EXHIBIT 2.4
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ASSET PURCHASE AGREEMENT
between
RHONE MERIEUX, INC.
and
SYNBIOTICS CORPORATION
TABLE OF CONTENTS
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Section Page
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1 Purchase and Sale of the Assets.................................... 1
1.1 Purchase of the Assets from the Seller....................... 1
1.2 Purchase Price for the Assets................................ 2
1.4 Further Assurances........................................... 3
1.5 Closing...................................................... 3
1.6 Sales of Retained Inventory.................................. 3
1.7 Post-Closing Adjustment to Purchase Price.................... 4
2 Representations and Warranties of the Seller....................... 5
2.1 Authorization of the Transaction............................. 5
2.2 Organization................................................. 6
2.3 Non-Contravention............................................ 6
2.4 Broker's Fees................................................ 6
2.5 Ownership of the Assets...................................... 6
2.6 Absence of Undisclosed Liabilities........................... 6
2.7 Litigation................................................... 6
2.8 Intangible Property.......................................... 6
2.9 Inventory.................................................... 7
2.10 Tax Matters.................................................. 7
2.11 Compliance with Laws......................................... 7
2.12 Customers and Suppliers...................................... 8
2.13 Warranty and Product Liability Claims........................ 8
2.14 Absence of Certain Changes or Events......................... 8
2.15 Disclosure................................................... 9
3 Representations and Warranties of the Buyer........................ 9
3.1 Organization and Authority................................... 9
3.2 Authorization................................................ 9
3.3 Broker's Fees................................................ 10
3.4 Disclosure................................................... 10
4 Pre-Closing Covenants of the Seller................................ 10
4.1 Conduct of Business.......................................... 10
4.2 Absence of Material Changes.................................. 10
4.3 Inventory Deficit............................................ 10
4.4 Continuing Obligation to Inform.............................. 10
5 Parties' Efforts to Obtain Satisfaction of Conditions.............. 10
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated as of the 14th day of
May, 1997 by and between Synbiotics Corporation, a California corporation with
its principal office at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Buyer"),
and Rhone Merieux, Inc., a Georgia corporation with its principal office at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller").
Preliminary Statement
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1. The Buyer is acquiring from Rhone Merieux S.A. ("RM") and its
Affiliates (as defined below) RM's veterinary diagnostics business.
2. The Seller, a wholly-owned subsidiary of RM, owns and operates the
immunological veterinary diagnostics business of RM in the United States and
Canada (the "Business").
3. The Buyer will purchase, and the Seller will sell, certain of the
assets of the Business for the consideration set forth below, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1 Purchase and Sale of the Assets
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1.1 Purchase of the Assets from the Seller.
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(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this Agreement
(the "Closing"), the Seller shall sell, transfer, convey and assign to the
Buyer, and the Buyer shall purchase, acquire and accept from the Seller, free
from all liens, charges, encumbrances and equities of any description together
with all rights now or hereafter attaching thereto with full title guarantee,
the following assets:
(i) all inventories of finished goods and packaging
materials for the "Witness" and "VetRed" product lines (the "Products") which
exist on the date of the Closing; provided, that if the net book value of all
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inventory of finished Products at Closing exceeds $389,000, or if the number of
units of VetRed Products in inventory exceeds 120% of the amount of such VetRed
Products in inventory at December 31, 1996, then the Seller shall retain all
inventory in excess of such ($389,000 or 120%) amount(s) (the "Retained
Inventory") and shall sell the Retained Inventory to the Buyer from time to time
in accordance with Section 1.6 below (the inventory, less the Retained
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Inventory, is referred to
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herein as the "Inventory").
(ii) all rights of the Seller under the Distribution
Agreement dated March 24, 1992 between the Seller and AGEN Biomedical Ltd. (the
"Distribution Agreement");
(iii) a list of customers of the Seller for the Products
(such list shall be based upon the Seller's computer records and shall be, to
the best of the Seller's knowledge, accurate and complete in all material
respects);
(iv) all rights of the Seller under express or implied
warranties from the suppliers of the Seller;
(v) all of the Seller's right, title and interest in and
to all Intangible Property (as defined in Section 2.8 below) and all licenses
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and other agreements to which the Seller is a party (as licensor or licensee) or
by which the Seller is bound relating to any Intangible Property; and
(vi) all of the Seller's right, title and interest to all
Permits listed in Section 2.11 of the Disclosure Schedule.
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(b) The Inventory, the Distribution Agreement, the Intangible
Property, the Permits and other assets of the Seller described in paragraph (a)
above shall be referred to collectively as the "Assets."
(c) At the Closing, the Seller shall deliver to the Buyer the
Assets and such instruments of conveyance or assignment as shall be required to
convey to the Buyer title to the Assets. Nothing in this Agreement shall oblige
the Buyer to buy any of the Assets or otherwise complete this Agreement unless
the sale and purchase of all of the Assets is completed simultaneously.
(d) Except as specifically provided above, the Seller shall
retain all other assets (including the Retained Inventory), properties, claims,
rights and interests of the Seller which exist on the date of the Closing, of
every kind and nature and description, whether tangible or intangible, real,
personal or mixed.
(e) The Buyer shall not at the Closing assume or agree to
perform, pay or discharge, and the Seller shall remain unconditionally liable
for, all obligations, liabilities and commitments, fixed or contingent, of the
Seller other than (i) the obligations of the Seller assumed in connection with
the transfer of the Distribution Agreement, (ii) liabilities related to the
Intangible Property transferred and (iii) obligations related to the Permits.
1.2 Purchase Price for the Assets. The aggregate purchase price (the
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"Purchase Price") to be paid by the Buyer for the Assets shall be Four Million
Two Hundred
2
Thousand U.S. Dollars ($4,200,000), payable at the Closing by wire transfer of
immediately available funds to an account designated by the Seller; provided
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that if the aggregate net book value of the Inventory on the date of the Closing
is less than 100% of the net book value of the Inventory at December 31, 1996
(an "Inventory Deficit") then the Purchase Price shall be reduced by an amount
equal to such Inventory Deficit. The Seller shall inform the Buyer two business
days prior to Closing whether it expects there to be an Inventory Deficit and,
if so, the anticipated amount of such Inventory Deficit as of the date of the
Closing. In the event that there is an anticipated Inventory Deficit, the
Purchase Price paid at Closing will be reduced by the amount of the anticipated
Inventory Deficit, with a reconciliation based on the finally calculated actual
Inventory Deficit to occur as soon as practicable.
1.3 Allocation of Purchase Price The aggregate amount of the
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Purchase Price shall be allocated among the Assets as set forth on Schedule 1.3
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attached hereto.
1.4 Further Assurances. At any time and from time to time after the
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Closing, at the Buyer's request and without further consideration, the Seller
shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take all such other action as the
Buyer may reasonably request, more effectively to transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control of the Assets, to assist the
Buyer in exercising all rights with respect thereto and to carry out the purpose
and intent of this Agreement.
1.5 Closing. The Closing shall take place simultaneously with, and
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at the same location as, the closing of the purchase by the Buyer of the shares
of RM Diagnostics S.A.S. under the Stock Purchase Agreement dated the date
hereof among RM, the Buyer and others (the "Stock Purchase Agreement") or at
such other place, time or date as may be mutually agreed upon in writing by the
parties.
1.6 Sales of Retained Inventory. In the event that the Seller has
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Retained Inventory (as defined in Section 1.1(a)(i) above), the Buyer agrees to
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purchase such Retained Inventory from the Seller, in accordance with the
following provisions:
(a) the Seller shall sell such Retained Inventory to the Buyer
from time to time upon receipt of firm purchase orders from the Buyer;
(b) all items of Retained Inventory sold to the Buyer shall be
of standard quality and have expiration dates of not less than eight months from
the date of delivery (the Seller may have extended the expiration dates of such
items of Retained Inventory sold to the Buyer, if permissible by United States
Department of Agriculture ("USDA") regulations); provided that, during the term
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of the Distribution Agreement (as defined in Section 6.6 below) the Buyer agrees
to purchase Retained Inventory with an expiration period of less than eight
months if the Seller agrees to repurchase all such Retained Inventory from the
Buyer in accordance with the terms of the Distribution Agreement;
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(c) the purchase price for items of Retained Inventory shall be
the Seller's actual cost of purchasing or manufacturing such items, as shown in
the books and records of the Seller (the Seller shall provide evidence of such
cost to the Buyer at the Buyer's request);
(d) the Seller shall not use, sell or otherwise dispose of items
of Retained Inventory without the consent of the Buyer other than in accordance
with this Section 1.6; provided that the Seller may destroy any items of
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Retained Inventory whose expiration dates would make them unsalable to the
Buyer; and
(e) to the extent that Buyer requires stocks of Products, it
agrees to purchase them from the Seller out of the Retained Inventory, for so
long as the Seller continues to have in the Retained Inventory stocks of such
Products meeting the criteria set forth in Subsection 1.6(b) above.
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1.7 Post-Closing Adjustment to Purchase Price.
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(a) The Seller shall make a post-Closing payment (the "Post
Closing Payment") to the Buyer in the event that the Seller's net revenues from
sales of the Products in the United States and Canada (other than to Buyer)
during the period from Closing through September 30, 1997, as reflected in the
accounting records of the Seller, are less than $741,285, unless sales of VetRed
Products during such period are greater than $574,000 and as a consequence make
up in whole or in part the amount of the shortfall in Witness Products. In such
case, the Seller shall pay to the Buyer a Post-Closing Payment equal to 38% of
the amount of such shortfall in Retained Inventory and, if necessary, in cash,
in accordance with paragraph (c) below.
(b) Not later than October 15, 1997, the Seller shall determine
whether a Post-Closing Payment is required and shall so notify the Buyer,
including in such notice the method of calculating the Post-Closing Payment.
Unless the Buyer disputes the calculation of the Post-Closing Payment within
fifteen (15) calendar days after the Buyer receives from the Seller the
calculation of the Post-Closing Payment, the Buyer shall be deemed to have
accepted the calculation of the Post-Closing Payment performed by the Seller. In
the event that the Buyer disputes the calculation of the Post-Closing Payment in
writing within fifteen (15) calendar days after delivery of the Post-Closing
Payment calculation, the Chief Executive Officers of each of Buyer and the
Seller shall first use reasonable commercial efforts to resolve such dispute
between themselves. If they are unable to resolve the dispute within fifteen
(15) calendar days after delivery of the aforementioned notice, the dispute
shall be submitted to binding arbitration in accordance with the procedures set
forth in Section 10 of this Agreement.
(c) The Post-Closing Payment shall be made to the Buyer by the
transfer to the Buyer of Retained Inventory (meeting the standards set forth in
Subsection 1.6(b) above) having a value equal to the amount of the Post-Closing
Payment, valuing such Retained Inventory at the Seller's cost; provided that in
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no event shall the amount of Retained
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Inventory so transferred to the Buyer, taken together with all then existing
Inventory held by the Buyer, exceed the Buyer's forecasted ten-month purchase
requirements for such Products. Title to such Retained Inventory shall be
transferred to the Buyer within three (3) business days after the amount of the
Post-Closing Payment is finally determined in accordance with this Section 1.7
(the "Post-Closing Payment Date"). The Seller shall warehouse such Retained
Inventory on behalf of the Buyer, as bailee for the Buyer and at the Seller's
sole cost and expense. To the extent that the amount of the Post-Closing Payment
exceeds (i) the value of the Retained Inventory (if any) then held by the Seller
or (ii) the value of the Retained Inventory transferred to the Buyer in
accordance with the first sentence of this Subsection (c), the Seller shall pay
such excess amount to the Buyer in cash on the Post-Closing Payment Date.
2 Representations and Warranties of the Seller
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The Seller represents and warrants to the Buyer that the statements
made in this Section 2 are true and correct. Attached to this Agreement is a
schedule of exceptions to the warranties of the Seller set forth in this Section
2 (the "Disclosure Schedule"). The Disclosure Schedule is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
2, and the disclosures in any paragraph of the Disclosure Schedule shall qualify
only the corresponding paragraph in this Section 2. Any information disclosed in
the Disclosure Schedule may be incorporated from any paragraph or section of the
Disclosure Schedule into any other paragraph or section of the Disclosure
Schedule by a specific cross-reference; provided that any such cross-reference
shall only be adequate if the information that is cross-referenced responds with
specificity to the warranty with respect to which disclosure is being made. For
purposes of this Agreement, any statement that is made "to the knowledge" or "to
the best knowledge" of the Seller or the Buyer, as the case may be, shall be
deemed to include facts and circumstances known, or that should have been known
upon reasonable investigation, to any officer, director or manager of the Seller
or the Buyer, as the case may be, either on the date of this Agreement or
immediately prior to the Closing. For purposes of this Agreement, "Affiliate"
shall have the meaning set forth in Section 1.5 of the Stock Purchase Agreement.
2.1 Authorization of the Transaction. The Seller has the full right,
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power and authority to enter into this Agreement and to perform its obligations
under this Agreement. The execution and delivery by the Seller of this Agreement
and the consummation by the Seller of all transactions contemplated by this
Agreement have been duly authorized by all requisite corporate action on the
part of the Seller. This Agreement has been duly executed by the Seller and
constitutes a valid and legally binding obligation of the Seller, enforceable
against the Seller in accordance with its terms. The execution, delivery and
performance by the Seller of this Agreement and the agreements provided for
herein to which the Seller is a party, and the consummation by the Seller of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both: (a) violate the provisions of
any United States or Georgia law, rule or regulation applicable to the Seller;
(b) violate any judgment, decree, order or award of any court, governmental body
or arbitrator to which the Seller is a party or by which it is bound;
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(c) conflict with or result in the breach or termination of any term or
provision of, or con stitute a default under, or cause any acceleration under,
the charter or by-laws of the Seller or any agreement to which the Seller is a
party or by which the Seller or any of its properties is or may be bound; or (d)
cause the creation of any lien, charge or encumbrance upon the Assets. Section
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2.1 of the Disclosure Schedule sets forth a true, correct and complete list of
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all consents and approvals of third parties that are required in connection with
the consummation by the Seller of the transactions contemplated by this
Agreement.
2.2 Organization. The Seller is a corporation duly organized and
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validly existing under the laws of the State of Georgia.
2.3 Non-Contravention. The Seller is not a party to, subject to or
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bound by any agreement or any judgment, order, writ, prohibition, injunction or
decree of any court or other governmental body which would prevent the
execution, delivery or performance of this Agreement by the Seller. Neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated by this Agreement, will conflict with or violate any
provision of the charter and bylaws of the Seller or any contract or agreement
to which the Seller is a party or by which it is bound.
2.4 Broker's Fees. No broker or finder has acted for the Seller in
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connection with the transactions contemplated by this Agreement.
2.5 Ownership of the Assets. The Seller is, and at the Closing will
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be, the true and lawful owner of the Assets, and will have the right to sell and
transfer to the Buyer good, clear, record and marketable title to the Assets,
free and clear of all claims, liabilities, liens, pledges, charges, encumbrances
or equities of any kind affecting the Assets (collectively "Encumbrances"). The
delivery to the Buyer of the instruments of transfer of ownership contemplated
by this Agreement will vest good and marketable title to the Assets in the
Buyer, free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of any kind or nature
whatsoever.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent
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set forth in Section 2.6 of the Disclosure Schedule, the Seller had no material
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liability or obligation, secured or unsecured, whether known or unknown,
accrued, absolute, contingent, unasserted or otherwise, affecting the Assets.
2.7 Litigation. Except as set forth in Section 2.7 of the
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Disclosure Schedule, the Seller is not (a) subject to any unsatisfied judgment,
order, decree, stipulation or injunction, (b) a party (either as a plaintiff or
defendant) to any pending complaint, action, suit, proceeding, hearing or
investigation or (c), to the best of Seller's knowledge, threatened to be made a
party to any complaint, action, suit, proceeding, hearing or investigation, in
each such case only insofar as such action would (if decided adversely to the
Seller) affect the Seller's ownership of or title to or right to use the Assets
or its ability to convey the Assets to the Buyer, and, to the best of Seller's
knowledge, there is no basis for any such complaint, action, suit, proceeding,
hearing or investigation.
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2.8 Intangible Property. Section 2.8 of the Disclosure Schedule
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sets forth, (i) a true, correct and complete list or description of all patents,
trade names, trademarks, trade name and trademark registrations, copyrights and
copyright registrations, and applications for any of the foregoing (together
with all trade secrets, know-how and other items of intangible personal property
(which do not need to be described in Section 2.8 of the Disclosure Schedule),
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"Intangible Property") owned or used by the Seller in carrying on the Business,
specifying which items of Intellectual Property are owned by the Seller and
which items are owned by a third party (including by RM or an Affiliate of RM);
and (ii) a true, correct and complete list of all licenses or similar agreements
or arrangements to which the Seller is a party, either as licensee or licensor,
with respect to the Intangible Property. Except as otherwise disclosed in
Section 2.8 of the Disclosure Schedule:
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(a) the Seller owns all right, title and interest in and to the
patents, patent applications, trade names, trademarks, and trademark
registrations included in the Intangible Property, free and clear of all
licenses or other rights of third parties (including RM and its Affiliates) and
any liens, security interests, charges, encumbrances and equities and, to the
best of its knowledge, owns all of the other Intangible Property;
(b) the Seller has the right to use, and the Buyer will have the
right to continue to use immediately after the Closing, the Intangible Property
in connection with the conduct of the Business in the manner presently
conducted, and, to the knowledge of the Seller, such use or continuing use
immediately after the Closing does not conflict with, infringe upon or violate
any rights of any other person or entity;
(c) there are no outstanding, nor to the best knowledge of the
Seller, any threatened, disputes or other disagreements with respect to any
licenses or similar agreements or arrangements described in Section 2.8 of the
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Disclosure Schedule or with respect to infringement by a third party of any of
the Intangible Property or alleged invalidity or joint ownership or joint right
to use immediately after the Closing any of the Intangible Property; and
(d) the Seller has taken all steps reasonably necessary to
protect its right, title and interest in and to (and, where appropriate, the
secrecy and confidentiality of) the Intangible Property owned by it and the
continued use immediately after the Closing of the Intangible Property owned by
third parties.
2.9 Inventory. The Seller has provided to the Buyer a true, correct
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and complete list of the Inventory as of March 31, 1997. All inventories of
finished goods reflected in such list had expiration dates of not less than
eight months at March 31, 1997. The Inventory consists of elements of standard
quality. The amount of the Inventory is normal for the Business. The Inventory
does not have any evident defect.
2.10 Tax Matters. The Seller has filed on a timely basis all tax
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returns required to be filed, and paid all taxes, interest, penalties,
assessments and deficiencies which have become due or which have been claimed to
be due, with respect to the Business, where the failure to so file or pay could
have a material adverse impact on the Assets or the Buyer's
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rights therein after the Closing.
2.11 Compliance with Laws. The Seller has all requisite
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governmental licenses, permits and certificates, including United States
Department of Agriculture approvals, necessary to conduct the Business and own
and operate the Assets (collectively, the "Permits"). Section 2.11 of the
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Disclosure Schedule attached hereto sets forth a true, correct and complete list
of all such Permits, copies of which have previously been delivered by the
Seller to the Buyer. To the best knowledge of Seller, the Seller has not
violated, and on the date hereof does not violate, in any material respect, any
applicable laws, regulations or orders (including, but not limited to, any of
the foregoing relating to employment discrimination, occupational safety,
environmental protection, hazardous waste, conservation or corrupt practices)
with respect to the Business, the enforcement of which would have a material
adverse effect on the Assets or the Buyer's rights therein after the Closing.
The Seller has had no notice or communication from any governmental or
regulatory authority of any such violation or noncompliance.
2.12 Customers and Suppliers. The Seller has provided to the Buyer a
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true and correct list of the names, addresses and telephone numbers of all
customers that have purchased Products directly from the Seller or its
Affiliates since January 1, 1995. Section 2.12 of the Disclosure Schedule lists
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(a) the names of, and the volume and percentage of, products or services
purchased from, each of ten (10) largest suppliers of products and services
during the year ended December 31, 1996, and (b) the names of, and the volume
and percentage of sales to, the Seller's fifteen (15) largest customers during
such period (including RM and its Affiliates in each such list as a single
customer or supplier). Seller has not received written notice of the
interruption of its relations with such 10 largest suppliers and 15 largest
customers and, except as described in Section 2.12 of the Disclosure Schedule,
there are no disputes between the Seller and any of such customers or suppliers
pending or, to the knowledge of the Seller, threatened.
2.13 Warranty and Product Liability Claims. There have been no
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warranty or product liability claims made against the Seller with respect to the
Products from January 1, 1994 through the date hereof. If any such claims arise
after the date hereof with respect to any period prior to the Closing, all
information relative to such claims shall be made available to the Buyer.
2.14 Absence of Certain Changes or Events.
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Except as set forth in Section 2.14 of the Disclosure Schedule,
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since December 31, 1996, the Seller has not experienced any materially adverse
event or entered into any transaction which is not in the usual and ordinary
course of business which materially affects the Business nor, without limiting
the generality of the foregoing:
(i) sold or purchased, assigned, transferred or licensed-
out any of the Intangible Property;
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(ii) authorized or issued recall notices for any of the
Products;
(iii) received notice of any litigation, material warranty
claim or products liability claims affecting the Assets or the Products; or;
(iv) made any material change in its selling methods or
efforts with respect to the "VetRed" Products.
2.15 Disclosure. The information concerning the Seller and the Assets
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set forth in this Agreement, the Disclosure Schedule and any document, statement
or certificate furnished to the Buyer by or on behalf of the Seller or any of
its Affiliates pursuant to this Agreement, does not contain any untrue statement
of a material fact nor does it omit to state any material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not false or misleading.
3 Representations and Warranties of the Buyer
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The Buyer represents and warrants to the Seller as follows:
3.1 Organization and Authority. The Buyer is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California, U.S.A., and has all requisite power and authority (corporate and
other) to own its properties and to carry on its business as now being
conducted. The Buyer has full power and authority to execute and deliver this
Agreement and the agreements contemplated herein, and to consummate the
transactions contemplated hereby and thereby. Certified copies of the Articles
of Incorporation and the Bylaws of the Buyer, as amended to date, have been
previously delivered to the Seller, are complete and correct, and no amendments
have been made thereto or have been authorized since the date thereof.
3.2 Authorization. The execution and delivery by the Buyer of this
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Agreement and the agreements provided for herein, and the consummation by the
Buyer of the transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed by the Buyer and this Agreement and all such other agreements and
written obligations entered into and undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms. The execution, delivery and performance of this Agreement and
the agreements provided for herein, and the consummation by the Buyer of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any United States Federal or California law, rule or regulation applicable to
the Buyer; (b) violate the provisions of the Buyer's Articles of Incorporation
or Bylaws; (c) violate any judgment, decree, order or award of any court,
governmental body or arbitrator applicable to the Buyer or by which it or any of
its properties or assets is bound; (d) conflict with or result in the breach or
termination of any term or
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provision of, or constitute a default under, or cause any acceleration under,
any agreement to which the Buyer is a party or any of its assets or properties
is or may be bound; or (e) or cause the creation of any lien, charge or
encumbrance upon the properties or assets of the Buyer pursuant to any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Buyer is a party or by which the Buyer or any of its properties is or may be
bound. Schedule 3.3 attached hereto sets forth a true, correct and complete
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list of all consents and approvals of third parties that are required in
connection with the consummation by the Buyer of the transactions contemplated
by this Agreement.
3.3 Broker's Fees. No broker or finder has acted for the Buyer in
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connection with the transactions contemplated by this Agreement other than ▇▇▇
▇▇▇▇▇▇ & Co.
3.4 Disclosure. The information concerning the Buyer set forth in
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this Agreement, any schedule hereto and any document, statement or certificate
furnished to the Seller by or on behalf of the Buyer or any of its Affiliates
pursuant to this Agreement, does not contain any untrue statement of a material
fact nor does it omit to state any material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not false or misleading.
4 Pre-Closing Covenants of the Seller
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From and after the date hereof and until the Closing Date:
4.1 Conduct of Business. Except as agreed to in writing by the
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Buyer, the Seller shall carry on the Business diligently and substantially in
the same manner as heretofore (or in accordance with the "Witness" roll out
plans as disclosed previously to Buyer) and shall not impair any of the Assets.
4.2 Absence of Material Changes. Without the prior written consent
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of the Buyer, the Seller shall not take any action (or fail to take any action)
within the Seller's control that would result in any of the warranties set forth
in Section 2 hereof to be untrue as at the Closing Date.
4.3 Inventory Deficit. Two business days prior to the date of the
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Closing, the Seller shall inform the Buyer, in accordance with Section 1.2
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above, as to whether the Seller expects that there will be a reduction in the
Purchase Price due to an Inventory Deficit.
4.4 Continuing Obligation to Inform. Prior to the Closing, the
-------------------------------
Seller will promptly deliver or cause to be promptly delivered to the Buyer
supplemental information concerning events subsequent to the date hereof which
would render any statement or warranty in this Agreement or any information
contained in any Schedule attached hereto inaccurate or incomplete in any
material respect at any time after the date hereof until the Closing Date;
provided, that none of such supplemental information shall constitute an
--------
amendment of any statement or warranty in this Agreement or any Schedule,
Exhibit or
10
document furnished pursuant hereto.
5 Parties' Efforts to Obtain Satisfaction of Conditions
-----------------------------------------------------
The Seller and the Buyer covenant and agree to use commercially
reasonable efforts to obtain the satisfaction of the conditions specified in
this Agreement.
6 Conditions to Obligations of the Buyer
--------------------------------------
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
6.1 Continued Truth of Representations and Warranties of the Seller;
-----------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of the Seller shall be true on and as of the Closing Date as though such
warranties were made on and as of such date (even though they purport to have
been given on a date prior to the Closing Date, other than representations and
warranties that are made as of a date certain, which representations and
warranties shall be true as of such date), except for any changes consented to
in writing by the Buyer. The Seller shall have performed and complied with all
terms, conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by it prior to or at the
Closing Date.
6.2 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Seller of the transactions contemplated by this
Agreement and the ownership of the Assets and/or operation of the Business by
the Buyer shall have consented to, authorized, permitted or approved such
transactions, except where the absence of such consent, authorization or
approval would not have a material adverse effect on the Buyer's ownership of
the Assets and/or operation of the Business after the Closing.
6.3 Consents of Third Parties. The Seller shall have received all of
-------------------------
the consents and approvals set forth on Schedule 6.3 hereto.
------------
6.4 Adverse Proceedings. No action or proceeding by or before any
-------------------
court or other governmental body shall have been instituted or threatened which
shall seek to restrain, prohibit or invalidate the transactions contemplated by
this Agreement or which might affect the right of the Buyer to own the Assets
and/or operate the Business after the Closing.
6.5 Opinion of Counsel. The Buyer shall have received an opinion of
------------------
▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel of the Seller, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit A, and as to such other
---------
matters as may be reasonably requested by the Buyer or its counsel.
11
6.6 Distribution Agreement. The Buyer and the Seller shall have
----------------------
entered into a Distribution Agreement (the "Distribution Agreement") under which
the Seller shall agree to continue to distribute the Products on a short-term
basis.
6.7 Closing Deliveries. The Buyer shall have received at or prior to
------------------
the Closing, such documents, instruments or certificates as the Buyer may
reasonably request including, without limitation:
(a) a certificate executed by the Secretary (or equivalent
officer) of the Seller certifying the adoption by the Seller of all corporate
resolutions necessary to approve the execution and delivery of this Agreement
and the other agreements contemplated by this Agreement to which the Seller is a
party and attaching copies of all such resolutions;
(b) all of the consents to the transaction set forth on Schedule
--------
6.3 hereto, none of which consents shall contain any uncustomary condition that
---
is unduly burdensome to the Buyer; and
(c) a cross-receipt executed by the Seller.
6.8 Stock Purchase Agreement. The Stock Purchase Agreement shall
------------------------
remain in full force and effect and all conditions to the obligations of the
parties thereunder shall have been satisfied or waived.
6.9 USDA Approval. The USDA shall have approved the distribution and
-------------
sale of the first "Witness" Product in the United States, and such approval
shall not contain any conditions reasonably deemed by the Buyer to be unduly
burdensome or unusual.
7 Conditions to Obligations of the Seller
---------------------------------------
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Seller:
7.1 Continued Truth of Representations and Warranties of the Buyer;
---------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of the Buyer in this Agreement shall be true on and as of the Closing Date as
though such warranties were made on and as of such date (even though they
purport to have been given on a date prior to the Closing Date, other than
representations and warranties that are made as of a date certain, which
representations and warranties shall be true as of such date), except for any
changes consented to in writing by the Seller. The Buyer shall have performed
and complied with all terms, conditions, covenants, obligations, agreements and
restrictions required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings
---------------------
required to be taken on the part of the Buyer to authorize or carry out this
Agreement and the other
12
agreements contemplated hereby shall have been taken.
7.3 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions,
except where the absence of such consent, authorization or approval would not
have a material adverse effect on the Buyer's ownership of the Assets after the
Closing.
7.4 Consents of Third Parties. The Buyer shall have received all of
-------------------------
the consents and approvals set forth on Schedule 3.3 hereto.
------------
7.5 Adverse Proceedings. No action or proceeding by or before any
-------------------
court or other governmental body shall have been instituted or threatened which
shall seek to restrain, prohibit or invalidate the transactions contemplated by
this Agreement or which might affect the right of the Seller to transfer the
Assets.
7.6 Distribution Agreement. The Buyer and the Seller shall have
----------------------
entered into the Distribution Agreement.
7.7 Closing Deliveries. The Seller shall have received at or prior
------------------
to the Closing such documents, instruments or certificates as the Seller, may
reasonably request including, without limitation:
(a) the Purchase Price, in accordance with Section 1.2,
evidenced by the receiving bank;
(b) a certificate executed by the Secretary of the Buyer
certifying the adoption by the Buyer of all corporate resolutions necessary to
approve the execution and delivery of this Agreement and the other agreements
contemplated by this Agreement to which the Buyer is a party and attaching
copies of all such resolutions; and
(c) a cross-receipt executed by the Buyer.
7.8 Stock Purchase Agreement. The Stock Purchase Agreement shall
------------------------
remain in full force and effect and all conditions to the obligations of the
parties thereunder shall have been satisfied or waived.
8 Indemnification
---------------
8.1 By the Seller. If the Closing occurs, the Seller hereby
-------------
indemnifies and agrees to hold harmless the Buyer from and against all claims,
damages, losses, liabilities, costs and expenses (including, without limitation,
settlement costs and any reasonable legal, accounting or other expenses for
investigating or defending any actions or threatened actions)
13
(collectively, the "Losses") in connection with each and all of the following:
(a) any breach of any representation or warranty made by the
Seller in this Agreement or made in any statement, certificate or schedule
furnished by the Seller pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Seller contained in this Agreement;
(c) any warranty claim, product liability claim or costs of a
recall relating to (i) Products manufactured or sold by the Seller prior to the
Closing Date (including without limitation any and all Retained Inventory) or
(ii) the Seller's business or operation prior to the Closing Date; and
(d) any tax liabilities of the Seller with respect to the Assets
arising prior to Closing (and any sales or use tax with respect to the Assets
arising at the Closing).
8.2 By the Buyer. If the Closing occurs, the Buyer hereby
------------
indemnifies and agrees to hold harmless the Seller and its Affiliates from and
against all Losses in connection with each and all of the following:
(a) any breach of any warranty made by the Buyer in this
Agreement or made in any statement, certificate or schedule furnished by the
Buyer pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement; and
(b) any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement.
8.3 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this Section 8, the Buyer or the Seller, as the case may
be, seeking indemnification (the "Indemnified Party"), shall as promptly as
practicable after the Indemnified Party becomes aware of the material facts that
form the basis of such claim (and in any event within 5 business days after the
Indemnified Party becomes aware of any tax claim or receives written notice that
a legal claim has been filed, which tax claim or legal claim could give rise to
indemnification hereunder) notify the party required to provide indemnification
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice shall specify, if known, the amount or an estimate of
the amount of the liability arising therefrom. The Indemnified Party shall not
settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after notification
thereof as
14
provided in Subsection 8.4 of this Agreement, the Indemnified Party shall have
the right to settle or compromise such claim upon giving notice to the
Indemnifying Party as provided in Subsection 8.4.
8.4 Defense by the Indemnifying Party. In connection with any claim
---------------------------------
which may give rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the Indemnified Party, the
Indemnifying Party, at the sole cost and expense of the Indemnifying Party, may,
upon written notice to the Indemnified Party, assume the defense of any such
claim or legal proceeding. If the Indemnifying Party assumes the defense of any
such claim or legal proceeding, the Indemnifying Party shall select counsel
reasonably acceptable to the Indemnified Party to conduct the defense of such
claims or legal proceedings and at the sole cost and expense of the Indemnifying
Party shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding, without the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. If the Indemnifying Party does not assume the
defense of any such claim or litigation resulting therefrom within 30 days after
the date on which notice of such claim is received: (a) the Indemnified Party
may, at the Indemnifying Party's sole expense (payable as incurred and on
demand) defend against such claim or litigation as set forth in Section 8.3,
-----------
after giving notice of the same to the Indemnifying Party, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense.
8.5 Limitations on Liability. The liability of the Seller for
------------------------
indemnification hereunder shall be limited to the sum of (a) $14,883,690 plus
(b) the amount of the Earn-Out Payment, if any, actually paid to RM pursuant to
the Stock Purchase Agreement, less (c) the Post-Closing Reduction, if any,
actually paid (in the form of Retained Inventory and/or cash) to the Buyer
(collectively, the "Indemnification Amount"); provided that the aggregate amount
--------
for which the Seller shall be obligated to indemnify the Buyer hereunder, and
for which RM shall be obligated to indemnify the Buyer under the Stock Purchase
Agreement, shall not exceed the Indemnification Amount. Notwithstanding the
foregoing provisions, however, the Seller will have indemnification liability
under this Agreement only if the aggregate amount of Losses suffered by the
Buyer under this Agreement and under the Stock Purchase Agreement exceeds an
amount equal to $350,000 (the "Indemnity Threshold"); provided, that after the
--------
aggregate amount of Losses suffered by the Buyer exceeds the Indemnity
Threshold, all Losses suffered by the Buyer (including those included in
reaching the Indemnity Threshold) shall be subject to the Seller's
indemnification obligations. The liability of the Buyer to the Seller for
indemnification shall be limited to the Indemnification Amount. The liability
of the Buyer to the Seller for indemnification shall be limited to the
Indemnification Amount; provided that the aggregate amount for which the Buyer
--------
shall be obligated to indemnify the Seller hereunder, and for which the Buyer
shall be obligated to indemnify RM under the Stock Purchase Agreement, shall not
exceed the Indemnification Amount. The indemnification obligations of the
parties set forth in this Article 8 shall be the exclusive
15
remedy of the parties with respect to claims for a breach of representations or
warranties hereunder or the failure to perform obligations required to be
performed hereunder.
8.6 Payment of Indemnification Obligation. All indemnification
-------------------------------------
payments by an Indemnifying Party hereunder shall be made within thirty (30)
days after (a) such claim is accepted by the Indemnifying Party or (b) final
judgment is rendered thereon by an arbitration tribunal or court of competent
jurisdiction. The amount of any indemnification payment shall be net of all
insurance proceeds received by the Indemnified Party with respect to the claim
for which indemnification is being made. All indemnification payments shall be
effected by payment of cash or delivery of a cashier's or certified check in the
amount of the indemnification liability; provided, that if the Seller is the
--------
Indemnifying Party, it may elect to pay up to 19.314% of the amount of any
indemnification payment by causing RM to deliver to the Buyer a portion of the
Buyer Shares (as defined in the Stock Purchase Agreement) then held by RM. Any
such shares shall be valued at the higher of $5.00 per share or the average
closing price of shares of the Buyer's Common Stock on the principal market
where such shares are traded during the fifteen (15) trading days immediately
preceding the date on which such shares are delivered by RM to the Buyer. The
parties shall treat all indemnification payments as either a reimbursement to
the party making the original payment or as a reduction in the Purchase Price
paid by the Buyer, as appropriate to achieve the most beneficial tax and
accounting treatment for both parties. In the event that treating the payment
as either reimbursement or a reduction of the Purchase Price will have a
positive tax and accounting effect for one of the parties and no negative tax or
accounting effect for the other party, the payment shall be so treated. If one
party will benefit from one form of treatment at the expense of the other, the
parties shall treat the payment for tax and accounting purposes to minimize
taxes and, subsidiarily, in a manner which favors the Indemnified Party.
8.7 Survival of Representations and Warranties; Claims for
------------------------------------------------------
Indemnification. All representations and warranties made by the Seller and the
---------------
Buyer in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby, shall
survive the Closing and any investigation at any time made by or on behalf of
the Seller or the Buyer, as the case may be. All such representations and
warranties shall expire on the second anniversary of the Closing Date, except
with respect to claims, if any, (a) asserted in writing prior to such second
anniversary identified as a claim for indemnification pursuant to this Section 8
or (b) which are based upon the representations and warranties of the Seller
related to taxes and environmental matters, which shall survive until the
applicable statute of limitations has expired.
9 Termination of Agreement; Option to Proceed; Damages. This Agreement
----------------------------------------------------
shall terminate at 12:00 noon California time, on July 31, 1997, if the Closing
has not been consummated, unless such date is extended by the written consent of
all parties hereto; provided that, if on the Closing Date, one or more of the
--------
conditions to Closing set forth in Article 6 or Article 7 shall not have been
satisfied, but the party having the obligation to obtain satisfaction of such
condition certifies in writing to the other party that it believes that such
condition will be satisfied within 30 days, the party having such obligation may
elect, by
16
written notice to the other party, to extend the Closing Date for a period not
to exceed 30 days, and thereafter the parties shall use their respective best
efforts to satisfy all conditions to Closing during the period of such
extension.
10 Dispute Resolution
------------------
10.1 General. In the event that any dispute should arise between the
-------
parties hereto with respect to any matter covered by this Agreement, the parties
hereto shall resolve such dispute in accordance with the procedures set forth in
this Section 10.
10.2 Consent of the Parties. In the event of any dispute between the
----------------------
parties with respect to any matter covered by this Agreement, the parties shall
first use their best efforts to resolve such dispute among themselves. If the
parties are unable to resolve the dispute the dispute will be submitted to
arbitration in accordance with Subsection 10.3 hereof.
10.3 Arbitration. Any dispute arising in connection with the present
-----------
Agreement that cannot be settled between the parties in accordance with Section
10.2 shall be finally settled under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce by one or more arbitrators appointed in
accordance with the said Rules. The arbitration shall take place in Geneva,
Switzerland, and shall be conducted in the English language.
11 Notices
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by confirmed
telecopier or international courier, addressed as follows or to such other
address of which the parties may have given notice:
To the Buyer:
Synbiotics Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
(fax: (▇) ▇▇▇-▇▇▇-▇▇▇▇)
17
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
Hasilwood House
▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
(fax: (▇▇) ▇▇▇-▇▇▇-▇▇▇▇)
To the Seller:
Rhone Merieux, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(fax (▇) ▇▇▇-▇▇▇-▇▇▇▇)
With copies to:
Rhone Merieux S.A.
▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ - ▇▇▇▇ CEDEX 07
FRANCE
Attention: Mr. B. Adelus
(fax: (▇▇) ▇▇▇-▇▇-▇▇-▇▇)
and
Shearman & Sterling
▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention : Bruno Ranger
(fax: (▇▇) ▇-▇▇▇▇-▇▇▇▇)
and
Jurifib S.A.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇
▇▇▇▇▇▇
Attention : Maitre ▇. ▇▇▇▇▇▇▇
(fax: (▇▇) ▇-▇▇▇▇-▇▇▇▇)
18
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, or (b) two
business days after being sent, if sent by confirmed telecopy or international
courier.
12 Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Seller, on the other hand, may not assign their
respective obligations hereunder without the prior written consent of the other
party; provided, however, that the Buyer may assign this Agreement, and its
rights and obligations hereunder, to one or more subsidiaries or Affiliates of
the Buyer, after the Closing Date, or to any person which acquires the Buyer or
substantially all of the Buyer's assets. Any assignment in contravention of this
provision shall be void. No assignment shall release the Buyer or Seller from
any obligation or liability under this Agreement.
13 Entire Agreement; Amendments; Attachments
-----------------------------------------
(a) This Agreement, the Disclosure Schedule, all other Schedules and
Exhibits hereto, and all agreements and instruments to be delivered by the
parties pursuant hereto represent the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and supersede all
prior oral and written and all contemporaneous oral negotiations, commitments
and understandings between such parties with respect to such subject matter.
The Buyer and the Seller may amend or modify this Agreement, in such manner as
may be agreed upon, only by a written instrument executed by the Buyer and the
Seller.
(b) If the provisions of the Disclosure Schedule or any Schedule or
Exhibit to this Agreement are inconsistent with the provisions of this
Agreement, the provisions of the Agreement shall prevail. The Disclosure
Schedule and other Schedules and Exhibits attached hereto or to be attached
hereto are hereby incorporated as integral parts of this Agreement.
14 Severability
------------
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
15 Investigation
-------------
All representations and warranties contained herein which are made to
the best knowledge of a party shall require that such party make reasonable
investigation and inquiry
19
with respect thereto to ascertain the correctness and validity thereof.
16 Expenses
--------
Except as otherwise expressly provided herein, the Buyer, on the one
hand, and the Seller, on the other hand, will pay all fees and expenses
(including, without limitation, legal and accounting fees and expenses) incurred
by them in connection with the transactions contemplated hereby.
17 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
18 Section Headings
----------------
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
19 Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
BUYER:
SYNBIOTICS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
and Chief Executive Officer
SELLER
RHONE MERIEUX, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Counsel/Proxy
20