EXHIBIT 2.7
ASSET PURCHASE AGREEMENT
dated
August 3, 2001
by and among
▇▇▇▇▇▇ HEALTHCARE CORPORATION,
NEXELL OF CALIFORNIA, INC.
and
NEXELL THERAPEUTICS INC.
TABLE OF CONTENTS
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ARTICLE I
TERMS................................................................................................ 2
Section 1.1 Definitions............................................................................. 2
Section 1.2 Interpretation.......................................................................... 9
ARTICLE II
PURCHASE AND SALE.................................................................................... 10
Section 2.1 Purchase and Sale....................................................................... 10
Section 2.2 Treatment of Liabilities................................................................ 11
Section 2.3 Assignment of Assigned Contracts........................................................ 13
Section 2.4 Purchase Price.......................................................................... 13
Section 2.5 Determination of Adjustment Amount...................................................... 14
Section 2.6 Royalty Payments........................................................................ 15
Section 2.7 Reimbursement Amount.................................................................... 15
Section 2.8 Recovered European Taxes................................................................ 16
ARTICLE III
CLOSING.............................................................................................. 16
Section 3.1 Closing................................................................................. 16
Section 3.2 Payment................................................................................. 16
Section 3.3 ▇▇▇▇▇▇'▇ Closing Deliveries............................................................. 16
Section 3.4 Nexell California's Closing Deliveries.................................................. 17
Section 3.5 Nexell's Closing Deliveries............................................................. 18
ARTICLE IV
TERMINATION OF CERTAIN AGREEMENTS.................................................................... 18
Section 4.1 Termination of Hardware and Disposables Supply Agreement................................ 18
Section 4.2 Termination of US and Canada Instrument Services Agreement.............................. 18
Section 4.3 Termination of Hardware and Disposables Manufacturing Agreement......................... 18
Section 4.4 Termination of Antibody Manufacturing and Storage Agreement............................. 18
Section 4.5 Royalty Agreement....................................................................... 19
Section 4.6 LOI..................................................................................... 19
Section 4.7 Equipment Finance Lease................................................................. 19
Section 4.8 Global Instrument Services Agreement.................................................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEXELL AND NEXELL CALIFORNIA....................................... 19
Section 5.1 Good Standing........................................................................... 19
Section 5.2 Authority............................................................................... 19
Section 5.3 Title to Purchased Assets............................................................... 20
Section 5.4 Sufficiency of Assets................................................................... 20
Section 5.5 Nexell International.................................................................... 20
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TABLE OF CONTENTS
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(Continued)
Section 5.6 Governmental Permits.................................................................... 21
Section 5.7 FDA and Related Regulatory Matters...................................................... 22
Section 5.8 Licensed Intellectual Property.......................................................... 23
Section 5.9 Assigned Contracts...................................................................... 23
Section 5.10 Customers and Distributors............................................................. 24
Section 5.11 Accounts Receivable; Inventories....................................................... 24
Section 5.12 Taxes.................................................................................. 25
Section 5.13 Employees.............................................................................. 26
Section 5.14 No Violation, Litigation or Regulatory Action.......................................... 27
Section 5.15 Contracts with Baxter.................................................................. 28
Section 5.16 Other Information...................................................................... 28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEXELL............................................................. 28
Section 6.1 Good Standing........................................................................... 28
Section 6.2 Authority............................................................................... 28
Section 6.3 SEC Documents and Other Reports......................................................... 29
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BAXTER............................................................. 30
Section 7.1 Good Standing........................................................................... 30
Section 7.2 Authority............................................................................... 30
ARTICLE VIII
ACTIONS PRIOR TO THE CLOSING DATE.................................................................... 30
Section 8.1 Investigation of the Toolbox Products Distribution Business by Baxter................... 30
Section 8.2 Preserve Accuracy of Representations and Warranties..................................... 31
Section 8.3 Series B Consent; Governmental Approvals................................................ 31
Section 8.4 Operations Prior to the Closing Date.................................................... 31
Section 8.5 Notification by Nexell California of Certain Matters.................................... 33
Section 8.6 Insurance............................................................................... 33
ARTICLE IX
COVENANTS............................................................................................ 34
Section 9.1 Facilitation of Possession.............................................................. 34
Section 9.2 Further Assurances and Cooperation...................................................... 34
Section 9.3 Non-Solicitation........................................................................ 34
Section 9.4 Transition Employees.................................................................... 34
Section 9.5 Certain Contracts....................................................................... 34
Section 9.6 Related Documents....................................................................... 35
Section 9.7 Pre-Paid European Taxes................................................................. 35
Section 9.8 Use of Name............................................................................. 35
Section 9.9 Remittance of Receivables............................................................... 35
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TABLE OF CONTENTS
-----------------
(Continued)
ARTICLE X
EMPLOYMENT OF CERTAIN EMPLOYEES...................................................................... 36
Section 10.1 U.S. Employees and Employment Matters.................................................. 36
Section 10.2 Stock Option Programs.................................................................. 37
ARTICLE XI
CONDITIONS TO CLOSING................................................................................ 37
Section 11.1 Conditions Precedent to Obligations of Baxter.......................................... 37
Section 11.2 Conditions Precedent to the Obligations of the Nexell Group............................ 37
ARTICLE XII
TAXES................................................................................................ 38
ARTICLE XIII
SURVIVAL; INDEMNIFICATION............................................................................ 40
Section 13.1 Survival of Representations and Warranties............................................. 40
Section 13.2 Indemnification by the Nexell Group.................................................... 40
Section 13.3 Indemnification by Baxter.............................................................. 40
Section 13.4 Notice of Claims....................................................................... 41
Section 13.5 Third Party Claims..................................................................... 41
ARTICLE XIV
TERMINATION.......................................................................................... 42
Section 14.1 Termination............................................................................ 42
Section 14.2 Notice of Termination.................................................................. 43
Section 14.3 Effect of Termination.................................................................. 43
ARTICLE XV
MISCELLANEOUS........................................................................................ 43
Section 15.1 Notices................................................................................ 43
Section 15.2 Expenses............................................................................... 44
Section 15.3 Allocation of Consideration............................................................ 44
Section 15.4 Entire Agreement: No Modification...................................................... 44
Section 15.5 Waiver of Breach....................................................................... 44
Section 15.6 Benefit of Parties; Assignment......................................................... 44
Section 15.7 Headings............................................................................... 45
Section 15.8 Governing Law; Jurisdiction............................................................ 45
Section 15.9 Dispute Resolution..................................................................... 45
Section 15.10 Multiple Counterparts; Execution by Fax............................................... 46
Section 15.11 Exhibits and Schedules................................................................ 47
Section 15.12 Construction.......................................................................... 47
Section 15.13 Publicity............................................................................. 47
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List of Schedules
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Schedule 1.1(a): Estimated Purchase Price Calculation
Schedule 1.1(b): Toolbox Products
Schedule 2.1(a)(i): Purchased Assets - Inventory
Schedule 2.1(a)(ii): Purchased Assets - Trade Accounts Receivable
Schedule 2.1(a)(iii): Purchased Assets - Pre-Paid European Taxes
Schedule 2.1(b): Regulatory Submissions, Approvals and Files
Schedule 2.2(b): Assumed Liabilities - Assigned Contracts
Schedule 2.2(c): Customer Rebates
Schedule 2.3: Assignment of Assigned Contracts
Schedule 5.3: Exceptions - Title to Purchased Assets
Schedule 5.5(a): Nexell International
Schedule 5.5(b): Nexell International Consolidated Ledger
Schedule 5.6(a): Governmental Permits
Schedule 5.6(b): Exceptions - Governmental Permits
Schedule 5.7(a): Exceptions - Manufacture of Toolbox Products and
Facilities
Schedule 5.7(b): Foreign Authorizations, Clearances and Approvals
Schedule 5.7(c): FDA Submissions
Schedule 5.7(d): Exceptions - Import and Export Provisions
Schedule 5.8(a): Exceptions - Licensed Intellectual Property,
Licensed Trademarks and Sublicenses
Schedule 5.8(c): License Agreements and Supply Agreements
Schedule 5.9: Exceptions - Assigned Contracts
Schedule 5.10: Exceptions - Customers and Distributors
Schedule 5.11(a): Exceptions - Accounts Receivable
Schedule 5.11(b): Exceptions - Inventory
Schedule 5.12(a): Exceptions - Taxes
Schedule 5.12(b): Exceptions - Nexell International Taxes
Schedule 5.13(a)(i): Key Employees
Schedule 5.13(a)(ii): Exceptions - Employment Matters
Schedule 5.13(b)(i): Nexell International Employees
Schedule 5.13(b)(ii): Exceptions - Nexell International Employment Matters
Schedule 5.13(b)(iii): Employee Benefit Plans
Schedule 5.14: Exceptions - No Violation, Litigation or Regulatory
Action
Schedule 5.15: Nexell California / Baxter Contracts
Schedule 8.4(b): Operations Prior to the Closing Date
Schedule 9.4: Transition Employees
Schedule 9.6(f): Sublicenses
Schedule 10.1(c): Key Employees
Schedule 11.1(c): Necessary Consents
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List of Exhibits
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Exhibit A: Opinion of Counsel to Nexell California and Nexell
Exhibit B: Form of Distribution License
Exhibit C: Form of First BD Sublicense Agreement
Exhibit D: Form of Second BD Sublicense Agreement
Exhibit E: Form of Dorken Sublicense Agreement
Exhibit F: Form of Sublicense Agreements
Exhibit G: Form of Employee Lease Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") made this 3rd day of
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August, 2001, by and among ▇▇▇▇▇▇ HEALTHCARE CORPORATION, a Delaware corporation
with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Baxter"), NEXELL
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OF CALIFORNIA, INC., a Delaware corporation f/k/a Nexell Therapeutics, Inc.
("Nexell California") and NEXELL THERAPEUTICS INC., a Delaware corporation f/k/a
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VIMRx Pharmaceuticals Inc. ("Nexell"). Nexell California and Nexell have offices
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located at Nine Parker, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and, together with the
Affiliates of Nexell California and Nexell, are collectively referred to from
time to time herein as the "Nexell Group".
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RECITALS
WHEREAS, pursuant to that certain Asset Purchase Agreement by and
among Baxter, Nexell and Nexell California dated as of October 10, 1997, as
amended, Baxter sold to Nexell California the assets of the Immunotherapy
Division of ▇▇▇▇▇▇'▇ Biotech Business Group;
WHEREAS, pursuant to that certain Asset Transfer Agreement by and
among Baxter, Nexell and Nexell California dated as of June 30, 1999, Baxter and
Nexell terminated the distribution obligations of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ sold to
Nexell California the assets utilized in or relating to the sales and marketing
of Nexell California's products previously distributed by Baxter;
WHEREAS, Nexell California has determined to restructure the business
of marketing, sales and distribution of Toolbox Products (as defined below) (the
"Toolbox Products Distribution Business");
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WHEREAS, Nexell California has determined that the future of its
business exists in expanding research and development of clinical therapeutic
applications of its products;
WHEREAS, ▇▇▇▇▇▇'▇ willingness to engage in the Toolbox Products
Distribution Business will improve Nexell California's ability to commercialize
the Toolbox Products;
WHEREAS, the amounts paid by Baxter pursuant to this Agreement are, in
the view of Nexell and Nexell California, fair and reasonable for the assets and
rights being conveyed; and
WHEREAS, Baxter desires to purchase certain assets and assume certain
obligations of the Toolbox Products Distribution Business from Nexell California
and Nexell, and Nexell California and Nexell desire to sell certain assets and
transfer certain obligations of the Toolbox Products Distribution Business to
Baxter, upon the terms and subject to the conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties agree as follows:
ARTICLE I
TERMS
Section 1. Definitions. The following capitalized terms used herein
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shall have the following meanings:
"Accepting Employees" has the meaning set forth in Section 10.1(c).
"Additional ▇▇▇▇▇▇ Hire" has the meaning set forth in Section 10.1(c).
"Adjustment Amount" has the meaning set forth in Section 2.5(d).
"Affiliate" shall mean, with respect to any party, any entity
(i) which directly, or indirectly through one or more intermediaries, Controls,
is Controlled by, or is under common Control with, the party or (ii) fifty
percent (50%) or more of the voting capital stock (or in the case of an entity
which is not a corporation, fifty percent (50%) or more of the equity interest)
of which is beneficially owned or held by a party or any of such party's
Subsidiaries. For the avoidance of doubt, (a) none of the members of the Nexell
Group shall be considered an Affiliate of Baxter and (b) Nexell International
shall be considered an Affiliate of Nexell only for matters pertaining to the
period prior to the Closing.
"Agreed Net Asset Value of Nexell International" shall mean, as of the
Closing Date (after giving affect to the transactions contemplated hereby), an
amount equal to (a) the net book value of all assets identified in the
"Purchased NBV" column on the consolidated ledger of Nexell International
attached to Schedule 1.1(a) (including any adjustments to such Schedule made by
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the parties prior to the Closing Date), minus (b) the Nexell International Pre-
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Closing Liabilities.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Antibody Manufacturing and Storage Agreement" shall mean the Antibody
Manufacturing and Storage Agreement dated December 17, 1997 by and between
Baxter and BIT Acquisition Corp.
"Arbitrator" has the meaning set forth in Section 2.5(c).
"Assigned Contracts" shall mean the Customer Contracts, Distributor
Contracts and Supply Contracts, each of which is identified on Schedule 2.2(b)
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attached hereto, true and correct copies of which have been delivered by Nexell
California to Baxter (for those contracts that are written). For the avoidance
of doubt, any customer contract, distributor contract or supply contract to
which Nexell International is a party shall be deemed an Assigned Contract for
purposes of this Agreement.
"Assumed Liabilities" has the meaning set forth in Section 2.2(b).
"Authority" shall mean any federal, state, municipal, foreign or other
government or governmental department, commission, board, bureau, agency or
instrumentality.
2
"Balance Sheet" shall mean the balance sheet of the Toolbox Products
Distribution Business as finally prepared and agreed to by Baxter and Nexell
California pursuant to Section 2.5.
"Baxter" has the meaning set forth in the preamble of this Agreement.
"Baxter Representatives" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and
▇▇▇▇ Beccafico, or such other person(s) as Baxter may from time to time
designate in writing to Nexell California.
"Claim Notice" has the meaning set forth in Section 13.4(a).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Date Aggregate Net Book Value" shall mean: (a) the
net book value of the Purchased Assets described in Section 2.1(a)(i) hereto;
plus (b) the book value of the Purchased Assets described in Section 2.1(a)(ii)
----
hereto (net of any applicable allowance for doubtful accounts and excluding any
trade accounts due from Baxter or its Affiliates as of the Closing Date); plus
----
(c) the net book value of the Purchased Assets described in Section 2.1(a)(iv);
plus (d) any trade accounts due Nexell California or its Affiliates from Baxter
----
or its Affiliates as of the Closing Date; minus (e) trade accounts due Baxter or
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its Affiliates from Nexell California or its Affiliates as of the Closing Date;
plus or minus (f) the Agreed Net Asset Value of Nexell International.
---- -----
"Closing Date Payment Amount" has the meaning set forth in Section
3.2.
"COBRA" has the meaning set forth in Section 10.1(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
an entity (other than a natural person), whether through the ownership of voting
capital stock, by contract or otherwise.
"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.
"Customer Contracts" shall mean those agreements, whether written or
oral, designated as "Customer Contracts" on Schedule 2.2(b) hereto.
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"Customer Rebate Amount" shall mean $75,000.
"Damages" has the meaning set forth in Section 13.2(a).
"Deductions" shall mean the Pre-Paid Amount plus the Customer Rebate
Amount.
3
"Disputed Items" has the meaning set forth in Section 2.5(b).
"Distribution License" shall mean the Distribution and License
Agreement between Baxter and Nexell California in the form of Exhibit B hereto.
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"Distributor Contracts" shall mean those agreements, whether written
or oral, designated as "Distributor Contracts" on Schedule 2.2(b) hereto.
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"Dorken Sublicense Agreement" shall mean a sublicense to the Dorken
Sublicense Agreement dated December 17, 1997 by and between ▇▇▇▇▇▇ Deutschland
GmbH and BIT Acquisition Corp. in the form attached as Exhibit E hereto.
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"Employee" has the meaning set forth in Section 10.1(a).
"Employee Benefit Plan" shall mean any employee benefit plan, program,
policy, practice, or other arrangement providing benefits to any current or
former employee, officer or director of Nexell International or any beneficiary
or dependent thereof that is sponsored or maintained by Nexell International or
to which any of them contributes or is obligated to contribute, whether or not
written or funded or unfunded, including without limitation any Pension
Arrangement, disability, death benefit, hospitalization, medical or other
employee welfare benefit plan or employee pension benefit plan and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option, stock
appreciation, severance, early retirement, seniority, employment, change of
control or fringe benefit plan, program or agreement.
"Encumbrance" shall mean any lien, charge, security interest,
encumbrance or claim, whether legal or equitable.
"Environmental Laws" shall mean any and all laws, statutes, codes,
rules, regulations, ordinances, orders, writs, decrees and injunctions of any
Authority relating to the protection or pollution of the environment, or
community health and safety, including the Comprehensive Environmental Response
Compensation and Liability Act, as amended, the Federal Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act and the Hazardous
and Solid Waste Amendments, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act and any similar or analogous
statutes, regulations and decisional law of any Authority.
"Equipment Finance Lease" shall mean the Equipment Lease Agreement
dated December 21, 2000 between Baxter and Nexell.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Estimated Purchase Price" shall mean $4,347,062, calculated in
accordance with the methodology listed on Schedule 1.1(a) hereto.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
4
"Excluded Inventory" has the meaning set forth in Section 5.11(b)
"FDA" shall mean the United States Food and Drug Administration, or
any successor organization.
"FDA Submissions" has the meaning set forth in Section 5.7(c).
"First BD Sublicense Agreement" shall mean a sublicense to the First
BD Sublicense Agreement dated December 17, 1997 by and between Baxter and BIT
Acquisition Corp. in the form attached as Exhibit C hereto.
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"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, applied on a
consistent basis.
"Global Instrument Services Agreement" shall mean the Instrument
Services Agreement dated November 30, 1999 by and between Baxter and Nexell
California.
"Governmental Permits" has the meaning set forth in Section 5.6(a).
"Hardware and Disposables Manufacturing Agreement" shall mean the
Hardware and Disposables Manufacturing Agreement dated December 17, 1997 by and
between Baxter and BIT Acquisition Corp.
"Hardware and Disposables Supply Agreement" shall mean the Hardware
and Disposables Supply Agreement dated December 17, 1997 by and between Baxter
and BIT Acquisition Corp.
"Indemnified Party" has the meaning set forth in Section 13.4(a).
"Indemnifying Party" has the meaning set forth in Section 13.4(a).
"Intellectual Property" means: (i) United States and foreign
copyrights, both registered and unregistered, along with the registrations and
applications to register any such copyrights; (ii) United States and foreign
patents and applications for patents, including any continuations,
continuations-in-part, re-examinations, patents by addition, Supplemental
Protection Certificates, patent term extensions, divisions, renewals, reissues
and extensions thereof; (iii) United States and foreign trademarks, trade names,
service marks, collective marks and certification ▇▇▇▇ registrations and pending
applications; (iv) business and non-technical information; (v) non-patented and
non-patentable technical information, inventions, processes and formulations;
and (vi) discoveries, trade secrets, know-how and technical data.
"Key Employees" has the meaning set forth in Section 10.1(c).
"Licensed Intellectual Property" shall have the meaning ascribed to
such term in the Distribution License.
5
"Licensed Trademarks" shall have the meaning ascribed to such term in
the Distribution License.
"LOI" shall mean the Letter of Intent dated June 11, 2001 by and
between Baxter and Nexell.
"Necessary Consents" has the meaning set forth in Section 11.1(c).
"Nexell" has the meaning set forth in the preamble of this Agreement.
"Nexell California" has the meaning set forth in the preamble of this
Agreement.
"Nexell Group" has the meaning set forth in the preamble of this
Agreement.
"Nexell International" shall mean Nexell International SPRL, an entity
formed under the laws of Belgium and a wholly owned Subsidiary of Nexell.
"Nexell International Employee" has the meaning set forth in Section
5.13(b)(i).
"Nexell International Pre-Closing Liabilities" shall mean, as of the
Closing Date (after giving effect to the transactions contemplated hereby), all
liabilities of Nexell International that would be required to be reflected on a
balance sheet prepared in accordance with GAAP.
"Nexell SEC Documents" has the meaning set forth in Section 6.3.
"Non-Assumed Liabilities" has the meaning set forth in Section 2.2(a).
"Non-Competition Agreement" shall mean the Non-Competition and
Confidentiality Agreement dated December 17, 1997 by and among Baxter, VIMRx
Pharmaceuticals Inc. and BIT Acquisition Corp., as amended.
"Pension Arrangement" shall mean a defined benefit pension promise
which has been made by Nexell International on an individual, collective or
local labor law basis to one or more of their employees prior to the Closing
Date, including pension-type indemnities provided upon retirement on a mandatory
basis, supplemental executive retirement programs, defined benefit cash balance
plans, seniority awards, disability pension benefits, survivor pension benefits,
early or accelerated retirement arrangements and post-employment medical
benefits, but excluding externally funded, pure defined contribution promises.
"Permitted Encumbrances" shall mean (a) liens for Taxes which 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
business for sums not yet due and payable, (c) liens on deposits or pledges to
secure obligations under workmen's compensation, social security or similar laws
and (d) other liens, encumbrances or imperfections on property which are not
material in amount or do not detract from the value of or impair the existing
use of the property affected by such lien, encumbrance or imperfection.
6
"Preliminary Accounting Report" has the meaning set forth in Section
2.5(a)(iii).
"Preliminary Balance Sheet" has the meaning set forth in Section
2.5(a)(i).
"Preliminary Closing Date Aggregate Net Book Value" has the meaning
set forth in Section 2.5(a)(ii).
"Pre-Paid Amounts" has the meaning set forth in Section 2.2(b).
"Pre-Paid European Taxes" has the meaning set forth Section
2.1(a)(iii).
"Purchased Assets" has the meaning set forth in Section 2.1(d).
"Purchase Price" has the meaning set forth in Section 2.4.
"Recovered European Taxes" has the meaning set forth in Section
2.8(a).
"Reimbursement Amount" has the meaning set forth in Section 2.7.
"Regulatory Submissions, Approvals and Files" has the meaning set
forth in Section 2.1(b)(i).
"Related Documents" has the meaning set forth in Section 9.6.
"Relevant Persons" has the meaning set forth in Section 1.2.
"Requirements of Laws" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Authority or existing under common law.
"Royalty Agreement" shall mean the Royalty Assignment and Agreement
dated December 17, 1997 by and between ▇▇▇▇▇▇ and BIT Acquisition Corp.
"SEC" shall mean the United States Securities and Exchange Commission,
or any successor organization.
"Second BD Sublicense Agreement" shall mean a sublicense to the Second
BD Sublicense Agreement dated December 17, 1997 by and between ▇▇▇▇▇▇ and BIT
Acquisition Corp. in the form attached as Exhibit D hereto.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Series B Consent" shall mean the requisite approval and consent of
the holders of Nexell's Series B Cumulative Convertible Preferred Stock and
Class A and B warrants with respect to this Agreement and the transactions
contemplated hereby, in a form reasonably satisfactory to ▇▇▇▇▇▇.
7
"Sublicense Agreements" shall mean: (a) the Dorken Sublicense
Agreement dated December 17, 1997 by and between ▇▇▇▇▇▇ Deutschland GmbH and BIT
Acquisition Corp.; (b) the First BD Sublicense Agreement dated December 17, 1997
by and between ▇▇▇▇▇▇ and BIT Acquisition Corp.; and (c) the Second BD
Sublicense Agreement dated December 17, 1997 by and between ▇▇▇▇▇▇ and BIT
Acquisition Corp.
"Sublicenses" shall have the meaning ascribed to such term in the
Distribution License.
"Subsidiary" shall mean, as to any party, any corporation of which
more than fifty percent (50%) of the outstanding capital stock having ordinary
voting power to elect the majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
party, by one or more of its subsidiaries, or by the party and one or more of
its subsidiaries.
"Supply Agreement" shall mean a Supply Agreement between ▇▇▇▇▇▇ and
Nexell California in a form reasonably acceptable to the parties.
"Supply Contracts" shall mean those agreements, whether written or
oral, designated as "Supply Contracts" on Schedule 2.2(b) hereto.
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"Taxes" shall mean all taxes, including all federal, state, local,
foreign and other income, franchise, sales, use, license, excise, employment,
property, payroll, stamp, withholding, environmental, alternative or add-on
minimum, ad valorem, value-added, VAT, transfer, stamp and other taxes,
assessments, charges, duties, fees, levies or other governmental charges of any
kind whatsoever, and all estimated taxes, deficiency assessments, additions to
tax, penalties and interest, and any contractual or other obligation to
indemnify or reimburse any person with respect to any such assessment.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, VAT registration, claim
for refund, amended return or declaration of estimated Tax.
"Tax Sharing Arrangement" shall mean any written or unwritten
agreement or arrangement for the allocation or payment of Tax liabilities or
payment for Tax benefits with respect to a consolidated, combined or unitary Tax
Return which Tax Return includes Nexell International.
"Terminated Agreements" shall mean the Hardware and Disposables Supply
Agreement, the US and Canada Instrument Services Agreement, the Global
Instrument Services Agreement, the Hardware and Disposables Manufacturing
Agreement, the Antibody Manufacturing and Storage Agreement, the Royalty
Agreement, the LOI, the Equipment Lease and each additional agreement listed on
Schedule 5.15 hereto as being terminated.
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"Toolbox Products" are set forth in Schedule 1.1(b) hereto.
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8
"Toolbox Products Distribution Business" has the meaning set forth in
the third recital of this Agreement.
"Transferred Amounts" has the meaning set forth in Section 10.2(d).
"US and Canada Instrument Services Agreement" shall mean the United
States and Canada Instrument Services Agreement dated as of June 30, 1999 by and
between ▇▇▇▇▇▇ and Nexell California.
"USDA" shall mean the United States Department of Agriculture, or any
successor organization.
"VAT Refund" shall mean the receivable in the amount of $1,632,606
from the Belgian government as set forth in the consolidated ledger of Nexell
International.
"WARN" has the meaning set forth in Section 5.13(b).
Section 1.2 Interpretation. (a) The terms "to the knowledge of"
--------------
such party and "awareness of" such party, and variations thereof, shall be
deemed to refer to the actual knowledge and/or awareness (without any
requirement of inquiry) of the Relevant Persons of such party. In respect of
▇▇▇▇▇▇, the term "Relevant Persons" shall be deemed to refer to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇. In respect of the Nexell Group, the term "Relevant Persons" shall be
deemed to refer to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇.
(b) Whenever in this Agreement the phrase "in the ordinary course of
business" is used, it shall be construed as meaning "in the ordinary course of
business and substantially consistent with prior practice."
(c) Whenever in this Agreement the term "including" is used, it shall
be construed as meaning "including but not limited to. "
(d) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP in effect at the Closing Date.
(e) Whenever in this Agreement the term "agreement" is used, it shall
be deemed to refer to commitments, leases, licenses, contracts and agreements.
(f) Whenever in this Agreement the term "party to" is used in regard
to an agreement, it shall be construed as meaning "party to or bound by."
(g) Whenever in this Agreement the singular is used, it shall include
the plural if the context so requires, and whenever the masculine gender is used
in this Agreement, it shall be construed as if the masculine, feminine or neuter
gender, respectively, has been used where the context so dictates, with the rest
of the sentence being construed as if the grammatical and terminological changes
thereby rendered necessary have been made.
9
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale. (a) Upon the terms and subject to the
-----------------
conditions of this Agreement, ▇▇▇▇▇▇ agrees to purchase or to cause one or more
of its Affiliates to purchase from Nexell California (and its Affiliates) and
Nexell California (and its Affiliates) agrees to sell, transfer, assign, convey
and deliver, or cause to be sold, transferred, assigned, conveyed and delivered,
to ▇▇▇▇▇▇ (or one or more Affiliates of ▇▇▇▇▇▇), free and clear of all
Encumbrances, except for Permitted Encumbrances, the following assets of the
Toolbox Products Distribution Business:
(i) The inventory of finished goods of the Toolbox Products
Distribution Business (which does not include any obsolete inventory or
Excluded Inventory), except as expressly set forth in Schedule 2.1(a)(i);
------------------
(ii) The trade accounts receivable of the Toolbox Products
Distribution Business, none of which, as of the Closing Date, will be older
than one hundred twenty (120) days;
(iii) The Taxes paid by Nexell California, Nexell International
or Affiliates of either of the foregoing to Taxing Authorities in Europe
prior to such Taxes becoming due, listed on Schedule 2.1(a)(iii) attached
--------------------
hereto ("Pre-Paid European Taxes");
-----------------------
(iv) The fixed assets of Nexell California relating primarily to
the Toolbox Products Distribution Business;
(v) The fixed assets owned by Nexell California and utilized by
▇▇▇▇▇▇ or its Affiliates up to the Closing Date pursuant to the Terminated
Agreements;
(vi) The rights of Nexell California, Nexell or any Affiliate of
either of the foregoing under the Assigned Contracts listed on Schedule
--------
2.2(b) attached hereto; and
------
(vii) All books, records, files and papers, whether in hard copy
or computer format, relating to the Purchased Assets listed in (i) through
(vi) above, including, without limitation, lists of present and former
customers of and distributors for the Toolbox Products Distribution
Business and any information relating to Key Employees.
(b) (i) In addition, Nexell California agrees to assign and transfer
to ▇▇▇▇▇▇, as of the Closing Date, the ownership of the regulatory applications
and submissions to the FDA and other state, local and foreign regulatory
authorities relating to the Toolbox Products, including marketing and clinical
investigation authorizations and approvals, together with the supporting files
and documentation relating to the foregoing listed on Schedule 2.1(b) attached
---------------
hereto (collectively, the "Regulatory Submissions, Approvals and Files"). Within
-------------------------------------------
two business days of the Closing, Nexell California shall file or cause to be
filed with the FDA and other regulatory authorities worldwide notice of the
assignment and transfer of the ownership of the Regulatory Submissions,
Approvals and Files, such notice to confirm that all rights to the
10
Regulatory Submissions, Approvals and Files have been transferred to ▇▇▇▇▇▇.
Upon receipt of the filings from Nexell California, ▇▇▇▇▇▇ shall promptly file
or cause to be filed with the FDA and other regulatory authorities its consent
to the assignment and transfer of ownership of the Regulatory Submissions,
Approvals and Files and its acceptance of full responsibility for compliance
obligations relating to the period from and after the Closing Date under the
applicable federal, state and international laws and regulations. Each of Nexell
and ▇▇▇▇▇▇ agrees to take all actions reasonably necessary to effect the
assignment and transfer to ▇▇▇▇▇▇ contemplated hereby.
(ii) Upon completion of the assignment and transfer of the
Regulatory Submissions, Approvals and Files to ▇▇▇▇▇▇, ▇▇▇▇▇▇ agrees to
provide Nexell California with a Right of Reference, as well as any and all
other rights necessary or desirable to grant Nexell California the ability
to cross-reference and use the Regulatory Submissions, Approvals and Files,
data contained therein and approved applications for research and
development purposes. ▇▇▇▇▇▇ agrees to cooperate and undertake any actions
that may be reasonably necessary to implement the Right of Reference
granted Nexell California under this Agreement.
(iii) In the event ▇▇▇▇▇▇ exits the Toolbox Products Distribution
Business, as evidenced by the absence of any commercial sales for ninety
(90) consecutive days, the Regulatory Submissions, Approvals and Files
shall revert to Nexell California. In such event, each party agrees to take
all actions reasonably necessary to effect such immediate and orderly
assignment and transfer to Nexell California.
(c) On the Closing Date, Nexell agrees to sell and transfer to ▇▇▇▇▇▇
all shares of stock of or other equity interests in Nexell International.
(d) The items referred to in (a) above, together with the Regulatory
Submissions, Approvals and Files and the shares of Nexell International,
constitute the "Purchased Assets."
----------------
Section 2.2 Treatment of Liabilities. (a) Notwithstanding any
------------------------
provision in this Agreement or any other writing to the contrary, ▇▇▇▇▇▇ is
assuming only the Assumed Liabilities and is not assuming or agreeing to pay or
discharge any other liability or obligation of Nexell, Nexell California or any
Affiliate of either of the foregoing (or any predecessor of all or part of the
business and assets of any of the foregoing) of whatever nature whether
presently in existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations of Nexell California (or
Nexell or any Affiliate of Nexell or Nexell California, as the case may be) (all
such liabilities and obligations not being assumed being herein referred to as
the "Non-Assumed Liabilities"), and notwithstanding anything to the contrary in
-----------------------
this Section 2.2 and solely for purposes of clarification, none of the following
shall be Assumed Liabilities for the purposes of this Agreement (except to the
extent any of the following are Nexell International Pre-Closing Liabilities):
(i) Any indebtedness of Nexell California, Nexell or any
Affiliate of either of the foregoing;
11
(ii) Any liability or obligation under any of the Assigned
Contracts (which shall include any customer rebates thereunder payable
after the Closing to the extent attributable to sales prior to the Closing
except to the extent assumed by ▇▇▇▇▇▇ pursuant to Section 2.2(c)) or under
the Regulatory Submissions, Approvals and Files, in each case that arises
out of or relates to the period on or prior to the Closing Date;
(iii) Any intercompany payables and other liabilities or
obligations among Nexell California, Nexell or any Affiliate of either of
the foregoing;
(iv) Any obligation or liability for Taxes for which Nexell
California, Nexell or any Affiliate of either of the foregoing is liable
pursuant to Article XII of this Agreement;
(v) Any liabilities or obligations under WARN;
(vi) Any liabilities or obligations relating to employee
benefits or compensation arrangements (including severance payments and
continuation coverage obligations under COBRA and any other applicable
state law), or any other obligation to employees of Nexell California,
Nexell or any Affiliate of either of the foregoing, except as otherwise
expressly provided in Article X;
(vii) Any liability or obligation of Nexell California, Nexell
or any Affiliate of either of the foregoing under Environmental Laws;
(viii) Any liability or obligation arising out of the failure of
Nexell California, Nexell or any Affiliate of either of the foregoing to
comply with any Requirements of Laws;
(ix) Any liabilities in respect of the claims or proceedings
described in Schedule 5.14;
-------------
(x) Any recalls after the Closing Date mandated by an
Authority of any products that have been released by the Toolbox Products
Distribution Business on or prior to the Closing Date;
(xi) Any product liability or claims for injury to person or
property, regardless of when made or asserted, relating to products
manufactured, distributed or sold by Nexell California, Nexell or any
Affiliate of either of the foregoing (except to the extent such liability
relates to products manufactured by ▇▇▇▇▇▇ or an Affiliate of ▇▇▇▇▇▇ not in
accordance with their applicable specifications) or services performed by
Nexell California, Nexell or any Affiliate of either of the foregoing on or
prior to the Closing Date; and
(xii) Any costs or expenses incurred by Nexell California,
Nexell or any Affiliate of either of the foregoing incident to the
negotiation and preparation of this Agreement and the performance and
compliance with the agreements and conditions contained herein.
12
(b) Upon the terms and subject to the conditions of this Agreement,
▇▇▇▇▇▇ hereby agrees, effective at the time of Closing, to assume (i) the Nexell
International Pre-Closing Liabilities and (ii) all liabilities and obligations
of Nexell California, Nexell or any Affiliate of either of the foregoing arising
under the Assigned Contracts listed on Schedule 2.2(b) attached hereto, provided
---------------
that ▇▇▇▇▇▇ shall assume liabilities and obligations only to the extent such
liabilities and obligations relate to the period after the Closing Date
(collectively, "Assumed Liabilities"). Schedule 2.2(b) also lists, for each
------------------- ---------------
Assigned Contract, any amounts pre-paid by any customer to Nexell California for
goods or services not yet delivered or performed as of the Closing Date (in
aggregate, the "Pre-Paid Amounts").
----------------
(c) Upon the terms and subject to the conditions of this Agreement,
▇▇▇▇▇▇ hereby agrees, effective at the time of Closing, to assume all
liabilities and obligations of Nexell California or its Affiliates arising under
the customer rebates listed on Schedule 2.2(c) to the extent reflected on such
---------------
schedule up to a maximum of $75,000.
Section 2.3 Assignment of Assigned Contracts. To the extent that any
--------------------------------
Assigned Contract is not capable of being assigned, transferred or conveyed
without the approval, consent, novation or waiver of the issuer thereof or the
other party or parties thereto, or any other third person (including an
Authority), or would be breached in the event of a sale, assignment, transfer,
or conveyance without such approval, consent or waiver, this Agreement shall
not, in the event any such issuer or third party shall object to such
assignment, constitute a sale, assignment, transfer or conveyance thereof, or an
attempted sale, assignment, transfer or conveyance thereof absent such approval,
consent or waiver. At the request of ▇▇▇▇▇▇, Nexell California shall use its
commercially reasonable best efforts, both prior and subsequent to the Closing
Date, to obtain all necessary approvals, consents or waivers necessary to convey
to ▇▇▇▇▇▇ each such Assigned Contract as soon as reasonably practicable;
provided, however, that ▇▇▇▇▇▇ shall not be required to pay any additional
-------- -------
consideration in order to obtain such approvals, consents or waivers. Schedule
2.3 identifies those Assigned Contracts for which Nexell California has not
received the necessary approvals, consents or waivers as of the date of this
Agreement. To the extent any of the approvals, consents or waivers referred to
in this Section 2.3 have not been obtained as of the Closing Date, Nexell
-----------
California shall, during the remaining term of the applicable Assigned Contract
(and without limiting ▇▇▇▇▇▇'▇ right to have Nexell California persist,
following the Closing Date, in attempting to obtain any such approval, consent
or waiver), exercise commercially reasonable best efforts to cooperate with
▇▇▇▇▇▇ in any reasonable and lawful arrangements designed to provide the
benefits of such Assigned Contract to ▇▇▇▇▇▇. Notwithstanding anything in this
Agreement to the contrary, Nexell California shall remain responsible for all
liabilities associated with each Assigned Contract unless and until the full
benefits of such Assigned Contract are lawfully provided to ▇▇▇▇▇▇, whether by
consent of the other part(y)(ies) thereto, by subcontract or otherwise.
Section 2.4 Purchase Price. The aggregate purchase price for the
--------------
Purchased Assets (the "Purchase Price") shall be allocated pursuant to the
--------------
methodology described in Section 15.3, and shall be equal to the aggregate US
dollar value of:
(a) The Closing Date Payment Amount; plus
----
(b) The Reimbursement Amount; plus or minus
---- -----
13
(c) The Adjustment Amount; plus
(d) The Recovered European Taxes.
In addition, the parties acknowledge the financial benefit that will
be received by Nexell as a result of the termination of the Equipment Finance
Lease in accordance with Section 4.7 and the resulting cancellation of
obligations of Nexell thereunder.
Section 2.5 Determination of Adjustment Amount. (a) As promptly as
----------------------------------
practicable following the Closing Date (but not later than sixty (60) days after
the Closing Date), ▇▇▇▇▇▇ and Nexell California shall cooperate in causing
Nexell California to:
(i) prepare, in accordance with GAAP, a balance sheet as of the
Closing Date with respect to the Toolbox Products Distribution Business
(the "Preliminary Balance Sheet"),
-------------------------
(ii) determine the Closing Date Aggregate Net Book Value in
accordance with the provisions of this Agreement (such Closing Date
Aggregate Net Book Value as determined hereunder being referred to as the
"Preliminary Closing Date Aggregate Net Book Value"), and
-------------------------------------------------
(iii) deliver to ▇▇▇▇▇▇ a statement, which shall be derived from
the Preliminary Balance Sheet, setting forth the Preliminary Closing Date
Aggregate Net Book Value (the "Preliminary Accounting Report").
-----------------------------
(b) If ▇▇▇▇▇▇ and Nexell California are unable to agree on the
contents of the Preliminary Accounting Report within sixty (60) days after the
receipt of the Preliminary Accounting Report by ▇▇▇▇▇▇, ▇▇▇▇▇▇ and Nexell
California shall as soon as reasonably practicable (but in no event later than
thirty (30) days after such sixty (60) day period has expired), set forth in
writing their unresolved issues (the "Disputed Items"). If ▇▇▇▇▇▇ and Nexell
--------------
California agree to the contents of the Preliminary Accounting Report, the
Preliminary Balance Sheet and the Preliminary Closing Date Aggregate Net Book
Value set forth in the Preliminary Accounting Report shall be final and binding
as the Balance Sheet and the Closing Date Aggregate Net Book Value,
respectively, for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(c) In the event there are Disputed Items, such Disputed Items shall
be submitted by the parties to an accounting firm acceptable to both ▇▇▇▇▇▇ and
Nexell California (or, if they cannot agree on such selection, a national (big
five) accounting firm will be selected by lot after eliminating ▇▇▇▇▇▇'▇ and
Nexell's regular outside firm of auditors) and the firm so selected (the
"Arbitrator") shall be directed by ▇▇▇▇▇▇ and Nexell California to review the
----------
Disputed Items as promptly as reasonably practicable and, upon completion of
such review, to deliver written notice to each of ▇▇▇▇▇▇ and Nexell California
setting forth the Arbitrator's resolution of each Disputed Item. The
Arbitrator's review shall be conducted in accordance with the Commercial
Arbitration Rules of the Center for Public Resources and the Arbitrator's
determination shall be final and binding on the parties hereto. The place for
such arbitration
14
shall be Chicago, Illinois, or at such other place as may be agreed upon by
▇▇▇▇▇▇ and Nexell California.
(i) The Balance Sheet and the Closing Date Aggregate Net Book
Value shall then be prepared in a manner giving effect to the Arbitrator's
resolution of the Disputed Items and shall become, as so adjusted, final
and binding as the Balance Sheet and the Closing Date Aggregate Net Book
Value, respectively, for purposes of this Agreement, but shall not in any
way limit the representations, warranties, covenants and agreements of the
parties set forth elsewhere in this Agreement.
(ii) If applicable, the parties hereto shall make available to
the Arbitrator such books, records and other information (including work
papers) as the Arbitrator may reasonably request, subject to the
Arbitrator's execution of an appropriate confidentiality agreement. The
fees and expenses of the Arbitrator for its services provided herein shall
be paid fifty percent (50%) by ▇▇▇▇▇▇ and fifty percent (50%) by Nexell
California.
(d) Promptly (but not later than five (5) days) after the
determination of the Closing Date Aggregate Net Book Value pursuant to Section
2.5(c) that is final and binding as set forth herein, ▇▇▇▇▇▇ shall pay to Nexell
California, or Nexell California shall pay to ▇▇▇▇▇▇, the amount set forth below
(the "Adjustment Amount"):
-----------------
(i) If the Closing Date Aggregate Net Book Value exceeds the
Closing Date Payment Amount plus the Deductions, ▇▇▇▇▇▇ shall pay to Nexell
California, by wire transfer of immediately available funds to such bank
account as Nexell California shall designate in writing to ▇▇▇▇▇▇, an
amount equal to the excess of the Closing Date Aggregate Net Book Value
over the Closing Date Payment Amount plus the Deductions; or
(ii) If the Closing Date Payment Amount plus the Deductions
exceeds the Closing Date Aggregate Net Book Value, Nexell California shall
pay to ▇▇▇▇▇▇, by wire transfer of immediately available funds to such bank
account as ▇▇▇▇▇▇ shall designate in writing to Nexell California, an
amount equal to the excess of the Closing Date Payment Amount plus the
Deductions over the Closing Date Aggregate Net Book Value.
Section 2.6 Royalty Payments. As an integral part of the transactions
----------------
contemplated hereby, ▇▇▇▇▇▇ shall pay to Nexell California an earned royalty on
Net Sales (as such term is defined in the Distribution License) of the Toolbox
Products sold by ▇▇▇▇▇▇, as provided in Section 7 of the Distribution License
and subject to the terms and conditions set forth therein.
Section 2.7 Reimbursement Amount. As promptly as practicable following
--------------------
the earlier of (i) the Closing Date (but no later than thirty (30) days after
the Closing Date) and (ii) termination of this Agreement other than as
contemplated by Section 14.1(c) hereof, ▇▇▇▇▇▇ shall pay to Nexell an amount
equal to Four Hundred Thousand Dollars ($400,000) per month (or pro rata for any
portion of a month) from August 1 until the Closing Date or termination date (as
the
15
case may be), subject to a maximum of Eight Hundred Thousand Dollars ($800,000).
The amount payable by ▇▇▇▇▇▇ pursuant to this Section 2.7 shall be referred to
herein as the "Reimbursement Amount".
--------------------
Section 2.8 Recovered European Taxes. (a) ▇▇▇▇▇▇ will pay Nexell
------------------------
California for the Pre-Paid European Taxes, if and to the extent ▇▇▇▇▇▇ and its
Affiliates and Nexell International obtains the benefits of such Pre-Paid
European Taxes after the Closing (the "Recovered European Taxes").
------------------------
(b) ▇▇▇▇▇▇ agrees to make written reports to Nexell California
quarterly, within sixty (60) days following the end of each calendar quarter,
until the earlier of (i) the date upon which there are no Pre-Paid European
Taxes which have not become Recovered European Taxes or (ii) receipt by Nexell
California of a notice from ▇▇▇▇▇▇ certifying that in ▇▇▇▇▇▇'▇ determination, no
more Pre-Paid European Taxes are recoverable by ▇▇▇▇▇▇ and its Affiliates and
Nexell International. Such reports shall set forth whether any Pre-Paid European
Taxes have become Recovered European Taxes, and the amount of any such Recovered
European Taxes, in the previous calendar quarter. Calendar quarters shall begin
on January 1, April 1, July 1 and October 1 of each year.
(c) ▇▇▇▇▇▇ shall pay to Nexell California the amount of Recovered
European Taxes as soon as reasonably practicable and, in any event, no later
than three (3) business days after ▇▇▇▇▇▇ sends a quarterly report to Nexell
California disclosing the existence of Recovered European Taxes.
ARTICLE III
CLOSING
Section 3.1 Closing. The closing ("Closing") of the purchase and sale
------- -------
of the Purchased Assets and the assumption of the Assumed Liabilities hereunder
shall be consummated as soon as the conditions set forth in Article XI are
fulfilled or waived (the "Closing Date") at the offices of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ &
------------
Wood, Bank One Plaza, 10 South Dearborn Street, Chicago, Illinois, or at such
other location as ▇▇▇▇▇▇ and Nexell California shall agree upon.
Section 3.2 Payment. Subject to fulfillment or waiver of the
-------
conditions set forth in Article XI, at Closing ▇▇▇▇▇▇ shall pay to Nexell
California an amount equal to seventy-five percent (75%) of the Estimated
Purchase Price minus the Deductions (the "Closing Date Payment Amount"), by wire
---------------------------
transfer of immediately available funds to such account as Nexell California
shall deliver to ▇▇▇▇▇▇ not later than three (3) business days prior to the
Closing Date. Nexell hereby authorizes ▇▇▇▇▇▇ to pay any consideration relating
to the sale of the capital stock of Nexell International to which Nexell is
entitled hereunder directly to Nexell California.
Section 3.3 ▇▇▇▇▇▇'▇ Closing Deliveries. Subject to fulfillment or
---------------------------
waiver of the conditions set forth in Article XI, at Closing ▇▇▇▇▇▇ shall
deliver, or cause to be delivered, to Nexell California all of the following:
16
(a) Executed copies of the Related Documents to which ▇▇▇▇▇▇ or any
Affiliate of ▇▇▇▇▇▇ is a party;
(b) The certificate contemplated by Section 11.2(a), duly executed by
the President or any Vice President of ▇▇▇▇▇▇; and
(c) Such other documents as counsel for the Nexell Group has
reasonably requested or as may be otherwise necessary to evidence and effect the
transactions contemplated hereby.
Section 3.4 Nexell California's Closing Deliveries. At Closing,
--------------------------------------
Nexell California shall deliver, or cause to be delivered, to
▇▇▇▇▇▇ all of the following:
(a) Executed copies of the Related Documents to which Nexell
California or any Affiliate of Nexell California is a party;
(b) A ▇▇▇▇ of sale from Nexell California and from each other entity,
if any, which shall then own any Purchased Asset(s), conveying the Purchased
Asset(s) to ▇▇▇▇▇▇ (or to an Affiliate of ▇▇▇▇▇▇, as designated by ▇▇▇▇▇▇), each
to be in form and substance reasonably satisfactory to ▇▇▇▇▇▇;
(c) The Necessary Consents;
(d) Individual or general contract assignments of the applicable
Assigned Contracts to ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇;
(e) Certificates of title or origin (or like documents) with respect
to any equipment and fixed assets included in the Purchased Assets for which a
certificate of title or origin is required or customary in order to transfer
title;
(f) The Regulatory Submissions, Approvals and Files, and all books,
records, files and papers, whether in hard copy or computer format, relating to
the Regulatory Submissions, Approvals and Files;
(g) Opinion(s) of ▇▇▇▇▇ ▇▇▇▇ LLP substantially in the form attached
hereto as Exhibit A, together with the opinion(s) of Morris, Nichols, Arsht &
---------
▇▇▇▇▇▇▇ substantially in the form attached hereto as Exhibit A.
---------
(h) The Series B Consent;
(i) The certificate contemplated by Section 11.1(a), duly executed by
the President or any Vice President of Nexell California; and
(j) Such other executed assignments, bills of sale, endorsements,
notices, consents, novations, assurances and such other instruments of
conveyance and transfer as counsel for ▇▇▇▇▇▇ has reasonably requested and as
shall be effective to vest in ▇▇▇▇▇▇ Nexell California's, Nexell's, or any
Affiliate of either of the foregoing's rights, title and interest in the
applicable Purchased Assets.
17
Section 3.5 Nexell's Closing Deliveries. At Closing, Nexell shall
---------------------------
deliver, or cause to be delivered, to ▇▇▇▇▇▇ all of the following:
(a) Executed copies of the Related Documents to which Nexell is a
party;
(b) The certificate contemplated by Section 11.1(a), duly executed by
the President or any Vice President of Nexell;
(c) Certificates representing all of the shares of stock of or other
equity interests in Nexell International, accompanied by transfer documents
customary in similar transactions; and
(d) Such other documents as counsel for ▇▇▇▇▇▇ has reasonably
requested or as may be otherwise necessary to evidence and effect the
transactions contemplated hereby.
ARTICLE IV
TERMINATION OF CERTAIN AGREEMENTS
Section 4.1 Termination of Hardware and Disposables Supply Agreement.
--------------------------------------------------------
The Hardware and Disposables Supply Agreement is hereby terminated effective as
of the Closing Date, and all obligations of both ▇▇▇▇▇▇ and Nexell California
thereunder are terminated, null and void as of the Closing Date, provided that
each of ▇▇▇▇▇▇ and Nexell California agree that notwithstanding the termination
of the Hardware and Disposables Supply Agreement, both parties will fulfill any
obligations it has incurred to the other as of the Closing Date arising out of
the Hardware and Disposables Supply Agreement. Notwithstanding the foregoing,
Nexell California and ▇▇▇▇▇▇ agree that Section 2.1 of the Hardware and
Disposables Supply Agreement is terminated, null and void, ab initio, and no
rights or obligations pursuant to such section shall survive the Closing Date.
Section 4.2 Termination of US and Canada Instrument Services
------------------------------------------------
Agreement. The US and Canada Instrument Services Agreement is hereby terminated
---------
effective as of the Closing Date, and all obligations of both ▇▇▇▇▇▇ and Nexell
California thereunder are terminated, null and void as of the Closing Date,
provided that each of ▇▇▇▇▇▇ and Nexell California agree that notwithstanding
the termination of the US and Canada Instrument Services Agreement, both parties
will fulfill any obligations it has incurred to the other as of the Closing Date
arising out of the US and Canada Instrument Services Agreement.
Section 4.3 Termination of Hardware and Disposables Manufacturing
-----------------------------------------------------
Agreement. The Hardware and Disposables Manufacturing Agreement is hereby
---------
terminated effective as of the Closing Date, and all obligations of both ▇▇▇▇▇▇
and Nexell California thereunder are terminated, null and void as of the Closing
Date, provided that each of ▇▇▇▇▇▇ and Nexell California agree that
notwithstanding the termination of the Hardware and Disposables Manufacturing
Agreement, both parties will fulfill any obligations it has incurred to the
other as of the Closing Date arising out of the Hardware and Disposables
Manufacturing Agreement.
Section 4.4 Termination of Antibody Manufacturing and Storage
-------------------------------------------------
Agreement. The Antibody Manufacturing and Storage Agreement is hereby terminated
---------
18
effective as of the Closing Date, and all obligations of both ▇▇▇▇▇▇ and Nexell
California thereunder are terminated, null and void as of the Closing Date,
provided that each of ▇▇▇▇▇▇ and Nexell California agree that notwithstanding
the termination of the Antibody Manufacturing and Storage Agreement, both
parties will fulfill any obligations it has incurred to the other as of the
Closing Date arising out of the Antibody Manufacturing and Storage Agreement.
Section 4.5 Royalty Agreement. The Royalty Agreement is hereby
-----------------
terminated effective as of the Closing Date, and all obligations of both ▇▇▇▇▇▇
and Nexell California thereunder are terminated, null and void as of the Closing
Date, provided that each of ▇▇▇▇▇▇ and Nexell California agree that
notwithstanding the termination of the Royalty Agreement, both parties will
fulfill any obligations it has incurred to the other as of the Closing Date
arising out of the Royalty Agreement.
Section 4.6 LOI. The LOI is hereby terminated effective as of the
---
Closing Date, and all obligations of both ▇▇▇▇▇▇ and Nexell thereunder are
terminated, null and void as of the Closing Date.
Section 4.7 Equipment Finance Lease. The Equipment Finance Lease is
-----------------------
hereby terminated effective as of the Closing Date, and all obligations of both
▇▇▇▇▇▇ and Nexell thereunder are terminated, null and void as of the Closing
Date, provided that each of ▇▇▇▇▇▇ and Nexell agree that notwithstanding the
termination of the Equipment Finance Lease, both parties will fulfill any
obligations it has incurred to the other as of the Closing Date arising out of
the Equipment Finance Lease.
Section 4.8 Global Instrument Services Agreement. The Global
------------------------------------
Instrument Services Agreement is hereby terminated effective as of the Closing
Date, and all obligations of both ▇▇▇▇▇▇ (and its Affiliates) and Nexell
California (and its Affiliates) thereunder are terminated, null and void as of
the Closing Date, provided that each of ▇▇▇▇▇▇ (and its Affiliates) and Nexell
California (and its Affiliates) agree that notwithstanding the termination of
the Global Instrument Services Agreement, both parties will fulfill any
obligations it has incurred to the other as of the Closing Date arising out of
the Global Instrument Services Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF NEXELL AND NEXELL CALIFORNIA
Nexell and Nexell California represent and warrant to ▇▇▇▇▇▇ that:
Section 5.1 Good Standing. Nexell California is a corporation
-------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary corporate power and authority to own, lease and
operate its properties and to carry on its business as the same is now being
conducted.
Section 5.2 Authority. Nexell California possesses full right,
---------
corporate power and legal authority to execute and deliver this Agreement and
the Related Documents to be executed by Nexell California and to perform each of
the agreements and make each of the representations and warranties on its part
to be performed and made hereunder and thereunder.
19
The execution and delivery of this Agreement and the Related Documents to which
Nexell California is a party and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by Nexell California's board of directors and stockholder and do not
require any further authorization, approval or consent. This Agreement and the
Related Documents to be executed by Nexell California have been duly and validly
executed by Nexell California and constitute the legal, valid and binding
obligations of Nexell California enforceable against it in accordance with their
terms subject to the qualification that the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws, now or hereafter in effect, affecting creditors'
rights and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding for the enforcement thereof may be brought. The execution and
delivery of this Agreement by Nexell California and the Related Documents to
which Nexell California is a party and the performance by it of all of the
transactions contemplated herein and therein do not and shall not (with or
without the giving of notice or the passage of time or both) (A) violate or
conflict with the Certificate of Incorporation or By-laws of Nexell California,
or the constituent documents of Nexell International or (B) (1) violate or
conflict with any law, rule, ruling, determination, ordinance or regulation of
any Authority or any condition or provision of, (2) result in the creation or
imposition of any Encumbrance upon any of the Purchased Assets pursuant to, (3)
accelerate or create, or permit the acceleration or creation of, any liability
or obligation of Nexell California or Nexell International under, or (4) cause a
termination under or give rise to a right of termination under the terms of, any
mortgage, lien, agreement, indenture, trust, instrument, order, judgment or
decree to which Nexell California or Nexell International is a party or which is
binding upon Nexell California or Nexell International.
Section 5.3 Title to Purchased Assets. Except as set forth on Schedule
-------------------------
5.3, Nexell California (or its Affiliates) is the sole and exclusive owner of
and has good and valid title to all of the Purchased Assets, free and clear of
all Encumbrances, except for Permitted Encumbrances. Except as otherwise
provided in any agreement between ▇▇▇▇▇▇ and Nexell California and/or Nexell or
by applicable law, rule or regulation there exists no restriction on the use,
ownership or transfer of any of the Purchased Assets by Nexell California and
its Affiliates to ▇▇▇▇▇▇.
Section 5.4 Sufficiency of Assets. The Purchased Assets constitute,
---------------------
and on the Closing Date will constitute, all of the assets or property used or
held for use in the Toolbox Products Distribution Business as presently
conducted, except for: (i) the Licensed Intellectual Property; (ii) the
Sublicense Agreements; and (iii) any assets owned by ▇▇▇▇▇▇ or its Affiliates.
Upon consummation of the transactions contemplated hereby, ▇▇▇▇▇▇ will have
acquired good title in and to each of the Purchased Assets, free and clear of
all Encumbrances, except for Permitted Encumbrances.
Section 5.5 Nexell International. (a) Schedule 5.5(a) sets forth the
-------------------- ---------------
authorized capital stock of Nexell International and indicates the number of
issued and outstanding shares of capital stock of Nexell International. Except
as set forth in Schedule 5.5(a) and except for this Agreement, there are no
---------------
agreements, arrangements, options, warrants, calls, rights or commitments or any
character relating to the issuance, sale, purchase or redemption of any shares
of capital stock of Nexell International. All of the outstanding shares of
capital stock of Nexell International are validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of
20
Nexell International are validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of Nexell
International are owned by Nexell of record and beneficially free from all
Encumbrances.
(b) Except as set forth in the consolidated ledger of Nexell
International dated June 30, 2001 attached as Schedule 5.5(b), Nexell
---------------
International is not subject to any liability, individually or in the aggregate,
in excess of $10,000 (including, without limitation, unasserted claims), whether
absolute, contingent, accrued or otherwise. The Intercompany Payables listed on
Schedule 5.5(b) will be extinguished with no remaining liability to Nexell
---------------
International prior to the Closing.
(c) The consolidated ledger of Nexell International dated June 30,
2001 attached as Schedule 5.5(b) presents fairly, in all material respects, the
---------------
financial position of Nexell International as of its date.
(d) True and complete copies of the constituent documents of Nexell
International have been made available to ▇▇▇▇▇▇.
(e) Nexell International does not, directly or indirectly, own, of
record or beneficially, any outstanding voting securities or other equity
interests in any corporation, partnership, joint venture or other entity.
Section 5.6 Governmental Permits. (a) Nexell California and its
--------------------
Affiliates own, hold or possess all licenses, franchises, permits,
registrations, certifications, privileges, immunities, approvals and other
similar authorizations from Authorities which are necessary, advisable or
customary to entitle Nexell California and its Affiliates to own, operate and
use the Purchased Assets and to carry on and conduct the Toolbox Products
Distribution Business substantially as conducted (herein collectively called the
"Governmental Permits"), and has made all filings with, or notifications to, all
--------------------
Authorities required. Schedule 5.6(a) sets forth a list and brief description,
---------------
including the identity of the holder, of the Governmental Permits. Complete and
correct copies of all such Governmental Permits, except as identified on
Schedule 5.6(a), have heretofore been delivered by Nexell California to ▇▇▇▇▇▇.
---------------
(b) Except as set forth on Schedule 5.6(b): (i) with respect to the
---------------
Toolbox Products Distribution Business, Nexell California and its Affiliates
have fulfilled and performed their obligations under the Governmental Permits,
and, to the knowledge of Nexell California, no event has occurred or condition
or state of facts exists which constitutes or, after notice or lapse of time or
both, would constitute a material breach or default under any such Governmental
Permit or which permits or, after notice or lapse of time or both, would permit
revocation or termination of any such Governmental Permit, or which might
materially adversely affect the rights of Nexell California or its Affiliates
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, Nexell California; and (iii) each of the Governmental Permits is
valid, subsisting and in full force and effect.
21
Section 5.7 FDA and Related Regulatory Matters. (a) Except as set
----------------------------------
forth on Schedule 5.7(a), to the knowledge of Nexell California, all Toolbox
---------------
Products (other than research grade products) which are manufactured, processed,
packaged, labeled or held by persons other than Nexell California and its
Affiliates (and other than ▇▇▇▇▇▇ and its Affiliates) and all facilities in
which the Toolbox Products are manufactured, processed, packaged or labeled are
in compliance, in all material respects, with all applicable requirements of the
FDA, the USDA and any analogous Authority in any country or other jurisdiction
in which such Toolbox Products are manufactured, processed, packaged, labeled,
held or sold.
(b) To the knowledge of Nexell California, Schedule 5.7(b) sets forth
---------------
a true and correct list of all required foreign marketing and clinical
authorizations, clearances and approvals in each foreign country in which Nexell
California and its Affiliates distribute any Toolbox Products (including all
approvals necessary for Nexell California or such Affiliate to be paid or
reimbursed therefor), including a listing of each foreign jurisdiction involved
and including pending submissions that have not yet been approved. Except as set
forth on Schedule 5.7(b), Nexell California or its Affiliates have obtained each
---------------
such required foreign marketing and clinical authorizations, clearances and
approvals. Schedule 5.7(b) lists all jurisdictions in which Nexell California
---------------
and its Affiliates currently distribute the Toolbox Products.
(c) Schedule 5.7(c) sets forth a true and correct list of all PMAs,
---------------
510(k)s, IDEs, INDs, MAFs, DMFs, ELAs, PLAs, USDA permits and other FDA related
submissions ("FDA Submissions") which (i) relate to Toolbox Products and (ii)
---------------
are either (A) submitted and pending, or (B) cleared and/or approved. Except as
set forth in Schedule 5.7(c), all non-clinical data supporting the quality and
---------------
integrity of the safety data in all FDA Submissions were generated in compliance
with all applicable requirements under federal, state, local or foreign law.
(d) Except as set forth in Schedule 5.7(d), in regard to the Toolbox
---------------
Products, Nexell California and its Affiliates have complied in all material
respects with the applicable import and export provisions of federal, state and
local law as well as the applicable import and export laws of relevant foreign
countries.
(e) In connection with the Toolbox Products, neither Nexell
California, nor any Affiliate of Nexell California nor any representative of any
of the foregoing, has made an untrue statement of a material fact or a
fraudulent statement to the FDA or any other Authority or failed to disclose a
material fact required to be disclosed to the FDA or any such other Authority.
(f) Nexell California and its Affiliates own, hold or possess the
Regulatory Submissions, Approvals and Files, and, to the knowledge of Nexell
California, the Regulatory Submissions, Approvals and Files constitute all
regulatory applications and submissions to the FDA and other regulatory
authorities, marketing and clinical investigation authorizations and approvals
and supporting files and documentation that are necessary, advisable or
customary to entitle Nexell California and its Affiliates to own, operate and
use the Toolbox Products and Purchased Assets and to carry on and conduct the
Toolbox Products Distribution Business substantially as conducted.
22
Section 5.8 Licensed Intellectual Property. (a) Except as set forth on
------------------------------
Schedule 5.8(a) and except for Intellectual Property owned by ▇▇▇▇▇▇ or its
---------------
Affiliates, the Licensed Intellectual Property, Licensed Trademarks and
Sublicenses constitute, and on the Closing Date will constitute, all of the
Intellectual Property used or held for use in the Toolbox Products Distribution
Business as presently conducted. Upon consummation of the transactions
contemplated hereby, ▇▇▇▇▇▇ will have acquired an exclusive, worldwide license
to market, sell and distribute the Toolbox Products.
(b) Except as set forth on Schedule 5.8(a): (i) all registrations for
---------------
copyrights, patents and trademarks included in the Licensed Intellectual
Property and Licensed Trademarks are valid and in force, and all applications to
register any unregistered copyrights, patents and trademarks are pending and in
good standing, all without challenge of any kind; (ii) the Licensed Intellectual
Property and Licensed Trademarks are valid and enforceable; (iii) Nexell
California or one of its Affiliates has the sole and exclusive right to bring
actions for infringement or unauthorized use of the Licensed Intellectual
Property and Licensed Trademarks, and to the knowledge of Nexell California,
there is no basis for any such action; (iv) none of the Toolbox Products
conflicts with or infringes on or, to the knowledge of Nexell California, has
been alleged to conflict with or infringe on, any patents, trademarks, trade
names, service marks, copyrights or other intellectual property rights of
others; (v) the consummation of the transactions contemplated hereby will not
result in the loss or impairment of any of the Licensed Intellectual Property or
Licensed Trademarks; (vi) the Licensed Intellectual Property and Licensed
Trademarks are free and clear of all Encumbrances, except for Permitted
Encumbrances; and (vii) to the knowledge of Nexell California, there are no
third parties using any of the Licensed Intellectual Property or Licensed
Trademarks.
(c) Schedule 5.8(c) lists all license agreements (royalty bearing or
---------------
royalty free) and supply agreements relating to the Toolbox Products
Distribution Business.
Section 5.9 Assigned Contracts. (a) There is no existing breach of any
------------------
of the Assigned Contracts by Nexell California (or its Affiliate), no event has
occurred which, with the lapse of time or the giving of notice or both, is
reasonably likely to constitute a breach of any such agreement by Nexell
California (or its Affiliate) or give rise to a right on the part of any of the
other parties thereto to terminate such agreement or, to the knowledge of Nexell
California, to deprive Nexell California (or its Affiliate) of any right, or
accelerate any of its obligations, thereunder.
(b) To Nexell California's knowledge, there is no existing breach of
any of the Assigned Contracts by any party (other than Nexell California (or its
Affiliate)) thereto and no event has occurred which, with the lapse of time or
the giving of notice or both, is reasonably likely to constitute a breach
thereof by such other party or give rise to a right on the part of Nexell
California (or its Affiliate) to terminate such agreement or to deprive the
other party of any right, or accelerate any obligation of such party,
thereunder.
(c) Except as set forth on Schedule 5.9, each of the Assigned
------------
Contracts listed on Schedule 2.2(b) constitutes a valid and binding obligation
---------------
of the parties thereto and is in full force and effect and, except as identified
on Schedule 2.3, may be transferred to ▇▇▇▇▇▇ pursuant to this Agreement and
------------
will continue in full force and effect thereafter, in each case without
23
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder and without the consent, approval or act of, or the making of
any filing with, any other party. Nexell California is not currently
renegotiating any of the Assigned Contracts or paying liquidated damages in lieu
of performance thereunder. Complete and correct copies of each of the Assigned
Contracts as currently in effect, including all pricing terms, have heretofore
been delivered to ▇▇▇▇▇▇. Except (i) as set forth on Schedule 5.9, and (ii) for
------------
the contracts designated as "terminated" on Schedule 5.15, the contracts
-------------
designated "Customer Contracts," the contracts designated "Distributor
Contracts" and the contracts designated "Supply Contracts" on Schedule 2.2(b)
---------------
constitute all of the agreements of the Toolbox Products Distribution Business
with customers, distributors and suppliers, respectively. There has been no
prepayment of any amounts to Nexell California by customers pursuant to any of
the Assigned Contracts except for the Pre-Paid Amounts listed on Schedule
--------
2.2(b), and the list of Pre-Paid Amounts on Schedule 2.2(b) is accurate in all
------ ---------------
material respects.
(d) Other than the Assigned Contracts, the license agreements and
supply agreements set forth on Schedule 5.8(c) and any agreements with ▇▇▇▇▇▇ or
---------------
its Affiliates, there are no material contracts relating to the Toolbox Products
Distribution Business.
(e) Nexell California represents and warrants that the Co-Development
Agreement dated April 28, 2000 by and between Nexell and Takara Shuzo Co., Ltd.
has expired.
Section 5.10 Customers and Distributors. Set forth on Schedule 5.10 is
-------------------------- -------------
a list of names and addresses of all customers and distributors of the Toolbox
Products Distribution Business who are parties to any of the Assigned Contracts.
Except as set forth on Schedule 5.10, there exists no actual or, to the
-------------
knowledge of Nexell California, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship with
any of the customers or distributors party to the Assigned Contracts, and there
exists no present or future condition or state of facts or circumstances
involving customers or distributors which Nexell California can now reasonably
foresee would materially adversely affect the Toolbox Products Distribution
Business or prevent the conduct of the Toolbox Products Distribution Business
after the consummation of the transactions contemplated by this Agreement in
essentially the same manner in which it has heretofore been conducted.
Section 5.11 Accounts Receivable; Inventories. (a) Except as set forth
--------------------------------
on Schedule 5.11(a), all trade accounts receivable of the Toolbox Products
----------------
Distribution Business reflected on Schedule 2.1(a)(ii), and to be reflected on
-------------------
the Balance Sheet, are good and collectible in the ordinary course of business
at the aggregate recorded amounts thereof, net of any applicable allowance for
doubtful accounts reflected on Schedule 2.1(a)(ii) hereto. None of the trade
-------------------
accounts receivable set forth on Schedule 2.1(a)(ii) hereto is older than one
-------------------
hundred twenty (120) days. Schedule 2.1(a)(ii) sets forth the trade accounts
-------------------
receivable of the Toolbox Products Distribution Business as of the date hereof
and includes for each account receivable a listing of the payor, the amount
outstanding and the product(s) to which such receivable relates. Nexell
California shall update such schedule as of the Closing Date. All trade accounts
receivable of the Toolbox Products Distribution Business have arisen from bona
fide transactions by Nexell California or its Affiliates in the ordinary course
of the Toolbox Products Distribution Business.
24
(b) Schedule 2.1(a)(i) sets forth, as of the date hereof, the
------------------
inventory of finished goods of the Toolbox Products Distribution Business (which
do not include any obsolete inventory or Excluded Inventory). Nexell California
shall update such schedule as of the Closing Date. Except as set forth on
Schedule 5.11(b), the inventories of Nexell California and its Affiliates listed
----------------
on Schedule 2.1(a)(i) as of the date hereof and to be reflected on the Balance
------------------
Sheet (i) are in good, merchantable and usable condition, (ii) do not include
any inventory consisting of expired product, recalled product or product not
saleable, including product not saleable due to governmental or regulatory
agency action or noncompliance with any other legal or administrative
requirements, or product subject to dating that has an expiration date less than
one hundred eighty (180) days after the Closing Date (collectively, "Excluded
--------
Inventory"), (iii) are or will be reflected in the balance sheets of Nexell
---------
California and its Affiliates at the lower of cost or market in accordance with
GAAP and (iv) are of a quality and quantity saleable in the ordinary course of
business. The inventory obsolescence policies of Nexell California and its
Affiliates are appropriate for the nature of the products sold and the marketing
methods used by Nexell California and its Affiliates. Such inventory
obsolescence policies include an immediate write-down to net realizable value
for obsolete inventory, as follows: (y) if an item has been available for use in
production or sale for one (1) year, but has not sold or been used in
production, it shall be considered for reserve as an obsolete item; (z) if an
item is slow-moving, in that it has been available for use in production or sale
for six (6) months, but has not sold or been used in production, it shall be
considered for a fifty percent (50%) write-down, unless specific facts or
business conditions warrant a higher level of reserve. Nexell California has
heretofore made available to ▇▇▇▇▇▇ a list of places where material inventories
of Nexell California and its Affiliates were located as of June 30, 2001.
Section 5.12 Taxes. (a) Except as set forth on Schedule 5.12(a): (i)
----- ----------------
Nexell California and its Affiliates have, in respect of the Toolbox Products
Distribution Business and the Purchased Assets, filed all Tax Returns which are
required to be filed and have paid all Taxes which have become due pursuant to
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 Toolbox Products Distribution Business and the
Purchased Assets; (iii) all such Tax Returns have been examined by the relevant
Taxing Authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired; (iv) neither Nexell
California nor its Affiliates is currently the beneficiary of any extension of
time within which to file any Tax Return; (v) there is no action, suit,
investigation, audit, claim or assessment pending or proposed or threatened with
respect to Taxes of the Toolbox Products Distribution Business or the Purchased
Assets and, to Nexell California's knowledge, no basis exists therefore; (vi)
all monies required to be withheld by Nexell California and its Affiliates
(including from employees of the Toolbox Products Distribution Business 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 Toolbox Products Distribution Business.
(b) Except as set forth on Schedule 5.12(b): (i) Nexell International
----------------
has filed all Tax Returns required to be filed; (ii) all such Tax Returns are
complete and accurate and disclose all Taxes required to be paid or deposited by
Nexell International; (iii) Nexell International is not currently the
beneficiary of any extension of time within which to file any
25
Tax Return; (iv) all Taxes (whether or not shown on any Tax Return) owed by
Nexell International have been timely paid; (v) Nexell International has not
waived or been requested to waive any statute of limitations in respect of Taxes
which waiver is currently in effect; (vi) the Tax Returns referred to in clause
(i) have been examined by the appropriate Taxing Authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired; (vii) there is no action, suit, investigation, audit, claim
or assessment pending or proposed or threatened with respect to Taxes of Nexell
International and, to the knowledge of Nexell California and Nexell
International, no basis exists therefor; (viii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) have been paid in full; (ix) all Tax Sharing Arrangements and Tax
indemnity arrangements relating to Nexell International (other than this
Agreement) will terminate prior to the Closing Date and Nexell International
will not have any liability thereunder on or after the Closing Date; (x) there
are no liens for Taxes upon the assets of Nexell International except liens
relating to current Taxes not yet due; (xi) all Taxes which Nexell International
is required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued, reserved against and entered on
the books of Nexell International.
Section 5.13 Employees.
---------
(a) U.S. Employees. (i) Schedule 5.13(a)(i) sets forth a true, full
-------------- ----------
and accurate list of the names, dates of commencement of employment and
salaries, jurisdiction of employment and employing entity of the Key Employees.
Within five business days after the date hereof, Nexell California shall provide
▇▇▇▇▇▇ with a reasonable description of fringe benefits, including any incentive
or discretionary bonus arrangements, and other material terms and conditions of
employment of all the Key Employees. Except as set forth on Schedule 5.13(a)(i),
-------------------
no such employee is entitled to any claim for compensation on termination of his
or her employment by Nexell California or any of its Affiliates, nor is any such
employee entitled to special or additional compensation or other payment in
connection with ▇▇▇▇▇▇'▇ acquisition of the Purchased Assets or the consummation
of the transactions contemplated hereunder. Except as set forth on Schedule
--------
5.13(a)(i), no Key Employee has indicated to Nexell California or its Affiliates
----------
that he or she intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise within two (2) years after the
Closing Date.
(ii) Except as set forth on Schedule 5.13(a)(ii), Nexell
--------------------
California and its Affiliates have complied with all applicable laws,
rules and regulations which 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 Nexell California and its Affiliates) or
any Taxes or penalties for failure to comply with any of the foregoing.
Nexell California and its Affiliates have no liabilities pursuant to
the Workers Adjustment and Retraining Notification Act ("WARN"), and
----
the transactions contemplated by this Agreement will not give rise to
any liabilities pursuant to WARN for either Nexell California and its
Affiliates or ▇▇▇▇▇▇. Nexell California believes that its relations
with the employees of the Toolbox Products Distribution Business are
satisfactory. Nexell California and its Affiliates are not a party to,
and the Toolbox Products Distribution Business is not affected by, or
to the knowledge of the Nexell Group, threatened with, any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving the employees of the Toolbox Products
26
Distribution Business. Nexell California and its Affiliates are not
affected by any dispute or controversy with a union or with respect to
unionization or collective bargaining involving any customer or distributor
of the Toolbox Products Distribution Business. To the knowledge of the
Nexell Group, there is no union organizing or election activities involving
any non-union employees of the Toolbox Products Distribution Business which
have occurred since December 31, 2000 or which is threatened.
(b) Non-U.S. Employees. (i) Schedule 5.13(b)(i) includes a true, full
------------------ -------------------
and accurate list of the names, dates of commencement of employment and salaries
and jurisdiction of employment of all the current employees of Nexell
International. Except as set forth in Schedule 5.5(b), Nexell International has,
---------------
or will have, paid, accrued and expensed all employee-related liabilities
relative to service prior to the Closing Date. Except as set forth in Schedule
--------
5.13(b)(i), no employee of Nexell International ("Nexell International
---------- --------------------
Employee") has indicated to his or her employer that he or she intends to resign
--------
or retire as a result of the transactions contemplated by this Agreement or
otherwise within two (2) years after the Closing Date.
(ii) Except as set forth in Schedule 5.13(b)(ii), Nexell
--------------------
International has complied with all applicable laws, rules and regulations
which relate to prices, wages, hours, employment and collective bargaining
and are not liable for any arrears of wages (other than normal accruals
reflected in the books and records of Nexell International). Nexell
International believes that its relations with their employees are
satisfactory. Nexell International is not affected by or threatened with
any dispute or controversy with a union or with respect to unionization
involving its employees and, to the knowledge of the Nexell Group, there is
no union organizing or election activities involving any non-union
employees which have occurred since December 31, 2000 or which is
threatened.
(iii) Schedule 5.13(b)(iii) includes a complete list of all
---------------------
Employee Benefit Plans. True and complete copies of all such Employee
Benefit Plans, including, but not limited to, any trust instrument or
insurance contract forming a part of any such Employee Benefit Plan, and
all amendments thereto, have been provided or made available to ▇▇▇▇▇▇.
Except as set forth in Schedule 5.13(b)(iii) each Employee Benefit Plan
---------------------
complies with all applicable local laws, and any contract or labor, works
council or collective bargaining agreement, and has been administered in
accordance with its terms. All contributions, premiums and other payments
due from Nexell International to (or under) an Employee Benefit Plan
through the date of this Agreement and as of the Closing Date have been
fully paid or, to the extent not required to be paid on or before such
date, have been provisioned for. Except as set forth in Schedule
--------
5.13(b)(iii) there are no liabilities arising out of or under any Employee
------------
Benefit Plan or other employee benefit plan sponsored, maintained or
contributed to by Nexell International, whether absolute, accrued,
contingent or otherwise, that relate to the period prior to the Closing
Date and would become a liability of ▇▇▇▇▇▇ and its Affiliates, upon or
after the consummation of the transactions contemplated by this Agreement
other than those liabilities which arise out of an event occurring after
the Closing Date under an Employee Benefit Plan.
Section 5.14 No Violation, Litigation or Regulatory Action. Except as
---------------------------------------------
set forth in Schedule 5.14:
-------------
27
(a) The Purchased Assets and their uses comply with all applicable
Requirements of Laws and Court Orders;
(b) Nexell California and its Affiliates have complied with all
Requirements of Laws and Court Orders which are applicable to the Purchased
Assets or the Toolbox Products Distribution Business;
(c) There are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of Nexell California, threatened
against or affecting Nexell California or its Affiliates in respect of the
Purchased Assets or the Toolbox Products Distribution Business nor, to the
knowledge of Nexell California, is there any basis for any of the same, and
there are no lawsuits, suits or proceedings pending in which Nexell California
or one of its Affiliates is the plaintiff or claimant and which relate to the
Purchased Assets or the Toolbox Products Distribution Business;
(d) There is no action, suit or proceeding pending or, to the
knowledge of Nexell California, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement; and
(e) To the knowledge of the Nexell Group, no legislative or
regulatory proposal has been adopted or is pending which could adversely affect
the Toolbox Products Distribution Business.
Section 5.15 Contracts with ▇▇▇▇▇▇. Schedule 5.15 contains a true,
--------------------- -------------
correct and complete list of all contracts between Nexell California (or any
Affiliate of Nexell California) and ▇▇▇▇▇▇ (or any Affiliate of ▇▇▇▇▇▇) in
effect on the day prior to the Closing Date. Except as set forth in such
Schedule, all of the contracts listed on Schedule 5.15 will be terminated as of
-------------
the Closing Date.
Section 5.16 Other Information. None of the information contained in
-----------------
this Agreement or the Schedules attached hereto is false or misleading in any
material respect or omits to state a fact herein or therein necessary in order
to make the statements herein or therein not misleading in any material respect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEXELL
Nexell represents and warrants to ▇▇▇▇▇▇ that:
Section 6.1 Good Standing. Nexell is a corporation organized, validly
-------------
existing and in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to own, lease and operate its
properties and to carry on its business as the same is now being conducted.
Section 6.2 Authority. Nexell possesses full right, corporate power
---------
and legal authority to execute and deliver this Agreement and the Related
Documents to be executed by Nexell and to perform each of the agreements and
make each of the representations and warranties on its part to be performed and
made hereunder and thereunder. The execution
28
and delivery of this Agreement by Nexell and the Related Documents to which
Nexell is a party and the consummation by it of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by
Nexell's board of directors and stockholders to the extent required by law or
Nexell's organizational documents and do not require any further authorization,
approval or consent. This Agreement and the Related Documents to be executed by
Nexell have been duly and validly executed by Nexell and constitute the legal,
valid and binding obligations of Nexell enforceable against it in accordance
with their terms subject to the qualification that the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws, now or hereafter in effect, affecting creditors'
rights and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding for the enforcement thereof may be brought. The execution and
delivery of this Agreement by Nexell and the Related Documents to which Nexell
is a party and the performance by it of all of the transactions contemplated
herein and therein do not and shall not (with or without the giving of notice or
the passage of time or both) (A) violate or conflict with the Certificate of
Incorporation or By-laws of Nexell, or (B) (1) violate or conflict with any law,
rule, ruling, determination, ordinance or regulation of any Authority or any
condition or provision of, (2) result in the creation or imposition of any
Encumbrance upon any of the assets of Nexell pursuant to, (3) accelerate or
create, or permit the acceleration or creation of, any liability or obligation
of Nexell under, or (4) cause a termination under or give rise to a right of
termination under the terms of, any mortgage, lien, agreement, indenture, trust,
instrument, order, judgment or decree to which Nexell is a party or which is
binding upon Nexell.
Section 6.3 SEC Documents and Other Reports. Nexell has filed all
-------------------------------
required documents (including proxy statements) with the SEC since January 1,
2000 (the "Nexell SEC Documents"). As of their respective dates, the Nexell SEC
--------------------
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Nexell SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Nexell
included in the Nexell SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP (except, in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto) and fairly presented in all
material respects the consolidated financial position of Nexell as at the
respective dates thereof and the consolidated results of its operations and its
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Nexell SEC Documents
or as required by GAAP, Nexell has not, since March 31, 2001, made any change in
the accounting practices or policies applied in the preparation of financial
statements. Since March 31, 2001, there has been no change that is or could
reasonably be expected (as far as can be foreseen at the time) to be materially
adverse to the business, operations, properties, results of operations, or
condition (financial or otherwise), with all such matters being considered in
the aggregate, of the Toolbox Products Distribution Business or the Purchased
Assets.
29
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ represents and warrants to Nexell California that:
Section 7.1 Good Standing. ▇▇▇▇▇▇ is a corporation organized, validly
-------------
existing and in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to own, lease and operate its
properties and to carry on its business as the same is now being conducted.
Section 7.2 Authority. ▇▇▇▇▇▇ possesses full right, corporate power
---------
and legal authority to execute and deliver this Agreement and the Related
Documents to be executed by ▇▇▇▇▇▇ and to perform each of the agreements and
make each of the representations and warranties on its part to be performed and
made hereunder and thereunder. The execution and delivery of this Agreement by
▇▇▇▇▇▇ and the Related Documents to be executed by ▇▇▇▇▇▇ and the consummation
by it of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of ▇▇▇▇▇▇. This
Agreement and the Related Documents to which ▇▇▇▇▇▇ is a party have been duly
and validly executed by ▇▇▇▇▇▇ and constitute the legal, valid and binding
obligations of ▇▇▇▇▇▇ enforceable against it in accordance with their terms
subject to the qualification that the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding for the
enforcement thereof may be brought. The execution and delivery of this Agreement
by ▇▇▇▇▇▇ and the Related Documents to which ▇▇▇▇▇▇ is a party and the
performance by it of all of the transactions contemplated herein and therein do
not and shall not (with or without the giving of notice or the passage of time
or both) (A) violate or conflict with the Certificate of Incorporation or By-
laws of ▇▇▇▇▇▇, or (B) (1) violate or conflict with any law, rule, ruling,
determination, ordinance or regulation of any Authority or any condition or
provision of, (2) result in the creation or imposition of any Encumbrance upon
any of the assets of ▇▇▇▇▇▇ pursuant to, (3) accelerate or create, or permit the
acceleration or creation of, any liability or obligation of ▇▇▇▇▇▇ under, or (4)
cause a termination under or give rise to a right of termination under the terms
of, any mortgage, lien, agreement, indenture, trust, instrument, order, judgment
or decree to which ▇▇▇▇▇▇ is a party or which is binding upon ▇▇▇▇▇▇.
ARTICLE VIII
ACTIONS 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:
Section 8.1 Investigation of the Toolbox Products Distribution
--------------------------------------------------
Business by ▇▇▇▇▇▇. The Nexell Group shall afford to the officers, employees and
------------------
authorized representatives of ▇▇▇▇▇▇ (including, without limitation, independent
public accountants and attorneys) complete access during normal business hours
to the offices, properties, employees and business and financial records
(including computer files, retrieval programs and similar documentation) of the
Toolbox Products Distribution Business to the extent ▇▇▇▇▇▇ shall deem necessary
or desirable
30
and shall furnish to ▇▇▇▇▇▇ or its authorized representatives such additional
information concerning the Purchased Assets and the operations of the Toolbox
Products Distribution Business as shall be reasonably requested, including all
such information as shall be necessary to enable ▇▇▇▇▇▇ or its representatives
to verify the accuracy of the representations and warranties contained in this
Agreement, to verify that the covenants of Nexell and Nexell California
contained in this Agreement have been complied with and to determine whether the
conditions set forth in Article XI have been satisfied. ▇▇▇▇▇▇ agrees that such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of Nexell California. No investigation made by
▇▇▇▇▇▇ or its representatives hereunder shall affect the representations and
warranties of Nexell California or Nexell hereunder.
Section 8.2 Preserve Accuracy of Representations and Warranties. Each
---------------------------------------------------
of the parties hereto shall refrain from taking any action which would render
any representation or warranty contained in Article V, VI or VII of this
Agreement inaccurate as of the Closing Date. Each party shall promptly notify
the other of any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. Nexell California
shall promptly notify ▇▇▇▇▇▇ of any lawsuit, claim, proceeding or investigation
that may be threatened, brought, asserted or commenced against Nexell California
(or its Affiliates) which would have been listed in Schedule 5.14 if such
-------------
lawsuit, claim, proceeding or investigation had arisen prior to the date hereof.
Section 8.3 Series B Consent; Governmental Approvals. (a) During the
----------------------------------------
period prior to the Closing Date, Nexell will use commercially reasonable
efforts to obtain the Series B Consent as expeditiously as reasonably
practicable. ▇▇▇▇▇▇ shall cooperate with reasonable requests from Nexell in
Nexell's efforts to secure the Series B Consent; provided, however, that ▇▇▇▇▇▇
-------- -------
shall have no obligation to make any payments or accommodation (financial or
otherwise) in connection with securing the Series B Consent.
(b) During the period prior to the Closing Date, Nexell California
and ▇▇▇▇▇▇ shall act diligently and reasonably, and shall cooperate with each
other, to secure any consents and approvals of any Authority required to be
obtained by them in order to assign or transfer any Governmental Permits to
▇▇▇▇▇▇ or its Affiliates or to permit the consummation of the transactions
contemplated by this Agreement; provided that neither Nexell California nor any
--------
of its Affiliates shall make any agreement or understanding affecting the
Purchased Assets or the Toolbox Products Distribution Business as a condition
for obtaining any such consents or approvals except with the prior written
consent of ▇▇▇▇▇▇.
Section 8.4 Operations Prior to the Closing Date. (a) Nexell
------------------------------------
California and Nexell shall operate and carry on the Toolbox Products
Distribution Business only in the ordinary course and substantially as presently
operated. Consistent with the foregoing, Nexell California and Nexell shall keep
and maintain the Purchased Assets in good operating condition and repair and
shall use commercially reasonable efforts consistent with good business practice
to maintain the business organization of the Toolbox Products Distribution
Business intact and to preserve the goodwill of the suppliers, contractors,
licensors, employees, customers, distributors and others having business
relations with the Toolbox Products Distribution Business. In connection
therewith, Nexell California and Nexell shall not (i) transfer or cause to be
31
transferred from the Toolbox Products Distribution Business any employee or
agent thereof, except as contemplated by this Agreement and the transactions
contemplated hereby, (ii) offer employment after the Closing Date to any such
employee or agent or (iii) otherwise attempt to persuade any such person to
terminate his or her relationship with Nexell California (or its Affiliates).
(b) Except as expressly contemplated by this Agreement or except with
the express written approval of ▇▇▇▇▇▇ or as set forth on Schedule 8.4(b),
---------------
Nexell California (and its Affiliates) shall not:
(i) make any expenditures in excess of $10,000 individually or
$200,000 in the aggregate to suppliers of the Toolbox Products Distribution
Business or enter into any contract or commitment therefor;
(ii) enter into any contract, agreement, undertaking or
commitment which would have been required to be set forth in Schedule
--------
2.2(b) or as described in Section 5.9(d) if in effect on the date hereof,
------
or enter into any contract which cannot be assigned to ▇▇▇▇▇▇ or a
permitted assignee of ▇▇▇▇▇▇ without the consent of the other part(y)(ies)
thereto, or enter into any license agreement relating to the Toolbox
Products Distribution Business or the Licensed Intellectual Property;
(iii) sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers from Nexell California to any of its Affiliates),
or mortgage or pledge, or impose or suffer to be imposed any Encumbrance
on, any of the Purchased Assets, other than inventory and minor amounts of
personal property sold or otherwise disposed of for fair value in the
ordinary course of the Toolbox Products Distribution Business consistent
with past practice and other than Permitted Encumbrances;
(iv) cancel any debts owed to or claims held by Nexell
California (or its Affiliates) (including the settlement of any claims or
litigation) other than in the ordinary course of the Toolbox Products
Distribution Business consistent with past practice;
(v) accelerate or delay collection of any notes or accounts
receivable generated by the Toolbox Products Distribution Business in
advance of or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of the Toolbox Products
Distribution Business consistent with past practice or collect or agree to
collect any such receivable for less than the face amount thereof;
(vi) delay or accelerate payment of any account payable or
other liability of the Toolbox Products Distribution Business beyond or in
advance of its due date or the date when such liability would have been
paid in the ordinary course of the Toolbox Products Distribution Business
consistent with past practice;
(vii) allow the levels of raw materials, supplies, work-in-
process or other materials included in the inventory of the Toolbox
Products Distribution Business to decline below the level necessary for the
continued operation of the Toolbox Products Distribution Business;
32
(viii) make, or agree to make, any payment of cash or
distribution of assets to Nexell California or any of its Affiliates (other
than cash realized upon collection of receivables generated in the ordinary
course of the Toolbox Products Distribution Business);
(ix) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money or enter into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(x) institute any increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan with respect
to employees of the Toolbox Products Distribution Business; or
(xi) change the compensation of the Key Employees or the
employees of Nexell International, other than changes made in accordance
with normal compensation practices and consistent with past compensation
practices.
(c) Prior to the Closing Date Nexell California and its Affiliates
shall afford to the ▇▇▇▇▇▇ Representatives reasonable access to its facilities,
and will cause one or more of its designated representatives to consult as
requested by ▇▇▇▇▇▇ on a regular basis with the ▇▇▇▇▇▇ Representatives and to
discuss the general status of ongoing operations of the Toolbox Products
Distribution Business. Without limiting the generality of the foregoing, each of
Nexell California and Nexell shall use commercially reasonable efforts to ensure
that the ▇▇▇▇▇▇ Representatives are given reasonable advance notice of any
action or commitment which could be expected to involve a commitment,
expenditure, or other obligation (other than payments to employees in accordance
with normal compensation practices and consistent with past compensation
practices) relating to the Toolbox Products Distribution Business in an amount
exceeding $10,000. Nexell California and Nexell shall promptly provide the
▇▇▇▇▇▇ Representatives with copies of any materials and correspondence relating
to any of the notifications, communications, complaints or occurrences listed in
Section 8.5.
Section 8.5 Notification by Nexell California of Certain Matters.
----------------------------------------------------
During the period prior to the Closing Date, Nexell California will promptly
advise ▇▇▇▇▇▇ in writing of (i) any material adverse change in the condition of
the Purchased Assets or the Toolbox Products Distribution Business, (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, (iii) any material default under any Assigned
Contract or event which, with notice or lapse of time or both, would become such
a default on or prior to the Closing Date and of which Nexell California has
knowledge, and (iv) any complaints by customers or distributors received by
Nexell California or its Affiliates relating to the Toolbox Products
Distribution Business.
Section 8.6 Insurance. Until the Closing Date, Nexell California and
---------
its Affiliates 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 manner heretofore
33
maintained by Nexell California and its Affiliates with respect to the Toolbox
Products Distribution Business and the Purchased Assets.
ARTICLE IX
COVENANTS
Section 9.1 Facilitation of Possession. Subsequent to the date hereof,
--------------------------
Nexell California, at the request of ▇▇▇▇▇▇, shall write letters to, and
otherwise communicate with third parties, and do such other reasonable acts and
things as may be necessary or appropriate, to facilitate the gaining of
possession by ▇▇▇▇▇▇ of the applicable Purchased Assets.
Section 9.2 Further Assurances and Cooperation. On and subsequent to
----------------------------------
the Closing Date and subject to the terms and conditions hereof, each of ▇▇▇▇▇▇,
Nexell California and Nexell covenants and warrants that it shall, whenever and
as often as it shall be reasonably requested to do so by the other party to this
Agreement, execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered, any and all such further documents and instruments
as may be reasonably necessary, expedient or proper in order to complete any and
all of the conveyances, transfers, sales and assignments herein provided for.
Section 9.3 Non-Solicitation. Nexell, Nexell California and their
----------------
Affiliates shall not solicit for employment or otherwise seek to contract for
the services of any employee of ▇▇▇▇▇▇ or its Affiliates involved in the Toolbox
Products Distribution Business or employee hired by ▇▇▇▇▇▇ or its Affiliates
pursuant to this Agreement until one (1) year after the termination of such
employee's employment with ▇▇▇▇▇▇ or its Affiliates. No offer or other form of
solicitation of employment will be made at any time when the employment of such
person is prohibited by this Agreement. Such solicitation shall not be deemed to
include the placement of advertisements for employment in any general or
industry publications or the acceptance of unsolicited inquiries from employees
covered by this restriction in the normal course of business. In addition to all
other causes of action and damages ▇▇▇▇▇▇ may have, it is also agreed that
▇▇▇▇▇▇ will also have the right to injunctive relief with respect to a breach of
this Section 9.3.
Section 9.4 Transition Employees. As of the Closing Date, ▇▇▇▇▇▇ and
--------------------
Nexell California shall enter into an Employee Lease Agreement substantially in
the form attached as Exhibit G hereto (the "Employee Lease Agreement"). Schedule
--------- ------------------------ --------
9.4 sets forth a list of the transition employees to be covered by the Employee
---
Lease Agreement, and Nexell California agrees to use commercially reasonable
efforts to retain the services of the transition employees through the Closing
and until the expiration of the transition period specified in the Employee
Lease Agreement.
Section 9.5 Certain Contracts. Nexell California and its Affiliates
-----------------
covenant and agree that they shall use commercially reasonable efforts to assist
▇▇▇▇▇▇ in seeking the termination of each of the following contracts: (i) the
Distribution Agreement dated March 22, 2001 by and between Nexell California and
E-Wha International Inc.; (ii) the Distribution Agreement dated March 22, 2001
by and between Nexell California and YH Biotek, Inc.; (iii) the Distribution
Agreement dated April 15, 2000 by and between Nexell International and GR. Dinga
Sons S.A.; and (iv) the Distribution Agreement dated July 27, 2000 by and
between
34
Nexell International and GR. Dinga Sons S.A. In addition, Nexell California and
its Affiliates shall cooperate with reasonable requests from ▇▇▇▇▇▇ in order to
facilitate the fulfillment of ▇▇▇▇▇▇'▇ obligations thereunder.
Section 9.6 Related Documents. ▇▇▇▇▇▇ and Nexell and/or Nexell
-----------------
California agree to enter into each of the following agreements as of the
Closing Date, each in form and substance reasonably acceptable to each party
thereto (the "Related Documents"):
-----------------
(a) The Distribution License;
(b) The Supply Agreement;
(c) The First BD Sublicense Agreement;
(d) The Second BD Sublicense Agreement;
(e) The Dorken Sublicense Agreement;
(f) Sublicense agreements between ▇▇▇▇▇▇ and Nexell California with
respect to the agreements set forth on Schedule 9.6(f) substantially in the form
---------------
attached as Exhibit F hereto; and
---------
(g) The Employee Lease Agreement.
Section 9.7 Pre-Paid European Taxes. Subsequent to the Closing, ▇▇▇▇▇▇
-----------------------
agrees to, or to cause its Affiliates to, use commercially reasonable efforts to
cause ▇▇▇▇▇▇ and its Affiliates and Nexell International to obtain the benefits
of the Pre-Paid European Taxes and to cause such Pre-Paid European Taxes to
become Recovered European Taxes; provided, however that this Section 9.7 shall
-------- -------
not in any way limit or otherwise affect ▇▇▇▇▇▇'▇ ability to effect any
corporate reorganization or restructuring.
Section 9.8 Use of Name. Beginning as of the Closing Date, Nexell
-----------
grants to ▇▇▇▇▇▇ a royalty-free, limited, worldwide license to use the name
"Nexell International" in connection with the business conducted by Nexell
International up to the Closing Date; provided, however, that such use by ▇▇▇▇▇▇
-------- -------
shall cease upon the earlier of (i) the name change of Nexell International to a
name not containing the word "Nexell" or (iii) six (6) months following the
Closing Date. This Section 9.8 shall not in any way limit or otherwise modify
the license of the Licensed Trademarks pursuant to the Distribution License.
Section 9.9 Remittance of Receivables. If, after the Closing Date,
-------------------------
Nexell California or its Affiliates shall receive any remittance from any
account debtors with respect to the trade accounts receivable being conveyed to
▇▇▇▇▇▇ pursuant to this Agreement, Nexell California or such Affiliate shall
endorse such remittance to the order of ▇▇▇▇▇▇ and forward it to ▇▇▇▇▇▇ promptly
upon receipt thereof.
35
ARTICLE X
EMPLOYMENT OF CERTAIN EMPLOYEES
Section 10.1 U.S. Employees and Employment Matters. (a) Subject to any
-------------------------------------
employees that ▇▇▇▇▇▇ or its Affiliates may hire pursuant to Section 10.1(c) and
---------------
other than as ▇▇▇▇▇▇ may otherwise agree in its discretion, and other than the
employees of Nexell International, no person who is an employee of Nexell
California or any of its Affiliates (an "Employee") shall transfer employment to
--------
▇▇▇▇▇▇ or any of its Affiliates in connection with ▇▇▇▇▇▇'▇ purchase of assets
pursuant to this Agreement. Nothing contained in this Agreement shall obligate
▇▇▇▇▇▇ to employ any Employee or any person on layoff status with Nexell
California or any of its Affiliates. Nexell California shall retain the sole
responsibility for 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 fringe
benefits, including any severance which may be triggered as a result of any
termination of employment (including all severance liabilities incurred on or
prior to the Closing Date) and the conduct of all other matters relating to
labor relations, including compliance with Nexell California's obligations under
any applicable collective bargaining agreements and all negotiations and
communications with any union relating to employment of the Employees by Nexell
California. Nexell California shall retain liability for compliance with all
applicable labor and employment laws relating to the Employees in connection
with their employment by Nexell California or any of its Affiliates (including,
without limitation, any WARN Act liability).
(b) Nexell California shall retain all liabilities under its employee
benefits plans, programs, agreements and arrangements, including (i) any
liabilities relating to any noncompliance with applicable laws, including ERISA,
the Code and the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and (ii) any liabilities which arise as a result of Nexell
-----
California's joint and several liability through its relationship with an
Affiliate. Nexell California shall be solely responsible to provide continuation
coverage under COBRA and any other applicable state law to any Employee or
beneficiary of any Employee who is entitled to such continuation coverage.
(c) ▇▇▇▇▇▇ represents and warrants to Nexell California that prior to
Closing ▇▇▇▇▇▇ or its Affiliates will extend written offers of employment to the
employees of Nexell California set forth on Schedule 10.1(c) (the "Key
---------------- ---
Employees"). Such written offers of employment will be substantially in the form
---------
of the offer letters previously delivered to Nexell California. All Key
Employees who accept ▇▇▇▇▇▇'▇ offer of employment ("Accepting Employees") shall
-------------------
be terminated from employment with Nexell California or its Affiliates
immediately prior to Closing, and shall immediately after the Closing begin
working for ▇▇▇▇▇▇ or its Affiliates. Nexell California acknowledges and agrees
that ▇▇▇▇▇▇ in its sole discretion may hire any employees of the Toolbox
Products Distribution Business other than the Key Employees to work for a period
that commences as of or after the Closing Date, and Nexell California shall take
such actions as ▇▇▇▇▇▇ may reasonably request to arrange for these individuals
to discuss with ▇▇▇▇▇▇ their entering into employment arrangements with ▇▇▇▇▇▇
(each such employee that accepts an offer from ▇▇▇▇▇▇ for employment, an
"Additional ▇▇▇▇▇▇ Hire"). Nexell California shall remain responsible for the
----------------------
payment of salary, wages, vacation, sick pay, bonus or similar compensation or
benefits to Accepting Employees and Additional
36
▇▇▇▇▇▇ Hires accruing up to and including the date of termination of such
employee's employment with Nexell California or its Affiliates.
(d) Notwithstanding anything herein to the contrary, the provisions
of this Section 10.1 shall not apply to Nexell International.
Section 10.2 Stock Option Programs. Nexell shall be responsible for
---------------------
any and all payments, withholding and reporting obligations that arise on or
after the Closing Date under terms of any stock option programs including
payments, if any, which may be made by Nexell in its sole discretion, to settle
option rights under such programs.
ARTICLE XI
CONDITIONS TO CLOSING
Section 11.1 Conditions Precedent to Obligations of ▇▇▇▇▇▇. The
---------------------------------------------
obligations of ▇▇▇▇▇▇ under this Agreement shall, at the option of ▇▇▇▇▇▇, be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made in Articles V and VI of this Agreement (i) that is qualified as
to materiality shall be true on and as of the Closing Date with the same effect
as though such representation and warranty had been made or given on and as of
the Closing Date and (ii) that is not qualified with respect to materiality
shall be true in all material respects on and as of the Closing Date with the
same effect as though made or given on and as of the Closing Date; and there
shall have been delivered to ▇▇▇▇▇▇ certificates to such effect, dated the
Closing Date, signed on behalf of each of Nexell California and Nexell by the
President or any Vice President of Nexell California and Nexell, respectively.
(b) 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.
(c) Necessary Consents. Nexell California shall have received
------------------
consents, in form and substance reasonably satisfactory to ▇▇▇▇▇▇, from the
other parties to all contracts and agreements to which Nexell California (or one
of its Affiliates) is a party and which are specified in Schedule 11.1(c) (the
----------------
"Necessary Consents").
------------------
(d) Performance of Obligations of the Nexell Group. The Nexell Group
----------------------------------------------
shall have performed or complied in all material respects with all obligations,
conditions and covenants required to be performed by it under this Agreement on
or prior to the Closing Date, including but not limited to the execution of the
Related Documents.
(e) Series B Consent. The Series B Consent shall have been obtained.
----------------
Section 11.2 Conditions Precedent to the Obligations of the Nexell
-----------------------------------------------------
Group. The obligations of the Nexell Group under this Agreement shall, at the
-----
option of the Nexell Group, be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
37
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made in Articles VII of this Agreement (i) that is qualified as to
materiality shall be true on and as of the Closing Date with the same effect as
though such representation and warranty had been made or given on and as of the
Closing Date and (ii) that is not qualified with respect to materiality shall be
true in all material respects on and as of the Closing Date with the same effect
as though made or given on and as of the Closing Date; and there shall have been
delivered to the Nexell Group a certificate to such effect, dated the Closing
Date, signed on behalf of ▇▇▇▇▇▇ by the President or any Vice President of
▇▇▇▇▇▇.
(b) Performance of Obligations of ▇▇▇▇▇▇. ▇▇▇▇▇▇ shall have performed
------------------------------------
or complied in all material respects with all obligations, conditions and
covenants required to be performed by it under this Agreement on or prior to the
Closing Date, including but not limited to the execution of the Related
Documents.
(c) 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.
(d) Series B Consent. The Series B Consent shall have been obtained.
----------------
ARTICLE XII
TAXES
(a) Nexell California and Nexell shall be, jointly and severally,
liable for and shall pay, and pursuant to Article XIII shall indemnify ▇▇▇▇▇▇
and its Affiliates from and against all Taxes (whether assessed or unassessed)
applicable to the Toolbox Products Distribution Business and the Purchased
Assets, in each case attributable to periods (or portions thereof) ending on or
prior to the Closing Date. ▇▇▇▇▇▇ shall be liable for and shall pay, and
pursuant to Article XIII shall indemnify Nexell California and its Affiliates
from and against all Taxes (whether assessed or unassessed) applicable to the
Toolbox Products Distribution 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 after the Closing Date except that Taxes imposed on a
periodic basis shall be allocated on a daily basis.
(b) (i) Nexell California and Nexell shall be, jointly and severally,
liable for and shall pay, and pursuant to Article XIII shall indemnify ▇▇▇▇▇▇
and its Affiliates from and against all Taxes (including, without limitation,
any liability for the payment of amounts relating to Taxes under a Tax Sharing
Arrangement, Tax indemnity agreement or otherwise) imposed on Nexell
International, or for which Nexell International may otherwise be liable, for
any taxable year or period that ends on or before the Closing Date and, with
respect to any period beginning before and ending after the Closing Date, the
portion of such period ending before the Closing Date (including, without
limitation, any obligations to contribute to the payment of a Tax determined on
a consolidated, combined or unitary basis with respect to Nexell California or
Nexell. (ii) ▇▇▇▇▇▇ or its Affiliate that purchases all of the shares of Nexell
International shall be, jointly and severally, liable for and shall pay, and
pursuant to Article XIII shall indemnify Nexell
38
California and its Affiliates from and against all Taxes imposed on Nexell
International, or for which Nexell International is liable for any taxable year
or period that begins on or after the Closing Date, and, with respect to any
period beginning before and ending after the Closing Date, the portion of such
period beginning on the Closing Date; provided, however, that neither ▇▇▇▇▇▇ nor
-------- -------
its Affiliate that purchases the shares of Nexell International shall be liable
for or pay, and shall not indemnify Nexell California and its Affiliates from
and against, any Taxes for which Nexell International is liable under this
Agreement (including, without limitation, Section 5.12 and Section 12(b)(i)).
(c) Notwithstanding Section 12(a), any sales Tax, use Tax, real or
personal property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Purchased Assets shall be paid one-
half by Nexell California and one-half by ▇▇▇▇▇▇. Each of the parties agrees to
timely sign and deliver such certificates or forms as may be necessary or
appropriate to establish an exemption from (or otherwise reduce), or make a
report with respect to, such Taxes.
(d) Nexell California or ▇▇▇▇▇▇, 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 Article
XII. 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.
(e) After the Closing Date, each of Nexell California and ▇▇▇▇▇▇
shall, and shall cause their respective Affiliates to:
(i) assist the other party in preparing any tax returns which
such other party is responsible for preparing or filing;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing Authorities regarding, any tax returns of the Toolbox
Products Distribution Business or the Purchased Assets;
(iii) make available to the other and to any taxing Authority as
reasonably requested all information, records and documents relating to
Taxes of the Toolbox Products Distribution Business or the Purchased
Assets;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to Taxes of the
Toolbox Products Distribution Business or the Purchased Assets for taxable
periods for which the other may have a liability under this Article XII;
and
(v) furnish the other party with copies of all correspondence
received from any taxing Authority in connection with any Tax audit or
information request with respect to any taxable periods for which the other
party may have liability pursuant to this Article XII.
39
(f) The parties agree that, if ▇▇▇▇▇▇ is unable to recoup the VAT
Refund in whole or in part after using commercially reasonable efforts to do so,
Nexell California shall reimburse ▇▇▇▇▇▇ for the unrecouped amount of the VAT
Refund. In such case, to the extent permitted by applicable law, ▇▇▇▇▇▇ shall
assign and transfer to Nexell California or one of its Affiliates the right to
collect the unrecouped amount of the VAT Refund.
ARTICLE XIII
SURVIVAL; INDEMNIFICATION
Section 13.1 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained in, or in any certificate delivered
pursuant to or in connection with, this Agreement shall survive the Closing Date
of the transactions contemplated under this Agreement until eighteen (18) months
from the Closing Date; provided that the representations and warranties
contained in Sections 5.1, 5.2, 5.3, 5.4 and 5.5(a) shall survive indefinitely.
All covenants and agreements contained in this Agreement shall survive in
accordance with their terms.
Section 13.2 Indemnification by the Nexell Group. Nexell and Nexell
-----------------------------------
California, jointly and severally, hereby agree to indemnify ▇▇▇▇▇▇ and its
Affiliates against and agrees to hold each of them harmless from any and all
claims, damage, loss, liability, Taxes and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding) (collectively,
"Damages") incurred or suffered by ▇▇▇▇▇▇ or any of its Affiliates arising out
-------
of or related to:
(a) The Non-Assumed Liabilities;
(b) Any breach or inaccuracy of, or failure to comply with, any of
the representations or warranties made by either Nexell or Nexell California
pursuant to this Agreement;
(c) Any breach of, or failure to comply with, any of the covenants,
agreements or undertakings to be performed by either Nexell or Nexell California
pursuant to this Agreement; and
(d) Any failure of Nexell California to obtain prior to the Closing
Date consents to the Assigned Contracts set forth on Schedule 2.3 (it being
------------
understood that such contracts shall only be assigned in accordance with Section
2.3).
It is understood that ▇▇▇▇▇▇ may recover any indemnification payment due from
the Nexell Group pursuant to this Section 13.2 by retaining and setting off any
amounts due or to become due from ▇▇▇▇▇▇ to Nexell California pursuant to the
Distribution License.
Section 13.3 Indemnification by ▇▇▇▇▇▇. ▇▇▇▇▇▇ hereby agrees to
-------------------------
indemnify Nexell California and its Affiliates against and agrees to hold them
harmless from any and all Damages incurred or suffered by Nexell California or
any of its Affiliates arising out of or related to:
(a) The Assumed Liabilities;
40
(b) Any breach or inaccuracy of, or failure to comply with, any of
the representations or warranties made by ▇▇▇▇▇▇ pursuant to this Agreement; and
(c) Any breach of, or failure to comply with, any of the covenants,
agreements or undertakings to be performed by ▇▇▇▇▇▇ pursuant to this Agreement.
Section 13.4 Notice of Claims. (a) Any party seeking indemnification
----------------
hereunder (the "Indemnified Party") shall give to the party obligated to provide
-----------------
indemnification to such Indemnified Party (the "Indemnifying Party") a notice (a
------------------
"Claim Notice") describing in reasonable detail the facts giving rise to any
------------
claim for indemnification hereunder and shall include in such Claim Notice (if
then known) the amount or the method of computation of the amount of such claim,
and a reference to the provision of this Agreement or any other agreement,
document or instrument executed hereunder or in connection herewith upon which
such claim is based; provided, that a Claim Notice in respect of any action at
--------
law or suit in equity by or against a third party as to which indemnification
will be sought shall be given promptly after the action or suit is commenced;
and provided, further, that failure to give such notice shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent it shall
have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Article XIII shall be determined: (i) by a written agreement between the
Indemnified Party and the Indemnifying Party; (ii) by a final judgment or
resolution of an arbitrator or arbitration panel, or by a court of competent
jurisdiction entering such a judgment; or (iii) by any other means to which the
Indemnified Party and the Indemnifying Party shall agree. The judgment or
resolution of an arbitrator, arbitration panel or court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken shall have been finally determined.
Section 13.5 Third Party Claims. (a) Subject to Section 13.5(b), the
------------------
Indemnified Party shall have the right to conduct and control, the defense,
compromise or settlement of any claim, action or suit by a third party
(including any taxing Authority) against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnifying
Party hereunder, and in any such case the Indemnifying Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnified Party in connection therewith;
provided, that the Indemnifying Party may participate, through counsel chosen by
--------
it and at its own expense, in the defense of any such claim, action or suit as
to which the Indemnified Party has so elected to conduct and control the defense
thereof; and provided, further, that the Indemnified Party shall not, without
-------- -------
the written consent of the Indemnifying Party (which written consent shall not
be unreasonably withheld), pay, compromise or settle any such claim, action or
suit. Notwithstanding the foregoing, the Indemnified Party shall have the right
to pay, settle or compromise any such claim, action or suit without such
consent, provided that in such event the Indemnified Party shall waive any right
to indemnity therefor hereunder unless such consent is unreasonably withheld.
41
(b) If any claim, action or suit by a third party against any
Indemnified Party is solely for money damages (except for claims, actions or
suits relating to Taxes) or, where Nexell or Nexell California is the
Indemnifying Party, will have no continuing effect in any material respect on
the Toolbox Products Distribution Business or the Purchased Assets, then the
Indemnifying Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any such claim, action
or suit by a third party against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnifying
Party hereunder if the Indemnifying Party has acknowledged and agreed in writing
that, if the same is adversely determined, the Indemnifying Party has an
obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnifying Party in connection
therewith; provided, that the Indemnified Party may participate, through counsel
--------
chosen by it and at its own expense, in the defense of any such claim, action or
suit as to which the Indemnifying Party has so elected to conduct and control
the defense thereof. Notwithstanding the foregoing, the Indemnified Party shall
have the right to pay, settle or compromise any such claim, action or suit,
provided that in such event the Indemnified Party shall waive any right to
indemnity therefor hereunder unless the Indemnified Party shall have sought the
consent of the Indemnifying Party to such payment, settlement or compromise and
such consent was unreasonably withheld, in which event no claim for indemnity
therefor hereunder shall be waived.
ARTICLE XIV
TERMINATION
Section 14.1 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 ▇▇▇▇▇▇, Nexell California and Nexell;
(b) By ▇▇▇▇▇▇ or Nexell California and Nexell if the Closing shall
not have occurred on or before October 1, 2001 (or such later date as may be
mutually agreed to by the parties hereto);
(c) By ▇▇▇▇▇▇ in the event of any material breach by Nexell
California or Nexell of any of Nexell California's or Nexell's agreements,
representations or warranties contained herein and the failure of Nexell
California or Nexell to cure such breach within seven (7) days after receipt of
notice from ▇▇▇▇▇▇ requesting such breach to be cured; or
(d) By Nexell California and Nexell in the event of any material
breach by ▇▇▇▇▇▇ of any of ▇▇▇▇▇▇'▇ agreements, representations or warranties
contained herein and the failure of ▇▇▇▇▇▇ to cure such breach within seven (7)
days after receipt of notice from Nexell California requesting such breach to be
cured.
42
Section 14.2 Notice of Termination. Any party desiring to terminate
---------------------
this Agreement pursuant to Section 14.1 shall give written notice of such
termination to the other party to this Agreement.
Section 14.3 Effect of Termination. In the event that this Agreement
---------------------
shall be terminated pursuant to this Article XIV, all further obligations of the
parties under this Agreement (other than Section 15.2) 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.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices. All notices, requests, demands, and other
-------
communications permitted or required under this Agreement shall be in writing
and shall be either personally delivered (including couriers such as Federal
Express) or sent by pre-paid certified mail, return receipt requested, or
facsimile transmission, with a confirmation copy personally delivered or sent by
pre-paid certified mail, addressed or transmitted to the address set forth above
of the party or the facsimile number stated below of the party to which notice
is given, or to such other address or facsimile number as such party may have
fixed by notice given in accordance with the terms hereof:
(a) To the Nexell Group:
President, Nexell of California, Inc.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) To ▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Manager
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq. - General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
43
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇'▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice, sent as provided above, shall be deemed given if personally
delivered or, if sent by certified mail, upon delivery at the address provided
for above (or, in the event delivery is refused, the first date on which
delivery was tendered) or, if sent by facsimile transmission, upon receipt by
the sender of confirmation of delivery.
Section 15.2 Expenses. Each party hereto shall bear its own expenses
--------
(including all attorneys', accountants', investment bankers', brokers',
representatives' and consultants' fees) incurred in connection with the
negotiation and preparation of this Agreement and the other Related Documents
and the transactions contemplated hereby and thereby.
Section 15.3 Allocation of Consideration. The parties shall exercise
---------------------------
their good faith efforts to agree upon how the consideration paid or given for
the Purchased Assets (including the Purchase Price) shall be allocated. In the
event that any such agreement is executed and delivered by the parties, such
consideration shall be deemed, for all purposes (including those relating to
Taxes of any kind whatsoever), to be allocated to the Purchased Assets in
accordance therewith and, without limiting the foregoing, any IRS Forms 8594
shall be prepared consistent therewith.
Section 15.4 Entire Agreement: No Modification. This Agreement,
---------------------------------
including the Schedules, Exhibits, documents and instruments delivered pursuant
hereto, and the agreements noted on Schedule 5.15 as continuing in effect, set
-------------
forth the entire agreement and understanding between the parties hereto as to
the specific subject matter hereof and thereof, and merges and supersedes all
prior discussions, agreements and understandings of every kind and nature
between them with respect to the specific subject matter hereof and thereof, and
no party hereto shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement. This
Agreement shall not be changed or amended except by a writing signed by ▇▇▇▇▇▇,
Nexell California and Nexell.
Section 15.5 Waiver of Breach. The waiver by a party of a breach or
----------------
violation by any other party of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach or violation by any
party of the same or any other provision of this Agreement. No such waiver shall
be effective unless in writing signed by the party claimed to have made the
waiver.
Section 15.6 Benefit of Parties; Assignment. This Agreement shall be
------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, successors and permitted
assigns. No party shall have the right to assign any of its rights or
obligations arising hereunder, except with the prior written consent of each
other party hereto; provided, however, that any party may assign any or all of
-------- -------
its rights and obligations hereunder to any person or entity who shall, by
merger, consolidation, transfer of assets or
44
otherwise, have acquired all or substantially all of the assets (not counting
cash and cash equivalents) of such party; provided, further, that no such
-------- -------
assignment shall relieve the assigning party of the obligation to satisfy and
discharge the obligation(s) so assigned. Notwithstanding the foregoing, ▇▇▇▇▇▇
shall have the right to assign this Agreement, and any rights and obligations
arising hereunder (including entering into the Related Documents), to one or
more Affiliates of ▇▇▇▇▇▇ without the prior written consent of any other party
hereto; provided, that no such assignment shall relieve ▇▇▇▇▇▇ of any of its
--------
obligations hereunder. Any purported assignment in violation of this Section
15.6 shall be null and void ab initio.
Section 15.7 Headings. The headings of the sections and paragraphs of
--------
this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
Section 15.8 Governing Law; Jurisdiction. This Agreement shall be
---------------------------
governed by and construed in accordance with the internal laws of the State of
Delaware, without application of conflicts of law principles, and, subject to
Section 15.9 below, each party hereby submits to the jurisdiction and venue of
any state or federal court in the State of Delaware. To the extent permissible
by law, each of the parties hereby waives, releases and agrees not to assert,
and agrees to cause its Affiliates to waive, release and not assert, any rights
such party or its Affiliates may have under any foreign law or regulation that
would be inconsistent with the terms of this Agreement as governed by Delaware
law.
Section 15.9 Dispute Resolution. (a) Provisional Remedies: Except as
------------------ --------------------
set forth in Section 2.5, the procedures specified in this Section 15.9 shall be
the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
-------- -------
party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 15.9.
(b) Negotiations Between Executives: The parties will attempt in good
-------------------------------
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
15.9), promptly by negotiation between executives who have authority to settle
the controversy and who are at a higher level of management than the persons
with direct responsibility for the administration of this Agreement.
(c) Arbitration: In the event that any dispute arising out of or
-----------
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
15.9(b), such dispute shall, upon written notice by either party to the other,
be finally settled by arbitration administered by the Center for Public
Resources in accordance with the provisions of its Commercial Arbitration Rules
and the United States Federal Arbitration Act, as modified below:
(i) The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators all of whom shall be selected from a
list of neutral arbitrators supplied by the Center for Public Resources.
From such list, each of ▇▇▇▇▇▇ and Nexell
45
shall select one (1) arbitrator, and the arbitrators so selected shall
select a third. The panel shall designate one (1) among them to serve as
chair.
(ii) The arbitration proceedings shall be conducted in Los
Angeles County or Orange County in the State of California.
(iii) Any party may seek interim or provisional remedies under
the Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the party
pending the decision of the arbitrators.
(iv) The parties shall allow and participate in limited
discovery for the production of documents and taking of depositions, which
shall be conducted in accordance with the Commercial Arbitration Rules of
the Center for Public Resources. All discovery shall be completed within
sixty (60) days following the filing of the answer or other responsive
pleading. Unresolved discovery disputes shall be brought to the attention
of the chair of the arbitration panel and may be disposed of by the chair.
(v) Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators,
provided that the chair of the panel of arbitrators may establish such
longer times for presentations as the chair deems appropriate.
(vi) The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal basis
for the award. Judgment thereon may be entered in any court having
jurisdiction thereof.
(vii) The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
-------- -------
arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
(d) Performance During Dispute: Each party is required to continue to
--------------------------
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
Section 15.10 Multiple Counterparts; Execution by Fax. This Agreement
---------------------------------------
may be signed in any number of counterparts which taken together shall
constitute one and the same instrument. This Agreement may be executed and
delivered by exchange of facsimile copies showing the signatures of the parties
hereto, and those signatures need not be affixed to the same copy. The facsimile
copies showing the signatures of the parties will constitute originally signed
copies of the same agreement requiring no further execution.
46
Section 15.11 Exhibits and Schedules. All exhibits and schedules
----------------------
referred to in this Agreement are attached hereto and are incorporated herein by
reference as if fully set forth herein.
Section 15.12 Construction. The language in all parts of this
------------
Agreement shall in all cases be construed as a whole according to its fair
meaning, strictly neither for nor against any party hereto, and without implying
a presumption that the terms thereof shall be more strictly construed against
one party by reason of the rule of construction that a document is to be
construed more strictly against the person who himself or through his agent
prepared the same, it being agreed that representatives of both parties have
participated in the preparation hereof.
Section 15.13 Publicity. No party to this Agreement shall issue or
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cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated hereby without first
providing a draft of such press release or announcement to the other parties and
obtaining the consent of the other parties hereto, which consent shall not be
unreasonably withheld; provided, however, that nothing herein shall prevent any
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party from making any disclosure required by law, including, without limitation,
the requirements of the SEC, the Securities Act and the rules promulgated
thereunder, or any applicable stock exchange or the Nasdaq Stock Market.
* * * * * *
47
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
▇▇▇▇▇▇ HEALTHCARE CORPORATION
By: /s/
------------------
Name:
Title:
NEXELL OF CALIFORNIA, INC.
By: /s/
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Name:
Title:
NEXELL THERAPEUTICS INC.
By: /s/
------------------
Name:
Title: