Exhibit 10.163
===============================================================================
ASSET PURCHASE AGREEMENT
Dated as of May 6, 2002
by and among
CERTIS U.S.A., L.L.C.
as Buyer,
and
ECOGEN INC.
ECOGEN-BIO INC.
ECOGEN TECHNOLOGIES I INCORPORATED
as Sellers
===============================================================================
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT (herein, together with the Schedules and Exhibits
attached hereto, referred to as this "Agreement"), dated as of May 6, 2002, by
and among CERTIS U.S.A., L.L.C., a Delaware limited liability company (the
"Buyer"), ECOGEN INC., a Delaware corporation ("Ecogen"), ECOGEN-BIO INC., a
Delaware corporation ("Ecogen-Bio") and ECOGEN TECHNOLOGIES I INCORPORATED, a
Delaware corporation ("Ecogen-Tech" and collectively with Ecogen and Ecogen-Bio,
the "Sellers" and individually, a "Seller"). Capitalized terms used in this
Agreement are defined or otherwise referenced in Section 10.03.
WITNESSTH:
---------
WHEREAS, the Sellers are in the business of, among other things,
researching, developing, evaluating, manufacturing, licensing and selling
bioinsecticide products and insecticidal nematodes products;
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers, certain assets related to the Bacillus thuringiensis
("Bt") bioinsecticide products (excluding only those Bt bioinsecticide products
known as CellCap(TM) products) and insecticidal nematode products used in the
Sellers' business, including those products listed on Schedule A (collectively
the "Products"), all as specified herein upon the terms and conditions
hereinafter set forth; and
WHEREAS, simultaneously herewith Sellers and Buyer will enter into an
agreement to grant Buyer a license to manufacture, have manufactured, market,
sell and distribute the Products, in the form of Exhibit H attached hereto (the
"Pre-Closing Business Arrangement Agreement").
NOW, THEREFORE, in consideration of the mutual representations and
warranties and covenants made herein, the Buyer and the Sellers, each intending
to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
---------------------------
Section 1.01 Purchase and Sale of Assets. (a) At the Closing provided
for in Section 2.01, on the terms and subject to the conditions set forth in
this Agreement, the Sellers shall sell, convey, transfer, assign and deliver to
the Buyer, free and clear of any and all Liens except for Permitted Liens, and
the Buyer shall purchase and acquire from the Sellers, all of the right, title
and interest of the Sellers in and to the assets and rights set forth below
(collectively, the "Purchased Assets"):
(i) all inventories relating to the Products including
raw materials, work in progress, consigned goods, finished goods, packaging
and labels (including any of the foregoing in the possession of third party
manufacturers, suppliers, dealers or
others in transit) (the "Inventory") including the Inventory set forth on
Schedule 1.01(a)(i);
(ii) all machinery and equipment set forth on Schedule 1.01(a)(ii);
(iii) all Bt strains (understood not to include Pseudomonas strains)
(the "Bt Strains"), Photorhabdus strains, Xenorhabdus strains, and
nematode strains (collectively, the "Strains"), all past and current Bt
genes, proteins and associated libraries and all specifications,
processes, standard operating procedures ("SOPs"), manufacturing and
quality control processes and procedures and technological know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) owned,
licensed or used by the Sellers (the "Technology") including those set
forth in the reports, binders and other items listed in Schedule
1.01(a)(iii) (it being understood that the Bt Strains are listed in the
binders provided by Sellers to Buyer and initialed by representatives of
Buyer and Ecogen, hereinafter, the "Binders"); provided, however, subject
to the terms and conditions herein, Buyer shall permit Ecogen to retain
one copy of the Bt Strains and one set of the Binders for the sole purpose
of enforcing Sellers' rights pursuant to the agreements listed in Section
1.01(b)(iii)(B) through (F);
(iv) all electronic and software databases that were developed or
used in connection with any of the Products or the Purchased Assets
including those used to track, store or identify the strains, genes and
proteins (the "Databases") provided, however, subject to the terms and
conditions herein, Buyer shall permit Ecogen to retain one set of the
Databases for the sole purpose of enforcing Sellers' rights pursuant to
the agreements listed in Section 1.01(b)(iii)(B) through (F);
(v) all product registrations relating to the Products pending
before, issued or granted by any Governmental Entity including those set
forth on Schedule 1.01(a)(v) (the "Product Registrations"), all regulatory
files including all supporting data and all correspondence with any
Governmental Entity, and any other approvals, consents, permits, licenses,
registrations, authorizations, applications and clearances of any
Governmental Entity or Person issued or granted to the Sellers including
all licenses, product clearances and any other authorizations relating, in
each case, to any of the Products or the Purchased Assets (the "Permits")
including the Permits set forth on Schedule 1.01(a)(v);
(vi) all books, records, files and other data of the Sellers
(including those stored electronically) relating to any of the Products or
the Purchased Assets, including machinery and equipment maintenance files,
customer lists, customer purchasing histories, price lists, distribution
lists, supplier lists, raw material supplier qualifications, inventory
reports of raw materials, packaging, goods in process and finished goods,
production data, manufacturing and quality control records and procedures,
SOP records, distributor and customer correspondence, complaint and
inquiry files, research and development files, records, data and
laboratory books, records and note-books, medical reports, files relating
to the safety and effectiveness of each of the Products, toxicology data
and reports, sales materials and records (including pricing
2
history, total sales, terms and conditions of sale, sales and pricing
policies and practices), strategic plans, internal financial statements,
marketing and promotional surveys, material and research, trademark and
Intellectual Property files and import and export records, in each case
relating to the Products or the Purchased Assets (the "Records");
(vii) the agreements, contracts, licenses, commitments,
understandings, instruments, binding obligations and arrangements (oral or
written), including Sellers' Monsanto R&D License Rights and Sellers'
Monsanto 2001 License Rights, set forth (or, in the case of oral contracts
a description of the material terms of which are set forth) in Schedule
1.01(a)(vii) (the "Assumed Contracts");
(viii) all labels, logos, graphics and associated artwork, all
current and historical packaging and promotional material, and all
associated material, in each case owned or used by any of the Sellers
relating to the Products or the Purchased Assets;
(ix) all patents, patent rights, inventions, copyrights,
trademarks, service marks (if any), trade names, and trade dress rights
that (i) relate in any manner to the Products or any other Purchased Asset
and are owned, used, filed by any of the Sellers in connection with the
Products or any Purchased Assets, (ii) relate in any manner to the names
listed in Schedule 3.11(a)(iii), (iii) are or were used in or are
necessary for the exploitation of the Purchased Assets (collectively, the
"Intellectual Property"), including the goodwill associated therewith, and
the Sellers' right to ▇▇▇ for, and remedies against, past, present or
future infringements thereof, and rights of priority and protection of
interest therein;
(x) all rights, claims and causes of action against third
parties available to the Sellers with respect to any of the Products or
the Purchased Assets;
(xi) such materials set forth in Schedule 1.01(a)(xi) (the
"Other Materials"), provided, however, there shall be no adjustment to the
Purchase Price as a result of the inclusion or omission of any of the
Other Materials; and
(xii) all, if any, active ingredients or formulations of the
Products, as well as other developmental products, developmental active
ingredients and developmental formulations for Bt bioinsecticides
(excluding CellCap(TM)products) and insecticidal nematodes.
(b) Notwithstanding anything in this Agreement to the contrary,
specifically excluded from the Purchased Assets are the right, title and
interest of the Sellers in or to any of following (collectively, the "Excluded
Assets"):
(i) CellCap(TM) Bt assets, understood to mean those
products (end use microbial biopesticide formulations known as MVP, MVPII,
MATTCH, M-Trac and M-Peril), Mycogen Bt Toxins, registrations, trademarks,
Pseudomonas strains and technology relating to encapsulating proteins
which were obtained and/or licensed to Sellers from Mycogen Corporation
pursuant to the Asset Purchase and License Agreement dated February 15,
2000 between Mycogen Corporation and Ecogen including those produced from
Bt, into cells such as Pseudomonas or other bacterial
3
strains (for the purposes of this Agreement, "Mycogen Bt Toxins" means the
following Bt toxins: (i) the hybrid Cry1Ac toxin described in Fig. 1 of
U.S. Patent 5,128,130; (ii) the active toxin domain from Cry1C; (iii) the
hybrid Cry1F toxin described in Sequence Ids 26 and 27 of U.S. Patent
5,527,883; and (iv) the delta endotoxin contained in Bacillis
thuringiensis serovar japonensis strain buibui FERM BP-3465 (cry8C));
(ii) biofungicide assets, understood to mean Sellers'
microbial biofungicide formulated products known as AQ-10 and Aspire, the
development biofungicide designated CIM, the active ingredients contained
in each such product and related license rights to the patented microbes
which are the active ingredient of the respective formulated products, and
the related product registrations, trademark, process know-how and field
data; and
(iii) the following agreements:
(A) the Monsanto Investment Agreement;
(B) the Monsanto Technology Assignment Agreement;
(C) the Monsanto License Agreement;
(D) the Monsanto Research and Development Agreement
(except for the license rights granted in Section 6.1
thereof, as provided in Section 1.01(a)(vii) of this
Agreement);
(E) the Monsanto 2001 Purchase Agreement (except
for the license rights granted in Sections 2.2 and 2.4
thereof to the extent necessary to utilize the Purchase
Assets, as provided in Section 1.01(a)(vii) of this
Agreement); and
(F) Section 2.2 of the Ecogen License Agreement and
Articles I, V, and VI thereof as they relate thereto.
(c) Buyer will assume the Assumed Contracts by executing an
assumption in the form of Exhibit A (the "Instrument of Assignment and
Assumption").
Section 1.02 Purchase Price (a) In consideration of the sale,
conveyance, transfer, assignment and delivery of the Purchased Assets by the
Sellers pursuant to Section 1.01(a), the Buyer agrees to pay to the Sellers
U.S.$ 4,200,000 (four million two hundred thousand United States Dollars) (the
"Purchase Price") in the aggregate at Closing, subject to the adjustments
provided in Sections 1.04(a) and (b) hereof.
(b) Notwithstanding anything in this Agreement to the contrary,
the Buyer shall not assume, and the Sellers shall be responsible for the
payment, satisfaction, performance and discharge of all liabilities,
obligations, claims, demands, expenses, damages or responsibilities of the
Sellers, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due (collectively, the "Retained Liabilities")
except to the extent set forth in the Instrument of Assignment and Assumption.
4
Section 1.03 Payment of Purchase Price. At the Closing, the Buyer shall
deliver to the Sellers the Purchase Price as adjusted under Section 1.04 in
immediately available funds by wire transfer to an account or accounts
designated by Ecogen at least three (3) business days prior to the Closing Date.
Section 1.04 Adjustment to Purchase Price. (a) The Sellers shall provide
the Buyer with a statement of Inventory (the "Inventory Statement") dated as of
10:00 A.M. (local time) of the day prior to the Closing Date. The Inventory
Statement shall be prepared on a basis consistent with Schedule 1.01(a)(i) and
shall set forth the total of the net value of Inventory to be delivered at the
Closing (the "Closing Date Inventory Amount"). In the event that pursuant to the
Pre-Closing Business Arrangement Agreement or for any other reason, the Closing
Date Inventory Amount is less than $550,050.62, then the Purchase Price shall be
reduced by such deficit.
(b) Prior to Closing, the Sellers shall use reasonable
commercial efforts to obtain written confirmation of the scope of the Sellers'
rights under the Mycogen Settlement Agreement substantially in the form of
Exhibit G hereto (the "Mycogen Letter") and deliver it to Buyer. In the event
the Sellers have not delivered an executed Mycogen Letter in form and substance
reasonably satisfactory to the Buyer on or prior to Closing, the Purchase Price
shall be reduced by $250,000. Notwithstanding anything else set forth in this
Agreement, such reduction in the Purchase Price shall be the only consequence of
the failure to obtain the Mycogen Letter or of any claim with respect to the
matters set forth in the Mycogen Letter.
Section 1.05 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets by the parties in accordance with the
allocations set forth in Schedule 1.05. The Sellers and the Buyer represent,
warrant and agree that such allocations have been determined through
arm's-length negotiations. Each of the Sellers and the Buyer agree that, to the
extent permitted by Applicable Law, it will adopt and utilize the amounts
allocated to each asset or class of assets for purposes of all federal, state
and other income Tax Returns of any nature filed by it (but such allocation
shall not constrain reporting for other purposes) and that it will not
voluntarily take any position inconsistent therewith upon examination of any
such Tax Returns, in any claim for refund, in any litigation or otherwise with
respect to such Tax Returns. Notwithstanding any other provision of this
Agreement, the foregoing agreement shall survive the Closing Date indefinitely.
Section 1.06 Further Assurances. At the Closing and from time to time
after the Closing, at the request of the Buyer and without further
consideration, the Sellers shall promptly execute and deliver, to the Buyer such
agreements, certificates and other instruments of sale, conveyance, assignment
and transfer, and take such other action, as may be reasonably requested by the
Buyer (i) more effectively to sell, convey, assign and transfer to and vest in
the Buyer (or to put the Buyer in possession of) any of the Purchased Assets
(including, the Assumed Contracts, the Permits, the Product Registrations, the
Intellectual Property and the Technology) or (ii) to assist the Buyer in
registering the Intellectual Property with the appropriate Governmental Entities
in any jurisdiction requested by the Buyer. Sellers further (x) represent that
all Product Registrations are current and will be current as of the Closing
Date, (y) agree that they will not take any action that would cause such Product
Registrations not to be in full force and effect following the Closing Date
until the respective ends of the terms of such Product
5
Registrations and (z) agree that they will cooperate with any reasonable request
of Buyer concerning Product Registrations including maintaining such Product
Registrations at Buyer's expense. In addition, at the Closing and from time to
time after the Closing, at the reasonable request of the Buyer and without
further consideration, the Sellers shall take, or cause to be taken, all
actions, and do, or cause to be done, and assist and cooperate with the Buyer in
doing, all things necessary, proper or advisable in connection with the
preparation and filing with the appropriate Governmental Entities of all
documents required to be prepared and filed in connection with the transfer of
the Permits and the Product Registrations to the Buyer pursuant to this
Agreement. Notwithstanding anything in this Section 1.06 to the contrary, Buyer
shall reimburse Sellers' reasonable out-of-pocket expenses incurred in carrying
out or performing any of the foregoing actions at Buyer's request.
ARTICLE II
CLOSING
-------
Section 2.01 Closing Date. The closing of the transaction contemplated
hereby (the "Closing") shall take place at the offices of Pillsbury Winthrop
LLP, One Battery Park Plaza (24 Whitehall Street), New York, New York, as soon
as possible, but in no event later than five (5) Business Days after
satisfaction (or waiver) of the conditions set forth in Article VII (except for
the conditions which by their terms are to be satisfied at or immediately prior
to the Closing) or such other time or date as the Buyer and the Sellers agree in
writing. The time and date upon which the Closing occurs is herein referred to
as the "Closing Date."
Section 2.02 Instruments of Conveyance, Transfer, Assumption, Etc. (a)
The Sellers shall execute and deliver to the Buyer at the Closing:
(i) the ▇▇▇▇ of Sale;
(ii) a receipt for the Purchase Price;
(iii) the Intellectual Property Collective Assignment
assigning all the Intellectual Property to Buyer;
(iv) any individual assignment documents, as may be
reasonably provided, to facilitate Buyer's recordation of assignments on an
individual basis with the appropriate Governmental Entity, including
individual assignment documents, each individually identifying, e.g., a
patent application, a patent, a federally registered trademark, or a
federal trademark application, so that such individual assignments may be
recorded with the U.S. Patent and Trademark Office;
(v) any other documents and requisite executions of
such documents as may be reasonably necessary to facilitate the ability of
Buyer to perfect, to further pursue, to assert, and to otherwise realize
the full benefit of ownership in all the Intellectual Property;
(vi) the Instrument of Assignment and Assumption;
6
(vii) any documents required to be filed with the appropriate
Governmental Entities in connection with the transfer to the Buyer of the
Product Registrations and the Permits including assignment documents so
that such transfers may be recorded with the Environmental Protection
Agency (the "EPA") or other appropriate regulatory agencies;
(viii) certificates, sworn to under penalty of perjury,
setting forth each Seller's name, address and federal tax identification
number and stating that such Seller is not a "foreign person" within the
meaning of Section 1445 of the Internal Revenue Code;
(ix) certificates of each respective Secretary of the
Sellers certifying that the resolutions adopted by the board of directors
(or the equivalent thereof) attached thereto were duly and validly adopted
and are in full force and effect, and authorize the execution and delivery
by such Seller of this Agreement and the other Transaction Agreements to
which such Seller is a party, and the performance by such Seller of its
obligations hereunder and thereunder;
(x) certificates of each respective Secretary of the
Sellers as to the incumbency of such Seller's officers and certifying that
the copies of such Seller's articles and by-laws attached thereto are true
and correct;
(xi) an audit report for the October 2001 Financial
Statements, as contemplated by Section 3.04(a) hereof;
(xii) releases or such other documents, as contemplated by
Sections 5.03 and 7.02(i) hereof, relating to evidence of removal of
Liens;
(xiii) certificates as to Sellers' representations and
warranties, as contemplated by Section 7.02(a) hereof;
(xiv) certificates as to Sellers' performance of obligations,
as contemplated by Section 7.02(b) hereof;
(xv) Consents and Filings as set forth in Schedule 3.03, as
contemplated by Section 7.02(d) hereof;
(xvi) opinion of counsel to the Sellers, as contemplated by
Section 7.02(g) hereof;
(xvii) evidence of termination of any Affiliate Contracts, as
contemplated by Section 7.02(h) hereof;
(xviii) a Non-competition Agreement from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
as contemplated by Section 7.02(j) hereof
(xix) an inventor assignment from ▇▇▇▇▇ ▇. ▇▇▇▇, as
contemplated by Section 7.02(k) hereof;
7
(xx) a written notice of termination of the Aventis
Distribution Agreement, as contemplated by Section 7.02(l) hereof;
(xxi) any other certificates and other documents
contemplated by Section 7.02 hereof;
(xxii) such other agreements, certificates and other
instruments required to be delivered by the Sellers under this Agreement
or any of the other Transaction Agreements or as the Buyer or its counsel
may reasonably request to consummate the transactions contemplated by this
Agreement or the other Transaction Agreements.
(b) The Buyer shall execute and deliver to the Sellers at
the Closing:
(i) the Purchase Price as adjusted under Section 1.04
by wire transfer in immediately available funds to the account or accounts
designated by Ecogen;
(ii) the Instrument of Assignment and Assumption;
(iii) a certificate of the Secretary of the Buyer
certifying that the resolutions adopted by the Buyer's Board of Managers
attached thereto were duly and validly adopted and are in full force and
effect, and authorize the execution and delivery by the Buyer of this
Agreement and the other Transaction Agreements to which it is a party, and
the performance by the Buyer of its obligations hereunder and thereunder;
(iv) a certificate of the Secretary of the Buyer as to
the incumbency of certain officers of the Buyer and certifying that the
copies of the Buyer's certificate of formation and limited liability
company agreement attached thereto are true and correct;
(v) a certificate as to Buyer's representations and
warranties, as contemplated by Section 7.03(a) hereof;
(vi) a certificate as to Buyer's performance of
obligations, as contemplated by Section 7.03(b) hereof;
(vii) opinion of counsel to the Buyer, as contemplated by
Section 7.03(c);
(viii) any other certificates and other documents
contemplated by Section 7.03 hereof; and
(ix) such other agreements, certificates and other
instruments required to be delivered by the Buyer under this Agreement or
any of the other Transaction Agreements or as the Sellers or their counsel
may reasonably request to carry out the purpose of this Agreement or the
other Transaction Agreements.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Ecogen and Ecogen-Bio, jointly and severally, and Ecogen-Tech, severally,
represent and warrant to the Buyer as follows:
Section 3.01 Organization, Standing and Power. Each of the Sellers is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized (which jurisdiction is listed opposite
each Seller's name on Schedule 3.01) and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary or desirable to enable it to own, lease or otherwise hold
its properties and assets and to conduct its businesses as presently conducted.
Each Seller is duly qualified to do business in each jurisdiction where the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary and where the failure to so qualify could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
Section 3.02 Authority; Execution and Delivery; Enforceability. Each
Seller has all requisite power and authority to execute this Agreement and each
Seller has all requisite power and authority to execute each of the other
Transaction Agreements to which such Seller is (or will be) a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by each Seller of this Agreement and by each Seller of each of the
other Transaction Agreements to which such Seller is (or will be) a party and
the consummation by such Seller of the transactions contemplated hereby and
thereby, has been duly authorized by all necessary action on the part of such
Seller. Each Seller has duly executed and delivered this Agreement, and this
Agreement constitutes a legal, valid and binding obligation of each Seller,
enforceable against each Seller in accordance with its terms.
Section 3.03 No Conflicts; Consents. Except as set forth in Schedule
3.03, the execution and delivery by each Seller of this Agreement and the other
Transaction Agreements to which each Seller is (or will be) a party does not,
and the consummation of any transaction and compliance with the terms hereof and
thereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or result in the creation of any Lien upon
assets of the Sellers (including the Purchased Assets) under, any provision of
(i) each Seller's articles or by-laws, (ii) any material contract, lease,
license, indenture, mortgage, note, bond, agreement, permit, concession,
franchise or other instrument to which any of the Sellers is party or by which
any Seller's assets (including the Purchased Assets) are bound or (iii) subject
to the filings and other matters referred to in the following sentence, (A) any
judgment, order, injunction, award, decree or writ ("Judgment"), (B) any
federal, state, local or foreign statute, law (including, common law), code,
ordinance, rule or regulation enacted, adopted, issued or promulgated by any
Governmental Entity ("Applicable Law") applicable to such Seller or any of its
assets (including the Purchased Assets) or (C) any written or, to the best
knowledge of such Seller, oral request of any Governmental Entity. No consent,
approval, license, permit, release, order or authorization ("Consent") of, or
registration, declaration or filing with, or notice to ("Filing"), any federal,
state, local or foreign government
9
or any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, including
the EPA (a " Governmental Entity"), or any Lenders or Person party to any
Assumed Contract or Product Registration or other issuer of any Permit, is
required to be obtained or made by or with respect to the Sellers in connection
with the execution, delivery and performance of any transaction contemplated by
this Agreement or any other Transaction Agreements, other than the Consents and
Filings set forth in Schedule 3.03.
Section 3.04 Financial Statements; SEC Documents; Undisclosed
Liabilities. (a) Set forth as Schedule 3.04 are true and complete copies of: (i)
the audited consolidated balance sheets of Sellers as of October 31, 1999 and
October 31, 2000 and the related audited consolidated statements of income; and
audited consolidated statements of cash flows for each of the twelve months then
ended (the "Audited Financial Statements"); (ii) the unaudited consolidated
balance sheets of Sellers as of October 31 2001 and the related unaudited
consolidated statements of income; and unaudited consolidated statements of cash
flows for the twelve months then ended (the "October 2001 Financial
Statements"); on or before Closing, Sellers shall deliver to Buyer an audit
report for the October 2001 Financial Statements, which will contain no material
changes thereto; upon delivery, such audited statements shall be included in the
definition of Audited Financial Statements as of the Closing Date; and (iii) the
unaudited consolidated balance sheets as of January 31, 2001 and January 31,
2002 and the related unaudited consolidated statements of income; and unaudited
consolidated statements of cash flows for each of the three months then ended
(these statements together with the October 2001 Financial Statements, the
"Unaudited Financial Statements" and together with the Audited Financial
Statements, the "Financial Statements"). Except, in the case of Unaudited
Financial Statements for the absence of notes, and subject to year-end audit
adjustments, all such Financial Statements are in all material respects, true,
complete and correct, were prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") consistently applied throughout the
periods indicated and present fairly the consolidated financial position of the
Sellers at and as of such dates and the consolidated results of operations and
consolidated cash flows for the periods then ended.
(b) Except as set forth in this sentence and in Schedule 3.04,
each Seller has filed all documents required to be filed by such Seller with the
SEC since February 1, 1999 (the "Sellers' SEC Documents") and all scheduled
exceptions (including the filing of Ecogen's Annual Report on Form 10-K for the
year ended October 31, 2001 and Quarterly Report on Form 10-Q for the three
months ended January 31, 2002) shall have been rectified as of the Closing Date.
As of their respective dates, the Sellers' SEC Documents were prepared in
accordance with and complied in all material respects with the requirements of
the Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such documents.
(c) There are no liabilities, debts, obligations or claims
against the Sellers of any nature, absolute or contingent, affecting the
Purchased Assets except (i) as and to the extent reflected or reserved against
on the Sellers' unaudited consolidated balance sheet dated as of January 31,
2002 or October 31, 2001; (ii) specifically described and identified as an
exception to this paragraph in any of the schedules delivered to the Buyer
pursuant to this Agreement; (iii) incurred since the date of the Sellers'
unaudited consolidated balance sheet dated as of October
10
31, 2001 in the ordinary course of business consistent with prior practice; or
(iv) open purchase or sales orders or agreements for delivery of goods and
services in the ordinary course of business consistent with prior practice,
provided that none of the Sellers is in material default thereunder.
Section 3.05 Absence of Certain Changes or Events. Except as set forth
on Schedule 3.05, from December 31, 2001 each of the Sellers has conducted its
operations related to the Purchased Assets in the ordinary course of business
consistent with past practice, and there has not been any:
(a) event, change, effect or development that, individually or
in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Purchased Assets, it being understood that the Sellers
continue to incur losses from operations;
(b) change in accounting methods, principles or practices by
the Sellers affecting the Purchased Assets;
(c) waiver of any right under any Assumed Contract or any
Permit relating to the Purchased Assets;
(d) sale, lease, license or other disposition of or subjecting
to any Liens any of the Purchased Assets, except sales of Inventory and excess
or obsolete assets in the ordinary course of business consistent with past
practice but excluding the sale or other disposition of any machinery and
equipment set forth in Schedule 1.01(a)(ii);
(e) acquisition or agreement to acquire any assets for use that
are material, individually or in the aggregate, to Sellers, except purchases of
Inventory or other assets in the ordinary course of business consistent with
past practice;
(f) (i) waiver of any claims or rights related to Purchased
Assets or (ii) waiver of any benefits of, or agreement to modify in any manner,
any confidentiality, standstill or similar agreement to which any of the Sellers
is a party and relating to the Purchased Assets;
(g) termination or failure to renew any Assumed Contract, or
termination or failure to renew, or receipt of any written threat (that was not
subsequently withdrawn) to terminate or failure to review, any Permit or Product
Registration;
(h) termination or failure to renew or to timely pay any fees,
annuities or renewals payable to any Governmental Entity in respect of any of
the Intellectual Property, Product Registrations or Permits; or
(i) event, change, effect or development that would cause the
Strains not to be viable and in good order.
Section 3.06 Taxes. (a) For purposes of this Agreement, (i) "Tax" or
"Taxes" means any federal, state, local, foreign or other taxes (including
income (net or gross), gross receipts, profits, alternative or add-on minimum,
franchise, license, capital, capital stock, intangible, services, premium,
mining, transfer, sales, use, ad valorem, payroll, wage, severance,
11
employment, occupation, property (real or personal), windfall profits, import,
excise, custom, stamp or withholding taxes) or governmental charges, fees,
assessment or levies of any kind whatsoever (including interest, penalties,
additions to tax or additional amounts with respect to any of the foregoing) and
(ii) "Returns" shall mean all returns, reports, declarations, statements or
forms, including information returns required to be filed in respect of any
Taxes.
(b) Except as set forth on Schedule 3.06, each of the Sellers
has filed or caused to be filed in a timely manner (within any applicable
extension periods) all Returns required by applicable foreign, state, local,
provincial or foreign Tax laws to be filed by such Seller on or prior to the
Closing Date, and each such Return is true, complete and correct in all material
respects.
(c) Except as set forth on Schedule 3.06, each of the Sellers
has timely paid, to the extent due and payable, or accrued all material Taxes,
whether or not shown to be due on any such Return described in Section 3.06(b).
No Tax Liens exist with respect to any of the Purchased Assets and no claims
have been asserted in a writing with respect to any Taxes.
(d) All Taxes which each of the Sellers is required by law to
withhold or collect have been duly withheld or collected and have been, paid
over to the appropriate governmental agency or authority to the extent due and
payable.
(e) Except as set forth in Schedule 3.06, none of the Sellers
is bound by any agreement with respect to Taxes relating to the Purchased
Assets.
Section 3.07 Workers' and Users' Injuries. Except as set forth in
Schedule 3.07, there has not been during the past three (3) years, any actual
or, to the best knowledge of each of the Sellers, threatened claims of (i) past
or present employees of any of the Sellers employed for compensation for any
material injury, disability or illness arising out of or relating to their
employment by such Seller, or (ii) users of any of the Products for any material
injury, disability or illness arising out of or relating to the use or handling
of the Products.
Section 3.08 Litigation. Except as set forth in Schedule 3.08, there is
(a) no outstanding Judgment of any Governmental Entity against any Seller, (b)
no suit, action, claim, dispute or legal, governmental, administrative,
arbitration or regulatory proceeding ("Proceeding") pending or, to the best
knowledge of each of the Sellers, threatened against any of the Sellers or any
of the Purchased Assets, and (c) no investigation by any Governmental Entity
pending or, to the best knowledge of the Sellers, threatened against any of the
Sellers or any of the Purchased Assets. None of the items set forth in Schedule
3.08, if adversely determined against any of the Sellers, would be material to
any of the Purchased Assets or materially adversely affect the ability of the
Sellers to consummate the transactions contemplated by this Agreement or any of
the other Transaction Agreements.
Section 3.09 Compliance with Applicable Laws. Except as set forth in
Schedule 3.09, each of the Sellers is (and during the past five (5) years has
been) in compliance with all Applicable Laws, and with all material requests of
all Governmental Entities. Except as set forth in Schedule 3.09, none of the
Sellers has received any communication during the past five (5) years from a
Governmental Entity that alleges that any of the Sellers is not in compliance
with
12
any Applicable Law or with any request by such Governmental Entity. This
Section 3.09 does not relate to matters with respect to Taxes, which are the
subject of Section 3.06.
Section 3.10 Environmental Matters. (a) There have been no environmental
reports, assessments or audits prepared by or on behalf of any of the Sellers or
by any Governmental Entity at any time during the five (5) year period
immediately preceding the date hereof relating to the operations of any of the
Sellers.
(b) Except as set forth in Schedule 3.10, (i) the Sellers hold,
and are in compliance in all material respects with, all Product Registrations,
Permits, licenses and governmental authorizations required for the Sellers to
conduct business under Environmental Laws (as defined herein); (ii) none of the
Sellers has received any written notice of a pending or threatened action,
demand, investigation or inquiry by any Governmental Entity or other Person
relating to any actual or alleged violations of Environmental Laws or any actual
or potential obligation to investigate or take any other action relative to the
Release (as defined herein) or threatened Release generation, disposal,
treatment, storage, shipment or handling of any Hazardous Materials (as defined
herein), by any of the Sellers and each of the Sellers has (and during the past
three (3) years has) conducted its operations in compliance in all material
respects with all Environmental Laws; (iii) none of the Sellers has entered into
or agreed to any court decree or order or agreement with any third party or is
subject to any Judgment relating to compliance with any Environmental Law or to
the investigation or cleanup of Hazardous Materials; and (iv) Hazardous
Materials have not been generated, transported, treated, stored, disposed of,
arranged to be disposed of, Released or threatened to be Released at, on, from
or under any property or facility currently owned, leased or otherwise operated
by any of the Sellers, except in compliance with all applicable, Environmental
Laws. As used in this Agreement, the term "Environmental Laws" means any and all
applicable federal, state, local and foreign law, treaty, regulation, ordinance,
judicial decision, judgment, order, decree, injunction, permit or agreement
entered into, issued, or promulgated by any Governmental Entity, relating to the
environment, preservation or reclamation of natural resources, or to the
management, Release or threatened Release of Hazardous Materials or to human
health and safety. As used in this Agreement, the term "Hazardous Materials"
means any pollutant, contaminant or waste, or any toxic, radioactive or
hazardous substance, chemical, material, petroleum product, constituent or waste
regulated, or classified as such, in each case under any Environmental Law. As
used in this Agreement, the term "Release" means any release, discharge,
emission or disposal to air, water, land or groundwater.
(c) Except as set forth in Schedule 3.10, no Environmental Law,
imposes any obligation upon the Sellers arising out of or as a condition to any
transaction contemplated by this Agreement or any of the other Transaction
Agreements, including any requirement to modify or to transfer any Permit, any
requirement to file any notice or other submission with any Governmental Entity,
or the modification of or provision of notice under any agreement, consent order
or consent decree. No Lien has been placed upon any of the Purchased Assets
under any Environmental Law.
Section 3.11 Intellectual Property. (a) Schedule 3.11(a)(i) sets forth a
true and complete list of all patents and patent rights owned by Sellers and
included in the Intellectual Property, specifying all registration, patent
and/or application numbers, and, for patent
13
applications, their filing dates. Schedule 3.11(a)(ii) sets forth a true and
complete list of all patents and patent rights to which Sellers hold license
rights, specifying all the names of the licensor, registration, patent and/or
application numbers, and, for patent applications, their filing dates. Schedule
3.11(a)(iii) sets forth a true and correct list of all trademarks, service marks
or trade names registered or used by Sellers in any country and included in the
Intellectual Property, specifying the registration and application numbers,
registration date, or, in the case of unregistered marks, the date of first use.
Schedule 3.11(a)(iv) sets forth a true and complete list of the remaining
Intellectual Property and Technology.
(b) As of the date hereof, none of the Sellers own or have
rights in any trademark, trade name, domain name, internet web site or service
▇▇▇▇ that is confusingly similar to the trademarks listed in Schedule
3.11(a)(iii).
(c) Except as set forth in Schedule 3.11(c) (or, in the case of
oral Intellectual Property Contracts, the material terms of which are described
in Schedule 3.11(c)), none of the Sellers is bound by or a party to any
agreement, contract, lease, option, license, commitment, instrument or any other
binding obligation or arrangement (oral or written) relating to the Intellectual
Property or the Technology (the "Intellectual Property Contracts"). Except as
set forth in Schedule 3.11(c), the Sellers (i) own all Intellectual Property and
Technology free and clear of any claims of others and of all Liens (other than
the Intellectual Property and Technology that is licensed to any third party
pursuant to any Intellectual Property Contract set forth in Schedule 3.11(c))
and (ii) have the legal right to use all of the intellectual property and
technology that is used pursuant to any Intellectual Property Contracts set
forth in Schedule 3.11(c).
(d) the Sellers further, jointly and severally, represent and
warrant that, except as set forth in Schedules 3.11(d)(iv) and (vi),:
(i) the Sellers have secured valid written assignments
of rights from all consultants, independent contractors, inventors and
employees who contributed to the creation or development of the
Intellectual Property and Technology or the rights to such contributions
that the Sellers do not own by operation of law;
(ii) the Sellers have made all statutorily required
filings, if any, to record their interests and taken reasonable actions to
protect their rights in such Intellectual Property and Technology;
(iii) all rights to the Intellectual Property and
Technology are in full force and effect and have not been used or enforced,
or failed to be used or enforced, in a manner that would result in the
abandonment, cancellation or enforceability of any of such rights, and all
of the patents, trademark registrations, service ▇▇▇▇ registrations, and
design right registrations, and copyright registrations included in the
Intellectual Property are valid, except that not all patented inventions
have been worked in all countries with working requirements;
(iv) there are no claims of adverse ownership or
invalidity or other opposition or challenge to any of the Seller's rights
in the Intellectual Property or
14
Technology, nor any pending or, to the best knowledge of any of the Sellers,
threatened suit, proceeding, claim, demand, action, or investigation of any kind
against the Sellers in connection with any of their rights in the Intellectual
Property of Technology, nor is any of the Sellers aware of any reasonable basis
therefor;
(v) the Products and the Purchased Assets (including the
Intellectual Property and Technology) do not infringe and have not infringed any
now existing or subsequently issued domestic or foreign patent, trademark,
service ▇▇▇▇, trade name, copyright, design right or other intellectual property
or proprietary right;
(vi) no person or entity has asserted that, with respect to
the Products or the Purchased Assets (including the Intellectual Property and
Technology), any of the Sellers or a licensee of any of the Sellers, if any, is
infringing or has infringed any domestic or foreign patent, trademark, service
▇▇▇▇, trade name, or copyright or design right, or has misappropriated or
improperly used or disclosed any trade secret, confidential information or
know-how;
(vii) all fees, annuities, renewals and other payments which
are payable by or due from any of the Sellers on or before the Closing for any
of the Intellectual Property or Technology, including all foreign or domestic
patents, patent applications, trademarks registrations, service ▇▇▇▇
registrations, copyright registrations and any applications for any of the
preceding, have been fully met or paid to the extent due and payable and Buyer
will not incur any late fees or fees for extension of time to act or pay;
(viii) to the best knowledge of each of the Sellers, none of
claims made in the foreign or domestic patents and patent applications that are
a part of the Intellectual Property is dominated by claims of patents or
published patent applications owned by other persons or entities;
(ix) to the best knowledge of each of the Sellers, no
unexpired foreign or domestic patents or patent applications exist that are
materially adverse to the Products or the Purchased Assets (including the
Intellectual Property and Technology);
(x) no part of the Intellectual Property was obtained
through inequitable conduct or fraud in the United States Patent and Trademark
Office or any foreign Governmental Entity;
(xi) there are no royalties, honoraria, fees or other
payments payable to any third party by reason of the ownership, use, license,
sale or disposition of the Products or the Purchased Assets (including the
Intellectual Property and Technology);
(xii) to the best knowledge of each of the Sellers, no
person or entity nor such person's or entity's business or products has
infringed, misused, misappropriated or conflicted with intellectual property
rights included within the Products or the Purchased Assets (including the
Intellectual Property and Technology) or currently is infringing, misusing,
misappropriating or conflicting with such intellectual property rights included
within such Products or Purchased Asset;
15
(e) the Sellers' performance under this Agreement will put the
Buyer in full possession of all materials and information required for the Buyer
to practice the Technology substantially in the manner practiced by the Sellers;
(f) the Sellers have taken all steps that are reasonably
necessary and appropriate to safeguard and maintain the secrecy and
confidentiality of all trade secrets contained in the Products and the Purchased
Assets (including the Intellectual Property and Technology) (including entering
into appropriate confidentiality, nondisclosure and non-competition agreements
with all officers, directors, employees and third-party consultants of the
Sellers).
Section 3.12 Contracts. Except as set forth in Schedule 3.12 (or, in the
case of oral Contracts, the material terms of which are described in Schedule
3.12), none of the Sellers is a party to or bound by any agreement, contract,
lease, option, license, commitment, instrument or any other binding obligation
or arrangement (oral or written) by or to which any of the Purchased Assets are
bound or subject or which affect or are material to the ownership, use or
enjoyment of the Purchased Assets or sale of the Products (collectively, the
"Contracts") including any:
(a) covenant not to compete (other than pursuant to any radius
restriction contained in any lease, reciprocal easement or development,
construction, operating or similar agreement) or other covenant of any of the
Sellers (i) limiting or restricting the development, manufacture, marketing,
distribution or sale of any of the Products or any future line extension of the
Products into other forms or (ii) limiting or restricting the ability of any of
the Sellers from entering into any market or line of business or competing with
any Person in connection with the Purchased Assets;
(b) Contracts with any Affiliate of the Sellers or any director,
officer, stockholder or employee of any of the Sellers;
(c) continuing Contract for the future purchase or price of raw
materials, supplies or equipment with a supplier described in Section 3.14;
(d) Contracts with customers, distributors or other sales
representatives described in Section 3.15;
(e) Contracts with manufacturers or subcontractors;
(f) Contracts relating in whole or in part to the Intellectual
Property or the Technology (including any Contract under which any of the
Sellers are licensees or licensors of any such Intellectual Property or
Technology) or to trade secrets, confidential information or proprietary rights
and processes of the technology of any other Person;
(g) mortgage, pledge, security agreement, deed of trust, loan
agreement, credit agreement, indenture, conditional sale or title retention
agreement, equipment financing obligation or other instrument, in any case,
granting a Lien upon any of the Purchased Assets;
(h) Contracts establishing or creating any partnership, joint
venture, limited liability company, limited liability partnership or similar
entity;
16
(i) Contracts relating to the storage or warehousing of any
Inventory or Products, or the charter or purchase of transportation or shipping
services;
(j) guarantees or other Contracts in respect of any Indebtedness
of any Person;
(k) Schedule 3.12(k) lists certain Contracts of the Sellers that
have been terminated and such terminated Contracts are no longer in force or in
effect.
Except as set forth or described in Schedule 3.12, each of the Assumed
Contracts is a valid and binding obligation of the Seller which is a party to
such Assumed Contract and, to the best knowledge of each of the Sellers, of the
other party thereto, and is in full force and effect and is enforceable by the
Seller which is a party to such Assumed Contract in accordance with its terms.
Except as set forth in Schedule 3.12, none of the Assumed Contracts shall by
their terms expire during the ninety (90) day period immediately succeeding the
Closing Date or shall be restricted in any manner having a Material Adverse
Effect. Except as set forth in Schedule 3.12, each of the Sellers has performed
in all material respects the obligations required to be performed by it to date
under the Assumed Contracts to which such Seller is a party and is not (with or
without the lapse of time or the giving of notice, or both) in breach or default
thereunder and, to the best knowledge of each of the Sellers, no other party to
any of the Assumed Contracts is (with or without the lapse of time or the giving
of notice, or both) in breach or default thereunder. Except as set forth in
Schedule 3.12, there have been no oral or written modifications, amendments or
waivers with respect to of any of the terms of any Assumed Contract. Except as
set forth in Schedule 3.12, from (and including) the date hereof, no other
Person which is a party to any Contract (including any Assumed Contract) has
informed any of the Sellers that it intends to change its current relationship
with any of the Sellers, as the case may be, in any manner which adversely
affects such Seller.
Section 3.13 Product Registrations and Permits. Schedule 3.13 sets forth a
true and complete list of all the Product Registrations and all Permits, in each
case issued or granted to any of the Sellers by any Governmental Entity in
connection with the Purchased Assets (including foreign registrations that are
set forth in the names of the foreign distributors and not the Sellers) and with
respect to each Product Registration and Permit, lists the issuing or granting
Governmental Authority, Products covered, registration or permit number,
registration or permit status and registration or permit holder. Except as set
forth in Schedule 3.13 and except for foreign registrations as to which no
representation is made herein, each of such Product Registrations and each of
such Permits has been validly issued or granted and is in full force and effect,
and may be transferred to the Buyer to the extent such party meets the
requirements of Applicable Law. No other product registrations relating to the
Product or Permits are necessary in connection with the conduct of any of the
Seller's business other than as set forth in Schedule 1.01(a)(v) and Schedule
3.13. Except as set forth in Schedule 3.13, each of the Product Registrations
and Permits in the name of a Seller and listed in Schedule 3.13 are validly held
by the Seller to which such Product Registration or Permit has been issued or
granted, and each of the Sellers has complied with all terms and conditions
thereof, and none of the Sellers has received any notice that the same are under
review by any Governmental Entity or subject to termination, suspension,
modification, revocation or non-renewal for any reason, or that they will be
subject to termination, suspension, modification, revocation or non-renewal as a
result of the
17
execution, delivery and performance of this Agreement or any of the other
Transaction Agreements or for any other reason. All working requirements and all
fees, annuities, renewals and other payments which are payable by or due from
any of the Sellers on or before the Closing for any Product Registration or
Permit have been fully met or paid to the extent due and payable and Buyer will
not incur any late fee or fees for an extension to act or pay.
Section 3.14 Suppliers. Schedule 3.14 is a true and complete list of the
twenty (20) largest suppliers of the Sellers, by dollar amount, of raw
materials, packaging materials, or any other component of inventory of the
Products for each calendar year beginning January 1, 1999 and sets forth for
each such supplier a description of the raw materials or other supplies supplied
during such period.
Section 3.15 Distributors and Customers. Schedule 3.15 is a true and
complete list of all distributors and customers for each calendar year beginning
January 1, 1999 which purchased in any year $30,000 or more worth of Products
directly from any of the Sellers and sets forth for each distributor and
customer a description of the amounts, unit prices and total sales by Product
for each year during such period. Except as set forth in Schedule 3.15, since
January 1, 1999, the Seller has not received any written complaint from any
distributor or customer (not limited to those listed in Schedule 3.15) regarding
any of the Products or any services performed by any of the Sellers, nor has it
had any Products returned by a distributor, customer or subsequent purchaser
thereof or been the subject of a product liability claim.
Section 3.16 Manufacturers. Schedule 3.16 is a true and complete list of
all manufacturers of Products and sets forth the amounts for the production of
the Products by such manufacturer for each calendar year beginning January 1,
1999. There are no special terms and conditions associated with any such
manufacturing arrangements.
Section 3.17 Brokers. No broker, investment banker, financial advisor or
other Person, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
hereby or by any of the other Transaction Agreements based upon arrangements
made by or on behalf of the Sellers or any of their Affiliates.
Section 3.18 Machinery and Equipment; Other Materials. The machinery and
equipment set forth in Schedule 1.01(a)(ii) and the Other Materials set forth in
Schedule 1.01(a)(xi) are being sold to the Buyer on an "as is, where is" basis,
provided that no such machinery, equipment or Other Materials are subject to any
mortgage, pledge, security agreement, deed of trust, loan agreement, credit
agreement, indenture, conditional sale or title retention agreement, equipment
financing obligation or other instrument, in any case, granting a Lien upon such
machinery, equipment or Other Materials that would materially interfere with
their transfer to Buyer hereunder.
Section 3.19 Transactions with Affiliates. Except as set forth or
otherwise described in Schedule 3.19 (or, in the case of oral Affiliate
Contracts, the material terms of which are described in Schedule 3.19), there
are no agreements, contracts, leases, options, licenses, commitments,
instruments or any other binding obligations or arrangements (oral or written)
(the "Affiliate Contracts") between any of the Sellers, on the one hand, and any
of their Affiliates, on
18
the other hand, relating to the Products or the Purchased Assets. Except as set
forth on Schedule 3.19, all Affiliate Contracts between any of the Sellers, on
the one hand, and any of the Sellers' Affiliates, on the other hand, relating to
the Products or the Purchased Assets, will be terminated as of the Closing Date
and thereafter will be of no further force or effect. Except as set forth in
Schedule 3.19 or in Section 1.01(a)(iii) and (iv), after the Closing neither the
Sellers nor any of the Sellers' Affiliates will own or have any interest in any
assets, property (real or personal, tangible or intangible) or contract or
agreement used in, held by or necessary or desirable for the use or ownership of
the Purchased Assets or license to the Purchased Assets, including the
Intellectual Property. Schedule 3.19 sets forth a description of all services
material to the use or ownership of the Purchased Assets (including
administrative, warehousing, transportation, insurance, payroll, information
systems and other business support services in each case material to the use or
ownership of the Purchased Assets), raw materials or supplies (including types
and quantities) provided directly or indirectly by any Affiliate of the Sellers.
Each of Ecoresearch Corn Borer III Inc., Ecoresearch Nematodes IV Inc.,
Ecoresearch Rootworm V Inc., and Ecoresearch Turf VI Inc. have merged into
Ecogen-Tech and no longer exist as separate entities.
Section 3.20 Products. (a) Except as set forth in Schedule 3.20, there
are no statements, citations or decisions by any Governmental Entity (including
the EPA) stating that any of the Products is defective or unsafe or fails to
meet any standards promulgated by any such Governmental Entity. Except as set
forth on Schedule 3.20, there have been no recalls ordered by any Governmental
Entity with respect to any of the Products. Except as set forth on Schedule
3.20, none of the Sellers has received any written complaints of any injury or
harm to any person relating to the Products and there is no (i) fact relating to
any of the Products that may impose upon any of the Sellers a duty to recall any
of the Products or a duty to warn customers of a defect in any of the Products,
(ii) latent or overt design, manufacturing or other defect in any of the
Products or (iii) material liability for warranty claims or returns with respect
to any of the Products not fully reflected on the Financial Statements. Schedule
3.20 sets forth a description of all Product warranty claims for each of
calendar years 1999, 2000 and 2001. Except as set forth in Schedule 3.20, the
Product formulations being sold to the Buyer pursuant to Section 1.01(a), and
each of the ingredients therein, conform in all respects with any standards
promulgated by and all requests of the EPA and in all material respects with any
other Applicable Laws and any other requests of other Governmental Entities, and
such formulations and ingredients are safe and, to the best knowledge of the
Sellers, do not pose any risk of injury or harm to any person when used in
accordance with applicable instructions.
(b) Since January 1, 1999, there has been no interruption in or
disruption to the distribution or sale of any of the Products by any of the
Sellers as a result of the failure by a Seller, to comply with the formulation
or labeling requests by or requirements of Governmental Entities, and the
Sellers have no reason to believe that any such interruption or disruption will
occur from and after the date of this Agreement.
Section 3.21 Inventory. Except as set forth on Schedule 3.21, the
Inventory meets and conforms with all Applicable Laws and all requests of all
Governmental Entities, will be formulated, manufactured, packaged and labeled in
accordance with Applicable Laws, SOPs, and such requests of Governmental
Entities, will meet all quality assurance and quality control specifications
applicable to the Products and will be safe when used in accordance with the
applicable instructions. All of the Inventory is in good condition, conforms in
all respects with
19
the applicable warranties of the Sellers and with all applicable Product
Registrations, Permits, is not obsolete, is useable or saleable in the ordinary
course of business. All work in progress and finished goods included in the
Inventory has been produced in compliance with the applicable SOPs and quality
control procedures of the Sellers and with Applicable Law. The Sellers have no
reason to believe that any of the Products is likely to result in claims or
litigation in respect of personal injury. The Inventory shall not include any
Products returned from customers, Products having a shelf life of less than 12
months, or any obsolete, nonconforming, defective, substandard, off
specification, unsaleable or unusable Products. No Inventory has been added
since December 31, 2001. The Sellers shall deliver to the Buyer at 10:00 A.M.
(local time) on the day prior to the Closing the Inventory Statement setting
forth the Closing Date Inventory Amount. The Inventory Statement shall be
complete and correct as of such time and date.
Section 3.22 False and Misleading Statements; Schedules Complete. No
representation or warranty made by the Sellers hereunder and no statement made
by the Sellers in any Schedule furnished by the Sellers hereunder contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances in
which they were made, not misleading. Each Schedule furnished by the Sellers
hereunder is complete and accurate. For the purposes of this Section 3.22, each
Schedule furnished by Seller hereunder means Schedule A, Schedules 1.01(a)(i)
through 1.01(a)(v) and Schedules 3.01 through 3.21.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer represents and warrants to the Sellers as follows:
Section 4.01 Organization, Standing and Power. The Buyer is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full limited liability company power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary or desirable to enable it to own, lease or otherwise hold
its properties and assets and to conduct its businesses as presently conducted.
The Buyer is duly qualified to do business in each jurisdiction where the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary and where the failure to so qualify could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect
on the Buyer.
Section 4.02 Authority; Execution and Delivery; Enforceability. The
Buyer has all requisite power and authority to execute each of the Transaction
Agreements to which it is (or will be) a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Buyer of this Agreement, and of each of the other Transaction Agreements to
which it is (or will be) a party, and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Buyer. The Buyer has duly executed and delivered this
Agreement, and this Agreement constitutes a legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms.
20
Section 4.03 No Conflicts; Consents. The execution and delivery by the
Buyer of this Agreement and the other Transaction Agreements to which it is (or
will be) a party, does not, and the consummation of any transaction and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Lien upon any of its properties or
assets under, any provision of (a) its certificate of formation or limited
liability company agreement, (b) any material contract, lease, license,
indenture, mortgage, note, bond, agreement, permit, concession, franchise or
other instrument to which it is a party or by which any of its properties or
assets is bound or (c) subject to the filings and other matters referred to in
the following sentence, any Judgment or Applicable Law applicable to it or its
properties or assets or any written, or, to the best knowledge of Buyer, oral
request of any Governmental Entity. No Consent of, or Filing with, any
Governmental Entity is required to be obtained or made by or with respect to the
Buyer in connection with the execution, delivery and performance of any
transaction contemplated by this Agreement or any other Transaction Agreements,
other than the Consents and Filings set forth in Schedule 4.03.
Section 4.04 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby or by any of the other Transaction Agreements based upon arrangements
made by or on behalf of the Buyer or any of its Affiliates.
Section 4.05 Schedule Complete. Schedule 4.03 furnished by the Buyer
hereunder is complete and accurate.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.01 Conduct of Business by the Sellers. Except for matters
permitted or contemplated by this Agreement and subject to the terms and
conditions of the Pre-Closing Business Arrangement Agreement and the other
Transaction Agreements, from the date of this Agreement to the Closing Date, the
Sellers agree to operate the Purchased Assets in the usual, regular and ordinary
course in substantially the same manner as previously conducted and, to the
extent consistent therewith, to use commercially reasonable efforts to preserve
intact the Purchased Assets, to use commercially reasonable efforts to keep
available the services of the current President, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., employed
in connection with the sale of the Products and use commercially reasonable
efforts to keep their relationships with licensors, licensees, and others having
business dealings with each of the Sellers to the end that its goodwill and
ongoing business shall be unimpaired at the Closing Date. In addition, and
without limiting the generality of the foregoing, except for matters set forth
in Schedule 5.01 or otherwise permitted or contemplated by this Agreement and
the other Transaction Agreements, from the date of this Agreement to the Closing
Date, the Sellers agree that none of them shall undertake any of the following
actions without the prior written consent of the Buyer:
21
(a) enter into or assume any contract material to the Products or
the Purchased Assets;
(b) acquire or agree to acquire any assets for use that are
material, individually or in the aggregate, except purchases of Inventory or
other assets in the ordinary course of business consistent with past practice;
(c) make any change in accounting methods, principles or
practices affecting the reported combined consolidated assets, liabilities or
results of operations related to the Purchased Assets;
(d) sell, lease, license, pledge or otherwise dispose of or
subject to any Lien any of the Purchased Assets or enter into a legally binding
commitment to do any of the foregoing other than sales of Inventory in the
ordinary course of business consistent with past practice;
(e) make any change, revision, amendment or other modification to
any Product labeling;
(f) make any change, revision or other modification to the
formulation of any of the Products;
(g) make any change (or announce any prospective change) in
prices, sales discounts or allowances or any other sales incentives in
connection with the sale of any of the Products to distributors or customers;
(h) (x) waive any claims or rights related to the Purchased
Assets or (y) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which any of the Sellers is
a party and relates to the Products or the Purchased Assets;
(i) sell, lease, license, pledge or otherwise dispose of or
subject to any Lien any of the Other Materials; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 5.02 Other Actions. The parties hereto shall not, and shall not
permit any of their respective Affiliates to, take any action that would, or
that could reasonably be expected to, result in (a) any of the representations
and warranties of such party set forth in the Agreement becoming untrue or
inaccurate or (b) any condition set forth in Article VII not being satisfied.
Section 5.03 Sellers' Secured Loans. (a) On or before the Closing Date,
the Sellers shall have obtained from all secured lenders, including Berkshire
Bank and Momar Corporation (collectively, the "Lenders") and delivered to the
Buyer a release on Form UCC-3 of any and all Liens on the Purchased Assets
granted to each of the Lenders pursuant to and in connection with any credit or
security agreements and such other agreements, releases, waivers, certificates
or other documents as reasonably requested by the Buyer.
22
Section 5.04 Advise of Changes. The Sellers shall promptly advise the
Buyer orally and in writing of any occurrence, change or event prior to the
Closing which, if it occurred or existed on or prior to the date hereof, would
have been required to have been disclosed on any of the Schedules to be
delivered by the Sellers to the Buyer pursuant to Article III.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
Section 6.01 Access to Information. The Sellers shall afford the Buyer
and its officers, employees, accountants, counsel, financial advisors and other
representatives, access during normal business hours during the period prior to
the Closing Date to all its properties, books, contracts, commitments, personnel
and records relating to the Products or any of the Purchased Assets and, during
such period, the Sellers shall furnish promptly to the Buyer (a) a copy of each
report, schedule and other document filed by any of them during such period with
any Governmental Entity relating to any of the Products or any of the Purchased
Assets, (b) a copy of any and all correspondence to or from any Governmental
Entity relating to any of the Products or any of the Purchased Assets, and (c)
all other information concerning the Products or any of the Purchased Assets as
the Buyer may reasonably request. No investigation by the Buyer shall affect the
representations and warranties of any of the Sellers.
Section 6.02 Commercially Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, the Sellers and the Buyer shall
use their commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated hereby or by the other Transaction
Agreements, including (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary Filings including filings with Governmental Entities and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties
(including in connection with any of the Assumed Contracts), (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or any other Transaction Agreement or the
consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated hereby or by the other Transaction Agreements and to fully carry
out the purposes of each of the Transaction Agreements and (v) providing the
location of, access to and release of the Other Materials.
Section 6.03 Fees and Expenses. Except as otherwise provided in this
Agreement, all fees and expenses incurred in connection with the transactions
contemplated by this Agreement and the other Transaction Agreements shall be
paid by the party incurring such fees or expenses, whether or not the
transactions contemplated hereby or thereby are consummated.
Section 6.04 Public Announcements. The parties hereto agree that, from
the date of this Agreement through the Closing Date, no public release,
announcement or any other
23
disclosure concerning any of the transactions contemplated hereby or by any of
the other Transaction Agreements shall be made or issued by any party hereto
without the prior written consent of the other parties hereto (which consent
shall not be unreasonably withheld), except as such release, announcement or
disclosure may be required by Applicable Law, in which case the party required
to make the release, announcement or disclosure shall allow the other parties
hereto reasonable time to comment on such release, announcement or disclosure in
advance of such issuance or disclosure. Notwithstanding anything in this Section
6.04 to the contrary, except as may be required by Applicable Law and except as
disclosed in the Sellers' SEC Documents or for disclosure to such party's
financial and legal advisors and independent accountants or permitted pursuant
to the preceding sentence or in connection with the procedures contemplated by
Section 10.10, neither the Buyer, the Seller nor any of their respective
Affiliates or representatives will disclose to any Person the Purchase Price.
Section 6.05 Advertising and Promotional Materials. The Buyer shall be
permitted to use any and all advertising and promotional materials included in
the Purchased Assets bearing any of the Sellers' corporate names, logos and
product identification numbers until the earlier of the date when such materials
are exhausted or at the end of a period of twelve (12) months after Closing or
such shorter period of time if limited by the requirements of Applicable Law or
Governmental Entity. The Buyer agrees to maintain quality standards for the
Purchased Assets substantially equal to those maintained by the Sellers at the
time of Closing for so long as the Buyer shall continue to use any advertising
or promotional materials bearing any of the Seller's corporate names, logos, or
product identification numbers.
Section 6.06 Stockholder's Meeting. As promptly as practicable after the
date of this Agreement, the Sellers shall take all actions necessary for
stockholder approval of this Agreement and the transactions contemplated hereby
and will prepare and file any filings required to be filed by it under the
Exchange Act, or any other Applicable Law in order to consummate this Agreement
and the other Transaction Agreements and the transactions contemplated hereby
and thereby (the "Securities Filings"). Ecogen will cause all documents that it
is responsible for filing with the SEC under this Section 6.06 to comply in all
material respects with all requirements of Applicable Law. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Securities Filings, Ecogen will promptly inform the Buyer of such occurrence and
cooperate in filing with the SEC or its staff, and/or mailing to stockholders of
such Seller, such amendment or supplement.
Section 6.07 Nonsolicitation. (a) From the date of this Agreement
through the Closing Date, none of the Sellers nor any of their Affiliates shall,
nor shall they authorize or permit any officer, director, employee of, or any
investment banker, attorney or other advisor or representative of the Sellers
to, directly or indirectly, (i) solicit, initiate, encourage or induce
(including by way of furnishing information) the submission of any Competing
Proposal (as defined below), (ii) enter into or agree to enter into any Contract
with respect to any Competing Proposal or (iii) participate in any discussions
or negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Proposal, provided, that nothing contained in this Section 6.07 or any
other provision hereof shall prohibit the Sellers or Sellers' Boards of
Directors from (i) taking and disclosing to the Sellers' stockholders a position
with respect to an offer by a third party, or (ii) making such
24
disclosure to Seller's stockholders as, in the good faith judgment of such
Seller's Board of Directors, after receiving advice from outside counsel, is
required under Applicable Law. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer, director, employee or Affiliate of any Seller or any investment
banker, attorney or other advisor or representative of any of the Sellers shall
be deemed to be a breach of this Section 6.07 by Sellers. Notwithstanding the
foregoing, prior to the Closing Date, Sellers may furnish information concerning
its business, properties or assets to any Person or group and may negotiate and
participate in discussions and negotiations with such Person or group concerning
a Competing Proposal if:
(w) such Person or group has submitted a Competing Proposal;
(x) the Board of Directors of such Seller determines in good
faith after consultation with outside legal counsel that such action is
necessary for the Board of Directors of such Seller to comply with its
fiduciary duty under Applicable Law;
(y) at least forty-eight (48) hours prior to furnishing any
such information to, or entering into discussions or negotiations with,
such Person or group, Sellers give Buyer written notice of the identity of
such Person or group, of the terms and conditions of the offer and of
Sellers' intention to furnish information to, or enter into discussions or
negotiations with, such Person or group; and
(z) such Seller receives from such Person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
Person or group by or on behalf of the Sellers containing terms no less
favorable to Sellers than those set forth in the Confidentiality Agreement
between Ecogen and Buyer dated May 10, 2001, as amended and restated by
Ecogen and Buyer effective January 21, 2002.
Sellers will promptly notify Buyer of the existence of any proposal, discussion,
negotiation or inquiry received by any Seller regarding any Competing Proposal.
Contemporaneously with furnishing any such information to such Person or group,
Sellers shall furnish such information to Buyer (to the extent that such
information has not been previously furnished by Sellers to Buyer). Sellers will
keep Buyer informed of the status of any such Competing Proposal and of any
amendments or proposed amendments to any Competing Proposal. Sellers will
provide Buyer with at least twenty-four (24) hours prior notice of any meeting
of any Sellers Board of Directors at which such Seller's Board of Directors is
reasonably expected to consider a Competing Proposal and will promptly notify
Buyer of any determination by such Seller's Board of Directors that a Competing
Proposal has been made.
(b) "Competing Proposal" shall mean any proposal for a
transaction or series of transactions to acquire, in any manner, any interest
in, or a substantial portion of the Purchased Assets or to merge or engage in
other business combinations involving the Purchased Assets, other than the
transactions contemplated by the Transaction Agreements.
Section 6.08 Transfer Taxes. All transfer, stamp, documentary, sales,
use, registration, withholding and other similar Taxes and related fees
(including penalties, interest and additions
25
to Tax) required to be paid in connection with this Agreement or the
transactions contemplated hereby including all sales, transfer or other
conveyance taxes shall be paid by the Sellers and shall constitute a Retained
Liability. The Sellers shall prepare and timely file all Returns required to be
filed in respect of any such Taxes.
Section 6.09 Intellectual Property Matters. (a) The parties hereto agree
that the Buyer, in its sole discretion, shall be entitled to control the filing
and recording of the assignments of the Intellectual Property contemplated by
this Agreement, by the Intellectual Property Collective Assignment and any
individual assignment documents, and the Sellers hereby agree to provide to the
Buyer any such information and documentation as may be reasonably necessary or
desirable to file or record such assignments in any and all countries and
jurisdictions requested by the Buyer. The Sellers shall cooperate with any
written request by the Buyer to obtain signatures on all documentation including
declarations and assignments, that may be required subsequent to the execution
of this Agreement to enable the Buyer to secure and record any Intellectual
Property in accordance with this Agreement.
Section 6.10 Confidentiality. From and after the date of this Agreement,
except as required by law, the Sellers shall not, and shall cause their
Affiliates not to, disclose, divulge, furnish or make accessible to any Person,
any confidential or proprietary information regarding the Purchased Assets
including the Intellectual Property, the Technology, sales, profits, markets,
products, clients, key personnel, pricing policies, operation methods, technical
processes, designs, business affairs and methods, trade secrets and any other
information not readily available to the public (collectively, the "Confidential
Information"). The Sellers agrees to keep, or cause its Affiliates to keep, in
strict confidence and not directly or indirectly disclose, divulge, furnish,
make accessible or use any of the Confidential Information.
Section 6.11 Covenant Not to Compete. (a) For the period ending on the
third anniversary of the Closing Date, none of the Sellers or any Affiliate of
the Sellers shall engage in the research, development, sale or distribution of
Bt products or product components (other than CellCap(TM) Bt and in planta Bt
products) and nematode related products and technology (including through the
provision of management, consulting or advisory services or through a joint
venture or partnership), in any geographical area in which the Sellers plan to
do, currently do or have done business during the past three (3) years. For the
avoidance of doubt, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall not be deemed an Affiliate of the
Sellers once he leaves the employ of the Sellers.
(b) For the period ending on the third anniversary of the Closing
Date the Sellers or any Affiliate shall not induce or attempt to induce any
person employed by the Buyer to leave the employ of the Buyer. Sellers and their
Affiliates shall not hire any person formerly employed by Buyer for one (1) year
after any such employee voluntarily leaves the employ of the Buyer.
(c) Without intending to limit the remedies available to the
Buyer, Sellers agree that damages at law would be an insufficient remedy to
Buyer in the event of any breach by Sellers or any Affiliate of this Section
6.11 and that Buyer shall be entitled to injunctive relief or other equitable
remedies in the event of any such breach (without the posting of a bond or other
security).
26
(d) If any of the provisions of this Section 6.11 are held to
be unenforceable because of the scope, term or area of the applicability, then
the court making such determination shall modify such scope, term or area or all
of them to the extent necessary to render this Section 6.11 enforceable under
applicable law and such provisions shall then be enforced in such modified form.
Section 6.12 Security of Bt Strains. Sellers shall ensure the physical
security of the copy of the Bt Strains and the sets of Databases and Binders
retained by Ecogen pursuant to Sections 1.01(a)(iii) and 1.01(a)(iv) by limiting
access to persons responsible for enforcing such rights of Sellers.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.01 Conditions to Each Party's Obligation To Effect The
Closing. The respective obligations of each party to effect and complete the
Closing is subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order shall have been issued
by any Governmental Entity and no other legal restraint or prohibition shall
have arisen preventing the consummation of the transactions contemplated by this
Agreement or by the other Transaction Agreements; provided, however, that,
subject to Section 6.02, the Buyer and the Sellers shall have used their
commercially reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such injunction or other
order that may be entered.
(b) Transaction Agreements. All the Transaction Agreements
shall have been executed and delivered to the respective parties to such
agreements.
(c) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been duly approved and adopted, by the requisite
vote under Applicable Law by the stockholders of each of the Sellers as
contemplated by Section 6.06.
Section 7.02 Conditions to Obligations of the Buyer. The obligations of
the Buyer to effect and complete the Closing are further subject to the
following conditions:
(a) Representations and Warranties. All representations and
warranties of the Sellers set forth in this Agreement qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, in each case as of the date hereof and as
of the Closing Date as though made as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, as of such earlier date). The Buyer shall have received
certificates of the Sellers signed on behalf of such Seller by a duly authorized
officer of such Seller to such effect.
27
(b) Sellers' Performance of Obligations. The Sellers shall have
performed in all respects all of such Seller obligations required to be
performed by such Seller under this Agreement on or prior to the Closing Date.
The Buyer shall have received a certificate of each of the Sellers signed on
behalf of such Seller by a duly authorized officer of such Seller to such
effect.
(c) Absence of Material Adverse Effect. Since the date of this
Agreement there shall not have been any event, change, effect or development
that, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on the Purchased Assets.
(d) Consents and Approvals. All Consents set forth in Schedule
3.03 shall have been obtained and be in full force and effect and all Filings
set forth in Schedule 3.03 shall have been made with the appropriate Person, and
all applicable waiting periods shall have expired or terminated, and the Buyer
shall have been furnished with written evidence satisfactory to it of the
granting of such Consents or the submission of such Filings, as the case may be,
provided, Sellers shall consult with Buyer prior to seeking any of the Consents
and Filings set forth in Schedule 3.03 and such Consents and Filings shall be in
form and substance satisfactory to Buyer.
(e) Fees and Renewals. All payments of Permits, Product
Registration and Intellectual Property fees, annuities, renewals which are due
or payable on or before the Closing for any of the Products or Purchased Assets
shall have been fully met or paid and Buyer shall not incur any late fee or fees
for extension of time to act or pay.
(f) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity or any other Person, in
each case that has a reasonable likelihood of success, (i) challenging the
purchase by the Buyer of any of the Purchased Assets or seeking to restrain or
prohibit the consummation of the transaction contemplated hereby or by any of
the other Transaction Agreements or seeking to obtain from any of the parties
hereto any damages, (ii) seeking to prohibit or limit the ownership or operation
by the Buyer of any portion of the Purchased Assets, or to compel the Buyer to
dispose of or hold separate any portion of the Purchased Assets, as a result of
the transaction contemplated hereby or by any of the other Transaction
Agreements, (iii) seeking to prohibit the Buyer from effectively controlling any
of the Purchased Assets, or (iv) which otherwise is reasonably likely to have a
Material Adverse Effect on the Products or any of the Purchased Assets.
(g) Opinions of Counsel. The Buyer shall have received the opinion
of counsel to the Sellers, dated the Closing Date, addressed to the Buyer,
containing the matters set forth in the form attached hereto as Exhibit B.
(h) Affiliate Contracts. The Buyer shall have received evidence in
form and substance satisfactory to the Buyer of the termination of any Affiliate
Contracts between any of the Sellers, on the one hand, and any of the Sellers'
Affiliates, on the other hand, relating to the Products or the Purchased Assets
as set forth in Schedule 3.19.
28
(i) Releases. The Buyer shall have received in form and substance
satisfactory to the Buyer releases from the Lenders pursuant to Section 5.03 and
all other holders of Liens on the Purchased Assets.
(j) Non-Competition Agreement. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall have entered
into a Non-competition Agreement in the form attached hereto as Exhibit C.
(k) Inventor Assignment. The Buyer shall have received in form and
substance satisfactory to the Buyer a duly executed inventor assignment from
▇▇▇▇▇ ▇. ▇▇▇▇ to Ecogen for U.S. Patent 5,650,308 ("Recombinant Bacillus
Thuringiensis Strain Construction Method").
(l) Termination Notice. The Buyer shall have received in form and
substance reasonably satisfactory to the Buyer a written notice of Ecogen's
termination of the Aventis Distribution Agreement duly executed by an
appropriate officer of Ecogen, which notice shall instruct Aventis pursuant to
Paragraph 3.7 of such agreement to transfer to the Buyer or its designee all of
Aventis's rights of record or otherwise to registrations obtained pursuant to
such agreement.
Section 7.03 Conditions to Obligation of the Sellers. The obligation of the
Sellers to effect and complete the Closing is further subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Buyer set forth in this Agreement qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, in each case as of the date hereof and as of the Closing Date
as though made as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, as of such earlier date). The Sellers shall have received a
certificate signed on behalf of the Buyer by a duly authorized officer of the
Buyer to such effect.
(b) Performance of Obligations of the Buyer. The Buyer shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Sellers shall
have received a certificate signed on behalf of the Buyer by a duly authorized
officer of the Buyer to such effect.
(c) Opinion of Counsel. The Sellers shall have received the opinion of
counsel to the Buyer, dated the Closing Date, addressed to the Sellers,
containing the matters set forth in the form attached hereto as Exhibit D.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
29
(a) by mutual written consent of the Buyer and the Sellers;
(b) by either the Buyer or the Sellers in writing, without liability
to the terminating party on account of such termination (provided the
terminating party is not otherwise in default or in breach of this Agreement) if
the transactions contemplated hereby or by the other Transaction Agreements are
not consummated on or before June 28, 2002 (the "Outside Date") provided,
however, that the passage of such period shall be tolled for any part thereof
(but not exceeding ninety (90) days in the aggregate) during which any party
shall be subject to a non-final order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby or by the other Transaction Agreements or to a review by the
SEC of the Securities Filings; further provided, however, that the passage of
such period for such a review by the SEC shall not be tolled for a period
exceeding sixty (60) days in the aggregate;
(c) by either the Buyer or the Sellers in writing, without liability
to the terminating party on account of such termination (provided the
terminating party is not otherwise in default or in breach of this Agreement) if
(a) there shall have been a material breach by the other party of any of its
representations, warranties, covenants or agreements contained herein and (b)
such breach would result in a failure to satisfy a condition to the terminating
party's obligation to consummate the transactions contemplated hereby or by the
other Transaction Agreements;
(d) by either the Buyer or the Sellers in writing, if any Governmental
Entity issues an order, decree or ruling or takes any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated
hereby or by the other Transaction Agreements and such order, decree, ruling or
other action shall have become final and non-appealable; or
(e) by either the Buyer or the Sellers in writing, if the other party
(a) consents to the appointment of a receiver or a general assignment for the
benefit of creditors, (b) files or consents to the filing of a petition under
any bankruptcy or insolvency law or (c) has any such petition filed against it
which has not been stayed within thirty (30) days of the filing against it.
Section 8.02 Effect of Termination. In the event of termination of this
Agreement by either the Buyer or the Sellers as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of any party hereto other than Section 3.17, Section
4.04, Section 6.03, Section 6.04 and this Section 8.02 and except to the extent
that such termination results from the willful breach by a party of any covenant
set forth in this Agreement.
Section 8.03 Extension; Waiver. At any time prior to the Closing Date,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement, (c) waive compliance with
any of the agreements of the other party contained in this Agreement or (d)
waive any condition to such party's obligation to effect and complete the
Closing. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in
30
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.01 Indemnification by the Sellers. Ecogen and Ecogen-Bio,
jointly and severally, and Ecogen-Tech, severally, shall indemnify the Buyer and
its Affiliates and their respective officers, directors, employees,
stockholders, agents and representatives against and hold them harmless from any
loss, liability, claim, damage or expense (including reasonable legal fees and
expenses) (collectively, a "Loss") suffered or incurred by any such indemnified
party to the extent arising from (a) any breach of any representation or
warranty of any of the Sellers which survives the Closing contained in this
Agreement, (b) any breach of any representation or warranty of any of the
Sellers which survives the Closing contained in the other Transaction
Agreements, (c) any breach of any covenant or agreement of any of the Sellers
contained in this Agreement or the other Transaction Agreements requiring
performance after the Closing Date, (d) any of the Excluded Assets and the
Retained Liabilities; and (e) any failure to comply with applicable bulk sales
laws, provided that, except in the case of fraud and other than any Losses with
respect to breaches of the representations and warranties contained in Sections
3.01 (Organizations, Standing and Power), 3.02 (Authority, Execution and
Delivery, Enforceability) and 3.06 (Taxes), (A) the Sellers shall not be liable
under Section 9.01(a) and (b) unless and until the aggregate amount of Losses
with respect to matters referred to in Section 9.01(a) and (b) exceeds U.S.
$75,000 (the "Threshold Amount") (and thereafter shall be liable for any and all
Losses under Section 9.01(a) and (b), including the Threshold Amount) (B) the
Sellers' maximum liability under Section 9.01(a) and (b) shall not exceed the
Purchase Price, and (C) the Sellers' maximum liability under Section 9.01(e)
shall not exceed $550,050.62.
Section 9.02 Indemnification by the Buyer. The Buyer shall indemnify
the Sellers, their Affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against and hold them
harmless from any Loss suffered or incurred by any such indemnified party to the
extent arising from (a) any breach of any representation or warranty of the
Buyer which survives the Closing contained in this Agreement, (b) any breach of
any representation or warranty of the Buyer which survives the Closing contained
in the other Transaction Agreements, (c) any breach of any covenant or agreement
of the Buyer contained in this Agreement or the other Transaction Agreements
requiring performance after the Closing Date; (d) any liabilities under the
Assumed Contracts arising from Buyer's actions or inactions after the Closing
Date of Buyer provided that, except in the case of fraud, (A) the Buyer shall
not be liable under Section 9.02(a) and (b) unless and until the aggregate
amount of Losses with respect to matters referred to in Section 9.02(a) and (b)
exceeds the Threshold Amount (and thereafter shall be liable for any and all
Losses under Section 9.02(a) and (b), including the Threshold Amount) and (B)
the Buyer's maximum liability under Section 9.02(a) shall not exceed the
Purchase Price.
Section 9.03 Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto (a) with respect to Taxes, shall
terminate sixty (60) days after expiration of the applicable statutes of
limitations with respect to the Tax liabilities in question (giving
31
effect to any extension thereof), (b) pursuant to Sections 9.01(a) and (b) and
9.02(a) and (b), shall terminate when the applicable representation or warranty
terminates pursuant to Section 10.01, (c) pursuant to Section 9.01(e) shall
terminate one year after the Closing Date, and (d) pursuant to the other clauses
of Sections 9.01 and 9.02 shall continue indefinitely; provided, however, that
as to clauses (a) and (b) above such obligations to indemnify and hold harmless
shall not terminate with respect to any item as to which the Person to be
indemnified or the related party thereto shall have, before the expiration of
the applicable period, previously made a claim by delivering a notice of such
claim (stating in reasonable detail the basis of such claim) to the indemnifying
party.
Section 9.04 Procedures Relating to Indemnification for Third Party
Claims. In order for an indemnified party to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim or demand made by any Person (other than a party hereto) against the
indemnified party (a "Third Party Claim"), such indemnified party must notify
the indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within twenty (20) Business Days after receipt by such indemnified party
of written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification obligations set
forth in this Article IX except to the extent the indemnifying party shall have
been actually prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the indemnified party failed to give such notice). Thereafter,
the indemnified party shall deliver to the indemnifying party, reasonably
promptly after the indemnified party's receipt thereof, copies of all notices
and documents (including court papers) received by the indemnified party
relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if the indemnifying party so chooses and acknowledges its obligation to
indemnify the indemnified party therefor, to assume the defense thereof with
counsel selected by the indemnifying party; provided that such counsel is not
reasonably objected to by the indemnified party. Should the indemnifying party
so elect to assume the defense of a Third Party Claim, the indemnifying party
shall not be liable to the indemnified party for legal expenses subsequently
incurred by the indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel (not
reasonably objected to by the indemnifying party), at its own expense, separate
from the counsel employed by the indemnifying party, it being understood that
the indemnifying party shall control such defense. The indemnifying party shall
be liable for the reasonable fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has failed
to assume the defense thereof (other than during the period prior to the time
the indemnified party shall have given notice of the Third Party Claim as
provided above).
If the indemnifying party so elects to assume the defense of any Third
Party Claim, the indemnified party shall cooperate with the indemnifying party
in the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
32
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party shall have assumed the defense
of a Third Party Claim, neither the indemnifying party nor the indemnified party
shall admit any liability with respect to, or settle, compromise or discharge,
such Third Party Claim without the other party's prior written consent (which
consent shall not be unreasonably withheld).
Section 9.05 Procedures Related to Indemnification for Other Claims. In
the event any indemnified party should have a claim against any indemnifying
party under Section 9.01 or 9.02 that does not involve a Third Party Claim being
asserted against or sought to be collected from such indemnified party, the
indemnified party shall deliver notice of such claim with reasonable promptness
to the indemnifying party. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may have to such indemnified party under Section 9.01 or 9.02, except
to the extent that the indemnifying party demonstrates that it has been
materially prejudiced by such failure.
Section 9.06 Obligations of the Sellers. From the Closing Date until the
later of January 31, 2004, or the filing date of Ecogen's Annual Report on Form
10-K for the year ended October 31, 2003, Ecogen agrees that it will not
directly or indirectly pay any dividends, make any distribution or transfer of
cash or any other property to any of its stockholders unless, prior to or
concurrently with such dividend, distribution or transfer, such stockholders
agree, in writing reasonably satisfactory to and for the express benefit of the
Buyer, to be bound by such Sellers' obligations pursuant to this Agreement and
the Transaction Agreements up to the amount of such distribution to such
stockholder and the Buyer is provided with an original executed copy of such
agreement upon which it can rely, provided, however, such obligation shall not
apply to (i) sales of any Ecogen property or assets made on an arm's-length
basis by Ecogen to any stockholders holding less than 10% of any of Ecogen's
voting equity and (ii) dividends paid to Ecogen's 2000A Convertible Preferred
Stock stockholders. Any purported dividend, transfer or distribution of all or
substantially all of Ecogen's properties or assets in violation of this Section
9.06 shall be null and void.
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.01 Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any other document
delivered in connection herewith shall survive the Closing and shall terminate
as of the eighteen month anniversary of the Closing Date except for (i) Section
3.06 which shall survive the Closing until sixty (60) days after the expiration
of the applicable statute of limitations (giving effect to any extension
thereof); (ii) the representations and warranties set forth in Sections 3.01 and
3.02 which shall not terminate. This Section 10.01 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Closing Date.
Section 10.02 Notices. All notices, requests, claims, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be delivered by hand or sent by confirmed facsimile (with
the original to follow by first class mail, postage prepaid) or sent, postage
prepaid, by registered or certified mail or internationally recognized
33
overnight courier service and shall be deemed given when so delivered by hand,
facsimile, mail or overnight courier service at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to the Buyer, to
Certis USA
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Pillsbury Winthrop LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Sellers, to
Ecogen Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blank Rome ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ LLP
The Chrysler Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.03 Definitions. (a) For purposes of this Agreement:
"Affiliate" of any Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first Person.
"Aventis" means Aventis S.A., a French societe anonyme.
34
"Aventis Distribution Agreement" means the Distribution Agreement dated
March 26, 1991, as amended from time to time, originally between Ecogen and
▇▇▇▇▇▇▇-Uclaf and ultimately assigned to Aventis.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of sale to be delivered by the Sellers to the
Buyer on the Closing Date in the form attached hereto as Exhibit E.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized to close.
"Ecogen License Agreement" means the Ecogen License Agreement dated January
24, 1996 among Ecogen, Ecogen-Bio and Monsanto pursuant to which Ecogen is the
exclusive licensee from Monsanto of certain Bt technology including Bt strains
and genes for Microbial Applications.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
upon which interest charges are customarily paid (other than trade payables
incurred in the ordinary course of business consistent with past practice), (iv)
all obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (v) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services (excluding obligations of such Person to creditors for raw materials,
Inventory, services and supplies incurred in the ordinary course of such
Person's business), (vi) all lease obligations of such Person capitalized on the
books and records of such Person, (vii) all obligations of others secured by a
Lien on property or assets owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (viii) all obligations of such
Person under interest rate or currency hedging transactions (valued at the
termination value thereof) (other than forward or spot foreign currency exchange
contracts entered into in the ordinary course of business consistent with past
practice), (ix) all letters of credit issued for the account of such Person
(excluding letters of credit issued for the benefit of suppliers to support
accounts payable to suppliers incurred in the ordinary course of business) and
(x) all guarantees and arrangements having the economic effect of a guarantee of
such Person of any Indebtedness of any other Person.
"Intellectual Property Collective Assignment" means the Intellectual
Property Collective Assignment, to be dated as of the Closing Date, in the form
attached hereto as Exhibit F.
"Lien" means, with respect to any property or asset (or any income or
profits therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise), (a) any mortgage, lien, encumbrance, pledge, attachment, levy or
other security interest of any kind thereupon or in respect thereof, or (b) any
other arrangement, express or implied, under which the same is subordinated,
transferred, sequestered or otherwise identified so as to subject the same to,
or make the same available for, the payment or performance of any Indebtedness,
liability or obligation in priority to the
35
payment of the ordinary, unsecured liabilities of such Person. For the purposes
of this Agreement, a Person shall be deemed to own subject to a Lien any asset
that it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Material Adverse Effect" means (i) for any party, a material adverse
effect on the ability of such party to perform its obligations under any of the
Transaction Agreements or on the ability of such party to consummate the
transactions contemplated hereby or by any of the other Transaction Agreements
and (ii) for the Purchased Assets, a material adverse effect on the ability to
use the Purchased Assets by Buyer to the same degree the Purchased Assets were
used by any of the Sellers.
"Microbial Applications" means the use, development or commercialization of
insecticidal, bacterial, fungicidal, pesticidal, medical, veterinary,
scientific, nutritional, food additive or preservative materials, textiles and
similar products (but not the use, development or commercialization of
transgenic plants, seeds, cells or use of genetic material so plants express new
materials ("In Planta Applications").
"Monsanto" means the Monsanto Company, a Delaware corporation.
"Monsanto 2001 Purchase Agreement" means the Purchase Agreement dated
October 4, 2001 between Monsanto and Ecogen.
"Monsanto Investment Agreement" means the Investment Agreement dated
January 24, 1996 between Monsanto and Ecogen.
"Monsanto License Agreement" means the Monsanto License Agreement dated
January 24, 1996 among Ecogen, Ecogen-Bio and Monsanto pursuant to which
Monsanto is the exclusive licensee from Ecogen of Ecogen Bt technology solely
for In Planta Applications.
"Monsanto Research and Development Agreement" means the Research and
Development Agreement dated January 24, 1996 between Monsanto and Ecogen, as
amended and restated by the Amended and Restated Research and Development
Agreement dated January 30, 1998 between Monsanto and Ecogen.
"Monsanto Technology Assignment Agreement" means the Technology Assignment
Agreement dated January 24, 1996 between Ecogen and Monsanto.
"Mycogen" means the Mycogen Corporation, a California Corporation.
"Mycogen Settlement Agreement" means the License Agreement for
Bioinsecticide dated March 12, 1998 between Mycogen and Ecogen.
"Permitted Liens" means Liens for taxes, assessments or governmental
charges which are not yet due and payable or that, subject to adequate security
for payment, are being properly contested in good faith by the Seller.
36
"Person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
"SEC" means the United States Securities and Exchange Commission or any
successor agency, or with respect to any country or jurisdiction outside of the
United States, the Governmental Entity in such country or jurisdiction that
performs substantially similar functions as the SEC.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers' Monsanto R&D License Rights" means Sellers' worldwide, perpetual,
exclusive, fully paid-up, royalty free, transferable license to the Bt strains
or genes discovered or developed in the research program under the Monsanto
Research and Development Agreement, and all patents, trade secrets and
copyrights arising therefrom, to make, have made, offer for sale, import, use or
sell products solely for Microbial Applications.
"Sellers' Monsanto 2001 License Rights" means Sellers' worldwide,
perpetual, exclusive, fully paid-up, royalty free transferable license pursuant
to Sections 2.2 and 2.4 of the Monsanto 2001 Purchase Agreement (but excluding
license rights with respect to Bacillus Sphaericus) to make, have made, offer
for sale, import, use or sell products solely for Microbial Applications.
"Subsidiary" (including "Subsidiaries") means any corporation, joint
venture, partnership, limited liability company or other entity of which the
Seller, directly or indirectly, owns or controls capital stock or other equity
interests representing more than fifty percent (50%) of the general voting power
of such entity under ordinary circumstances.
"Transaction Agreements" means, collectively, this Agreement, the
Pre-Closing Business Arrangement Agreement, the Instruments of Assignment and
Assumption, the Bills of Sale, the Intellectual Property Collective Assignment
and any individual assignment documents.
(b) The following terms have the meanings set forth in the
Sections set forth below:
Term Section
---- -------
Affiliate 10.03(a)
Affiliate Contracts 3.19(a)
Agreement Recital
Applicable Law 3.03
Arbitration Panel 10.10(c)
Assumed Contracts 1.01(a)(vii)
Audited Financial Statements 3.04(a)
Aventis 10.03(a)
Aventis Distribution Agreement 10.03(a)
▇▇▇▇ of Sale 10.03(a)
Binders 1.01(a)(iii)
37
Term Section
---- -------
Bt Recital
Bt Strains 1.01(a)(iii)
Business Day 10.03(a)
Buyer Recital
Closing 2.01
Closing Date 2.01
Closing Date Inventory Amount 1.04(a)
Competing Proposal 6.07
Confidential Information 6.10
Consent 3.03
Contracts 3.12
Databases 1.01(a)(iv)
Ecogen Recital
Ecogen-Bio Recital
Ecogen-Tech Recital
Ecogen License Agreement 10.03(a)
Environmental Laws 3.10(b)
EPA 2.02(a)(vii)
Exchange Act 10.03(a)
Excluded Assets 1.01(b)
Filing 3.03
Financial Statements 3.04(a)
Governmental Entity 3.03
Hazardous Materials 3.10(b)
Indebtedness 10.03(a)
Instrument of Assignment and Assumption 1.01(c)
Intellectual Property 1.01(a)(ix)
Intellectual Property Collective Assignment 10.03(a)
Intellectual Property Contracts 3.11(c)
Inventory 1.01(a)(i)
Inventory Statement 1.04
Judgment 3.03
Lenders 5.03
Lien 10.03(a)
Loss 9.01
Material Adverse Effect 10.03(a)
Microbial Applications 10.03(a)
Monsanto 10.03(a)
Monsanto 2001 Purchase Agreement 10.03(a)
Monsanto Investment Agreement 10.03(a)
Monsanto License Agreement 10.03(a)
Monsanto Research and Development Agreement 10.03(a)
Monsanto Technology Assignment Agreement 10.03(a)
38
Term Section
---- -------
Mycogen 10.03(a)
Mycogen Settlement Agreement 10.03(a)
Mycogen Bt Toxin 1.01(b)(i)
Mycogen Letter 1.04(b)
October 2001 Financial Statements 3.04(a)(ii)
Other Materials 1.01(a)(xi)
Outside Date 8.01(b)
Permits 1.01(a)(v)
Person 10.03(a)
Permitted Liens 10.03(a)
Pre-Closing Business Arrangement Agreement Recital
Proceedings 3.08
Products Recital
Product Registrations 1.01(a)(v)
Purchase Price 1.02(a)
Purchased Assets 1.01(a)
Records 1.01(a)(vi)
Release 3.10(b)
Retained Liabilities 1.02(b)
Returns 3.06(a)
SEC 10.03(a)
Securities Act 10.03(a)
Securities Filings 6.06
Sellers Recital
Sellers' Monsanto R&D License Rights 10.03(a)
Sellers' Monsanto 2001 License Rights 10.03(a)
Seller's SEC Documents 3.04(b)
SOPs 1.01(a)(iii)
Stockholder Letter Agreement Recital
Subsidiaries 10.03(a)
Strains 1.01(a)(iii)
Tax and Taxes 3.06(a)
Technology 1.01(a)(iii)
Threshold Amount 9.01
Third Party Claim 9.04
Transaction Agreements 10.03(a)
Unaudited Financial Statements 3.04(a)
U.S. GAAP 3.04(a)
Section 10.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Applicable
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect.
39
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, such term or other provision will be interpreted so
as to best accomplish the intent of the parties within the limits of Applicable
Law.
Section 10.05 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.06 Entire Agreement; No Third-Party Beneficiaries. (a) Each of
the representations, warranties, covenants and agreements of any party hereto
contained in any Schedule or Exhibit hereto or any certificate delivered by or
on behalf of such party pursuant to Sections 7.02 or 7.03 of this Agreement will
be deemed incorporated and contained in this Agreement and will constitute
representations, warranties, covenants and agreements of such party. This
Agreement (including the Schedules and Exhibits hereto), supersedes any other
agreement, whether written or oral, that may have been made or entered into by
any party or any of their respective Affiliates (or by any director, officer or
representative thereof) with respect to the subject matter hereof, provided that
the Confidentiality Agreement dated May 10, 2001 between Ecogen and Buyer, as
amended and restated by Ecogen and Buyer effective January 21, 2002, shall
remain in full force and effect. This Agreement (including the Schedules and
Exhibits hereto), together with the other Transaction Agreements, constitutes
the entire agreement by and among the parties hereto with respect to the subject
matter hereof and there are no agreements or commitments by or among such
parties or the Affiliates with respect to the subject matter hereof except as
expressly set forth herein. No investigation or receipt of information by or on
behalf of the Buyer will diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller under this Agreement or the
conditions to obligations of the Buyer under this Agreement. No investigation or
receipt of information by or on behalf of the Seller will diminish or obviate
any of the representations, warranties, covenants or agreements of the Buyer
under this Agreement or the conditions to the obligations of the Seller under
this Agreement.
(b) Nothing in this Agreement, express or implied, is intended
to confer on any Person other than the parties hereto and their respective
permitted successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 10.07 Amendments. No modification or amendment of this Agreement
and no waiver of any of the terms or conditions hereof shall be valid or binding
unless made in writing and executed by all of the parties hereto.
Section 10.08 Assignment; Successors in Interest. (a) Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the other parties, except
that the Buyer may, in its sole discretion, assign any of or all of its rights,
interests and obligations under this Agreement to any wholly owned subsidiary of
Mitsui & Co. (U.S.A.), Inc., but no such assignment shall relieve the Buyer of
any of its obligations under this Agreement. Any purported assignment in
violation of this Section 10.08 shall be void. Subject
40
to the preceding sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
(b) In the event that any of the Sellers sells, transfers or
leases all or substantially all of its assets, or is not the surviving
corporation in any merger, consolidation or other business combination in which
it may enter with any Person, such Seller will cause such purchaser or surviving
corporation, as the case may be, to assume such Seller's obligations under this
Agreement upon the consummation of any such transaction, so long as any of such
obligations remain outstanding, unpaid or unperformed.
Section 10.09 Governing Law. Pursuant to Section 5-1401 of the New York
General Obligations Law, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
Section 10.10 Arbitration. (a) Any dispute, controversy or claim arising
out of or relating to this Agreement or the other Transaction Agreements that
cannot be resolved between the Buyer and the Sellers shall be resolved in
accordance with the procedures specified in this Section 10.10, which shall
constitute the sole and exclusive procedures for the resolution of such
disputes.
(b) The Buyer and the Sellers agree to use their commercially
reasonable efforts to settle promptly any disputes or claims arising out of or
relating to this Agreement or the Transaction Agreements through negotiations
conducted in good faith between representatives of each party having authority
to reach such a settlement. All negotiations pursuant to this Section 10.10
shall be confidential and shall be treated as compromise and settlement
negotiations and shall not be admissible for any purposes in any subsequent
arbitration.
(c) Any dispute arising out of or relating to this Agreement or
the other Transaction Agreements which has not been resolved by negotiations as
provided in subsection (b) of this Section 10.10, within forty-five (45) days
from the date that such negotiations shall have been first requested by any
party hereto, shall be settled by arbitration before a panel of three (3)
independent and impartial arbitrators (the "Arbitration Panel") in accordance
with the then current Commercial Arbitration Rules of the American Arbitration
Association, except to the extent such rules are inconsistent with this
Agreement, in which case the provisions of this Agreement shall be followed. The
Buyer and the Sellers each shall select one (1) member of the Arbitration Panel,
who shall jointly select the third member of the Arbitration Panel. In no case
shall there be any ex parte communications between any party hereto and any
member of the Arbitration Panel regarding any dispute between the parties. If
the Buyer or the Sellers refuses to participate in good faith in negotiations as
provided in subsection (b) of this Section 10.10, the Buyer or the Sellers, as
the case may be, may initiate arbitration at any time after such refusal without
waiting for the expiration of the forty-five (45) day period. Except as provided
in subject (d) of this Section 10.10, relating to provisional remedies, the
Arbitration Panel shall decide all aspects of any dispute brought to them,
including attorney disqualification and the timeliness of the making of any
claim. The Arbitration Panel shall have the discretion to order a
41
pre-hearing exchange of information by the parties, including the production of
requested documents, the exchange of testimony of proposed witnesses, and the
examination by deposition of parties. The Arbitration Panel shall not have the
authority to make any ruling, finding or award that does not conform to the
terms and conditions of this Agreement.
(d) The Buyer or the Sellers may, without prejudice to any
negotiation or arbitration procedures, proceed to any court of competent
jurisdiction to obtain provisional judicial relief if, in the Buyer's or the
Sellers' discretion, as the case may be, such action is necessary to avoid
imminent irreparable harm or to preserve the status quo pending the conclusion
of the dispute procedures specified in this Section 10.10.
(e) The site of any arbitration brought pursuant to this
Agreement shall be New York, NY, and the language in which the arbitration shall
be conducted, including all writings relating thereto (including the award of
the Arbitration Panel), shall be in English. All discovery activities shall be
completed within sixty (60) days after the initial meeting of the Arbitration
Panel. The award of the Arbitration Panel shall be (i) final and binding upon
the parties, (ii) issued within ninety (90) days after the initial meeting of
the Arbitration Panel, (iii) in writing and (iv) set forth the factual and legal
bases for such award. The Arbitration Panel is to award attorneys' fees and cost
of the arbitration to the prevailing party. Judgment on the award rendered by
the Arbitration Panel may be entered and enforced in any court having
jurisdiction thereof in accordance with the New York Convention on Arbitration.
Section 10.11 Interpretation. (a) Unless the context otherwise requires,
(i) all references made in this Agreement to a Section, Schedule or an Exhibit
are to a Section, Schedule or an Exhibit of or to this Agreement, (ii) each term
defined in this Agreement has the meaning ascribed to it, (iii) "or" is
disjunctive but not necessarily exclusive, (iv) words in the singular include
the plural and vice versa, (v) the phrase "to the best knowledge of the Seller"
means to the best knowledge of the individuals identified in Schedule 10.11, in
each case after due inquiry, provided, however, nothing contained in this
Agreement shall be deemed to make either individual personally liable hereunder.
The table of contents and headings contained in this Agreement and the Schedules
and Exhibits hereto are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement and the Schedules and
Exhibits hereto. Whenever the words "include," " includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(b) In the event of an ambiguity or question of intent or
interpretation, this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the extent to which any such party or its
counsel participated in the drafting of any provision hereof or by virtue of the
extent to which any such provision is inconsistent with any prior draft hereof.
(c) All references to "$" or dollar amounts are to lawful
currency of the United States of America.
(d) All documents and correspondence relating to this Agreement
and the other Transaction Agreements shall be in the English language.
42
Section 10.12 Schedules. For purposes of this Agreement, information which
is necessary to make a schedule delivered pursuant to this Agreement complete
and accurate, but is omitted therefrom, shall nevertheless be deemed to be
contained therein if it is contained on any other schedule; but only if such
information appears on such other schedule in such form and detail that it is
reasonably apparent to the party receiving such schedule that it is responsive
to the requirements of such given schedule. The parties may, at their option,
include in one or more of the disclosure schedules delivered by it pursuant
hereto items which are not "material" or otherwise required to be disclosed; and
the inclusion of any such item shall not be deemed to be an acknowledgement by
such party that it is "material" or that it is required to be disclosed.
Section 10.13 Waiver. The failure of any of the parties to enforce at any
time any of the provisions of this Agreement or the other Transaction Agreements
shall in no way be construed to be a waiver of any such provision, nor in any
way to affect the validity of this Agreement or any other Transaction Agreement
or any part hereof or thereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of or non-compliance with
this Agreement or any other Transaction Agreement shall be held to be a waiver
of any other subsequent breach or non-compliance.
Section 10.14 Payments. Unless otherwise provided, all payments required to
be made pursuant to this Agreement or the other Transaction Agreements shall be
made in U.S. Dollars in the form of cash or by wire transfer or immediately
available funds to an account designated by the party receiving such payment.
43
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
all as of the date first written above.
ECOGEN INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief
Executive Officer
ECOGEN-BIO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief
Executive Officer
ECOGEN TECHNOLOGIES I INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief
Executive Officer
CERTIS U.S.A., L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive
Officer
44
TABLE OF CONTENTS
Page
----
ARTICLE I
---------
PURCHASE AND SALE OF ASSETS
---------------------------
Section 1.01 Purchase and Sale of Assets.................................... 1
Section 1.02 Purchase Price................................................. 4
Section 1.03 Payment of Purchase Price...................................... 5
Section 1.04 Adjustment to Purchase Price................................... 5
Section 1.05 Allocation of Purchase Price................................... 5
Section 1.06 Further Assurances............................................. 5
ARTICLE II
----------
CLOSING
-------
Section 2.01 Closing Date................................................... 6
Section 2.02 Instruments of Conveyance, Transfer, Assumption, Etc........... 6
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Section 3.01 Organization, Standing and Power............................... 9
Section 3.02 Authority; Execution and Delivery; Enforceability.............. 9
Section 3.03 No Conflicts; Consents......................................... 9
Section 3.04 Financial Statements; SEC Documents; Undisclosed Liabilities... 10
Section 3.05 Absence of Certain Changes or Events........................... 11
Section 3.06 Taxes.......................................................... 11
Section 3.07 Workers' and Users' Injuries................................... 12
Section 3.08 Litigation..................................................... 12
Section 3.09 Compliance with Applicable Laws................................ 12
Section 3.10 Environmental Matters.......................................... 13
Section 3.11 Intellectual Property.......................................... 13
Section 3.12 Contracts...................................................... 16
Section 3.13 Product Registrations and Permits.............................. 17
Section 3.14 Suppliers...................................................... 18
Section 3.15 Distributors and Customers..................................... 18
i
Section 3.16 Manufacturers.................................................. 18
Section 3.17 Brokers........................................................ 18
Section 3.18 Machinery and Equipment; Other Materials....................... 18
Section 3.19 Transactions with Affiliates................................... 18
Section 3.20 Products....................................................... 19
Section 3.21 Inventory...................................................... 19
Section 3.22 False and Misleading Statements; Schedules Complete............ 20
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
Section 4.01 Organization, Standing and Power............................... 20
Section 4.02 Authority; Execution and Delivery; Enforceability.............. 20
Section 4.03 No Conflicts; Consents......................................... 21
Section 4.04 Brokers........................................................ 21
Section 4.05 Schedule Complete.............................................. 21
ARTICLE V
---------
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.01 Conduct of Business by the Sellers............................. 21
Section 5.02 Other Actions.................................................. 22
Section 5.03 Sellers' Secured Loans......................................... 22
Section 5.04 Advise of Changes.............................................. 23
ARTICLE VI
----------
ADDITIONAL AGREEMENTS
---------------------
Section 6.01 Access to Information.......................................... 23
Section 6.02 Commercially Reasonable Efforts................................ 23
Section 6.03 Fees and Expenses.............................................. 23
Section 6.04 Public Announcements........................................... 23
Section 6.05 Advertising and Promotional Materials.......................... 24
Section 6.06 Stockholder's Meeting.......................................... 24
Section 6.07 Nonsolicitation................................................ 24
Section 6.08 Transfer Taxes................................................. 25
Section 6.09 Intellectual Property Matters.................................. 26
Section 6.10 Confidentiality................................................ 26
ii
Section 6.11 Covenant Not to Compete......................................... 26
Section 6.12 Security of Bt Strains.......................................... 27
ARTICLE VII
-----------
CONDITIONS PRECEDENT
--------------------
Section 7.01 Conditions to Each Party's Obligation To Effect The Closing..... 27
Section 7.02 Conditions to Obligations of the Buyer.......................... 27
Section 7.03 Conditions to Obligation of the Sellers......................... 29
ARTICLE VIII
------------
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.01 Termination..................................................... 29
Section 8.02 Effect of Termination........................................... 30
Section 8.03 Extension; Waiver............................................... 30
ARTICLE IX
----------
INDEMNIFICATION
---------------
Section 9.01 Indemnification by the Sellers.................................. 31
Section 9.02 Indemnification by the Buyer.................................... 31
Section 9.03 Termination of Indemnification.................................. 31
Section 9.04 Procedures Relating to Indemnification for Third Party Claims... 32
Section 9.05 Procedures Related to Indemnification for Other Claims.......... 33
Section 9.06 Obligations of the Sellers...................................... 33
ARTICLE X
---------
GENERAL PROVISIONS
------------------
Section 10.01 Survival of Representations and Warranties...................... 33
Section 10.02 Notices......................................................... 33
Section 10.03 Definitions..................................................... 34
Section 10.04 Severability.................................................... 39
Section 10.05 Counterparts.................................................... 40
Section 10.06 Entire Agreement; No Third-Party Beneficiaries.................. 40
Section 10.07 Amendments...................................................... 40
iii
Section 10.08 Assignment; Successors in Interest.......................... 40
Section 10.09 Governing Law............................................... 41
Section 10.10 Arbitration................................................. 41
Section 10.11 Interpretation.............................................. 42
Section 10.12 Schedules................................................... 43
Section 10.13 Waiver...................................................... 43
Section 10.14 Payments.................................................... 43
iv