permit the consummation of the transactions contemplated by this
Agreement, or to otherwise satisfy the conditions set forth in Section 9.5, in
each case as necessary to the extent such consents are not provided for or
satisfied by the Bankruptcy Court Order; provided that Sellers shall not make
any agreement or understanding affecting the Equity Interests, the Purchased
Assets or the Business (excluding the Excluded Assets and Excluded Liabilities)
as a condition for obtaining any such consents or approvals, except with the
prior written consent of Buyer. During the period prior to the Closing Date,
Buyer shall act diligently and reasonably to cooperate with Sellers to obtain
the consents and approvals contemplated by this Section 7.3(b).
(b) As Buyer may reasonably request, Sellers shall use reasonable
best efforts to obtain and deliver to Buyer written assurances, estoppel
certificates and similar instruments from lessors and other parties to the
Seller Agreements or Governmental Permits verifying the existence of such Seller
Agreements or Governmental Permits and verifying whether Sellers, any of their
Affiliates, Dermagraft JV or DermEquip, as the case may be, has fulfilled and
performed all of its obligations thereunder and is not in or alleged to be in
breach or default (or as applicable, specifying the nature of any breach or
default); provided, however, that any default resulting solely from the Filing
shall not be deemed a breach for purposes of this Section 7.3(c).
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7.4. Operations Prior to the Closing Date. (a) Sellers shall, and
shall cause Dermagraft JV and DermEquip to, operate and carry on the Business
(excluding the Excluded Assets, Excluded Liabilities and Employees who are not
Transferred Employees) only in a manner consistent with the Budget and, to the
extent consistent with the Budget, in the ordinary course consistent with past
practice. Sellers agree to fund Dermagraft JV as required under normal practice
and consistent with the Budget. Consistent with the foregoing and with the
Budget and to the extent permitted or required by the Bankruptcy Proceedings,
Sellers shall, and shall cause Dermagraft JV and DermEquip to, use their
reasonable best efforts to continue operating the Business (excluding the
Excluded Assets, Excluded Liabilities and Employees who are not Transferred
Employees) as a going concern, and to maintain the business organization of the
Business (excluding the Excluded Assets, Excluded Liabilities and Employees who
are not Transferred Employees) intact and to preserve the goodwill of the
manufacturers, suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the Business (excluding
the Excluded Assets, Excluded Liabilities and Employees who are not Transferred
Employees).
In connection therewith, and except for Employees who are not
Transferred Employees, Sellers shall not (i) transfer or cause to be transferred
from the Business any Employee or agent thereof, (ii) offer employment for any
period on or after the Closing Date to any such employee or agent regarding whom
Buyer makes offers of employment (if any); provided, that Sellers may offer
employment to each of the Employees listed in Section 7.4 of the Disclosure
Schedule if such Employee declines employment with Buyer or its Affiliates or
Buyer and its Affiliates do not offer to employ such Employee, (iii) otherwise
attempt to persuade any such person to terminate his or her relationship with
the Business, or (iv) except for Employees who are not Transferred Employees,
make any change in compensation of the employees of Sellers or any of their
Affiliates rendering services to the Business, other than changes made, in the
case of employees other than officers, in accordance with normal compensation
practices and consistent with past compensation practices and Sellers shall
promptly notify Buyer regarding any such changes.
7.5. Notification of Certain Matters. During the period prior to the
Closing Date, Sellers will promptly advise Buyer in writing of (i) any Material
Adverse Effect, (ii) any written notice or, to the knowledge of Sellers, other
communication from any third Person alleging that the consent of such third
Person is or may be required in connection with the transactions contemplated by
this Agreement, or (iii) to the knowledge of Sellers, any default under any
Seller Agreement or event that, with notice or lapse of time or both, would
become such a default on or prior to the Closing Date. During the period prior
to the Closing Date, Buyer will promptly advise Sellers in writing of any
written notice or, to the knowledge of Buyer, other communication from any third
Person alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement.
7.6. Insurance. Until the Closing, Sellers shall maintain or cause to
be maintained in force (including necessary renewals thereof) insurance policies
against risk and liabilities to the extent and in the matter heretofore
maintained by Sellers with respect to the Business and the Purchased Assets.
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7.7. New Contracts and Other Assets. Without limiting Sellers'
obligation to comply with Section 7.4, Sellers shall promptly furnish to Buyer
copies of all Contracts for or relating to the Business that are entered into on
or after the date hereof, and Sellers shall promptly furnish to Buyer a
description of all other assets for or relating to the Business in which any
Seller or any of Sellers' Affiliates acquires an interest on or after the date
hereof, and Sellers shall appropriately supplement the Disclosure Schedule to
include such new Contracts and other assets and Sellers and Buyer shall
appropriately supplement Sections 2.2(b), 2.2(c), 2.2(d), 2.2(e), 2.2(f), 2.2(g)
and 2.2(i) of the Disclosure Schedule, as applicable, to include such new
Contracts and other assets as Purchased Assets, unless prior to the Closing
Buyer in its sole discretion indicates otherwise.
7.8. Ethicon Agreement. Parent and Buyer shall cooperate and use their
commercially reasonable efforts to obtain on behalf of Buyer an agreement (the
"Ethicon Agreement") directly from Ethicon, Inc. ("Ethicon") pursuant to which
Ethicon will supply Vicryl to Buyer and its Affiliates after the Closing. The
Ethicon Agreement shall be in form and substance reasonably acceptable to Buyer.
The parties acknowledge and agree that Buyer shall not be obligated to enter
into an Ethicon Agreement, except as Buyer shall determine in its sole
discretion.
7.9. Bankruptcy Court Approvals. Sellers shall as soon as practicable
use their commercially reasonable efforts to obtain an order of the Bankruptcy
Court approving the Bidding Procedures, including payment of the Reimbursed
Expenses to Buyer as set forth therein, and approving Section 8.5 hereof.
Sellers shall use their commercially reasonable efforts to obtain Bankruptcy
Court approval, in the form of the Bankruptcy Court Order, of the transactions
described herein.
7.10. Delivery of Disclosure Schedule. The parties have agreed to
execute and deliver this Agreement prior to completion and delivery of the
Disclosure Schedule. Sellers will use their best efforts to prepare and deliver
to Buyer the Disclosure Schedule together with all supporting agreements and
documents related to the information disclosed therein, as promptly as
practicable (but in no event later than ten days after the date hereof) in a
form and substance reasonably satisfactory to Buyer in all respects (and the
parties hereto acknowledge and agree that it is reasonable for Buyer to reject
the Disclosure Schedule in the event that the Disclosure Schedule as delivered
by Sellers includes or should include, for accuracy and completeness (based upon
Buyer's investigation performed through the date of delivery of the Disclosure
Schedule), any materially adverse information, in which event the Disclosure
Schedule shall be deemed not delivered and Sellers shall be in breach of this
Section 7.10).
7.11. Agreements Relating to DermEquip Loan. Buyer shall use
commercially reasonable efforts to cause Parent to be fully released, effective
as promptly as practicable after the Closing, from all of its obligations under
that certain Guaranty, dated as of August 8, 1997 (the "Guaranty"), executed by
Parent in favor of The Chase Manhattan Bank (the "Bank"). After the Closing,
Buyer shall not, and shall not permit any of its Affiliates to, renew, extend or
increase the principal amount of the loan evidenced by that certain Agreement,
dated as of August 12, 1997, between the Bank and DermEquip, without providing
Parent with evidence that the Guaranty has been released with respect to Parent.
Buyer and Parent shall each use commercially reasonable efforts to negotiate and
enter into (or cause their respective Affiliates
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and DermEquip, as appropriate, to enter into) an appropriate agreement (the
"Contribution Termination Agreement"), which shall be effective at the time
Parent is released from its obligations under the Guaranty, and which shall (i)
terminate any obligations of Parent under, or any obligations of DermEquip or
▇▇▇▇▇ & Nephew plc, a United Kingdom company ("Buyer Parent"), to Parent under,
that certain Indemnity, Subrogation and Contribution Agreement, dated as of
August 8, 1997, among Parent, Buyer Parent and DermEquip, (ii) terminate that
certain Security Agreement, dated as of August 8, 1997, between DermEquip and
Parent, and (iii) terminate that certain Pledge Agreement, dated as of August 8,
1997, by Buyer in favor of Parent.
7.12. Efforts to Agree to Certain Contracts. Buyer and Parent shall
each use commercially reasonable efforts to negotiate and enter into (or cause
their respective Affiliates to enter into) effective at the Closing, the
following agreements, each of which shall be in form and substance reasonably
acceptable to each party thereto:
(a) Manufacturing and Supply Agreement between Buyer and Parent
(the "Manufacturing and Supply Agreement") pursuant to which Buyer shall have
access, free of charge, to all manufacturing equipment, raw materials and other
materials owned or held by Parent or any of its Affiliates that are required to
perform Buyer's obligations under the Manufacturing and Supply Agreement and
shall manufacture (i) collagen and NouriCel and collagen and NouriCel products
for and on behalf of Parent in connection with Parent's existing arrangements
with third parties at the current supply prices from Dermagraft JV to Parent for
a period ending no later than December 31, 2003 (and Parent shall be permitted
to assign its rights thereunder relating to collagen to Inamed Corporation so
long as Inamed Corporation assumes all of Parent's liabilities and obligations
relating thereto) and (ii) pilot-scale quantities (i.e., no more than are
necessary to support pre-clinical and clinical trials) of those products
currently so produced by Dermagraft JV on behalf of Parent relating to
periodontal, cardiovascular and other uses of such products in the ATS Business
at full manufacturing cost for a period of no more than three years;
(b) ATS Intellectual Property License Agreement between Buyer or
its Affiliates and Parent or its Affiliates, as applicable (the "ATS
Intellectual Property License Agreement"), pursuant to which Parent or such
Affiliates shall grant to Buyer (or its designated Affiliates) an exclusive
(within the field of use defined by the Business), worldwide, royalty-free (and
fully paid in connection with the transactions contemplated by this Agreement)
and assignable (with the right to sublicense) license with respect to the
Retained Patent or Software which is used in or held for use in or relating to
the Business but is not included in the Purchased Assets. The term of such
license shall be, in the case of the Retained Patent, for the life of the
Retained Patent and, in the case of Software, indefinitely;
(c) Business Intellectual Property License Agreement between
Buyer and Parent or their respective Affiliates, as applicable (the "Business
Intellectual Property License Agreement"), pursuant to which Buyer or its
Affiliates shall grant to Parent (or certain designated Affiliates of Parent) an
exclusive (other than the field of use defined by the Business) worldwide,
royalty-free (and fully paid in connection with the transactions contemplated by
this Agreement) and assignable (with the right to sublicense) license with
respect to all Intellectual Property (other than Trademarks) or Software that is
included in the Purchased Assets (other
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than the Cartilage Assets, which are governed by Section 7.15) and that is also
used in or held for use in or relating to the ATS Business. The term of such
license shall be, in the case of Patents, for the life of the Patent and, in the
case of all other such Intellectual Property, indefinitely;
(d) ATS Primary Assets Agreement between Buyer and Sellers or
their respective Affiliates, as applicable (the "ATS Primary Assets Agreement"),
pursuant to which Parent or its Affiliates shall grant to Buyer (or certain
designated Affiliates of Buyer) the right to use at no charge any of the ATS
Primary Assets reasonably designated by Buyer which do not constitute Software
for a period of time to be agreed among the parties;
(e) Business Primary Assets Agreement between Buyer and Parent or
their respective Affiliates, as applicable (the "Business Primary Assets
Agreement"), pursuant to which Buyer or its Affiliates shall grant to Parent (or
certain designated Affiliates of Parent) the right to use at no charge any of
the Business Primary Assets reasonably designated by Parent which do not
constitute Software for a period of time to be agreed among the parties;
(f) Transition Services Agreement between Buyer and Sellers or
each of their respective Affiliates, as applicable (the "Transition Services
Agreement"), pursuant to which Buyer and Sellers or such Affiliates shall
provide transition services reasonably requested by such other party, including
the provision by Buyer to Sellers of reasonable access to master cell banks and
working cell banks in limited quantities to be mutually agreed upon, in each
case for products that do not compete, directly or indirectly, with the
Business; and
(g) Waiver and Release Agreement among Buyer, Parent, ATS
Dermagraft and ATS Orthopedics (the "Waiver and Release Agreement") pursuant to
which Buyer and its Affiliates, on the one hand, and Parent, ATS Dermagraft and
ATS Orthopedics and each of their Affiliates, on the other hand, waive and
release any claims each party may have against the other relating to the
Dermagraft JV, the SNATS Partnership or DermEquip, other than any claims arising
out of this Agreement.
7.13. Termination of Current Agreements. Each of Parent and Buyer
shall, and shall cause each of their Affiliates (including for this purpose,
Dermagraft JV and DermEquip) who are parties to any of the agreements referenced
in this Section to, execute and deliver at the Closing an agreement, in form and
substance reasonably acceptable to each of Parent and Buyer (the "Termination
Agreement Relating to Current Agreements"), acknowledging and agreeing that each
of the following agreements and all of the parties' rights and obligations
thereunder, are terminated in their entirety effective at the Closing: (i) Heads
of Agreement, dated as of April 29, 1996, between Parent and Buyer Parent; (ii)
Agreement of General Partnership of Dermagraft U.S., dated as of April 29, 1996,
between ATS Dermagraft and Buyer, (iii) Agreement of General Partnership of
Dermagraft International, dated as of April 29, 1996, between ATS Dermagraft and
Buyer; (iv) Heads of Agreement, dated as of January 14, 1998, among ATS
Dermagraft, Buyer, Parent and Buyer Parent; (v) Heads of Agreement, dated as of
August 6, 1998, between Parent and Buyer Parent; (vi) Amendment to Agreements of
General Partnership of Dermagraft U.S. and Dermagraft International, effective
as of January 1, 1999, between ATS Dermagraft and Buyer, and acknowledged by
Parent and Buyer Parent; (vii) Stand Alone Joint Venture For Dermagraft(R),
TransCyte(TM) and Other Wound Applications of the Technology, effective as of
January 1, 1999, between ATS Dermagraft and Buyer; (viii) Term Sheet (2/21/00)
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between Parent and Buyer Parent; (ix) First Amendment to the Term Sheet dated
February 21, 2000 Restructuring Certain Terms of the Dermagraft Joint Venture
between Parent and Buyer Parent; (x) U.S. License Agreement, dated as of April
29, 1996, between ATS Dermagraft and Dermagraft JV, as successor in interest to
Dermagraft U.S.; (xi) ATS Parent License Agreement for U.S. License Agreement,
dated as of March 11, 1997, with a retroactive effective date of April 29, 1996,
between Parent and ATS Dermagraft; (xii) U.K. License Agreement, dated as of
April 29, 1996, between ATS Dermagraft and TJS&N ; (xiii) International License
Agreement, dated as of April 29, 1996, among ATS Dermagraft, TJS&N and
Dermagraft JV, as successor in interest to Dermagraft International; (xiv) ATS
Parent License Agreement for International and U.K. License Agreements, dated as
of March 11, 1997, with a retroactive effective date of April 29, 1996, between
Parent and ATS Dermagraft; (xv) DermEquip, L.L.C. Limited Liability Company
Agreement, dated as of June 6, 1997, among DermEquip, Buyer and ATS Dermagraft;
and (xvi) Equipment Lease dated as of August 8, 1997, as amended or
supplemented, between Parent, as lessee, and DermEquip, as lessor (and any other
leasing agreement between the parties where DermEquip is the lessor).
7.14. Dermagraft JV Loan to ATS. Buyer and Parent shall each use
commercially reasonable efforts to negotiate and enter into and cause the
Dermagraft JV to enter into appropriate documentation (the "Dermagraft JV Loan
Termination Documentation") pursuant to which Parent will be fully released,
effective at the Closing, from its obligations to repay that certain loan
secured by Inventory (the "ATS Dermagraft Loan") which was made by the
Dermagraft JV to Parent pursuant to that certain Term Sheet (2/21/00), between
Parent and Buyer Parent, as amended by the First Amendment to the Term Sheet
dated February 21, 2000 Restructuring Certain Terms of the Dermagraft Joint
Venture. The Dermagraft JV Loan Termination Documentation shall be in form and
substance reasonably acceptable to Buyer and Parent.
7.15. Cessation of Operations of the SNATS Partnership. ATS Orthopedics
and Buyer shall cooperate and mutually agree to cease operations and dissolve
the SNATS Partnership, effective on the Closing Date, pursuant to (i) the terms
of this Agreement, (ii) Section 12.4.2 of that certain Agreement of General
Partnership of SNATS Partnership, dated as of November 25, 1994, as amended by
that Amendment to Partnership Agreement, dated as of July 31, 1995 (the "SNATS
Partnership Agreement"), between ATS Orthopedics and Buyer, and (iii) a
Termination Agreement - SNATS Partnership between ATS Orthopedics and Buyer to
be in form and substance reasonably acceptable to the parties thereto (the
"SNATS Revised Agreement"). The SNATS Revised Agreement shall (i) include
appropriate agreements between the parties to the SNATS Partnership Agreement
(or their Affiliates) that specifically set forth the rights and obligations of
the parties generally contemplated by Section 12.4 of the SNATS Partnership
Agreement (ii) include one or more licenses from Buyer or its Affiliates to
Sellers or their Affiliates of any Intellectual Property (other than Trademarks)
included in the Cartilage Assets being transferred to Buyer pursuant to this
Agreement in accordance with Section 12.4.2 of the SNATS Partnership Agreement
(i.e., non-exclusive, worldwide, perpetual and with no restrictions on use and
subject only to royalties as described in such Section 12.4.2), (iii) include or
contemplate the assignment by Sellers or their Affiliates to Buyer or its
Affiliates of all rights and interests in the MIT Licenses and (iv) set forth
the termination date, as applicable, for each agreement executed by ATS
Orthopedics, Buyer, or their respective Affiliates, involving or relating to the
SNATS Partnership. To the extent that any conflict exists between the terms of
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the SNATS Partnership AgreemFent and this Agreement or the SNATS Revised
Agreement, this Agreement and the SNATS Revised Agreement shall govern the terms
of such cessation and dissolution and the parties' respective rights thereafter.
7.16. Real Property Lease. Parent and Buyer shall cooperate and use their
commercially reasonable efforts to (i) obtain on behalf of Buyer, a lease
agreement (the "Lease Agreement") directly from 10933 North ▇▇▇▇▇▇ ▇▇▇▇▇, LLC, a
Delaware limited liability company ("Lessor") pursuant to which Buyer may occupy
the premises currently occupied by Parent pursuant to that certain Standard
Industrial Lease--Multi-Tenant, dated as of September 25, 1989, as amended,
between Lessor and Parent, as tenant, and that certain Industrial Lease, dated
as of September 13, 1993, as amended, between Lessor and Parent, as tenant
(collectively, the "Current Lease"), after the Closing, and (ii) obtain on
behalf of Parent a termination agreement (the "Lease Termination Agreement")
executed by Lessor pursuant to which the Current Lease is terminated effective
at the Closing. The Lease Agreement shall be in form and substance reasonably
acceptable to Buyer and the Lease Termination Agreement shall be in form and
substance reasonably acceptable to each of Parent and Buyer. Buyer and Parent
hereby agree that prior to the Closing Buyer may, in its sole discretion, pay
any amounts under the Current Lease as Buyer determines are necessary or
desirable to avoid or cure any default by Parent thereunder and such amounts
paid by Buyer shall reduce the Purchase Price in accordance with Section
3.1(b)(iv)(A).
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Covenant Not to Compete or Solicit Business. (a) In furtherance of
the sale of the Equity Interests, the Purchased Assets and the Business to Buyer
hereunder by virtue of the transactions contemplated hereby and more effectively
to protect the value and goodwill of the Equity Interests, the Purchased Assets
and the Business so sold, each of Parent and ATS Dermagraft covenants and agrees
that, for a period ending on the third anniversary of the Closing Date, neither
Parent, ATS Dermagraft nor any of their respective Affiliates shall directly or
indirectly (whether as principal, agent, independent contractor, partner or
otherwise) own, manage, operate, control, participate in, or otherwise carry on,
any business competitive with the Business in the United States or anywhere else
in the world where the Business is being conducted on the date hereof or planned
to be conducted in the next 12 months; provided, however, that nothing set forth
in this Section 8.1 shall prohibit Sellers or their respective Affiliates from
owning not in excess of 5% in the aggregate of any class of capital stock of any
corporation if such stock is publicly traded and listed on any national or
regional stock exchange or on the Nasdaq national market system.
(b) Each of Parent and ATS Dermagraft covenants that neither it nor
any of its Affiliates will for a period ending on the first anniversary of the
Closing Date, induce or attempt to persuade any Employee, agent, or customer of
the Business to (i) terminate such employment, agency or business relationship
in order to enter into any such relationship for, with or on behalf of Parent or
ATS Dermagraft or any of their respective Affiliates or (ii) otherwise engage in
activities in competition with the Business; provided, however, that the
solicitation or recruitment prohibitions of this Section 8.1(b) shall not be
breached by any general solicitation
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by Parent, ATS Dermagraft or any of their respective Affiliates that is not
specifically directed to any such Employee.
(c) Subject to Section 8.4, Buyer covenants that neither it nor any
of its Affiliates will for a period ending on the first anniversary of the
Closing Date, induce or attempt to persuade any employee, agent, or customer of
Parent or ATS Dermagraft to terminate such employment, agency or business
relationship in order to (i) enter into any such relationship for, with or on
behalf of Buyer or any of its Affiliates or (ii) otherwise engage in activities
in competition with the ATS Business; provided, however, that the solicitation
or recruitment prohibitions of this Section 8.1(c) shall not be breached by any
general solicitation by Buyer or any of its Affiliates that is not specifically
directed to any such employee of Parent or ATS Dermagraft.
(d) Each of Parent and ATS Dermagraft covenants and agrees that
neither it nor any of its Affiliates (unless subject to a confidentiality
agreement in form and substance reasonably satisfactory to Buyer) will divulge
(in any circumstance) or make use (other than outside the scope of the Business)
of any Trade Secrets or other confidential information of the Business or
related to the Purchased Assets (other than to disclose such secrets and
information to Buyer or its Affiliates).
(e) In the event Buyer, Parent or ATS Dermagraft or any of their
respective Affiliates violates any of its obligations under this Section 8.1,
the non-violating party may proceed against it in law or in equity for such
damages or other relief as a court may deem appropriate. Buyer and Sellers
acknowledge that a violation of this Section 8.1 may cause the non-violating
party irreparable harm that may not be adequately compensated for by money
damages. Buyer and Sellers therefore agree that in the event of any actual or
threatened violation of this Section 8.1, the non-violating party shall be
entitled, in addition to other remedies that it may have, to a temporary
restraining order and to preliminary and final injunctive relief against each
violating party or any Affiliate of each violating party to prevent any
violations of this Section 8.1, without the necessity of posting a bond. The
prevailing party in any action commenced under this Section 8.1 shall also be
entitled to receive reasonable attorneys' fees and court costs. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this Section 8.1, any term, restriction,
covenant or promise in this Section 8.1 is found to be unreasonable and for that
reason unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
8.2. Taxes. (a) Sellers shall be liable for and shall pay or cause to be
paid all Tax liabilities of Seller (whether assessed or unassessed) applicable
to the Equity Interests, the Business and the Purchased Assets attributable to
periods (or portions thereof) ending on or prior to the Closing Date. Buyer
shall be liable for and shall pay all Taxes (whether assessed or unassessed)
applicable to the Equity Interests, the Business and the Purchased Assets
attributable to periods (or portions thereof) beginning after the Closing Date.
For purposes of this paragraph (a), any period beginning before and ending after
the Closing Date shall be treated as two partial periods, one ending on the
Closing Date and the other beginning on the day after the Closing Date except
that Taxes (such as property Taxes) imposed on a periodic basis shall be
allocated on a daily basis.
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(b) Notwithstanding Section 8.2(a), any Tax attributable to the sale
or transfer of the Equity Interests or the Purchased Assets and not exempted
under the Bankruptcy Court Order or by Section 1146(c) of the Bankruptcy Code
("Transfer Taxes") shall be borne by Sellers. Sellers shall prepare and file all
necessary Tax Returns or other documents with respect to all such Transfer
Taxes; provided, however, that in the event any such Tax Return requires
execution by Buyer, Sellers shall prepare and deliver to Buyer a copy of such
Tax Return at least ten days before the due date thereof, and Buyer shall
promptly execute such Tax Return and deliver it to Sellers, which shall cause it
to be filed.
(c) Sellers or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this Section
8.2. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will not
relieve the other party from its liability hereunder.
8.3. Discharge of Liabilities. (a) Each Seller covenants and agrees that
it will pay and discharge, and hold Buyer, its shareholders, officers and
directors harmless from, each and every liability and obligation of Sellers in
respect of the Equity Interests, the Business or the Purchased Assets arising
from events occurring on or prior to the Closing Date, excepting only those
liabilities and obligations expressly assumed by Buyer at the Closing pursuant
to this Agreement or the Instrument of Assumption delivered to Sellers, it being
understood and agreed that Buyer is assuming no liabilities or obligations of
Sellers or any of their Affiliates other than liabilities and obligations so
expressly assumed by Buyer.
(b) Buyer covenants and agrees that it will pay and discharge, and
hold each Seller, its estate and its shareholders, officers and directors
harmless from, each and every liability and obligation of Buyer in respect of
the Equity Interests, the Purchased Assets, the Assumed Liabilities or the
Business (excluding the Excluded Assets and Excluded Liabilities) arising from
events occurring after the Closing Date unless otherwise set forth herein.
8.4. Employees and Employee Benefit Plans. (a) Buyer shall offer
employment to commence as of the Closing Date to the Employees listed on Section
8.4(a) of the Disclosure Schedule, as amended by Buyer from time to time in its
reasonable discretion. Sellers shall use all reasonable efforts as reasonably
requested by Buyer to assist Buyer in its efforts to hire the employees
receiving offers under this Section 8.4(a). In the case of any offeree who is in
inactive status or otherwise absent from employment on the Closing Date, Buyer
may, to the extent permitted by law, condition such offer upon the offeree's
reporting to work within twelve weeks after the Closing Date, or if absent by
reason of short-term disability, injury or illness, within the period prescribed
by the applicable Seller's short-term disability plan and with acceptable
medical release for regular work or work with reasonable accommodation, or if
absent on statutory leave such as maternity or parental leave within the period
prescribed by the applicable statute for such leave. Following acceptance of
offers made by Buyer pursuant to this Section 8.4(a), Buyer shall provide
written notice thereof to Sellers and Sellers shall transfer to Buyer, to the
extent permitted by law, all files and Employee records of Employees accepting
such offers (the "Transferred Employees"). The employment of each Transferred
Employee with Buyer shall be considered effective and his or her employment by
Sellers shall terminate
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and transfer to Buyer on the Closing Date. For periods prior to Closing, with
respect to Employees, Sellers shall retain the sole responsibility for and
control over all matters relating to the maintenance of personnel and payroll
records, the withholding and payment of federal, state and local income and
payroll taxes, the payment of workers' compensation and unemployment
compensation insurance, salaries, wages and pension, welfare and other employee
and fringe benefits, hiring and firing and the conduct of all other matters
relating to labor relations. Sellers shall be solely responsible for all
liabilities and obligations relating to or arising from any right of any
Employee to receive compensation for or because of the termination of his or her
employment with Sellers or their Affiliates. Buyer shall be responsible for all
liabilities and obligations to the Transferred Employees relating to or arising
from any right of any such employee to receive compensation for or because of
the termination of his or her employment with Buyer. Sellers shall retain
liability for compliance with all applicable labor and employment laws relating
to the Employees in connection with their employment by Sellers or any of their
Affiliates.
(b) Sellers shall retain all liabilities under their employee
benefit plans, programs, agreements and arrangements, including (i) any
liabilities relating to any noncompliance with applicable laws, including ERISA
and the Code, and (ii) any liabilities that arise as a result of Seller's joint
and several liability through its relationship with an Affiliate.
(c) Sellers shall be responsible for all liabilities and
obligations relating to or arising with respect to (i) any former employee who
is no longer employed by Sellers or any of Sellers' Affiliates as of the Closing
Date, including any person who has retired or terminated employment on or prior
to the Closing Date, and (ii) with respect to any act or omission relating to
the employment of any person and occurring on or prior to the Closing Date.
(d) Buyer will become the sole beneficiary of any innovation or
similar agreements of any Transferred Employees, as such relate to the Business
or the Cartilage Business.
(e) Sellers shall comply with all notice and other requirements
under the WARN Act and any Requirements of Law with respect to actions taken by
Sellers. In the event that, between the date hereof and the Closing Date, there
is any Employee (each, an "Affected Employee") whose employment is terminated,
whose work hours are reduced, who is laid off or who otherwise experiences an
"employment loss," within the meaning of the Workers Adjustment and Retraining
Notification Act (the "WARN Act"), Sellers shall promptly notify Buyer of (i)
each Affected Employee's site of employment, date of employment loss and nature
of employment loss and (ii) the total number of employees at each site of
employment listed in response to clause (i) immediately prior to the ninety-day
period ending on the Closing Date. Sellers shall provide such additional
information, which, to the knowledge of Sellers, shall be true and accurate in
all respects, that is reasonably requested by Buyer with respect to current and
former employees of Sellers (to the extent employed with respect to the
Business), and shall, at Buyer's request and in the manner reasonably directed
by Buyer, provide, or assist Buyer in providing, notice to some or all Employees
in accordance with the WARN Act. In any termination, layoff or plant closing by
Buyer affecting any Transferred Employee after the Closing Date, Buyer shall
comply fully with the WARN Act and all Requirements of Law. Buyer shall notify
Parent of any alleged violation of the WARN Act with respect to the
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Transferred Employees and will provide information that is reasonably requested
by Parent with respect to such alleged violation; provided that such requested
information is not privileged or protected by rights to privacy.
(f) Sellers shall be responsible for satisfying "continuation
coverage" requirements for all "group health plans" under COBRA or any similar
state or local statutes or regulations for all Transferred Employees. Sellers
shall offer "continuation coverage" under its "group health plans" to all
Transferred Employees and shall comply with all notice and other requirements
under COBRA or any similar state or local statutes or regulations so that Buyer
shall have no liability or obligation under COBRA or any similar state or local
statutes or regulations as a result of event occurring on or prior to the
Closing Date or as a result of the transactions contemplated under this
Agreement to the Transferred Employees or to any other current or former
employee of Sellers (to the extent employed with respect to the Business) or any
of their respective beneficiaries.
(g) Subject to the approval of the Bankruptcy Court, if Bankruptcy
Court approval is required, as soon as practicable following the Closing Date,
Sellers or their Affiliates shall (i) pay to all Transferred Employees all
compensation, bonus, and accrued but unused vacation and holiday compensation to
which they are entitled, and (ii) accrue under Sellers' Benefit Plans or
Requirements of Law all employee benefits to which they are entitled under the
terms thereof, pro rated for the period ending on the Closing Date.
8.5. Reimbursed Expenses. (a) In consideration of Buyer's entering into
this Agreement, and in recognition of the benefits that it provides Sellers in
seeking to sell the Business for the highest and best offer at the Auction,
Sellers agree (in addition to all other rights and remedies as Buyer may have
hereunder) to pay Buyer up to $300,000 of Buyer's reasonable out-of-pocket costs
and expenses incurred in connection with the transactions contemplated by this
Agreement (the "Reimbursed Expenses") under the circumstances described below:
(i) Sellers shall pay Buyer the Reimbursed Expenses if Sellers
select a Person other than Buyer as the successful bidder (the
"Successful Bidder") pursuant to the Sale Procedures Order and, in such
event, Sellers shall pay the Reimbursed Expenses as provided in the
Sale Procedures Order; or
(ii) Sellers shall pay Buyer the Reimbursed Expenses if this
Agreement is terminated pursuant to Section 11.1(b), Section 11.1(c),
Section 11.1(d) (unless Buyer is in material breach of any of its
obligations under this Agreement and if Sellers are not in material
breach of any of their obligations under this Agreement), Section
11.1(e), Section 11.1(f), Section 11.1(g), Section 11.1(j), or Section
11.1(k) and, in such event, Sellers shall pay the Reimbursed Expenses
within two business days after the termination of this Agreement.
(b) Except as provided in the Sale Procedures Order, any payment
by Sellers of all or a portion of the Reimbursed Expenses shall be by wire
transfer of immediately available funds to an account specified in writing by
Buyer.
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8.6. Administrative Claims. Subject to the approval of the Bankruptcy
Court, if Bankruptcy Court approval is required, all amounts to be paid to Buyer
pursuant to this Agreement shall constitute an allowed administrative expense
claim with priority over any and all administrative expenses of the kind
specified in Sections 503, 507 and 1114 of the Bankruptcy Code, and shall be, at
Buyer's option and except as otherwise permitted by this Agreement, (i)
immediately payable if and when any such obligation of Sellers arises under this
Agreement or the Sale Procedures Order, or (ii) credited against any amounts
owed by Buyer to Sellers pursuant to this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option
of Buyer (if permissible), be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
9.1. No Misrepresentation or Breach of Covenants and Warranties. There
shall have been no material breach by Sellers in the performance of any of their
covenants and agreements herein; each of the representations and warranties of
Sellers contained or referred to herein shall be true and correct in all
material respects on the Closing Date (except, in each case, those
representations and warranties that are qualified by materiality which shall be
true and correct in all respects) as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Buyer or any transaction
permitted by Section 7.4; and there shall have been delivered to Buyer a
certificate to such effect, dated the Closing Date, signed on behalf of each
Seller by the President of each Seller.
9.2. No Changes or Destruction of Property. Between the date hereof and
the Closing Date, there shall have been (a) no Material Adverse Effect; (b) no
federal or state legislative or regulatory change affecting the Business
(excluding the Excluded Assets and the Excluded Liabilities) or its products or
services where such change would constitute a Material Adverse Effect; or (c) no
damage to the Purchased Assets by fire, flood, casualty, act of God or public
enemy or other cause, regardless of insurance coverage for such damage where
such damage would constitute a Material Adverse Effect; and there shall have
been delivered to Buyer a certificate to such effect, dated the Closing Date and
signed on behalf of each Seller by the President of each Seller.
9.3. No Restraint or Litigation. No action, suit, investigation or
proceeding shall have been instituted or threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
9.4. Bankruptcy Court Order. The Bankruptcy Court Order shall have been
entered and shall be in full force and effect, and all conditions contemplated
by the Bankruptcy Court Order to consummate the transactions contemplated hereby
shall have been satisfied or waived.
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9.5. Necessary Governmental Approvals. Except to the extent not
obviated by the Bankruptcy Court Order, the parties shall have received all
approvals and actions of or by all Governmental Authorities that in the judgment
of Buyer are necessary to consummate the transactions contemplated hereby, which
are either (a) specified in Section 5.3 of the Disclosure Schedule or (b)
otherwise required to be obtained prior to the Closing by applicable
Requirements of Law and which is material to the transactions contemplated
hereby or the continued operation of the Business.
9.6. Necessary Consents. Except to the extent not obviated by the
Bankruptcy Court Order, Sellers shall have received all required consents, in
form and substance reasonably satisfactory to Buyer in all respects, to the
transactions contemplated hereby from the other parties to all Seller Agreements
and to the extent necessary to validly assign to Buyer the Governmental Permits,
Intellectual Property and Software which are used in or held for use in or
relating to the Business or the Purchased Assets, including as set forth in
Sections 2.2(c), 2.2(d), 2.2(e), 2.2(f), 2.2(g) and 2.2(i) of the Disclosure
Schedule, respectively, and which are material to the Business.
9.7. Deliveries. Each of the deliveries required to be made to Buyer
pursuant to Section 4.4 shall have been so delivered.
9.8. Disclosure Schedule. Sellers shall have delivered to Buyer the
Disclosure Schedule and such Disclosure Schedule and the form and substance of
the information reflected therein shall be reasonably satisfactory to Buyer in
all respects.
9.9. Real Property Lease. The parties shall have satisfied each of the
conditions set forth in Section 7.16 and the Lease Agreement and Lease
Termination Agreement shall be in form and substance reasonably acceptable to
Buyer. The parties acknowledge and agree that Buyer shall not be obligated to
enter into a Lease Agreement, except as Buyer shall determine in its sole
discretion.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement shall, at the
option of Sellers (if permissible), be subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
10.1. No Misrepresentation or Breach of Covenants and Warranties. There
shall have been no material breach by Buyer in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
Buyer contained or referred to in this Agreement shall be true and correct in
all material respects on the Closing Date (except, in each case, those
representations and warranties that are qualified by materiality which shall be
true and correct in all respects) as though made on the Closing Date; and there
shall have been delivered to Sellers a certificate to such effect, dated the
Closing Date and signed on behalf of Buyer by the President or any Vice
President of Buyer.
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10.2. No Restraint or Litigation. No action, suit or proceeding by any
Governmental Authority shall have been instituted or threatened to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
10.3. Bankruptcy Court Order. The Bankruptcy Court Order shall have
been entered and shall be in full force and effect, and all conditions
contemplated by the Bankruptcy Court Order to consummate the transactions
contemplated hereby shall have been satisfied or waived.
10.4. Necessary Governmental Approvals. Except to the extent not
obviated by the Bankruptcy Court Order, the parties shall have received all
approvals and actions of or by all Governmental Authorities necessary to
consummate the transactions contemplated hereby, which are required to be
obtained prior to the Closing by applicable Requirements of Law.
10.5. Deliveries. Each of the deliveries required to be made to Sellers
pursuant to Section 4.3 shall have been so delivered.
10.6. Real Property Lease Termination. If Buyer shall have entered into
the Lease Agreement, then Parent shall have entered into the Lease Termination
Agreement with Lessor with respect to the Current Lease. The parties acknowledge
and agree that Parent shall not enter into the Lease Termination Agreement
unless Buyer has entered into the Lease Agreement.
ARTICLE XI
TERMINATION
11.1. Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual consent of Buyer and Sellers;
(b) by Buyer if the Sale Procedures Order has not been entered by
the Bankruptcy Court within 35 days after the Filing;
(c) by Buyer if the Bankruptcy Court Order has not been entered
within 60 days after the Filing, provided that the failure of the Bankruptcy
Court Order to be entered by such date shall not have been caused by, or result
from, actions by Buyer;
(d) by Buyer if the Closing shall not have occurred within 75
days after the Filing, provided that the failure of the Closing to occur by such
date shall not have been caused by, or result from, a breach of this Agreement
by Buyer;
(e) by Buyer in the event of any material breach by Sellers of
any of Sellers' agreements, representations or warranties contained herein and
the failure of Sellers to cure such breach within seven days after receipt of
written notice from Buyer requesting such breach to be cured;
(f) by Buyer if Sellers' completed Disclosure Schedule has not
been delivered to Buyer within 10 days after the date hereof or if Buyer is not
reasonably satisfied in all respects
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with the form or substance of the information disclosed therein, including if
the Disclosure Schedule includes or should include, for accuracy and
completeness (based upon Buyer's investigation performed through the date of
delivery of the Disclosure Schedule), any materially adverse information;
(g) by Buyer if the form of each of the Ancillary Agreements have
not been agreed upon by the relevant parties thereto within 30 days after the
date hereof, or such other date as the Bankruptcy Court shall determine;
(h) by Sellers in the event of any material breach by Buyer of
any of Buyer's agreements, representations or warranties contained herein and
the failure of Buyer to cure such breach within seven days after receipt of
notice from Sellers requesting such breach to be cured;
(i) automatically if Sellers select a Person other than Buyer as
the Successful Bidder;
(j) by Buyer if Buyer shall not be reasonably satisfied with its
business, legal, environmental and financial due diligence review of Sellers,
Dermagraft JV, DermEquip, the Equity Interests, the Purchased Assets and the
Business; provided that, this Section 11.1(j) shall terminate on the fifteenth
day after Sellers have delivered to Buyer a full and complete Disclosure
Schedule pursuant to the terms of Section 7.10; or
(k) by Buyer if an Event of Default (as defined in the Loan
Agreement) has occurred and is continuing.
11.2. Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 11.1 shall give notice of such termination to the
other parties to this Agreement.
11.3. Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article XI, (i) all further obligations of the
parties under this Agreement (other than Sections 8.5, 8.6, 12.2 and 12.10)
shall be terminated without further liability of any party to the other,
provided that nothing herein shall relieve any party from liability for its
willful breach of this Agreement and (ii) all agreements between or among Buyer
and/or any of its Affiliates on the one hand, and any of Dermagraft JV,
DermEquip, SNATS Partnership, any Seller or any of Sellers' Affiliates, on the
other hand, and all agreements between or among any Seller or any of Sellers'
Affiliates on the one hand, and any of Dermagraft JV, DermEquip, SNATS
Partnership or Buyer or any of its Affiliates, on the other hand, shall remain
in full force and effect, and nothing herein is intended or shall be deemed to
waive, suspend or terminate any rights, remedies or obligations of the parties
under such agreements.
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Obligations; Indemnity. (a) All representations and
warranties contained in this Agreement shall terminate upon the Closing and each
of the covenants and agreements contained in this Agreement which contemplate
performance after the Closing Date shall survive the consummation of the
transactions contemplated by this Agreement.
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(b) For a period of one year from the Closing Date, Sellers shall
indemnify Buyer for liabilities or expenses incurred by Buyer with respect to
Excluded Liabilities; provided that the aggregate indemnification obligations of
Sellers pursuant to this Section 12.1(b) shall not exceed $1,000,000. Any such
indemnification amount shall constitute administrative expenses of Sellers under
Section 503(b) and 507(a) of the Bankruptcy Code.
12.2. Confidential Nature of Information. Each party agrees that it will
treat in confidence all documents, materials and other information that it shall
have obtained regarding the other party during the course of the negotiations
leading to the consummation of the transactions contemplated hereby (whether
obtained before or after the date of this Agreement), the investigation provided
for herein and the preparation of this Agreement and other related documents.
Such documents, materials and information shall not be communicated to any third
Person (other than, in the case of Buyer, to its counsel, accountants, financial
advisors or lenders, and in the case of Sellers, to their counsel, accountants
or financial advisors). No party shall use any confidential information in any
manner whatsoever except solely for the purpose of evaluating the proposed
purchase and sale of the Equity Interests and the Purchased Assets and the
enforcement of its rights hereunder and under the Ancillary Documents; provided,
however, that after the Closing Buyer may use or disclose any confidential
information included in the Equity Interests and the Purchased Assets and may
use other confidential information that is otherwise reasonably related to the
Business or the Purchased Assets for purposes of the conduct of the Business.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information that (i) is or
becomes available to such party from a source other than such party, (ii) is or
becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law or
judicial process, including the Bankruptcy Proceedings and the Sale Procedures
Order, but only to the extent it must be disclosed, or (iv) such party
reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby.
12.3. No Public Announcement. Neither Sellers nor Buyer shall, without the
approval of the other, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law or regulation, including
as may be required by the Bankruptcy Proceedings and the Sale Procedures Order,
or the rules of any stock exchange or the Nasdaq national market system, in
which case the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued.
12.4. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be given or delivered by personal
delivery, by registered or certified mail (first class postage prepaid) or by
recognized private courier addressed as follows:
If to Buyer, to:
▇▇▇▇▇ & Nephew, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
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with a copy to:
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
If to Sellers, to:
Advanced Tissue Sciences, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with copies to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ Chance US LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
Any notice, consent, authorization, direction or other communication
delivered as aforesaid shall be deemed to have been effectively delivered and
received, if sent by recognized private overnight courier service, on the date
following the date upon which it is delivered to such courier service, if sent
by mail, on the earlier of the date of actual receipt or the fifth business day
after deposit in the United States mail, or, if delivered personally, on the
date of such delivery.
12.5. Successors and Assigns; No Third Party Beneficiaries. (a) Subject to
Section 2.7, the rights of any party under this Agreement shall not be
assignable by such party prior to the Closing without the written consent of the
other, except that the rights of Buyer and TJS&N hereunder may be assigned prior
to the Closing (in whole or in part), without the consent of Sellers, to any
Affiliate of Buyer or TJS&N, as applicable; provided that (i) the assignee shall
assume in writing the corresponding obligations of Buyer or TJS&N, as
applicable, to Sellers
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hereunder, and (ii) neither Buyer nor TJS&N shall be released from any of its
obligations hereunder by reason of such assignment.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include any permitted assignee as well as
the successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise).
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors and
assigns permitted by this Section 12.5 any right, remedy or claim under or by
reason of this Agreement.
12.6. Access to Records after Closing. For a period of six years after the
Closing Date, Sellers and their Representatives shall have reasonable access to
all of the books and records of the Business transferred to Buyer hereunder to
the extent that such access may reasonably be required by Sellers in connection
with matters relating to or affected by the operations of the Business prior to
the Closing Date. Such access shall be afforded by Buyer upon receipt of
reasonable advance notice and during normal business hours. Sellers shall be
solely responsible for any costs or expenses incurred by them pursuant to this
Section 12.6.
For a period of six years after the Closing Date, Buyer and its
Representatives shall have reasonable access to all of the books and records
relating to the Business that Sellers or any of their Affiliates may retain
after the Closing Date. Such access shall be afforded by Sellers and their
Affiliates upon receipt of reasonable advance notice and during normal business
hours. Buyer shall be solely responsible for any costs and expenses incurred by
it pursuant to this Section 12.6. If Sellers or any of their Affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Sellers shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select.
12.7. Entire Agreement; Amendments; Disclosure Schedule. This Agreement and
the Exhibits and Disclosure Schedule referred to herein and the documents
delivered pursuant hereto contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or letters of intent between or among any of
the parties hereto. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
12.8. Interpretation. Article titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Disclosure
Schedule and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. Reference to the singular includes the plural and reference to
the plural includes the singular, according to the context. Reference to the
neuter gender includes the masculine and feminine where appropriate. References
to any statute shall include any amendments thereto, any successor statutes and
all regulations, rulings and orders promulgated thereunder, in effect at any
applicable date of determination. Except as otherwise stated, reference to
Articles, Sections, Exhibits, paragraphs and recitals means the Articles,
Sections,
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Exhibits, paragraphs and recitals of this Agreement. For purposes of this
Agreement, (i) the words "including" or "includes" or similar terms used herein
shall be deemed to be followed by the words "without limitation", whether or not
such additional words are actually set forth herein, and (ii) the words
"herein", "hereof", "hereto", and "hereunder" refer to this Agreement as a
whole.
12.9. Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
12.10. Expenses. Except as otherwise provided herein, each party hereto
will pay all costs and expenses incident to its negotiation and preparation of
this Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and accountants.
12.11. Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
12.12. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of the Sellers and Buyer.
12.13. Further Assurances. On the Closing Date, Sellers shall (i) deliver
to Buyer such other bills of sale, deeds, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer, in form reasonably
satisfactory to Buyer and its counsel, as Buyer may reasonably request or as may
be otherwise reasonably necessary to vest in Buyer all the right, title and
interest of Sellers and their Affiliates in, to or under any or all of the
Equity Interests, the Business and the Purchased Assets, and (ii) take all steps
as may be reasonably necessary to put Buyer in actual possession and control of
all the Equity Interests, the Purchased Assets and the Business. From time to
time following the Closing and subject to any approval of the Bankruptcy Court
that may be required, Sellers shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary, and Sellers shall
take all other actions as may be reasonably necessary, to more effectively
convey and transfer to, and vest in, Buyer
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and put Buyer in possession of, the Equity Interests, the Business and the
Purchased Assets, and to effect the transactions contemplated by this Agreement.
In the case of licenses, certificates, approvals, authorizations, Contracts,
leases, easements and other commitments included in the Purchased Assets (a)
that cannot be transferred or assigned effectively without the consent of third
parties, which consent has not been obtained prior to the Closing, Sellers
shall, subject to any approval of the Bankruptcy Court that may be required,
cooperate with Buyer in endeavoring to obtain such consent promptly, and if any
such consent is unobtainable, Sellers shall, subject to any approval of the
Bankruptcy Court that may be required, use its reasonable best efforts to secure
to Buyer the benefits thereof in some other manner, or (b) that are otherwise
not transferable or assignable, Sellers shall, subject to any approval of the
Bankruptcy Court that may be required, use its reasonable best efforts to secure
to Buyer the benefits thereof in some other manner (including the exercise of
the rights of Sellers thereunder); provided, however, that nothing herein shall
relieve Sellers of their obligations under Section 7.3 or relieve Sellers from
liability for any breach, pursuant to the terms thereof, of their
representations, warranties and covenants in this Agreement and the Ancillary
Documents. Sellers shall also use their reasonable best efforts to cooperate
with and assist Buyer in preparing and submitting any information required in
connection with registrations and licenses that relate to periods of time before
and after the Closing Date.
On the Closing Date, Buyer shall deliver to Sellers such other instruments
of assumption, in form reasonably satisfactory to Sellers and their counsel, as
Sellers may reasonably request or as may be otherwise reasonably necessary to
document Buyer's assumption of the Assumed Liabilities. From time to time
following the Closing Buyer shall execute and deliver, or cause to be executed
and delivered, to Sellers such other instruments of assumption as Sellers may
reasonably request or as may be otherwise necessary, and Buyer shall take all
other actions as may be reasonably necessary, to effect the transactions
contemplated by this Agreement.
12.14. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Delaware.
12.15. Resolution of Disputes. Upon the Bankruptcy Court no longer having
jurisdiction over this Agreement and the transactions contemplated hereby, any
dispute, claim or controversy arising out of or relating to this Agreement or
the breach, termination or validity hereof ("Dispute") shall be finally settled
by binding arbitration in New York, New York, administered by the CPR Institute
under its commercial Arbitration Rules then in effect, as amended by this
Agreement. The law applicable to the arbitration, including the administration
and enforcement thereof, shall be the Federal Arbitration Act, 9 U.S.C. ▇▇.▇▇.
1-16, as amended from time to time, and the law governing this Agreement. The
cost of the arbitration, including the fees and expenses of the arbitrator(s),
shall be shared equally by Buyer and Sellers. Each party shall bear the cost of
preparing and presenting its case. The arbitration award ("Award") shall be
presented to the parties in writing, and upon request of either Buyer or
Sellers, shall specify the factual and legal bases for the Award. The Award may
be confirmed and enforced in any court of competent jurisdiction. Any post-Award
proceedings will be governed by the Federal Arbitration Act. Notwithstanding any
of the foregoing, either Buyer or Sellers may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction hereof and seek
interim provisional, injunctive or other equitable relief until the Award is
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rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or any Award, or to obtain
interim relief, neither Buyer or Sellers nor an arbitrator may disclose the
existence, content, or results of any arbitration hereunder without the prior
written consent of Buyer and Sellers.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
ADVANCED TISSUE SCIENCES, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:
ATS DERMAGRAFT, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:
ATS ORTHOPEDICS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:
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▇▇▇▇▇ & NEPHEW SNATS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
▇. ▇. ▇▇▇▇▇ & NEPHEW LIMITED
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Dick
Title: Director
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