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EXHIBIT 10.60
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CARACO PHARMACEUTICAL LABORATORIES, LTD.
and
SUN PHARMACEUTICAL INDUSTRIES, LTD.
dated as of
April 23, 1997
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TABLE OF CONTENTS
1. DEFINITIONS
2. PURCHASE AND SALE OF SHARES
2.1 TRANSACTION
2.2 PURCHASE PRICE
2.3 CLOSING
2.4 DELIVERIES AT THE CLOSING
3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 ORGANIZATION OF BUYER
3.2 AUTHORIZATION OF TRANSACTION
3.3 NONCONTRAVENTION
3.5 INVESTMENT
4. REPRESENTATIONS AND WARRANTIES CONCERNING SELLER
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER
4.2 CAPITALIZATION
4.3 AUTHORIZATION; NONCONTRAVENTION
4.4 BROKERS' FEES
4.5 SEC FILINGS; FINANCIAL STATEMENTS
4.6 NO OTHER AGREEMENTS TO SELL
4.7 PRODUCTS AND PRODUCT REGULATION
4.8 ABSENCE OF UNDISCLOSED LIABILITIES
4.9 ABSENCE OF CERTAIN DEVELOPMENTS
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4.10 BOOKS AND RECORDS
4.11 LEGAL COMPLIANCE
4.12 TAX MATTERS
4.13 TITLE TO PROPERTIES; ENCUMBRANCES
4.14 FACILITY SITE
4.15 ENVIRONMENTAL LAWS AND REGULATIONS
4.16 INTELLECTUAL PROPERTY
4.17 CONTRACTS
4.18 LITIGATION; PROCEEDINGS
4.19 EMPLOYEE BENEFITS
4.21 EMPLOYEES
4.22 PRODUCT LIABILITY
4.23 INSURANCE
4.24 AFFILIATE TRANSACTIONS
4.25 NOT A BUSINESS COMBINATION; SHARES ACQUIRED NOT CONTROL SHARES
4.26 REGISTRATION RIGHTS
4.27 GENERAL
5. PRE-CLOSING COVENANTS
5.1 GENERAL
5.2 NOTICES AND CONSENTS
5.3 FULL ACCESS
5.4 ADDITIONAL FINANCIAL STATEMENTS AND OTHER INFORMATION
5.5 HEXAL OPTIONS
5.6 AMENDMENT TO ARTICLES OF INCORPORATION
5.7 OTHER AFFIRMATIVE COVENANTS OF THE SELLER
5.8 NEGATIVE COVENANTS OF THE SELLER
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5.9 ADDITIONAL COVENANT OF BUYER
6. CONDITIONS TO OBLIGATION TO CLOSE
6.1 CONDITIONS TO OBLIGATION OF BUYER
6.2 CONDITIONS TO OBLIGATION OF THE SELLER
7. STOCK EXCHANGE LISTING
7.1 BEST EFFORTS TO RELIST ON NASDAQ
7.2 LISTING OF COMMON PURCHASED HEREUNDER
8. REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 SURVIVAL
8.2 INDEMNIFICATION
8.3 PLEDGE AGREEMENT PROVIDES SOLE REMEDY
8.4 ARBITRATION
8.5 FINDER'S OR BROKER'S FEES
9. TERMINATION
9.1 TERMINATION OF AGREEMENT
9.2 EFFECT OF TERMINATION
10. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS
11. NO THIRD-PARTY BENEFICIARIES
12. FURTHER ASSURANCES
13. ENTIRE AGREEMENT
14. BINDING EFFECT; ASSIGNMENT
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15. COUNTERPARTS
16. HEADINGS
17. NOTICES
18. GOVERNING LAW
19. AMENDMENTS AND WAIVERS
20. SEVERABILITY
21. EXPENSES
22. CONSTRUCTION
23. INCORPORATION OF EXHIBITS, ANNEXES AND SCHEDULES
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made this 1st day of April, 1997, by and between CARACO
PHARMACEUTICAL LABORATORIES, LTD., a Michigan corporation ("Seller"), and SUN
PHARMACEUTICAL INDUSTRIES, LTD., a corporation organized under the laws of India
("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the manufacture and distribution of generic
pharmaceuticals; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to issue
and sell to Buyer, 5,300,000 shares of Seller's Common Stock, with no par value
per share (with any stock into which such stock may hereinafter be changed,
"Common"), under the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows.
1. DEFINITIONS.
1.1 "Acceptable Letter of Credit" shall mean an irrevocable letter of
credit, expiring not less than six months after the date of issuance, issued by
a bank reasonably selected by Buyer and substantially in the form attached
hereto as EXHIBIT 1.1, which letter of credit provides that Seller may make
draws upon such letter of credit (i) automatically upon the expiration of such
letter of credit or (ii) by presenting evidence of a duly adopted resolution of
the Executive Committee of Seller's Board of Directors authorizing that such
draw be made certified by Seller's Chief Executive Officer.
1.2 "Affiliate" of any particular Person shall mean any other Person
controlling, controlled by or under common control with such
Person.
1.3 "Acquired Shares" has the meaning set forth in Section 2.1
below.
1.4 "Business Sale" has the meaning set forth in Section 5.8.2
below.
1.5 "By-law Amendment" has the meaning set forth in Section 6.1.12
below.
1.6 "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601-9675.
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1.7 "Closing" has the meaning set forth in Section 2.3 below.
1.8 "Closing Date" has the meaning set forth in Section 2.3 below.
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Common" has the meaning set forth in the recitals hereto.
1.11 "Contribution Agreement" has the meaning set forth in Section
6.1.13 hereof.
1.12 "Controlled Group" has the meaning set forth in Section 4.19.5
below.
1.13 "Employee Pension Plans" has the meaning set forth in Section
4.19.1 below.
1.14 "Employee Welfare Plans" has the meaning set forth in Section
4.19.1 below.
1.15 "Environmental and Safety Requirements" has the meaning set
forth in Section 4.15 below.
1.16 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.18 "FDA" has the meaning set forth in Section 4.7.2 below.
1.19 "GAAP" means generally accepted accounting principles of the
United States as in effect from time to time.
1.20 "Government Licenses" means all permits, licenses, franchises,
orders, registrations, certificates, variances, approvals and other
authorizations obtained from foreign, federal, state or local
governments or governmental agencies or other similar rights,
including those listed on Exhibit 4.20.
1.21 "Hagelstein" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, individually, and as
Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Trust u/a/d October 27, 1993.
1.22 "Hazardous Material" has the meaning set forth in Section 4.15
below.
1.23 "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
1.24 "Indemnified Parties" has the meaning set forth in Section 7.2
below.
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1.25 "Information Statement" has the meaning set forth in Section 5.5
below.
1.26 "Initial Payment" has the meaning set forth in Section 2.2.1 below.
1.27 "▇▇▇▇▇▇" means ▇▇▇ ▇. ▇▇▇▇▇▇, individually, and as Trustee of
the ▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Terminable Interest Marital Trust
u/a/d April 8, 1982.
1.28 "▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Performance Date" means the date on which
▇▇▇▇▇▇ and Hagelstein have made aggregate contributions to Seller
in an aggregate amount of not less than $1,000,000 in accordance
with the terms of the Contribution Agreement.
1.29 "Latest Balance Sheet" means the unaudited balance sheet as of
December 31, 1996 which is included in the Seller's Year End Report
on Form 10-KSB filed with the Securities and Exchange Commission on
March 31, 1997.
1.30 "Liens" means any mortgage, pledge, lien, encumbrance, security
interest, conditional sale agreement, easement, option, debt,
charge, claim or restriction of any kind.
1.31 "Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
1.32 "Ordinary Course of Business" means the ordinary course of
business for the Seller, consistent with past custom and practice.
1.33 "Other Plans" has the meaning set forth in Section 4.19.1 below.
1.34 "Permitted Liens" means (a) mechanic's, materialmen's and similar
liens; (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate
proceedings and as to which adequate reserves have been established
in accordance with GAAP; (c) other Liens arising in the Ordinary
Course of Business by operation of statute or law and securing
obligations of the Seller which are not yet due and payable; and
(d) the Liens listed on Exhibit 1.35 hereto.
1.35 "Person" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated
association, corporation, entity or governmental entity (whether
federal, state, county, city or otherwise and including any
instrumentality, division, agency or department thereof).
1.36 "Plans" has the meaning set forth in Section 4.19.1 below.
1.37 "Pledge Agreement" has the meaning set forth in Section 6.2.6
below.
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1.38 "Product" means a "drug" as defined in 21 U.S.C. 321(g), or a
"device" as defined in 21 U.S.C. 321(h).
1.39 "Products Agreement" has the meaning set forth in Section 6.1.10
below.
1.40 "Proprietary Rights" means all of the following owned by, issued
to, or licensed to Seller, or used in its business, along with all
associated income, royalties, damages and payments due from or
payable by any third party (including damages and payments for
past, present, or future infringements or misappropriations
thereof), all other associated rights (including the right to ▇▇▇
and recover for past, present, or future infringements or
misappropriations thereof), and any and all corresponding rights
that, now or hereafter, may be secured throughout the world: (i)
patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice),
and any reissues, continuations, continua tions-in-part, divisions,
extensions or reexaminations thereof; (ii) trademarks, service
marks, trade dress, logos, slogans, trade names and corporate
names, together with all goodwill associated therewith, and all
registrations and applications for registration thereof; (iii)
copyrights and works of authorship, and all registrations and
applications for registration thereof; (iv) mask works and all
registrations and applications for registration thereof; (v)
computer software (including data, data bases and related
documentation); (vi) trade secrets, confidential information, and
proprietary data and information (including compilations of data
(whether or not copyrighted or can copyright), ideas, formulae,
compositions, blends, processes, know-how, manufacturing and
production processes and techniques, research and development
information, drawings, specifications, designs, plans,
improvements, proposals, technical data, financial and accounting
data, business and marketing plans, and customer and supplier lists
and related information); (vii) other intellectual property rights
or proprietary rights; and (viii) all copies and tangible
embodiments of the foregoing (in whatever form or medium),
including, in the case of each of the foregoing items (i) through
(vii), the items set forth on Exhibit 4.16.
1.41 "Purchase Price" has the meaning set forth in Section 2.2 below.
1.42 "SEC" means the United States Securities and Exchange Commission,
or any successor governmental entity.
1.43 "Securities Act" means the Securities Act of 1933, as amended.
1.44 "SEC Reports" means all forms, reports, statements and documents
required to be filed by the Seller with the SEC since February 11,
1994.
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1.45 "Tax" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, real property gains, registration,
value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, customs, duties, real
property, personal property, capital stock, social security,
unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in
respect of the foregoing.
1.46 "Tax Return" means any return, declaration, report, claim for
refund, information return or other document (including any related
or supporting schedule, statement or information) filed or required
to be filed in connection with the determination, assessment or
collection of any Tax of any party or the administration of any
laws, regulations or administrative requirements relating to any
Tax.
1.47 "Voting Agreement" has the meaning set forth in Section 6.1.11
hereof.
2. PURCHASE AND SALE OF SHARES.
2.1 Transaction. Under and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Seller, and Seller agrees to issue and
sell to Buyer, 5,300,000 shares of Common (the "Acquired Shares") for the
consideration specified below in this Section 2.
2.2 Purchase Price. The purchase price for the purchase of the
Acquired Shares shall be US$7,500,000 (the "Purchase Price"), which shall be
paid to the Seller by Buyer as follows:
2.2.1 Anytime before the Closing, but after the receipt of final approval
of Reserve Bank of India and/or Government (or any agency or department) of
the Republic of India, by the Buyer, for remittance of funds in accordance
with the terms hereof and the Products Agreement, Buyer shall deliver to
Seller a certified or official Bank Check or wire transfer in the amount of
$500,000 payable to the order of Seller ("Advance towards Share Application
Money"). This amount shall be treated as interest bearing loan from the
Buyer to the Seller till the time of the Closing and shall be secured by a
charge on all the existing equipment and movable and immovable properties
of the Seller, subject to prior charges of 1) Economic Development
Corporation 2) Trustees of ▇. ▇▇▇▇▇▇ Trust 3) Trustee of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Trust and 4) Sun Pharma Global, Inc. for this purpose the Seller will enter
into a Security Agreement, a secured Promissory Note and such other
documents as the Buyer may reasonably require.
If for any reason whatsoever, this agreement is terminated or not acted
upon by the parties or the Closing does not come through, this amount or
$500,000 shall be refunded immediately by the Seller to the Buyer.
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However, if the Closing comes through, this amount shall be adjusted
towards the Buyer's payment of purchase price for the shares.
2.2.2 At the Closing, Buyer shall deliver to Seller a certified or
official bank check or wire transfer in the amount of $1,500,000 payable to
the order of Seller (the "Initial Payment").
2.2.3 On or before September 30, 1997, Buyer shall deliver to Seller one
or more Acceptable Letters of Credit, which, in the aggregate, have an
initial principal amount of $2,000,000.
2.2.4 Within 180 days after the ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Performance Date,
Buyer shall deliver to Seller one or more Acceptable Letters of Credit
which, in the aggregate, have an initial principal amount of $2,000,000.
2.2.5 Within 360 days after the ▇▇▇▇▇▇ and Hagelstein Performance Date,
Buyer shall deliver to Seller one or more Acceptable Letters of Credit
which, in the aggregate, have an initial principal amount of $1,500,000.
2.2.6 In lieu of all or any portion of any payment which may be made by
delivery of an Acceptable Letter of Credit, Buyer may, in its sole
discretion, deliver a certified or bank check or wire transfer in an amount
equal to the portion of the principal grant of the Acceptable Letter of
Credit which it has determined to pay in cash.
2.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Sun
Pharmaceutical to occur of (a) April 30, 1997 or (b) a date designated by
Buyer on a business day within fifteen (15) business days following the
date as of which the conditions to each party's obligations (as set forth
in Section 6 hereof) have been satisfied, or at such other date as Buyer
and Seller may mutually determine (the "Closing Date").
2.4 Deliveries at the Closing. At the Closing: (a) the Seller will
deliver to Buyer the various certificates, instruments and documents
referred to in Section 6.1 below; (b) Buyer will deliver to Seller the
various certificates, instruments and documents referred to in Section 6.2
below; (c) Seller will deliver to Buyer (i) three stock certificates with
each such certificate representing 1,413,333 shares of Common each being
dated the Closing Date and (ii) one stock certificate representing
1,060,001 shares of Common dated the Closing Date, all such stock
certificates to be duly executed, authorized and delivered by Seller; and
(d) Buyer will deliver to the Seller the Initial Payment as specified in
Section 2.2.1 above.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
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Buyer represents and warrants to Seller as follows:
3.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of India.
3.2 Authorization of Transaction. Buyer has full corporate power and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby to which Buyer is a party and to perform its
obligations hereunder and thereunder. The execution and delivery by Buyer
of this Agreement and the other agreements contemplated hereby to which
Buyer is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all requisite
corporate action, and no other corporate act or proceeding on the part of
Buyer, its board of directors or stockholders is necessary to authorize the
execution or delivery of this Agreement or the other agreements
contemplated hereby to which Buyer is a party. This Agreement has been
duly executed and delivered by Buyer and constitutes, and the other
agreements contemplated hereby to which Buyer is a party upon execution and
delivery by Buyer will each constitute, the valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms and conditions.
3.3 Noncontravention. Other than the consents and approvals of or
filings or registrations with the Reserve Bank of India and/or the
government of the Republic of India (or any agency thereof), neither the
execution and the delivery of this Agreement and the other agreements
contemplated hereby to which Buyer is a party, nor the consummation of the
transactions contemplated hereby and thereby, will: (a) violate, (b)
conflict with, (c) result in a breach of, (d) constitute a default under,
(e) result in the termination or acceleration of or create in any party the
right to accelerate, terminate, modify or cancel, or (f) require any
authorization, consent, approval, exemption or other action by or notice to
any Person under, Buyer's charter or bylaws, or any agreement, contract,
lease, loan agreement, indenture, license, permit, mortgage or other
instrument to which Buyer is a party or by which Buyer is bound or to which
any of its assets is subject or any statute, regulation, rule, injunction,
judgment, order or decree of any governmental agency or court to which
Buyer is subject, in any such case in any manner which would materially
and adversely affect the ability of buyer to perform its obligation under
this Agreement or any of the other Agreement contemplated hereunder.
3.4 Investment. Buyer: (a) understands that the Acquired Shares have
not been, and may never be (subject to Company's obligations under the
Registration Rights Agreement) registered under the Securities Act, or
under any state securities laws, and are being offered and sold in reliance
upon exemptions from the registration requirements of the Securities Act
and such state securities laws for transactions not involving any public
offering; (b) is acquiring the Acquired Shares solely for its own account
for investment purposes, and not with a view to, or for resale in
connection with, the
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distribution thereof; (c) is a sophisticated investor with such knowledge
and experience in business and financial matters that Buyer is capable of
evaluating the merits and risks of the investment hereunder; (d) has
received and relied upon certain information concerning Seller and has had
access to and the opportunity to review additional information (and to the
extent reviewed, has relied upon such information) including, without
limitation, books and records of Seller and material contracts and
documents relating to this transaction and has had the opportunity to
question the appropriate executive officers of Seller, all as desired in
order to evaluate the merits and risks inherent in holding the Acquired
Shares (provided that nothing in this clause (d) shall affect or limit in
any manner the representations, warranties, covenants or agreements of
Seller contained in this Agreement); and (e) is able to bear the economic
risk and lack of liquidity inherent in holding the Acquired Shares.
4. REPRESENTATIONS AND WARRANTIES CONCERNING SELLER.
Seller represents and warrants to Buyer, as follows:
4.1 Organization, Qualification and Corporate Power. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan. Seller is duly authorized to conduct
business under the laws of Michigan, which constitutes the only
jurisdiction in which the ownership of properties or the conduct of
business requires Seller to be so qualified and the failure to so qualify
could reasonably be expected to have an adverse effect on Seller or its
condition (financial or otherwise), earnings, assets, liabilities, business
operations or prospects or the transactions contemplated hereby. Seller has
full corporate power and authority and all licenses, permits and
authorizations necessary to carry on the business in which it is engaged
and will be engaged in immediately after the transactions contemplated by
this Agreement and to own and operate the properties owned and operated by
it. The copies of the Articles of Incorporation, attached hereto as
EXHIBIT 4.1(a), and Bylaws, attached hereto as EXHIBIT 4.1(b), of Seller
are, and will be, accurate and complete as of the date hereof (except to
the extent the By-laws have been amended by the By-law Amendment) and the
Closing Date. Seller does not have any subsidiaries and does not own any
stock, partnership interests, joint venture interests, membership interests
or any other security issued by any other Person.
4.2 Capitalization. As of the date of this Agreement, the authorized
capital stock of Seller consists of 20,000,000 shares of Common, 7,842,106
of which are currently issued and outstanding, and 5,000,000 Preferred
shares, 285,714 of which have been designated as Series A Preferred Stock
and are currently issued and outstanding. Other than the 285,714 shares of
Series A Preferred Stock, no other Preferred Shares have been designated or
issued or are outstanding. All of the outstanding shares of the Common and
Series A Preferred Stock have been duly and validly authorized and issued,
are fully
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paid and non-assessable and were issued in compliance with all applicable
federal and state securities law registration requirements (including,
without limitation, any requirements pursuant to Section 5 of the
Securities Act), or pursuant to valid exemptions therefrom. Other than
this Agreement and the Products Agreement and as listed on EXHIBIT 4.2,
there are no subscriptions, options, warrants, calls, commitment,
preemptive rights or other rights of any kind outstanding for the purchase
of, nor any securities convertible into or exchangeable for, any
securities. EXHIBIT 4.2 contains a true and correct list of all persons
holding options and/or warrants ("Stock Options") to purchase shares of
Common Stock, the number of Stock Options held by such person and the
exercise price with respect to such Stock Options. The execution,
delivery, and performance of this Agreement and the Products Agreement will
not result in any change in the exercise price or the number of shares
issuable upon the exercise of any of the Stock Options. There are no
restrictions upon the voting or transfer of any shares of the Common
pursuant to the Company's Articles of Incorporation, Bylaws or other
governing documents or any agreement or other instrument to which the
Seller is a party or by which the Seller is bound. Except for the Voting
Agreement, there are no voting trusts, proxies or any other agreements or
understandings with respect to the voting of the capital stock of Seller to
which the Company is a party or of which it knows, should reasonably know
or has received notice. Upon consummation of the transactions contemplated
by this Agreement, the Acquired Shares will be duly authorized and validly
issued and not subject to any preemptive or similar rights, and (i) upon
receipt of the Initial Payment, 1,413,333 of them will be fully paid and
non-assessable and (ii) each of the Acquired Shares released from the
pledge in accordance with the Pledge Agreement will be, upon such release,
fully paid and non-assessable. The Acquired Shares will be acquired free
and clear of any Lien, claim, charge, restriction or other encumbrance,
except as provided pursuant to the Pledge Agreement, and shall rank pari
passu with the existing issued and outstanding shares of Common.
4.3 Authorization; Noncontravention. Seller has full corporate power and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby to which it is a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by
Seller of this Agreement and the other agreements contemplated hereby to
which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all requisite
corporate action, and no other corporate act or proceeding on the part of
Seller, its board of directors or stockholders is necessary to authorize
the execution, delivery or performance of this Agreement or the other
agreements contemplated hereby to which Seller is a party and the
consummation of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by Seller and constitutes,
and the other agreements contemplated hereby which Seller is a party upon
execution and delivery by Seller will each constitute, the valid and
legally binding obligations of Seller, enforceable against Seller in
accordance with their respective terms
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and conditions. Neither the execution and the delivery of this Agreement
and the other agreements contemplated hereby, nor the consummation of the
transactions contemplated hereby or thereby, will: (a) violate, (b)
conflict with, (c) result in a breach of, (d) constitute a default under,
(e) result in the termination or acceleration of or create in any party the
right to accelerate, terminate, modify or cancel, (f) require any
authorization, consent, approval, exemption or other action by or notice to
any Person under, or (g) result in the creation of any Lien on any of
Seller's assets under, Seller's Articles of Incorporation or Bylaws, or any
agreement, contract, lease, loan agreement, indenture, license, permit,
mortgage or other instrument to which Seller is bound or to which any of
its assets is subject or any statute, regulation, rule, injunction,
judgment, order or decree of any governmental agency or court to which the
Seller is subject which could reasonably be expected to have a material
adverse effect on Seller or its condition (financial or otherwise),
earnings, assets, liabilities, business operations or prospects or the
transactions contemplated hereby.
4.4 Brokers' Fees. Seller does not have any liability or obligation to
pay any fees or commissions to any broker or finder with respect to the
transactions contemplated by this Agreement or the Products Agreement.
4.5 SEC Filings; Financial Statements. Seller has filed all of the SEC
Reports required to be filed by it. The SEC Reports (i) were each prepared
in accordance with, and at the time of filing complied with, the
requirements of all applicable rules and regulations and (ii) (except with
respect to the defalcation reported in SEC Reports, to the extent it
affected SEC Reports filed prior to the disclosure thereof) did not at the
time they were filed contain any untrue statement of material fact or omit
to state a material fact required to be stated therein, or necessary in
order to make the statement therein, in the light of the circumstance under
which they were made, not misleading. Each of the financial statements
(including, in each case, any related notes thereto) contained in the SEC
Reports has been prepared in accordance with GAAP consistently applied, and
each presents fairly the financial position of Seller at the respective
dates thereof and the consolidated results of its operations and changes in
cash flow for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
Except as disclosed in EXHIBIT 4.5 hereto, since September 30, 1996, there
has been no material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of
operations or prospects, of the Seller, whether as a result of any
legislative or regulatory change, revocation of any license or rights to do
business, accident, casualty, labor trouble, act of God, other public act
or otherwise.
4.6 No Other Agreements to Sell. Seller does not have any legal
obligation, absolute or contingent, to any Person to sell material assets
or the business of Seller or to effect
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any merger, consolidation, liquidation, dissolution, recapitalization or
other reorganization of Seller or to enter into any agreement with respect
thereto.
4.7 Products and Product Regulation.
4.7.1 EXHIBIT 4.7 sets forth each Product that is being
manufactured, distributed, sold or marketed by the Seller. With
respect to each such Product, the Seller has obtained all applicable
approvals, clearances, authorizations, licenses, and registrations,
required by federal, state, local or foreign governments or government
agencies, regulating the safety, effectiveness or marketing clearance
for each such Product. In the United States, these include, without
limitation, new drug applications, abbreviated new drug applications,
product license applications, investigational new drug exemptions,
premarket approval applications, premarket notifications under Section
510(k) of the Federal Food, Drug, and Cosmetic Act, investigational
device exemptions and product export applications.
4.7.2 The Seller has made available to Buyer for review all
potentially significant documents delivered to Seller concerning
communications to or from the Food and Drug Administration (the
"FDA"), or prepared by the FDA, which bear in any way on the Seller's
compliance with the FDA regulatory requirements.
4.7.3 The Seller's inventory of Products is in good and marketable
condition in accordance with industry standards and consists of a
quantity and quality usable and saleable in the Ordinary Course of
Business. There are no circumstances or facts existing which may
result in the recall of any of the Products manufactured, distributed,
sold or marketed by the Seller.
4.8 Absence of Undisclosed Liabilities. The Seller has no material
debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent, direct, indirect, perfected, inchoate, unliquidated or
otherwise, whether due or to become due) arising out of any transaction,
series of transactions, action or inaction at or prior to the Closing, or
any state of facts or condition existing at or prior to the Closing
(regardless of when any such liability or obligation is asserted),
including, without limitation, Taxes with respect to or based upon
transactions or events occurring on or before the Closing, except (a)
liabilities and obligations fully reflected on the Latest Balance Sheet,
and (b) liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the Ordinary Course of Business (none of which
relates to any material indebtedness for borrowed money, breach of
contract, breach of warranty, tort, infringement or violation of law or
arose out of any charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand). The Seller does not have any material
debt, liability
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or obligation, of any nature (as set forth in the preceding sentence) not
required by GAAP to be set forth in a financial statement. For the purpose
of this Section 4.8, any debt, liability, obligation or indebtedness in
excess of $10,000, individually or in the aggregate, shall be deemed
material.
4.9 Absence of Certain Developments. Except as set forth on EXHIBIT 4.9,
since the date of the Latest Balance Sheet, Seller has conducted its
business only in the Ordinary Course of Business, and Seller has not:
4.9.1 discharged or satisfied any Lien or encumbrance or paid any
obligation or liability, other than current liabilities paid in the
Ordinary Course of Business, or canceled, compromised, waived or
released any right or claim;
4.9.2 sold, assigned, licensed or transferred any of its assets
having a fair market value in excess of $10,000 individually or in the
aggregate (including to any employees or Affiliates of Seller), except
for dispositions of assets in the Ordinary Course of Business to
Persons, or mortgaged, pledged or subjected them to any Lien, except
for Permitted Liens, or canceled without fair consideration any debts
or claims owing to or held by it in excess of $10,000 individually or
in the aggregate;
4.9.3 sold, assigned, transferred, abandoned or permitted to lapse
any material Government Licenses or any of the Proprietary Rights or
other intangible assets, or disclosed any proprietary confidential
information to any Person or granted any license or sublicense, or
otherwise permitted the use, of any rights under or with respect to
any Proprietary Rights;
4.9.4 made or granted any bonus (in excess of the lesser of $5,000
and 5% of salary) or any wage or salary increase (in excess of the
lesser of 5% of previous wage or salary and $5,000) to any employee,
officer or director, or made any other material change in employment
terms for any employee, officer or director;
4.9.5 made or granted any increase in, or materially amended or
terminated, any existing plan, program, policy or arrangement,
including any Plan (as defined in Section 4.19.1), employee benefit
plan or arrangement or adopted any new employee benefit plan or
arrangement, or materially amended or renegotiated any existing
collective bargaining agreement or entered into any new collective
bargaining agreement or multiemployer plan;
4.9.6 made any capital expenditures or commitments therefor such
that the aggregate outstanding amount of unpaid obligations and
commitments with respect thereto shall comprise in excess of $100,000
on the Closing Date;
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4.9.7 made any loans or advances to, or guarantees for the benefit
of or entered into, amended or terminated any lease, contract,
agreement or commitment, or taken any other action or entered into any
other transaction with, any of the officers, directors, employees or
Affiliates of Seller, except for the transactions contemplated by this
Agreement;
4.9.8 suffered any extraordinary or material loss, damage,
destruction or casualty loss, whether or not covered by insurance, or
waived any material rights, whether or not covered by insurance and
whether or not in the Ordinary Course of Business;
4.9.9 received notification or gained knowledge that any of Seller's
10 largest customers (based on net revenues for the twelve months
ended December 31, 1996) or suppliers will stop or generally decrease
the rate of business done with the Seller;
4.9.10 suffered any destruction of Seller's books and records;
4.9.11 issued or sold any notes, bonds or other debt securities or
any equity securities or any securities convertible, exchangeable or
exercisable into any equity securities or warrants, options or other
rights to acquire equity securities;
4.9.12 borrowed any amount or incurred or become subject to any
liabilities in excess of $10,000 individually or in the aggregate,
except for current liabilities incurred in the Ordinary Course of
Business;
4.9.13 declared, set aside or paid any dividend or distribution of
cash or other property to shareholders of the Seller with respect to
its stock or purchased, redeemed or otherwise acquired any shares of
its capital stock or any warrants, options or other rights to acquire
its stock, or made any other payments to the shareholders of the
Seller;
4.9.14 made any charitable or other capital contribution or agreed
or pledged to make any charitable or other capital contribution in
excess of $10,000, either individually or in the aggregate;
4.9.15 made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person;
4.9.16 entered into any other single transaction or series of
related transactions in the Ordinary Course of Business with
commitments by such Seller in excess
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of $25,000, or entered into any transaction not in the Ordinary Course
of Business; or
4.9.17 permitted its current liabilities to exceed, in the
aggregate, $1,500,000 (excluding liabilities to the Economic
Development Corporation (EDC).
4.10 Books and Records. The minute books of Seller, as previously made
available to Buyer and Buyer's representatives, contain true and accurate
records of meetings of, and corporate action taken by (including action
taken by written consent), the shareholders and Board of Directors
(including any and all of its Committees) of Seller. Seller has made and
kept books and records and accounts, which in reasonable detail, accurately
and fairly reflect the activities of Seller and Buyer has reasonably relied
on such books and records and accounts.
4.11 Legal Compliance. Seller has complied with all applicable laws,
rules or regulations of any applicable federal, state and local or foreign
governments or agencies as to which the failure to comply could reasonably
be expected to have a material adverse effect on the Company, its condition
(financial or otherwise), assets, liabilities, business operations or
prospects, or its ability to consummate the transactions contemplated
hereby and by the Products Agreement, including, the Federal Food, Drug and
Cosmetic Act and all applicable rules, regulations, practices and policies
of the FDA, and no action, suit, proceeding, hearing, complaint, demand,
notice or investigation has been filed, commenced or, to the best of its
knowledge, threatened against Seller alleging any failure to so comply.
Seller has not, directly or indirectly, paid or delivered any payment of
cash or property, however characterized to any Person, which is in any
manner related to the business or operations of Seller and which Seller
knows or has reason to believe to have been illegal under any federal,
state or foreign law having jurisdiction, and has not participated,
directly or indirectly, in any boycotts or other similar practices
affecting any of its actual or potential customers.
4.12 Tax Matters.
4.12.1 Seller has timely filed all Tax Returns with respect to the
Seller and the Plans required to be filed by it, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are complete, true and
accurate in all material respects. All Taxes required to be paid by
the Seller in respect of the periods for which Tax Returns are due
have been paid, and the Seller has established an adequate accrual
or reserve in accordance with GAAP consistently applied for the
payment of all Taxes payable in respect of the period, including
portions thereof, subsequent to the last of such periods up to and
including the Closing Date.
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4.12.2 Except as set forth on EXHIBIT 4.12:
4.12.2.1 with respect to each taxable period or event of the
Seller, either such taxable period or event has been audited by
the relevant taxing authority or the time for assessing or
collecting any Tax with respect to each such taxable period or
event has closed and such taxable period or event is not subject
to review by any relevant taxing authority and there are no
disputed tax liabilities for any period or event;
4.12.2.2 no deficiency or proposed adjustment which has not
been settled or otherwise resolved for any amount of Tax has been
proposed, asserted or assessed by any taxing authority against the
Seller or with respect to its activities;
4.12.2.3 Seller has not requested or consented to extend the
time in which any Tax may be assessed or collected by any taxing
authority;
4.12.2.4 Seller has not requested or been granted an
extension of the time for filing any Tax Return to a date later
than the Closing Date;
4.12.2.5 there is no action, suit, taxing authority
proceeding or audit now in progress, pending or, to the best of
its knowledge, threatened against or with respect to the Seller
with respect to any Tax as such Tax relates to or concerns either
Seller or the Plans;
4.12.2.6 Seller is not a party to or bound by any Tax
allocation or Tax sharing agreement or has any current or
potential contractual obligation to indemnify any other Person
with respect to Taxes;
4.12.2.7 no claim has ever been made by a taxing authority
in a jurisdiction where Seller does not pay Tax or file Tax
Returns that Seller is or may be subject to Taxes assessed by
such jurisdiction; and
4.12.2.8 Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor or other
third party.
4.13 Title to Properties; Encumbrances. Except for properties and assets
which have been sold or otherwise disposed of in the Ordinary Course of
Business since the date of the Latest Balance Sheet, Seller has good, valid
and marketable title to: (a) all of its properties and assets (real and
personal, tangible and intangible), reflected in the Latest Balance Sheet;
and (b) all of the properties and assets acquired by it since the Latest
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Balance Sheet; in each case subject to no Lien (other than Permitted
Liens). All of Seller's offices, factories, buildings, improvements,
machinery, equipment and other tangible personal property and assets are in
good condition and repair, except for ordinary wear and tear and are in
conformity with all applicable laws and regulations relating thereto
currently in effect as to which the failure to comply could reasonably be
expected to have a material adverse effect on the Company, its condition
(financial or otherwise), assets, liabilities, business operations or
prospects, or its ability to consummate the transactions contemplated
hereby and by the Products Agreement. Seller owns or leases under valid,
binding and enforceable leases all real estate, offices, improvements,
machinery, equipment and other tangible personal property necessary for the
conduct of Seller's business as currently conducted.
4.14 Facility Site. The Seller does not own, lease or use any real
property other than the property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Facility Site"). Except for the Lien in favor of
the Economic Development Corporation of the City of Detroit, the Seller has
full ownership and good, valid and marketable title in fee simple to the
Facility Site, and enjoys peaceful and undisturbed possession thereof.
There are no pending, or to the Seller's knowledge after reasonable
investigation, where practicable, threatened condemnation proceedings
relating to the Facility Site. The Facility Site and the manufacturing
facility operated thereon have been inspected and approved by the FDA and
are operated in compliance with the FDA's currently applicable Good
Manufacturing Practices. All improvements on the Facility Site and the
operations therein conducted conform to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and
administrative rules and regulations as to which the failure to comply
could reasonably be expected to have a material adverse effect on the
Company, its condition (financial or otherwise), assets, liabilities,
business operations or prospects, or its ability to consummate the
transactions contemplated hereby and by the Products Agreement. All
buildings, structures, improvements and fixtures owned, leased or used by
Seller in the conduct of its business and the operations therein conform to
all applicable federal, state, local and foreign health, fire,
environmental, safety, zoning and building laws, ordinances and
administrative rules and regulations, and all applicable codes and rules
adopted by national and local associations and boards of insurance
underwriters as to which the failure to comply could reasonably be expected
to have a material adverse effect on the Company, its condition (financial
or otherwise), assets, liabilities, business operations or prospects, or
its ability to consummate the transactions contemplated hereby and by the
Products Agreement; and all such buildings, structures, improvements and
fixtures are in good operating condition and repair.
4.15 Environmental Laws and Regulations. Except as disclosed on EXHIBIT
4.15, Seller has complied and is in compliance with all Environmental and
Safety Requirements as to which the failure to comply could reasonably be
expected to have a material adverse effect on the Company, its condition
(financial or otherwise), assets, liabilities, business
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operations or prospects, or its ability to consummate the transactions
contemplated hereby and by the Products Agreement. For purposes hereof,
"Environmental and Safety Requirements" means all federal, state, local and
foreign statutes, rules, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders
and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and
pollution or protection of the environment (whether indoors or outdoors),
including, without limitation, all those relating to the presence, use,
production, generation, handling, management, disclosure, transportation,
treatment, storage, disposal, recycling, distribution, labeling, testing,
processing, discharge, release, threatened release, control, abatement, or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, radiation, or other forms of energy or pathogens
(collectively, "Hazardous Material"). Seller is not aware of any fact or
circumstance (including, without limitation, any proposed Environmental and
Safety Requirements) that could require Seller to make any capital
expenditure, individually or in the aggregate, in excess of $25,000, to
keep its operations as currently conducted in compliance with all
Environmental and Safety Requirements.
4.15.1 Without limiting the generality of the foregoing, Seller has
obtained and complied with, and is in compliance with, all Government
Licenses required pursuant to Environmental and Safety Requirements
for the occupation of its facilities and the operation of its
business. A list of all such Government Licenses is set forth on
EXHIBIT 4.15.
4.15.2 Seller has not received any written or oral notice, report or
other information regarding any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial, or penal sanctions, or
corrective costs or penal sanctions, relating to it or its facilities
and arising under Environmental and Safety Requirements.
4.15.3 Except as set forth on EXHIBIT 4.15, none of the following
exists at any property or facility owned or operated by Seller: (i)
underground tanks, (ii) surface impoundments; (iii)
asbestos-containing material in any form or condition; or (iv)
materials or equipment containing polychlorinated biphenyls.
4.15.4 Seller has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any
Hazardous Material or owned or operated any facility or property, so
as to give rise to response costs, natural resource damages or other
liabilities or attorneys' fees pursuant to Environmental and Safety
Requirements.
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4.15.5 Seller has not, either expressly or by operation of law,
assumed or undertaken any liability, including any obligation for
corrective or remedial action, of any other Person relating to
Environmental and Safety Requirements.
4.15.6 To Seller's knowledge after reasonable investigation, where
practicable after diligent investigation, the properties currently
owned or used by Seller are free of any environmental defect,
including, without limitation, contamination from Hazardous Materials.
4.15.7 Without limiting the foregoing, no facts, events or conditions
existing or occurring on or before the Closing Date relating to the
past or present facilities, properties or operations of Seller will
prevent, hinder or limit continued compliance with Environmental and
Safety Requirements, give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental and Safety
Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including any liabilities
relating to onsite or offsite releases or threatened releases of
Hazardous Materials, personal injury, property damage or natural
resource damage.
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4.16 Intellectual Property.
4.16.1 EXHIBIT 4.16 contains a complete and accurate list of all:
(i) patented or registered Proprietary Rights and pending patent
applications and other applications for registration of Proprietary
Rights owned, used or filed by or on behalf the Seller; (ii) trade
names, corporate names and unregistered trademarks and service marks
owned or used by the Seller; (iii) unregistered copyrights owned or
used by the Seller to the extent protected by common law; (iv)
software and databases owned or used by the Seller; and (v) licenses
or other rights granted by the Seller to any third party with respect
to any Proprietary Rights, and all licenses or other rights granted
by any third party to the Seller with respect to any Proprietary
Rights, in each case identifying the subject Proprietary Right.
4.16.2 To the best of its knowledge, the Proprietary Rights comprise
all of the proprietary or intellectual property rights necessary for
the operation of the Seller's business as currently conducted.
4.16.3 Except as indicated on the EXHIBIT 4.16: (i) there have
been no claims made against the Seller asserting the invalidity,
misuse or unenforceability of any Proprietary Rights; (ii) the
conduct of the Seller's business has not infringed, misappropriated
or otherwise violated, and does not infringe, misappropriate or
otherwise violate the intellectual property rights of any third
party, nor would the continued conduct of the Seller's business as
currently conducted infringe, misappropriate or otherwise violate the
intellectual property rights of any third party; (iii) the Seller has
not received any notices of, or is nor aware of any facts which
indicate a likelihood of, any infringement, misappropriation or other
violation by, or any conflict with, any third party, with respect to
the Proprietary Rights (including any demand or request that the
Seller cease using any Proprietary Rights or license any rights from
any third party); (iv) the Seller is not in breach of any license or
other grant of rights with respect to the Proprietary Rights; and (v)
the transactions contemplated by this Agreement will not have an
adverse effect on Seller's right, title and interest in and to the
Proprietary Rights.
4.17 Contracts.
4.17.1 Except as set forth on EXHIBIT 4.17, Seller is not a party
to any written or oral:
4.17.1.1 contract, agreement or other understanding with
any labor union or contract, agreement or other
understanding for the employment
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of any officer, employee or other person on a full-time,
part-time or consulting basis or any severance or golden
parachute agreements;
4.17.1.2 contract, agreement or indenture relating to the
borrowing of money, or the mortgaging, pledging or otherwise
placing a Lien on any of its assets;
4.17.1.3 contract, agreement or commitment with respect to
the lending or investment of funds to or in other Persons;
4.17.1.4 outstanding powers of attorney executed on behalf
of the Seller or any guaranty;
4.17.1.5 lease or agreement under which it is lessee of or
holds or operates any personal property owned by any other
party for which the annual rental exceeds $10,000;
4.17.1.6 lease or agreement under which it is lessor of or
permits any third party to hold or operate any property,
real or personal, owned or controlled by it for which the
annual rental exceeds $10,000;
4.17.1.7 outstanding bid, contract, agreement or group of
related contracts or agreements or orders with the same
party for the purchase or sale of products or services under
which the undelivered balance of such products or services
has a price in excess of $10,000;
4.17.1.8 license, sublicense or royalty agreement;
4.17.1.9 contract, agreement or understanding with any
employee, officer, director, stockholder or other Affiliate
of Seller;
4.17.1.10 contract which prohibits it from freely engaging
in business anywhere in the world;
4.17.1.11 other contract, agreement or understanding or
group of related contracts, agreements or understandings
with the same party requiring payments after the date hereof
to or by Seller of more than $10,000; or
4.17.1.12 other agreement, contract or understanding,
whether or not entered into in the ordinary course of
business, which, if not performed by Seller or any other
party thereto, would have a material adverse effect
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on the business, assets, liabilities, financial condition,
operating results or business prospects of Seller.
4.17.2 Except as disclosed on EXHIBIT 4.17, (i) no contract or
commitment described on EXHIBIT 4.17 has been, to Seller's knowledge
after reasonable investigation, where practicable, breached or
canceled by the other party that has not been duly cured or
reinstated, (ii) Seller has performed all of its obligations
required to be performed by it under such contracts and commitments
to the date of this Agreement and the Closing Date and is not in
receipt of any written claim of default or breach under any such
contract or commitment, and (iii) to its knowledge, no event has
occurred which with the passage of time or the giving of notice or
both would result in a breach or default under any such contract or
commitment.
4.18 Litigation; Proceedings. Except as disclosed on EXHIBIT 4.18, there
are no actions, suits, proceedings, hearings, orders, charges, complaints,
investigations or claims pending or, to the best of its knowledge,
threatened against or affecting Seller, its assets or the Plans (as defined
in Section 4.19.1 hereof) (or pending or, to the best of its knowledge,
threatened against or affecting any of Seller's officers, directors,
employees or shareholders), or to which Seller or any of its assets may be
bound or affected, at law or in equity, or by any federal, state,
municipal, foreign or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and, to the best of
its knowledge, there is no basis for any of the foregoing; nor are there
any pending or, to seller's knowledge, after reasonable investigation where
practicable its knowledge, threatened investigations, nor, to its
knowledge, is there any basis for any such investigation; neither the
Seller nor, to Seller's knowledge after reasonable investigation, where
practicable, any of its respective Affiliates, officers or directors is
subject to any judgment, order or decree of any court or governmental
agency; and Seller has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage.
4.19 Employee Benefits.
4.19.1 Except as set forth on EXHIBIT 4.19, with respect to current
or former employees of Seller, independent contractors, or the
spouses, beneficiaries or dependents thereof, Seller does not
maintain and has not maintained, does not contribute to and has not
contributed to, does not have and has not had any obligation to
contribute to, does not have and has not had any liability or
potential liability with respect to any (i) qualified defined
contribution or defined benefit plans or arrangements (whether or
not terminated) which are employee pension benefit plans (as defined
in Section 3(2) of ERISA) (the "Employee Pension
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Plans"); (ii) any ongoing or terminated funded or unfunded employee
welfare benefit plans (as defined in Section 3(1) of ERISA) ("Employee
Welfare Plans"); or (iii) any plan, policy, program or arrangement
(whether or not terminated) which provides nonqualified deferred
compensation benefits, bonus benefits or compensation, incentive
benefits or compensation, severance benefits or compensation, benefits
or compensation payable on account of a "change of ownership or
control" (including a change in ownership of a substantial portion of
the assets of Seller) or any program, plan, policy or arrangement
which provides any health, life, disability, accident, vacation,
tuition reimbursement or other fringe benefits ("Other Plans").
Except as set forth on EXHIBIT 4.19, Seller does not participate and
has not participated in or contributed to any Multiemployer Plan nor
does Seller have any other liability, including any potential
withdrawal liability, with respect to any Multiemployer Plan, and
Seller has not incurred any current or potential withdrawal liability
as a result of a complete or partial withdrawal (or potential partial
withdrawal) from any Multiemployer Plan. Seller does not maintain or
have any obligation to contribute to (or any other liability with
respect to) any funded or unfunded Employee Welfare Plan,
Multiemployer Plan or Other Plan which provides post-retirement
health, accident or life insurance benefits to current or former
employees, current or former independent contractors, current or
future retirees, their spouses, dependents or beneficiaries, other
than medical benefits required to be provided to former employees,
their spouses and other dependents under Part 6 of Subtitle B of Title
I of ERISA or Code Section 4980B. (Any Employee Pension Plan, any
Employee Welfare Plan, any Other Plan and any Multiemployer Plan shall
be referred to herein collectively as the "Plans.")
4.19.2 All Plans (and related trusts and insurance contracts)
materially comply in form and in operation with the applicable
requirements of ERISA and the Code. The Employee Pension Plans which
are employee pension benefit plans (as defined in section 3(2) of
ERISA) meet the requirements of "qualified plans" under Section 401(a)
of the Code, and each such Employee Pension Plan has received a
favorable determination letter from the Internal Revenue Service. The
Internal Revenue Service has taken no action to revoke any such letter
and, to the best of its knowledge, there is nothing that would cause
the Internal Revenue Service to take action to revoke any such letter.
4.19.3 Except as set forth on EXHIBIT 4.19, all required reports and
descriptions (including Form 5500 Annual Reports, summary annual
reports and the summary plan descriptions) with respect to all Plans
(other than Multiemployer Plans) have been properly filed with the
appropriate government agency and distributed as required by law to
employees and/or their beneficiaries and Seller has complied
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with the requirements of Part 6 of Subtitle B of Title V of ERISA or
Section 4980B of the Code.
4.19.4 With respect to all Employee Pension Plans and all
Multiemployer Plans, all contributions of Seller which are due
(including all employer contributions and employee salary reduction
contributions) have been paid to such Employee Pension Plans and
Multiemployer Plans and all contributions for periods prior to the
Closing Date which are not yet due have been made or accrued. With
respect to all Employee Welfare Plans and all Other Plans, all
premiums and/or contributions, whether or not due, for prior plan
years and the current plan year for the period ending on the Closing
Date have been paid or accrued. None of the Plans maintained by the
Seller has any unfunded liabilities which are not funded or otherwise
accrued.
4.19.5 Except as set forth on EXHIBIT 4.19, none of the Plans is a
"defined benefit plan" (as defined in Section 3(35) of ERISA) or a
Multiemployer Plan. Seller has not incurred any liability to the
Pension Benefit Guaranty Corporation, the Internal Revenue Service,
the Department of Labor, any other governmental agency, any
Multiemployer Plan or any Person with respect to any Plan subject to
Title IV of ERISA and which is currently or previously maintained by
members of the controlled group of companies (as defined in Section
414 of the Code) that includes Seller (the "Controlled Group") that
has not been satisfied in full, and no condition exists that presents
a risk to Seller or any other member of the Controlled Group of
incurring such a liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation.
4.19.6 With respect to each Plan, (i) there have been no prohibited
transactions as defined in Section 406 of ERISA and in Section 4975 of
the Code, (ii) no fiduciary (as defined in Section 3(21) of ERISA) has
any liability for breach of fiduciary duty or any other failure to act
or comply in connection with the administration or investment of the
assets of the Plans, (iii) no fiduciary has engaged in any
transactions with respect to the Plans which could subject Seller, any
fiduciary, any plan administrator or any party dealing with any such
plan to either a civil penalty assessed pursuant to Section 501(i) of
ERISA or the tax or penalty on prohibited transactions imposed by
Section 4975 of the Code, and (iv) no actions, investigations, suits
or claims with respect to the assets thereof are pending or, to the
best of its knowledge, threatened, and, to the best of its knowledge,
there are no facts which would give rise to or could reasonably be
expected to give rise to any such actions, suits or claims against any
Plan, any fiduciary with respect to such Plans or the assets of such
Plans.
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4.19.7 Except as set forth on EXHIBIT 4.19, with respect to each
Plan and any cafeteria plans under Section 125 of the Code, to the
extent applicable, the Seller has furnished to Buyer true and
complete copies of (i) the plan documents, summary plan descriptions,
any other document filed or required to be filed with a governmental
agency or any document distributed to any employee, participant or
beneficiary of such Plan, (ii) the most recent determination letter
received from the Internal Revenue Service, (iii) the last Form 5500
Annual Report and actuarial report, and (iv) all related trust
agreements, insurance contracts or other funding agreements which
implement the Plans.
4.19.8 Neither Seller nor any Person acting on behalf of Seller
has, in contemplation of any corporate transaction involving Seller,
issued any written communication to, or otherwise made or entered
into any legally binding commitment with, any employees of the Seller
to the effect that, following the date hereof, (i) any benefits or
compensation provided to such employees under the Plans or under any
other plan or arrangement will be enhanced, (ii) any new plans or
arrangements providing benefits or compensation will be adopted,
(iii) any Plans will be conducted for any period of time, or (iv) any
plans or arrangements provided by Seller will be made available to
such employees.
4.20 Material Government License Permits. EXHIBIT 4.20 contains a
complete listing and summary description of all material Government
Licenses held by the Seller for use in the conduct of its business. Except
as indicated on EXHIBIT 4.20, Seller holds all of the Government Licenses
that are necessary to own and operate its business as presently conducted,
including all Government Licenses required under any federal, state or
local law relating to public health and safety, employee health and safety,
pollution or protection of the environment, including without limitation,
the Federal Food, Drug and Cosmetic Act. Seller is in compliance with the
terms and conditions of the Government Licenses on EXHIBIT 4.20 and has
received no notices that it is in violation of any of the terms or
conditions of such Government Licenses. Seller has taken all necessary
action to maintain and renew all such Government Licenses. No loss or
expiration of any such Government License is pending, foreseeable or, to
Seller's knowledge after reasonable investigation, where practicable,
threatened, other than expiration in accordance with the terms thereof.
The consummation of the transactions contemplated hereby will not result in
any revocation, cancellation or suspension of any Government License.
4.21 Employees. Seller has complied with all applicable laws relating to
the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes, the Worker Adjustment and Retraining Notification
Act, as amended, and the Immigration Reform and Control Act of 1986, as
amended. There are no administrative charges or court complaints pending
or, to Seller's knowledge after reasonable investigation, where
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practicable, threatened against Seller before the U.S. Equal
Employment Opportunity Commission or any state or federal court or
agency concerning alleged employment discrimination, sexual
harassment, ethnic or racial discrimination or any other matters
relating to the employment of labor. There is no unfair labor
practice, charge or complaint pending or, to Seller's knowledge after
reasonable investigation, where practicable, threatened against
Seller before the National Labor Relations Board or any similar state
or local body. Within the last three (3) years, Seller has not
experienced any union organization attempts, labor disputes or
general work stoppage or slowdowns due to labor disagreements. There
is no labor strike, dispute, general work stoppage or slowdown
pending or, to Seller's knowledge after reasonable investigation,
where practicable, threatened. There is no request for representation
pending and no question concerning representation has been raised
within the past two years. There is no grievance or arbitration
proceeding pending. The Seller is not party to nor bound by any
collective bargaining agreement or other labor agreement.
4.22 Product Liability. Seller has no liability for, and to sellers
knowledge, after reasonable investigations, where practicable, there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Seller which
could give rise to, any liability arising out of any injury to individuals
as a result of the use of any product manufactured, sold, or delivered by
the Seller.
4.23 Insurance. EXHIBIT 4.23 sets forth an accurate description of each
insurance policy to which Seller has been a party, a named insured or
otherwise the beneficiary of coverage at any time during the past two
years. All of such insurance policies are legal, valid, binding and
enforceable and in full force and effect and Seller to Seller's knowledge
after reasonable investigation where practicable has never been in breach
or default with respect to its obligations under such insurance policies.
Except as set forth on the EXHIBIT 4.23, Seller has not been denied
insurance coverage requested by or on behalf of it within the past two
years.
4.24 Affiliate Transactions. Except as disclosed on EXHIBIT 4.24, no
director, officer or employee of Seller (or any of the relatives or
Affiliates of the aforementioned) is a party to any agreement, contract,
commitment or transaction with the Seller, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used
in or necessary to the business of Seller. Without limiting the foregoing,
to the best of its knowledge, no director, officer or employee of Seller
(or any of the relatives or Affiliates of the aforementioned) is a director
of any customer or supplier of Seller.
4.25 Not A Business Combination; Shares Acquired Not Control Shares. The
vote required by Section 780 of the Michigan Business Corporation Act does
not, and shall not, apply to (i) the transactions contemplated by this
Agreement, (ii) the transactions
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contemplated by the Product Agreement or (iii) any future
transaction, whether or not a "business combination" as defined
pursuant to Section 776 of the Michigan Business Corporation Act,
between Seller, on the one hand, and the Buyer or any of its existing
or future Affiliates, on the other hand. The transactions
contemplated by this Agreement and the Products Agreement shall not,
individually or in the aggregate, constitute a "Control Share
Acquisition" for the purposes of, and as defined pursuant to, Chapter
7B of the Michigan Business Corporation Act.
4.26 Registration Rights. Except for the rights existing pursuant
to the Registration Rights Agreement, no holder of Common or any
other security issued by the Company will have any right to require
the registration thereof (or of any security receivable upon the
exercise or conversion thereof) under the Securities Act or, except
as set forth in Section 4.26 hereof, the right to include any such
security (or any security receivable upon the exercise or conversion
thereof) in a registration statement filed by the Company under the
Securities Act. EXHIBIT 4.26 contains a complete and accurate
description of the terms of all agreements relating to the inclusion
of securities in a registration statement, including without
limitation, (i) the names of the Holders of such securities, (ii) the
type and quantity of securities eligible to be so included, (iii) the
preconditions to any such inclusion and (iv) any priority of such
securities to be included in an underwritten public offering.
4.27 General. The statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be
correct and complete in all material respects as of the Closing Date
(as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout this Section 4). Neither
this Section 4 nor any certificate delivered by Seller contains or
will contain, when taken as a whole, any untrue statement of a
material fact or omits or will omit a material fact necessary to make
the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
5. PRE-CLOSING COVENANTS.
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 General. Each of the parties will use its reasonable best efforts to
take all actions and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including,
without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered).
5.2 Notices and Consents. Each of the parties will give any notices to,
make any filings with, and use its reasonable best efforts to obtain, any
authorizations, consents and
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approvals of governmental agencies and third parties required in connection
with this Agreement.
5.3 Full Access. The Seller will permit representatives of Buyer to have
full and complete access at all reasonable times, upon prior notice, and in
a manner so as not to interfere with the normal business operations of the
Seller, to all premises, properties, personnel, customers, suppliers,
books, records (including tax records), contracts and documents of Seller.
5.4 Additional Financial Statements and Other Information. As soon as
reasonably practicable after they become available, Seller shall furnish to
Buyer (i) the quarterly financial statements of Seller, which shall have
been prepared in accordance with GAAP consistently applied, (ii) all
monthly financial statements or reports of the Company which shall have
been prepared in a manner consistent with past practice, (iii) copies of
all proxy statements, notice and reports as it shall send to its public
stockholders and copies of all registration statements and all reports
which it files with the Securities and Exchange Commission or with any
domestic securities exchange on which any of its securities are listed, and
(iv) copies of all press releases and other statements made available to
the public concerning material developments in the business of Seller. In
addition, Seller shall give prompt notice to the Buyer of any material
developments involving the operations or activities of Seller.
5.5 Hexal Options. Seller shall use its best efforts to negotiate,
execute and deliver an agreement with Hexal-Pharma GmbH regarding an
amendment to the Product Options issued by Seller to Hexal-Pharma GmbH.
5.6 Amendment to Articles of Incorporation. Seller's Board of Directors
shall recommend for approval of Seller's stockholders an amendment to
Seller's Articles of Incorporation, in a form reasonably acceptable to
Buyer, for the purpose of increasing the number of authorized shares of
Common to not less than 30,000,000, and shall take such actions as
reasonably necessary so that such proposed amendment will be considered by
Seller's stockholders at the first annual meeting of stockholders to occur
after the date hereof, or if no such annual meeting is to be held on or
before June 30, 1997, then at a special meeting of stockholders called for
the purpose of voting on such amendment to occur not later than June 30,
1997.
5.7 Other Affirmative Covenants of the Seller. Seller shall:
5.7.1 conduct its business and operations only in the Ordinary Course
of Business;
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5.7.2 keep in full force and effect its corporate existence and all
Government Licenses relating or pertaining to its business;
5.7.3 keep its business organizations and properties intact,
including its present business operations and physical facilities and
Seller's present relationships with lessors, licensors, suppliers,
customers, distributors, manufacturers and others having business
relations with it in the Ordinary Course of Business; and
5.7.4 promptly inform Buyer in writing of any variances from the
representations and warranties contained in Section 4 hereof or any
breach of any covenant hereunder by the Seller.
5.8 Negative Covenants of the Seller.
5.8.1 Except as otherwise provided herein, Seller shall
not:
5.8.1.1 except as disclosed on EXHIBIT 5.8, take any action
that would require disclosure under Section 4.9 hereof;
5.8.1.2 take any action that would or omit to take any
action the omission of which would reasonably be anticipated
to have a material and adverse effect upon the business,
assets, liabilities, financial condition, operating results
or business prospects of the Seller;
5.8.1.3 without the prior written approval of Buyer, (A)
enter into any contract (1) out of the Ordinary Course of
Business, or (2) restricting in any way the conduct of
Seller's business or operations, (B) make any loans, (C)
increase any officer's or employee's compensation, incentive
arrangements or other benefits, except for increases for
employees (but not officers) made in the Ordinary Course of
Business, (D) establish or, except in accordance with past
practice or as may be required by law, contribute to any
pension, retirement, profit sharing or stock bonus plan or
multiemployer plan covering employees of Seller, (E) pay any
dividends, redeem, purchase or otherwise acquire directly or
indirectly issued and outstanding capital stock, or any
outstanding rights or securities exercisable or exchangeable
for or convertible into capital stock of Seller, (F) amend
the charter or bylaws of Seller or issue or agree to issue
any capital stock or any rights to acquire, or securities
convertible into or exchangeable for, any of the capital
stock of Seller, (G) directly or indirectly engage in any
transaction, arrangement or contract with any employee,
officer, director, partner, stockholder or other insider or
Affiliate of Seller
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which is not at arm's length, or (H) execute any guarantee,
issue any debt or borrow any money, except for current
liabilities from suppliers in the Ordinary Course of
Business, or buy or sell any assets out of the Ordinary
Course of Business;
5.8.1.4 except upon the exercise or conversion of any
options, warrants or shares of preferred stock outstanding
on the date hereof issue any securities to any Person or
incur any additional Indebtedness without the prior written
consent of Buyer;
5.8.1.5 negotiate with any other Person engaged in the
pharmaceutical business with respect to any material
transaction between Seller and such Person, without the
prior written approval of Buyer; provided, however, that
nothing herein shall preclude Seller from honoring all of
its contractual commitments existing on the date hereof with
▇.▇. ▇▇▇▇▇▇▇ Corporation, McKesson, Hexal-Pharma GmbH & Co,
KG, Clonmel Chemicals Co., Ltd., Apotex, Inc. and another
pharmaceutical company with respect to which the Seller has
a confidentiality agreement; or
5.8.1.6 enter into any transaction, arrangement or contract
(including any transfer of the Seller's assets or placing a
Lien on the Seller's assets) except on an arm's-length basis
in the Ordinary Course of Business.
5.8.2 Until consummation of the transactions contemplated hereby
or termination of this Agreement pursuant to Section 8.1 hereof,
neither the Seller nor any of its Affiliates, representatives, agents,
officers, employees or directors shall, directly or indirectly, (i)
submit, solicit, initiate, encourage or discuss any proposal or offer
from any Person or enter into any agreement or accept any offer
relating to any (a) reorganization, liquidation, dissolution or
recapitalization of Seller, (b) borrowings or indebtedness of Seller,
(c) merger or consolidation involving Seller, (d) purchase or sale of
any assets or capital stock (other than a purchase or sale of assets
in the Ordinary Course of Business), or (e) similar transaction or
business combination involving Seller or any of its assets (the
foregoing items (a) through (e) collectively referred to herein as a
"Business Sale"), or (ii) furnish any information with respect to,
assist or participate in or facilitate in any other manner any effort
or attempt by any Person to do or seek to do any of the foregoing,
except with the prior written consent of Buyer.
5.9 Additional Covenant of Buyer. Between the date hereof and the Closing
Date, except as otherwise expressly provided herein, Buyer shall promptly
inform Seller in
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writing of any variances from the representations and warranties contained
in Section 3 hereof or any breach of any covenant hereunder by Buyer.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by Buyer in connection with the
Closing is subject to satisfaction of the following conditions:
6.1.1 The representations and warranties set forth in Section 4 above
shall be true and correct in all material respects at and as of the
Closing Date;
6.1.2 Seller shall have performed and complied in all material
respects with all of its covenants and agreements hereunder required
to be performed by it prior to the Closing;
6.1.3 There shall not be any pending or threatened injunction,
judgment, order, decree, act or ruling by any court or governmental
agency which presents a substantial risk to the restraint or
prohibition of the transactions contemplated by this Agreement or the
obtaining of material damages or other relief in connection therewith;
6.1.4 Seller shall have delivered to Buyer a certificate to the
effect that each of the conditions specified above in Sections 6.1.1,
6.1.2 and 6.1.3 is satisfied;
6.1.5 Seller shall have delivered to Buyer stock certificates
representing all of the Acquired Shares;
6.1.6 Seller shall have delivered to Buyer (i) good standing
certificates from the State of Michigan and any other states in which
the nature of its business or properties requires it to qualify to do
business as of the most recent practicable date, (ii) a copy of the
Articles of Incorporation and Bylaws of Seller which are certified as
of a recent date, in the case of the Articles of Incorporation, by the
Secretary of State of the State of Michigan and in the case of the
Bylaws by an appropriate officer of Seller and (iii) certified copies
of the resolutions duly adopted by the Board of Directors of Seller
authorizing the execution, delivery and performance of this Agreement
and the other agreements contemplated hereby, and the consummation of
all transactions contemplated hereby and thereby;
6.1.7 The Board of Directors of Seller shall consist of not more than
eleven members and shall include not less than six persons designated
in writing by
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Buyer to serve as its nominees; the Executive Committee of the Board
of Directors of Seller shall consist of not more than three members,
not less than two of which are directors nominated by Buyer; and the
Chief Executive Officer and Chairman of Seller shall be persons
approved of, in writing, by Buyer.
6.1.8 Seller shall have delivered to Buyer such other certificates
and documents as are required hereby or are reasonably requested by
Buyer (including, without limitation, copies of all governmental and
third party consents).
6.1.9 Seller shall have delivered to Buyer an opinion of Seyburn,
Kahn, Ginn, Bess, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, counsel to Seller, with respect
to the matters set forth in EXHIBIT 6.1.9 attached hereto, in form and
substance reasonably satisfactory to Buyer;
6.1.10 Seller and Buyer shall have entered into a product agreement
in substantially the form attached hereto as EXHIBIT 6.1.10 (the
"Products Agreement") and upon the Closing such agreement shall be
valid, binding and effective as to the parties thereto;
6.1.11 Seller, Buyer, ▇▇▇▇▇▇ and Hagelstein shall have entered into a
voting agreement in substantially the form attached hereto as EXHIBIT
6.1.11 (the "Voting Agreement") and upon the Closing such agreement
shall be valid, binding and effective as to the parties thereto;
6.1.12 Seller shall have adopted an amendment to its By-laws in
substantially the form attached hereto as EXHIBIT 6.1.12 (the "By-law
Amendment") and upon the Closing such amendment shall be binding and
effective;
6.1.13 Seller, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ shall have entered into a letter
agreement in substantially the form attached hereto as EXHIBIT 6.1.13
(the "Contribution Agreement") and upon the Closing such agreement
shall be valid, binding and effective as to the parties thereto;
6.1.14 Seller and ▇▇▇▇▇▇▇ ▇▇▇▇ shall have entered into an Amendment
to Employment Agreement in substantially the form attached hereto as
EXHIBIT 6.1.14 and upon the Closing such amendment shall be valid,
binding and effective as to the parties thereto;
6.1.15 Seller and ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have entered into an Amendment
to Employment Agreement in substantially the form attached hereto as
EXHIBIT 6.1.15 and upon the Closing such amendment shall be valid,
binding and effective as to the parties thereto;
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6.1.16 Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have entered into an
Amendment to Employment Agreement in substantially the form attached
hereto as EXHIBIT 6.1.16 and upon the Closing such amendment shall be
valid, binding and effective as to the parties thereto;
6.1.17 Seller and Buyer shall have entered into a Registration
Rights Agreement in substantially the form attached hereto as EXHIBIT
6.1.17, and such agreement shall be valid, binding and effective as
to the parties thereto.
6.1.18 Seller and the Economic Development Commission of the City of
Detroit shall have entered into a definitive agreement with respect to
the restructuring of Seller's debt to the Economic Development
Commission of the City of Detroit in a form reasonably acceptable to
Buyer and containing terms substantially similar to those set forth in
EXHIBIT 6.1.18 hereof, and such definitive agreements shall have
become, or upon the Closing will have become, valid, binding and
effective on the parties thereto.
6.1.19 The Reserve Bank of India and/or the government (or any agency
or department) of the Republic of India shall have granted final
approval of Buyer's remittance of funds in accordance with the terms
hereof and the Products Agreement;
6.1.20 Since the date of this Agreement, there shall have been no
events or conditions, which, either individually or in the aggregate,
has had or could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), properties, assets,
liabilities, business operations or prospects of Seller, and Buyer
shall be provided with a certificate from the Seller to that effect at
the Closing;
6.2 Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
6.2.1 The representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the
Closing Date;
6.2.2 Buyer shall have performed and complied in all material
respects with all of its covenants and agreements hereunder required
to be performed by it prior to the Closing;
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6.2.3 To Buyer's knowledge, after reasonable investigation, where
practicable, there shall not be any pending or threatened injunction,
judgment, order, decree or ruling by any court or governmental agency
which presents a substantial risk to the restraint or prohibition of
the transactions contemplated by this Agreement or the obtaining of
material damages or other relief in connection therewith;
6.2.4 Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in Sections 6.2.1,
6.2.2 and 6.2.3 is satisfied;
6.2.5 Buyer shall have delivered to Seller the Initial Payment in
accordance with Section 2.2; and
6.2.6 Buyer shall have executed and delivered the Pledge Agreement
substantially in the form attached hereto as EXHIBIT 6.2.6 (the
"Pledge Agreement") and delivered all necessary stock powers required
thereunder and such agreement shall be valid, binding and effective as
to the parties thereto.
7. STOCK EXCHANGE LISTING
7.1 Best Efforts to Relist on NASDAQ. From the date hereof and for a one
year period after the Closing, the Seller agrees to use all commercially
reasonable efforts to cause its Common to become admitted for trading on
the NASDAQ Small Cap Market.
7.2 Listing of Common Purchased Hereunder. In the event that the Common
shall be listed for trading on any national securities exchange or become
admitted for trading on the NASDAQ National Market or the NASDAQ Small Cap
Market, such listing or admission (to the extent permitted by the rules of
such exchange or NASDAQ market) shall include all Acquired Shares.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.1 Survival.
8.1.1 All representations, warranties, covenants and agreements of
Seller contained in this Agreement shall survive the Closing and
continue in full force and effect thereafter until ninety days after
delivery to Seller's Board of audited financial statements for Seller
for its fiscal year ending in 2000 except representation and
warranties on Stock options on which liabilities will expire on
December 31, 2005 and will not be affected by any examination made by
or on behalf of Buyer, the knowledge of any of its officers,
directors, stockholders, employees or agents, or the acceptance of any
certificate or opinion. In addition,
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no indemnification will be required from Seller until the aggregate of
Buyer's damages exceed $50,000.
8.1.2 All representations, warranties, covenants and agreements of
Buyer contained in this Agreement shall survive the Closing and
continue in full force and effect thereafter until ninety days after
delivery of audited financial statements for Seller for its fiscal
year ending in 1999 and will not be affected by any examination made
by or on behalf of Seller, the knowledge of any of its officers,
directors, stockholders, employees or agents or the acceptance of any
certificate or opinion.
8.2 Indemnification. Seller shall indemnify and hold harmless Buyer and
its Affiliates, directors, officers, advisors, agents and employees (the
"Indemnified Parties"), to the fullest extent lawful, from and against any
and all losses, damages, claims, liabilities, actions and expenses
(including, without limitation, costs of investigation, preparing or
defending any such claim or action and reasonable legal fees and expenses
(collectively "Losses") arising out or in connection with (i) any third
party claims asserted against an Indemnified Party arising out of or in
connection with the transactions contemplated hereby or (ii) the material
breach of any warranty, representation, covenant or agreement of the Seller
contained in this Agreement or any of the agreements contemplated hereby
(as to which breach Seller has received notice and not less than 30 days to
cure), and including, without limitation, any such Losses arising out of
transactions entered into or events occurring prior to the Closing. The
term "Losses" as used in this Section 8.2 is not limited to matters
asserted by third parties against an Indemnified Party, but includes Losses
incurred or sustained by any Indemnified Party in the absence of third
party claims.
8.3 Remedy. The Seller hereby specifically agrees that its only remedy
against the Buyer in case of any default by the Buyer of any of the terms
of this Agreement, is enforcement of its rights to recover the unpaid
balance moneys payable by the Buyer to the Seller, as purchase
consideration for 5.3 million shares i.e.; $7.5 million in the aggregate,
the idea being that under no circumstances Buyer's financial obligations
under this Agreement shall exceed $7.5 million and the Buyer will not be
liable for any extra or additional or consequential or liquidated or
director or indirect damages or claims or enhancement in price or losses of
opportunities or interest, either from the Seller or from other persons
whether claiming through the Seller or otherwise. The Seller hereby
specifically waives and foregoes all its other rights or remedies which it
may have against the Buyer under Michigan Business Corporation Act or any
other law, rules, bylaws, Articles of Incorporation, regulations or in
torts. The Seller also further hereby confirms that if it has committed a
prior material breach of any of the terms and conditions of this Agreement
or if Buyer's breach of any of the terms and conditions is directly or
indirectly caused by or motivated by or is the result of or is a defence
against any breach
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or action or omission of the Seller, then the Seller will have the right or
remedy whatsoever against the Buyer including the right to recover the
balance purchase consideration money for the shares.
8.4 Arbitration. Any dispute between the parties regarding any provision
of this Agreement shall be resolved by binding arbitration before the
London Court of International Arbitration according to its rules of
commercial arbitration. Judgment upon the award of the arbitrators may be
entered by any court of competent jurisdiction.
8.5 Finder's or Broker's Fees. Buyer represents and warrants and Seller
represents and warrants that, it has dealt with no broker or finder in
connection with any of the transactions contemplated by this Agreement,
and, insofar as it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions.
Each of the parties hereby agrees to indemnify and hold harmless one
another against any loss, liability, damage, cost, claim or expense
incurred by reason of any brokerage, commission or finder's fee alleged to
be payable by reason of any act, omission or statement of indemnifying
party.
9. TERMINATION.
9.1 Termination of Agreement. The Agreement may be terminated as provided
below:
9.1.1 Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
9.1.2 Either Buyer or Seller may terminate this Agreement if the
Closing has not occurred by June 30, 1997; provided that neither
Buyer, on the one hand, nor Seller, on the other hand, will be
entitled to terminate this Agreement pursuant to this Section 9.1.2 if
such party's breach of this Agreement has prevented the consummation
of the transaction contemplated hereby;
9.1.3 Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing in the event there has been a
material breach by Seller of any representation, warranty, covenant or
agreement contained in this Agreement, and Buyer has notified the
Seller of the breach, and the breach has continued without cure for a
period of thirty (30) days after the notice of breach; and
9.1.4 Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing in the event there has been a
material breach by
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the Buyer of any representation, warranty, covenant or agreement
contained in this Agreement, and Seller has notified Buyer of the
breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach.
9.2 Effect of Termination. If any party terminates this Agreement
pursuant to the Section 9.1 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in breach).
10. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
Unless required by law (in which case the Seller hereby agrees to give
Buyer a reasonable prior opportunity to review and comment upon any proposed
disclosure), after the date hereof through and after the Closing Date, Seller
shall not issue any press release or make any public announcement relating to
the subject matter of this Agreement or the transactions contemplated hereby
without the prior written approval of Buyer.
11. NO THIRD-PARTY BENEFICIARIES.
This Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective affiliates, officers, directors,
heirs, executors, administrators, successors and permitted assigns.
12. FURTHER ASSURANCES.
The parties hereto hereby agree to execute and deliver to one another such
further instruments and other documentation as may be requested by any other
party hereto at any time and from time to time to carry out the terms of this
Agreement.
13. ENTIRE AGREEMENT.
This Agreement and the exhibits and schedules attached hereto and the
documents executed and delivered pursuant hereto constitute the entire agreement
between the parties with respect to the subject matter contained herein, and
supersede all prior and contemporaneous oral and written communications and
agreements with respect thereto.
14. BINDING EFFECT; ASSIGNMENT.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors and
permitted assigns. No party has the right to assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto, except that Buyer may assign this Agreement and any of the provisions
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hereunder to any Affiliate of Buyer without the consent of Seller. In addition,
Buyer may assign its rights under this Agreement for collateral or other
security purposes to any lenders providing bonafide financing to Buyer without
the consent of Seller.
15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instruments.
16. HEADINGS.
Headings of sections shall be deemed to be included for purposes of
convenience only and shall not affect the interpretation of this Agreement.
17. NOTICES.
Any notices or consents required or permitted by this Agreement shall be in
writing and shall be deemed delivered if sent by certified mail, postage
prepaid, return receipt requested, or overnight delivery service (receipt
confirmed), or facsimile (receipt confirmed), as follows, unless such address is
changed by written notice hereunder:
If to Seller: Caraco Pharmaceutical Laboratories, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Seyburn, Kahn, Ginn, Bess, ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to Buyer: Sun Pharmaceutical Industries Limited
Synergy House, Subhanpura
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and
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Sun Pharmaceutical Industries Limited
▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇ (▇), ▇▇▇▇▇▇ - 400 014 India
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any notice delivered hereunder shall be deemed given when actually received.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Michigan.
19. AMENDMENTS AND WAIVERS.
This Agreement may be amended and any provision hereof waived only in a
writing signed by the party against whom an amendment or waiver is sought to be
enforced. The parties hereto shall have the right at all times to enforce the
provisions of this Agreement in strict accordance with the terms hereof,
notwithstanding any conduct or custom on the part of such party in refraining
from so doing at any time or times. The failure of any party at any time to
enforce its rights under such provisions strictly in accordance with the same
shall not be construed as having created a custom in any way or manner contrary
to specific provisions of this Agreement or as having in any way or manner
modified or waived the same.
20. SEVERABILITY.
If any provision of this Agreement shall be held invalid under any
applicable law, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provision, and, to this
end, the provisions hereof are severable.
21. EXPENSES.
Except as otherwise expressly provided in this Agreement, the parties will
bear their respective costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, Seller shall pay fees in connection with
the issuance of any Acceptable Letter of Credit in an amount
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not to exceed 1% of the face amount of any such Acceptable Letter of Credit,
with Buyer paying any such fees in excess thereof.
22. CONSTRUCTION.
The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, 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 authorship of any of the provisions of
this Agreement. Any reference to any foreign, federal, state or local statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.
23. INCORPORATION OF EXHIBITS, ANNEXES AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
themselves or by their duly authorized representatives, under seal, the day and
year first above written.
CARACO PHARMACEUTICAL LABORATORIES, LTD.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Title: President and COO
-------------------------------
SUN PHARMACEUTICAL INDUSTRIES, LTD.
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: Full Time Director
-------------------------------
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