<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 29, 1998
-----------------------------
SERACARE, INC.
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-21781 95-4343492
-----------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
1925 Century Park East, Suite 1970, Los Angeles, California 90067
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 772-7777
---------------------
Not Applicable
-----------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Total sequentially numbered pages in this document: ___.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 29, 1998 (the "Closing Date") SeraCare, Inc., a Delaware
corporation (the "Company") acquired all of the stock of American Plasma,
Inc., a Texas corporation (herein referred to as "American") located in
Houston, Texas.
American operates eleven plasmapheresis centers located in: Houston, Texas
(4), South Houston, Texas; Beaumont, Texas; Longview, Texas; Casa Grande,
Arizona; Phoenix, Arizona; Mesa, Arizona; and, Amarillo, Texas.
Under terms of the Stock Purchase Agreement dated September 29, 1998 (which
is filed as Exhibit 2.1 to this Form 8K and incorporated herein by this
reference), the purchase price paid by SeraCare (which is subject to
adjustment) consisted of $8,705,428 in cash. The purchase price was
determined through arms length negotiations between the Company and American.
The Company financed the acquisition by drawing $5.5 million from its
revolving credit facility with Brown Brothers Harriman and by obtaining
bridge loans from a related party of $1.250 million and from an unrelated
party of $2.0 million.
In the acquisition of the stock of American, the Company acquired all of the
operating assets of American and assumed the liabilities of American, with
the exception of certain "Excluded Liabilities". The operating assets
acquired by SeraCare include, but are not limited to: cash; trade accounts
receivable; inventories; furniture and fixtures; all machinery and
equipment; all leasehold improvements; all licenses and other intangible
properties including certifications, FDA licenses and trademarks; and all
rights and interests arising under or in connection with any contracts with
customers to which American is a party. The Company plans to continue to
operate American as a wholly-owned subsidiary.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
(1) Audited financial statements of American Plasma, Inc. for
the calendar years ended December 31, 1997 and 1996.
a. Report of Independent Certified Public Accountants.
b. Balance Sheets as of December 31, 1997 and 1996.
c. Statements of Earnings for the years ended December 31,
1997 and 1996.
d. Statement of Changes in Partners' Capital and
Stockholders' Equity for the years ended December 31, 1997
and 1996.
e. Statements of Cash Flows for the years ended December 31,
1997 and 1996.
f. Notes to Financial Statements.
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
At this time, it is impractical to file the required pro
forma financial information. Such data will be filed as
soon as practical, but no later than 60 days after the date
on which this Report on Form 8-K is filed.
(c) EXHIBITS
(2.1) Stock Purchase Agreement, dated as of September 29, 1998,
among SeraCare, Inc. and American Plasma, Inc. and
Uro-Tech, Ltd. And Omnimed Corporation and John H. Wilson,
III and Gary B. Wood, Ph.D.
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
SERACARE, INC.
DATE: OCTOBER 5, 1998 BY: /S/ BARRY D. PLOST
------------------ -----------------------------
BARRY D. PLOST
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
BY: /S/ JERRY L. BURDICK
-----------------------------
JERRY L. BURDICK
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
<PAGE>
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
AMERICAN PLASMA, INC.
DECEMBER 31, 1997 AND 1996
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
American Plasma, Inc.
We have audited the balance sheets of American Plasma, Inc. (formerly
American Plasma, Ltd.) as of December 31, 1997 and 1996 and the related
statements of earnings, changes in partners' capital and stockholders'
equity, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present
fairly, in all material respects, the financial position of American Plasma,
Inc. as of December 31, 1997 and 1996 and the results of its operations and
its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
As discussed in note A3, the Company changed its method of inventory
costing in 1996.
GRANT THORNTON LLP
Houston, Texas
March 2, 1998
<PAGE>
AMERICAN PLASMA, INC.
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 556,709 $ 561,272
Trade accounts receivable 265,923 144,125
Income taxes receivable 46,578 -
Inventories 519,092 805,857
Prepaid expenses 68,568 79,811
---------- ----------
Total current assets 1,456,870 1,591,065
PROPERTY AND EQUIPMENT, net 880,058 742,582
OTHER ASSETS
Goodwill (less accumulated amortization of $89,600
and $36,460) 707,500 760,640
Deferred noncompete agreement (less accumulated
amortization of $130,387 and $53,058) 333,593 410,923
Deferred tax asset 108,776 124,056
Deposits and other 26,138 29,583
---------- ----------
1,176,007 1,325,202
---------- ----------
$3,512,935 $3,658,849
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 37,124 $ 190,654
Accrued liabilities 224,277 255,422
Income taxes payable 17,124 269,491
Current maturities of long-term obligations 249,516 165,348
---------- ----------
Total current liabilities 528,041 880,915
LONG-TERM OBLIGATIONS, less current maturities 807,929 943,445
COMMITMENTS - -
STOCKHOLDERS' EQUITY
Common stock - authorized 10,000,000 shares; par
value $.01; issued and outstanding 1,000,000 shares 10,000 10,000
Additional paid-in capital 1,254,753 1,254,753
Retained earnings 912,212 569,736
---------- ----------
2,176,965 1,834,489
---------- ----------
$3,512,935 $3,658,849
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
AMERICAN PLASMA, INC.
STATEMENTS OF EARNINGS
Year ended December 31,
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net sales $17,263,384 $13,953,563
Cost of goods sold 15,732,753 12,811,735
----------- -----------
Gross profit 1,530,631 1,141,828
General and administrative expenses 726,376 991,939
----------- -----------
Earnings from operations 804,255 149,889
Other (income) expenses
Interest expense 93,568 70,134
Other expenses, net 146,331 123,669
Gain on sale of centers - (1,005,333)
----------- -----------
239,899 (811,530)
----------- -----------
Earnings before income taxes 564,356 961,419
Income tax expense (benefit)
Current 206,600 269,491
Deferred 15,280 (124,056)
----------- -----------
221,880 145,435
----------- -----------
Earnings before cumulative effect of a change in
accounting principle 342,476 815,984
Cumulative effect of a change in accounting principle - 197,531
----------- -----------
NET EARNINGS $ 342,476 $ 1,013,515
----------- -----------
----------- -----------
Basic and diluted net earnings per share:
Net earnings per share before cumulative effect of
a change in accounting principle $ 0.34 $ 0.81
Cumulative effect of a change in accounting principle - 0.20
----------- -----------
Net earnings per share $ 0.34 $ 1.01
----------- -----------
----------- -----------
Weighted average common shares outstanding 1,000,000 1,000,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
AMERICAN PLASMA, INC.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
AND STOCKHOLDERS' EQUITY
Years ended December 31, 1996 and 1997
<TABLE>
<CAPTION>
Total Additional
partners' Common paid-in Retained
capital stock capital earnings Total
---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ 820,974 $ - $ - $ - $ 820,974
Net earnings from January 1,
through September 30, 1996 443,779 - - - 443,779
---------- -------- ---------- -------- ----------
Balance at September 30, 1996 1,264,753 - - - 1,264,753
Conversion of entity from partnership
to corporate formation (1,264,753) 10,000 1,254,753 - -
Net earnings from October 1 through
December 31, 1996 - - - 569,736 569,736
---------- -------- ---------- -------- ----------
Balance at December 31, 1996 - 10,000 1,254,753 569,736 1,834,489
Net earnings for the year - - - 342,476 342,476
---------- -------- ---------- -------- ----------
Balance at December 31, 1997 $ - $ 10,000 $1,254,753 $912,212 $2,176,965
---------- -------- ---------- -------- ----------
---------- -------- ---------- -------- ----------
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
AMERICAN PLASMA, INC.
STATEMENT OF CASH FLOWS
Year ended December 31,
<TABLE>
<CAPTION>
1997 1996
--------- -----------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 342,476 $ 1,013,515
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 400,721 343,272
Gain on sale of centers - (1,005,333)
Loss on sale of equipment 33,211 -
Deferred tax provision 15,280 (124,056)
Cumulative effect of a change in accounting principle - (197,531)
Change in assets and liabilities
(Increase) decrease in trade accounts receivable (121,798) 43,668
Increase in income taxes receivable (46,578) -
Decrease (increase) in inventories 286,765 (448,661)
Decrease (increase) in prepaid expenses 11,243 (27,529)
Decrease in other assets 604 53,209
(Decrease) increase in accounts payable and
accrued liabilities (184,675) 221,495
(Decrease) increase in income tax payable (252,367) 269,491
--------- -----------
Net cash provided by operating activities 484,882 141,540
Cash flows from investing activities
Purchase of plasma centers - (62,500)
Purchase of equipment and capital improvements (439,187) (270,306)
Proceeds from sale of centers and disposal of equipment 1,090 1,043,498
--------- -----------
Net cash provided by investing activities (438,097) 710,692
Cash flows from financing activities
Proceeds from note payable 350,000 -
Payments on long-term obligations (401,348) (881,861)
--------- -----------
Net cash used by financing activities (51,348) (881,861)
--------- -----------
Net decrease in cash and cash equivalents (4,563) (29,629)
Cash and cash equivalents at beginning of year 561,272 590,901
--------- -----------
Cash and cash equivalents at end of year $ 556,709 $ 561,272
--------- -----------
--------- -----------
Supplemental disclosures of cash flow information
Cash paid for interest $ 91,944 $ 76,703
Cash paid for income taxes 505,545 -
Noncash transactions
Acquisition of plasma centers and noncompete agreement
in exchange for debt - 1,498,580
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - PURPOSE OF THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
American Plasma, Inc. (the Company) was formed on February 4, 1991, to
collect, market and sell blood plasma products to pharmaceutical companies
and health-care providers. It operates plasmapheresis centers in Texas and
Arizona.
The Company, which had been operating as a partnership, was incorporated on
September 30, 1996 in the state of Texas under the name American Plasma,
Inc. The ownership interest is substantially the same. It is a
wholly-owned subsidiary of Uro-Tech, Ltd.
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements follows.
1. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
American Plasma, Inc. maintains cash balances at several financial
institutions. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. Uninsured balances aggregate
to approximately $237,000 at December 31, 1997. The Company has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash and cash equivalents.
2. ACCOUNTS RECEIVABLE
The Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required.
3. INVENTORIES
Inventories of blood plasma are stated at the lower of cost or market. Cost
is determined by the first-in, first-out method.
6
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE A - PURPOSE OF THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - CONTINUED
Effective January 1, 1996, the Company changed its method of inventory
costing to include the direct production costs of its plasma centers.
Previously, such costs were charged to expense in the period incurred rather
than in the period in which the inventory was sold. The Company believes
this method is preferable because it provides a better matching of costs
with related revenues. The $197,531 cumulative effect of this change for
periods prior to January 1, 1996 is shown separately in the statement of
earnings. The effect of this change in 1996 was to increase net earnings by
$197,531.
4. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization
are provided for in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated useful lives on a straight-line
basis.
Leasehold improvements are amortized over the lives of the respective leases
or the service lives of the improvements, whichever is shorter.
5. NONCOMPETE AGREEMENTS
The costs incurred for noncompete agreements when a center is purchased by
the Company are amortized straight-line over the life of the individual
agreement, ranging from two to six years. The Company currently has one
such agreement which is being amortized over six years.
6. GOODWILL
Goodwill is the excess of cost over the fair value of net assets acquired
and is being amortized by the straight-line method over 15 years.
7. REVENUE RECOGNITION
Revenue from sales of blood plasma is recognized when the goods are shipped
to the customer.
7
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE A - PURPOSE OF THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - CONTINUED
8. REVENUE FROM MAJOR CUSTOMER
The Company has a sales contract with its major customer, Alpha Therapeutic
(Alpha). Sales to this customer accounted for approximately 93% and 94% of
total sales in 1997 and 1996, respectively. The sales contract states that
this major customer will provide plasma donor supplies and laboratory
testing services to the Company, in exchange for a price below market (equal
to Alpha's invoiced cost for such supplies and services provided to the
Company) on the sale of blood plasma to Alpha. The Company has accounted
for these transactions as nonmonetary reciprocal exchanges and operations in
the current year reflect the additional revenue and cost of goods sold that
would have been recognized had the Company purchased its plasma donor
supplies and laboratory testing services and sold its blood plasma at market
prices. Revenues and costs of goods sold for 1996 have been reclassified
for comparability. The amount of the revenue and cost of goods adjustment
is approximately $6,719,000 and $5,288,000 for 1997 and 1996, respectively.
9. INCOME TAXES
Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities as
measured by the enacted tax rates which will be in effect when these
differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities.
Income taxes for the period during which the Company operated as a
partnership are payable by the partners and are not reflected in the
Company's financial statements.
10. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
11. FAIR VALUES
The Company's financial instruments include cash and cash equivalents,
accounts receivable, accounts payable and long-term obligations. The fair
value of financial instruments are determined by reference to various market
data and other valuation techniques, as appropriate. The fair values of
financial instruments approximated their carrying value at December 31,
1997.
8
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE A - PURPOSE OF THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - CONTINUED
12. NEW ACCOUNTING PRONOUCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
REPORTING COMPREHENSIVE INCOME, and SFAS No. 131, DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 130 requires that a
company report comprehensive income and its components in the financial
statements. SFAS No. 131 requires that a public business enterprise report
financial and descriptive information about operating segments.
SFAS No. 130 and SFAS No. 131 are required for fiscal years beginning after
December 15, 1997. The Company will adopt SFAS No. 130 and SFAS No. 131 for
the year ended December 31, 1998. The implementation of SFAS No. 130 and
SFAS No. 131 will result only in additional disclosure and will have no
other impact on the financial statements.
13. LONG-LIVED ASSETS
The Company records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets might be
impaired and undiscounted cash flows estimated to be generated by those
assets are less than the carrying amount of those estimates. Based on
management's estimation process, no impairment losses were recorded as of
December 31, 1997.
14. EARNINGS PER SHARE
The Company's earnings per share is presented in accordance with Statement
of Financial Accounting Standards No. 128, EARNINGS PER SHARE. Basic
earnings per share is computed using the weighted average number of shares
outstanding. Diluted earnings per share is computed using the weighted
average number of shares outstanding adjusted for the incremental shares
attributed to outstanding securities with the ability to purchase or convert
into common stock.
9
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE B - PROPERTY AND EQUIPMENT
The following is a summary of the estimated lives used in determining
depreciation and property, plant and equipment at cost, less accumulated
depreciation:
<TABLE>
<CAPTION>
Estimated
Useful
Life 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Leasehold improvements 2 - 5 years $ 824,352 $ 590,644
Furniture and fixtures 5 years 191,138 222,255
Medical equipment 5 years 600,685 558,625
----------- -----------
1,616,175 1,371,524
Less accumulated depreciation and amortization 736,117 628,942
----------- -----------
$ 880,058 $ 742,582
----------- -----------
----------- -----------
</TABLE>
NOTE C - ACQUISITION AND DISPOSAL OF PLASMA CENTERS
During 1996, the Company purchased substantially all of the assets of three
plasma centers for $1,097,100. The assets acquired were recorded at the
combined fair value of $300,000 and the difference was recorded as goodwill.
The Company also acquired a noncompete agreement from the former owners of
these centers in exchange for a note payable over six years totaling
$463,980.
The Company sold three plasma centers during 1996. Total proceeds from
these sales were $1,040,000 and in a net gain on disposition of $1,005,333
was realized.
NOTE D - LINE OF CREDIT
The Company had an unused revolving line of credit in the amount of
$250,000 at December 31, 1997 and 1996. The interest rate on borrowings
under this line is prime plus 2%. The agreement was renewed on February 1,
1998.
10
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1997 and 1996
NOTE E - LONG-TERM OBLIGATIONS
Long-term obligations consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Promissory note payable in quarterly installments of
$40,152 including interest at 12%; matures May 1,
2002; collateralized by machinery and equipment $ 532,664 $ 623,349
Promissory note payable on demand, but if no demand
is made in monthly installments of $5,806 plus
interest at prime + 2%; maturing September 18, 2000;
collateralized by substantially all assets of the Company 191,667 -
Promissory note payable in quarterly installments of
$19,333; noninterest bearing; matures April 1, 2002;
collateralized by machinery and equipment 333,114 410,444
Noninterest-bearing loan payable to Uro-Tech, Ltd.; the
agreement has no repayment terms and is classified
as long-term - 75,000
----------- -----------
1,057,445 1,108,793
Less: current maturities (249,516) (165,348)
----------- -----------
$ 807,929 $ 943,445
----------- -----------
----------- -----------
</TABLE>
Maturities of long term debt for the five years following December 31, are as
follows:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ----------
<S> <C>
1998 $ 249,516
1999 262,153
2000 259,338
2001 223,535
2002 62,903
----------
$1,057,445
----------
----------
</TABLE>
11
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1997 and 1996
NOTE F - INCOME TAXES
The components of the Company's deferred taxes are:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Deferred tax assets
Depreciation and asset basis differences $ 74,164 $ 75,021
Accrued expenses not currently deductible
for tax purposes 29,238 53,517
Other 5,374 -
----------- -----------
108,776 128,538
Deferred tax liability
Other - (4,482)
----------- -----------
Net deferred tax asset $108,776 $124,056
----------- -----------
----------- -----------
</TABLE>
During the year ended December 31, 1996, the Company's income tax rate
differed from the Federal statutory rate primarily due to earnings
attributable to the period the Company operated as a partnership. Taxes on
these earnings were payable by the partners, not the Company.
Income taxes receivable for 1997 represents amounts related to federal income
taxes and income taxes payable for 1997 represents amounts due for state
income taxes. Income taxes payable for 1996 represents amounts due for both
federal and state income taxes.
NOTE G - COMMITMENTS
OPERATING LEASES
The Company conducts a portion of its operations in leased facilities and
leases certain equipment. The following is a schedule by years of minimum
rental payments due under these operating leases.
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ -----------
<S> <C>
1998 $ 504,100
1999 430,200
2000 316,800
2001 221,800
2002 225,800
Thereafter 676,800
-----------
$2,375,500
-----------
-----------
</TABLE>
12
<PAGE>
AMERICAN PLASMA, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1997 and 1996
NOTE G - COMMITMENTS AND CONTINGENCIES - CONTINUED
Total rent expense on operating leases was $559,854 and $469,140 for 1997 and
1996, respectively.
EMPLOYMENT AGREEMENT
The Company has entered into two employment agreements with an officer and an
executive. The annual commitment of these two agreements combined are as
follows:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ -----------
<S> <C>
1998 $ 135,600
1999 135,600
2000 86,850
2001 45,600
-----------
$ 403,650
-----------
-----------
</TABLE>
13
<PAGE>
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT, DATED AS OF SEPTEMBER 29, 1998, AMONG SERACARE,
INC. AND AMERICAN PLASMA, INC. AND URO-TECH, LTD. AND OMNIMED CORPORATION
AND JOHN H. WILSON, III AND GARY B. WOOD, PH.D.
<PAGE>
STOCK PURCHASE AGREEMENT
entered into
September 29, 1998,
by and among
SERACARE, INC.,
a Delaware corporation,
as Buyer
and
AMERICAN PLASMA, INC.
a Texas corporation,
as Company
and
URO-TECH, LTD.,
a Texas limited partnership,
as the Shareholder
and
OMNIMED CORPORATION,
a Delaware corporation
and
JOHN H. WILSON, III
and
GARY B. WOOD, Ph.D.
<PAGE>
SCHEDULES
SCHEDULE 2.7 Excluded Liabilities
SCHEDULE 4.1 Organization, Good Standing and Related Matters
SCHEDULE 4.2 Capitalization Matters
SCHEDULE 4.3(a) Audited Financial Statements
SCHEDULE 4.3(b) Unaudited Interim Financial Statements
SCHEDULE 4.3(d) No Material Adverse Changes
SCHEDULE 4.3(e) Liabilities or Contingencies
SCHEDULE 4.5 Material Contracts
SCHEDULE 4.6 Real and Personal Property; Title; Leases
SCHEDULE 4.7(a) Intellectual Property
SCHEDULE 4.7(b) Products
SCHEDULE 4.8 Authorization; No Conflicts
SCHEDULE 4.9 Legal Proceedings
SCHEDULE 4.10 Labor Relations
SCHEDULE 4.13 Insurance
SCHEDULE 4.14(b) Licenses
SCHEDULE 4.15 Employee Benefit Plans, and Collective Bargaining and
Employee Agreements
SCHEDULE 4.16(a) Certain Interests; Intercompany Services
SCHEDULE 4.17 Bank Accounts, Powers, etc.
SCHEDULE 4.21 Receivables and Commissions Payable
SCHEDULE 4.22(a) Customers and Suppliers; Donors
SCHEDULE 4.23 Environmental Compliance
SCHEDULE 4.24 Corporate Names
SCHEDULE 6.1(a) Non-Competition Locations
SCHEDULE 6.5 Outstanding Approvals
EXHIBITS
EXHIBIT A Escrow Agreement
EXHIBIT B Opinion of Counsel of the Shareholder and the Company
EXHIBIT C Secretary's Certificate of Omni
EXHIBIT D Secretary's Certificate of the Company
EXHIBIT E Secretary's Certificate of Buyer
EXHIBIT F Form of Houghton Release
EXHIBIT G Form of Weaver Release
ARTICLE I
DEFINITIONS
<PAGE>
ARTICLE II
PURCHASE AND SALE OF STOCK/HOLDBACK AMOUNT/CLOSING
2.1 Transfer of Stock by the Shareholder. . . . . . . . . . . . . . . . .7
2.2 Purchase of the Stock by Buyer. . . . . . . . . . . . . . . . . . . .8
2.3 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.4 Holdback Amount; Escrow Account . . . . . . . . . . . . . . . . . . .9
2.5 Post-Closing Audit; Purchase Price Adjustment . . . . . . . . . . . 10
(a) Estimate Statement; Post-Closing Audit . . . . . . . . . . . . 10
(b) Initial Determination Statement. . . . . . . . . . . . . . . . 11
(c) Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Certain Further Adjustments.. . . . . . . . . . . . . . . . . . . . 12
(a) Adjustment Statement . . . . . . . . . . . . . . . . . . . . . 12
(b) Buyer's Recovery of Aggregate Adjustment . . . . . . . . . . . 13
2.7 Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Deliveries by the Shareholder. . . . . . . . . . . . . . . . . 14
(c) Deliveries by the Company. . . . . . . . . . . . . . . . . . . 14
(d) Deliveries by Omni . . . . . . . . . . . . . . . . . . . . . . 15
(e) Deliveries by Buyer. . . . . . . . . . . . . . . . . . . . . . 15
(f) Simultaneous Delivery. . . . . . . . . . . . . . . . . . . . . 16
(g) Delivery of Closing Documents. . . . . . . . . . . . . . . . . 16
(h) Effective Date For Financial Statement Purposes; No
Equitable Conversion . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND OMNI
3.1 Representations and Warranties of the Shareholder . . . . . . . . . 16
(a) Organization . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Ownership of Stock . . . . . . . . . . . . . . . . . . . . . . 17
(c) Delivery of Good Title . . . . . . . . . . . . . . . . . . . . 17
(d) Execution and Delivery . . . . . . . . . . . . . . . . . . . . 17
(e) No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Representations and Warranties of Omni. . . . . . . . . . . . . . . 17
(a) Organization; Status as General Partner. . . . . . . . . . . . 17
(b) Execution and Delivery . . . . . . . . . . . . . . . . . . . . 18
(c) No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
4.1 Organization, Good Standing and Related Matters . . . . . . . . . . 18
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4.2 Capitalization Matters. . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Financial Statements; Changes; Contingencies. . . . . . . . . . . . 19
(a) Audited Financial Statements . . . . . . . . . . . . . . . . . 19
(b) Unaudited Interim Financial Statements . . . . . . . . . . . . 19
(c) Auditors' Letters. . . . . . . . . . . . . . . . . . . . . . . 20
(d) No Material Adverse Changes. . . . . . . . . . . . . . . . . . 20
(e) No Other Liabilities or Contingencies. . . . . . . . . . . . . 21
4.4 Tax and Other Returns and Reports . . . . . . . . . . . . . . . . . 21
4.5 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Real and Personal Property; Title; Leases . . . . . . . . . . . . . 22
4.7 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 23
4.8 Authorization; No Conflicts . . . . . . . . . . . . . . . . . . . . 23
4.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.10 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.11 Minute Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.12 Accounting Records; Internal Controls . . . . . . . . . . . . . . . 25
(a) Accounting Records . . . . . . . . . . . . . . . . . . . . . . 25
(b) Data Processing; Access. . . . . . . . . . . . . . . . . . . . 25
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.14 Compliance with Law; Status of Licenses . . . . . . . . . . . . . . 25
4.15 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Employee Benefit Plans, Collective Bargaining and Employee
Agreements, and Similar Arrangements. . . . . . . . . . . . . 26
(b) Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Title IV Plans . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Multiemployer Plans. . . . . . . . . . . . . . . . . . . . . . 27
(e) Fines and Penalties. . . . . . . . . . . . . . . . . . . . . . 27
4.16 Certain Interests; Intercompany Services. . . . . . . . . . . . . . 28
4.17 Bank Accounts and Powers. . . . . . . . . . . . . . . . . . . . . . 28
4.18 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . 28
4.19 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . 29
4.20 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.21 Receivables and Commissions Payable . . . . . . . . . . . . . . . . 29
4.22 Customers and Suppliers; Donors . . . . . . . . . . . . . . . . . . 29
4.23 Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . 30
4.24 Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.25 Corporate Books and Records . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Related Matters. . . . . . . . . . . . . . . . . . 31
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE VI
CERTAIN COVENANTS
6.1 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Restrictions on Competitive Activities . . . . . . . . . . . . 31
(b) Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Restrictions on Soliciting Employees . . . . . . . . . . . . . 32
(d) Special Remedies and Enforcement . . . . . . . . . . . . . . . 32
6.2 Nondisclosure of Confidential Information . . . . . . . . . . . . . 32
6.3 Tax Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.5 Post-Closing Approvals. . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Maintenance of Shareholder's Net Worth; Other Covenants.. . . . . . 34
(a) Maintenance of Net Worth . . . . . . . . . . . . . . . . . . . 34
(b) Liability of Wilson and Wood . . . . . . . . . . . . . . . . . 34
(c) Other Covenants. . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Buyer. . . . . . . . . . . . . . . . . . . . . . 35
7.2 Indemnification of the Shareholder. . . . . . . . . . . . . . . . . 36
7.3 Certain Tax Matters.. . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Indemnification of Buyer . . . . . . . . . . . . . . . . . . . 36
(b) Audit Matters. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . 37
(a) Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Denial of Obligation to Indemnify. . . . . . . . . . . . . . . 38
(c) Third Party Claims . . . . . . . . . . . . . . . . . . . . . . 38
(d) Agreed Claims. . . . . . . . . . . . . . . . . . . . . . . . . 39
(e) Subrogation of Indemnifying Party. . . . . . . . . . . . . . . 39
7.5 Tax Treatment of Indemnity Payments.. . . . . . . . . . . . . . . . 40
7.6 Survival of Representations and Warranties. . . . . . . . . . . . . 40
7.7 Limitations on Indemnity. . . . . . . . . . . . . . . . . . . . . . 40
(a) Minimum Loss . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Liability Cap. . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Sole and Exclusive Remedy. . . . . . . . . . . . . . . . . . . 41
7.8 Survival of Indemnity.. . . . . . . . . . . . . . . . . . . . . . . 41
7.9 Waiver of Right to Compel Indemnified Party to Proceed Against Others;
Offsets Against Net Amount Holdback . . . . . . . . . . . . . . . . 41
ARTICLE VIII
ARBITRATION
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8.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2 Judicial Arbitration and Mediation Services, the Company. . . . . . 42
8.3 Arbitration Panel . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4 Provisional Remedies. . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 Enforcement of Judgment . . . . . . . . . . . . . . . . . . . . . . 42
8.6 Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.8 Power and Authority of Arbitrator . . . . . . . . . . . . . . . . . 43
8.9 Law to be Applied . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.10 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX
GENERAL
9.1 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Schedules; Exhibits; Integration. . . . . . . . . . . . . . . . . . 43
9.3 Best Efforts; Further Assurances. . . . . . . . . . . . . . . . . . 43
(a) Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(b) Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.5 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.8 Publicity and Reports . . . . . . . . . . . . . . . . . . . . . . . 45
9.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.10 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 45
9.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.12 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.13 Remedies; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.15 Knowledge Convention. . . . . . . . . . . . . . . . . . . . . . . . 47
9.16 Representation By Counsel; Interpretation . . . . . . . . . . . . . 47
9.17 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 47
9.18 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.19 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into September 29, 1998,
by and among SeraCare, Inc., a Delaware corporation ("BUYER"), American
Plasma, Inc., a Texas corporation (the "COMPANY"), Uro-Tech, Ltd., a Texas
limited partnership (the "SHAREHOLDER"), OmniMed Corporation, a Delaware
corporation and the sole general partner of the Shareholder ("OMNI"), and,
solely for the limited purposes of Sections 6.4 and 6.6 hereof, John H.
Wilson, III, an individual ("WILSON"), and Gary B. Wood, an individual
("WOOD") (Buyer, the Company, the Shareholder, Omni, Wilson and Wood are
sometimes collectively referred to herein as the "PARTIES").
B A C K G R O U N D
A. The Shareholder owns all of the Stock (as defined herein) of
the Company; and
B. On and subject to the terms and conditions herein, the
Shareholder desires to sell, and Buyer desires to buy, the Stock for the
consideration described herein.
A G R E E M E N T
In consideration of the mutual covenants and agreements as set
forth herein and intending to be legally bound, the Parties agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires,
(a) the terms defined in this Article I have the meanings assigned
to them in this Article I and include the plural as well as the singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under generally accepted accounting principles ("GAAP"),
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
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As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"ACCOUNTING FIRM" has the meaning given in Section 2.5(c).
"ACTION" means any action, complaint, petition, investigation, suit
or other proceeding, whether civil or criminal, in law or in equity, or
before any arbitrator or before or by any Governmental Entity.
"ADJUSTMENT EXCESS" has the meaning given in Section 2.6(b).
"ADJUSTMENT STATEMENT" has the meaning set forth in Section 2.6(a).
"AFFILIATE" means a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person.
"AGGREGATE ADJUSTMENT" has the meaning set forth in Section 2.6(b).
"AGREED CLAIM" has the meaning set forth in Section 7.4(d).
"AGREEMENT" means this Agreement by and among Buyer, the
Shareholder, Omni, Wilson, Wood and the Company as amended or supplemented,
together with all Exhibits and Schedules attached or incorporated by
reference.
"APPLICANT PLASMA" has the meaning set forth in Section 2.6(a).
"APPROVAL" means any approval, authorization, assignment, consent,
qualification or registration, or any waiver of any of the foregoing,
required to be obtained from, or any notice, statement or other communication
required to be filed with or delivered to, any Governmental Entity or any
other Person.
"ASSOCIATE" of a Person means:
(i) a corporation or organization (other than the Company
or a Party to this Agreement) of which such Person is an officer or partner
or is, directly or indirectly, the beneficial owner of 10% or more of any
class of equity securities;
(ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee
or in a similar capacity; and
(iii) any relative or spouse of such Person or any relative
of such spouse who has the same home as such Person or who is a director or
officer of the Company or any of its Affiliates.
"AUGUST BALANCE SHEET" has the meaning set forth in Section 4.3(b).
"BUSINESS" means the business of the Company and shall be deemed to
include any of the following incidents of such business: income, cash flow,
operations, condition (financial or other), assets, properties, liabilities,
personnel and management.
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"BUYER" has the meaning set forth in the opening recital to this
Agreement.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section
7.1.
"CERTIFICATE" has the meaning set forth in Section 7.4(a).
"CHARGE-BACK NOTICE" has the meaning given in Section 2.6(a).
"CLIA" has the meaning set forth in Section 4.14(a).
"CLOSING" means the consummation of the purchase and sale of the
Stock under this Agreement.
"CLOSING ACCOUNTS RECEIVABLE" has the meaning set forth in Section
2.6(a).
"CLOSING DATE" means the date of the Closing.
"CLOSING SOURCE PLASMA" has the meaning set forth in Section 2.6(a).
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the opening recital to this
Agreement.
"CONFIDENTIAL INFORMATION" means all information and material which
is proprietary to a party, whether or not marked as "confidential" or
"proprietary," which is disclosed to the other and relates to the party's
past, present or future business activities, including, without limitation,
all of the following: data, documentation, diagrams, flow charts, research,
development, processes, procedures, Know How, new product information,
marketing techniques and materials, marketing timetables, strategies and
development plans, including trade names, trademarks, client supplier or
personnel names and other information related to clients, suppliers or
personnel, pricing policies, projections and other financial information, and
other information of a similar nature, whether or not reduced to writing or
other tangible form, and any other Trade Secrets or non-public business
information. Confidential Information shall not include information which
(i) is currently in the public domain or subsequently comes into the public
domain through no fault of the receiving party and not in breach of this
Agreement; (ii) was already known to the receiving party on the date of
disclosure through a proper and lawful source, provided that such prior
knowledge can be substantiated and proved by documentation; or (iii) properly
and lawfully becomes available to such receiving party from sources
independent of such party.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CUT-OFF DATE" has the meaning set forth in Section 2.6(a).
"DISPUTED CLAIM" has the meaning set forth in Section 7.4(b).
"DISPUTED ITEM" has the meaning set forth in Section 2.5(b).
8
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"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others,
trusts (constructive or other), equities, marital rights, or restriction of
any kind (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise.
"EQUITY SECURITIES" means any capital stock or other equity
interest or any securities convertible into or exchangeable for capital stock
or any other rights, warrants or options to acquire any of the foregoing
securities.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended, and the related regulations and published interpretations.
"ESCROW ACCOUNT" means the escrow account established and
administered in accordance with the Escrow Agreement and Section 2.4.
"ESCROW AGENT" means Southern California Bank, Escrow Division, or
any successor entity holding and administering the Escrow Account pursuant to
this Agreement and the Escrow Agreement (or any other escrow agreement
entered into among the Parties and any successor entity holding and
administering the Escrow Account).
"ESCROW AGREEMENT" means the escrow agreement among the Escrow
Agent, the Shareholder and Buyer pertaining to the Escrow Account, in the
form attached hereto as Exhibit A.
"ESTIMATED DEFICIT" has the meaning set forth in Section 2.5(a).
"ESTIMATED NET AMOUNT" has the meaning set forth in Section 2.5(a).
"ESTIMATE STATEMENT" has the meaning set forth in Section 2.5(a).
"EXCLUDED LIABILITIES" has the meaning given in Section 2.7.
"FDA" has the meaning set forth in Section 4.14(a).
"FINAL DETERMINATION STATEMENT" has the meaning set forth in
Section 2.5(c).
"FINAL NET AMOUNT" has the meaning given in Section 2.5(c).
"FINANCIAL STATEMENTS" means the financial statements of the
Company described in Section 4.3(a) and 4.3(b).
"FIRST RELEASE DATE" has the meaning set forth in Section 2.4(c).
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"GOVERNMENTAL ENTITY" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state
or local, domestic or foreign.
9
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"HAZARDOUS SUBSTANCE" means (but shall not be limited to) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Laws as "hazardous substances," "hazardous materials," "hazardous
wastes," "medical wastes" or "toxic substances," or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitibility, corrosivity, reactivity, radioactivity,
carcinogenicity, reproductive toxicity or "EP toxicity," and petroleum and
drilling fluids, produced waters and other wastes associated with the
exploration, development, or production of crude oil, natural gas or geothermal
energy.
"HCFA" has the meaning set forth in Section 4.14(a).
"HOUGHTON RELEASE" means the Release Agreement between Evelyn Houghton
and the Company in the form of Exhibit F hereto.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.4(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 7.4(a).
"INITIAL DETERMINATION STATEMENT" has the meaning set forth in Section
2.5(b).
"INTELLECTUAL PROPERTY" means all intellectual property of any kind or
nature, including, without limitation, all patents, patent applications (pending
or otherwise), patent rights, computer programs and other computer software,
Marks, Know How and Trade Secrets.
"IRS" means the U.S. Internal Revenue Service or any successor entity.
"KNOW HOW" means any information, including, but not limited to,
invention records, research and development records and reports, experimental
and engineering reports, pilot designs, production designs, production
specifications, raw material specifications, quality control reports and
specifications, drawings, photographs, models, tools, parts, algorithms,
processes, methods, market and competitive analysis, or other information
possessed by the Company, whether or not considered proprietary or a Trade
Secret.
"LAW" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order.
"LICENSES" means all licenses, permits, franchises, certificates of
authority, consents, authorizations, registrations, orders and approvals, and
any waiver or forbearance with respect to the foregoing, in the name of or
otherwise held or required to be held by the Company (whether or not the
location or locations to which the foregoing relate or are immediately prior to
the Closing Date, active or inactive), with or from Governmental Entities which
have jurisdiction over the Company and/or the Business, including, without
limitation, all export licenses, FDA Master Files, permits, licenses and
authorizations, CLIA licenses, permits or authorizations, specialty plasma
licenses or other permits or authorizations, and occupancy, fire, business and
other such permits from local officials.
"LOSS" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether
10
<PAGE>
foreseeable or unforeseeable, including, but not limited to, interest or
other carrying costs, penalties, reasonable legal, accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims, actual or threatened, and amounts paid in
settlement, that are imposed on or otherwise incurred or suffered by the
specified person.
"MARK" means any brand name, service mark, trademark, trade name,
copyright and all registrations or applications for registration of any of
the foregoing.
"MATERIAL CONTRACT" has the meaning set forth in Section 4.5.
"NEGATIVE PRICE ADJUSTMENT" has the meaning set forth in Section
2.5(c).
"NET AMOUNT HOLDBACK" has the meaning set forth in Section 2.3(d).
"NET WORTH PERIOD" has the meaning set forth in Section 6.6.
"NON-COMPETITION PERIOD" has the meaning set forth in Section 6.1.
"OBJECTION NOTICE" has the meaning set forth in Section 2.5(b).
"OMNI" has the meaning set forth in the opening recital to this
Agreement.
"ORDERS" means any decree, injunction, judgment, order, ruling,
assessment or writ of any Governmental Entity, including, but not limited to,
the Occupational Health and Safety Administration and the FDA.
"OSHA" has the meaning set forth in Section 4.14(a).
"OUTSTANDING APPROVALS" has the meaning set forth in Section 6.5.
"PERSON" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"POSITIVE PRICE ADJUSTMENT" has the meaning set forth in Section
2.5(c).
"POST-CLOSING AUDIT" has the meaning set forth in Section 2.5(b).
"POST-CLOSING PERIOD" has the meaning set forth in Section 6.5.
"PRODUCTS" has the meaning set forth in Section 4.7(b).
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"SECOND RELEASE DATE" has the meaning set forth in Section 2.4(d).
"SHAREHOLDER" has the meaning set forth in the opening recital to this
Agreement.
"SHAREHOLDER INDEMNIFIED PARTIES" has the meaning set forth in Section
7.2.
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"SHARES" or "STOCK" means all of the issued and outstanding capital
stock of the Company, including, without limitation, all common stock and
preferred stock of the Company, whether voting or non-voting, and whether or not
a certificate or certificates therefor have been issued.
"SOURCE PLASMA NOTICE" has the meaning set forth in Section 2.6(a).
"SUBSIDIARY" means any Person in which the Company has a direct or
indirect equity or ownership interest in excess of fifty percent (50%).
"TANGIBLE NET WORTH" has the meaning set forth in Section 6.6(a).
"TAX" means any foreign, federal, state, county or local income, sales
and use, excise, franchise, real and personal property, transfer, gross receipt,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding tax or charge imposed by any Governmental
Entity, any interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
"TAX RETURN" means a report, return or other information required to
be supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that includes the Company.
"TRADE NAMES" has the meaning set forth in Section 4.7.
"TRADE SECRETS" means formulas, patterns, devices or compilations of
information which is used in connection with or relating to the Business and
which gives an opportunity to obtain an advantage over competitors who do not
know or use it, including, but not limited to, formulas for chemical compounds,
processes of manufacturing, treating or preserving materials, patterns for
machines or any forms, plans, drawings, specifications, customer lists,
marketing and competition analysis and project management, inventory and cost
control systems and techniques.
"WEAVER RELEASE" means the Assignment, Assumption and Release
Agreement among Ralph Weaver, the Shareholder and the Company in the form
attached hereto as Exhibit G.
"WILSON" has the meaning set forth in the opening recital to this
Agreement.
"WOOD" has the meaning set forth in the opening recital to this
Agreement.
ARTICLE II
PURCHASE AND SALE OF STOCK/HOLDBACK AMOUNT/CLOSING
2.1 TRANSFER OF STOCK BY THE SHAREHOLDER.
Subject to the terms and conditions of this Agreement, the
Shareholder shall sell the Stock and deliver the certificates evidencing the
Stock to Buyer at the Closing. The
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certificates shall be properly endorsed for transfer to, or accompanied by a
duly executed stock power in favor of, Buyer or its nominee and otherwise in
a form acceptable for transfer on the books of the Company. Buyer shall pay
any stock transfer taxes for which it is liable under applicable Laws with
respect to the transfer of the Stock contemplated hereby, and the Shareholder
shall pay all Taxes for which it is liable under applicable Laws with respect
to such transfer of the Stock. The Stock shall be conveyed by the
Shareholder to Buyer free and clear of all Encumbrances whatsoever, other
than any Encumbrances created by Buyer in connection with Buyer's financing
for the transactions contemplated herein.
2.2 PURCHASE OF THE STOCK BY BUYER.
Subject to the terms and conditions of this Agreement, Buyer shall
purchase and accept from the Shareholder, on and as of the Closing Date for the
Purchase Price described in Section 2.3 hereof, all of the Stock.
2.3 PURCHASE PRICE.
Subject to Sections 2.4, 2.5 and 2.6 below, the aggregate
consideration to be paid by Buyer to the Shareholder pursuant to this Agreement
shall be Eight Million Seven Hundred Five Thousand Four Hundred Twenty-Eight
Dollars ($8,705,428) (the "PURCHASE PRICE"), which shall consist of:
(a) A cash payment of One Hundred Thousand Dollars ($100,000),
which was paid by Buyer to the Shareholder prior to the date hereof, and the
receipt of which by the Shareholder is hereby confirmed and acknowledged;
(b) A cash payment of Five Hundred Thousand Dollars ($500,000) (the
"HOLDBACK AMOUNT"), which shall be deposited by Buyer into the Escrow Account to
be held and disbursed pursuant to Section 2.4 and/or Section 2.5(c) below and
the Escrow Agreement;
(c) A cash payment equal to $7,900,000 (the "CLOSING CASH
PAYMENT"), which shall be made by Buyer to the Shareholder at the Closing via
wire transfer of immediately available funds to the account designated in
writing by the Shareholder; and
(d) Two Hundred Five Thousand Four Hundred Twenty-Eight Dollars
($205,428) (which represents the Estimated Net Amount (as determined pursuant to
Section 2.5 hereof)), $102,714 of which shall be paid by Buyer at the Closing
via wire transfer of immediately available funds to the account specified in
paragraph (c) above, and the remainder of which (the "NET AMOUNT HOLDBACK")
shall be retained by Buyer and shall be available to Buyer to offset the amount
of any Agreed Claims, Negative Price Adjustment and/or Aggregate Adjustment.
Buyer shall have the right to effect such offsets, and shall be entitled to
retain the amount or amounts so offset, promptly after the determination of any
Agreed Claims, Negative Price Adjustment and/or Aggregate Adjustment pursuant to
this Agreement. The Net Amount Holdback, less any such offsets, shall be paid
to the Shareholder within three business days after the Second Release Date (as
defined in Section 2.4). Concurrently with such payment, if any, Buyer shall
deliver to the Shareholder a written accounting setting forth the date and
amount of each offset, if any, from the Net Amount Holdback retained by Buyer
pursuant to this Agreement, which accounting shall, in the absence of manifest
error, be binding and conclusive
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on the Parties. If no portion of the Net Amount Holdback remains after
giving effect to all offsets hereunder, Buyer shall, within 10 business days
after effecting the offset or offsets reducing the Net Amount Holdback to
zero, deliver a written notice to the Shareholder so stating and itemizing
the date and amount of each offset against the Net Amount Holdback, which
itemization shall, in the absence of manifest error, be binding and
conclusive on the Parties.
2.4 HOLDBACK AMOUNT; ESCROW ACCOUNT.
(a) At the Closing, Buyer shall deposit the Holdback Amount in the
Escrow Account via wire transfer of immediately available funds in such amount.
The Escrow Account shall be an interest-bearing account, with interest accruing
and remaining on deposit in the Escrow Account until disbursed pursuant to
Section 2.4(c) and Section 2.4(d) below. The Holdback Amount shall be
available, in accordance with this Section 2.4 and the Escrow Agreement, to
satisfy up to $100,000 of any Negative Price Adjustment (as defined in Section
2.5(c)), any Adjustment Excess (as defined in Section 2.6(b)), and any claims
for indemnification that Buyer may have pursuant to Article VII.
(b) Buyer and the Shareholder shall jointly instruct the Escrow
Agent to release from the Escrow Account and disburse to Buyer all amounts (up
to the full amount of the Holdback Amount, but not including any interest
accrued on such amount) in respect of any Agreed Claims (to the extent not
offset against the Net Amount Holdback) promptly after the determination of such
amounts pursuant to Article VII. To the extent that the aggregate amount of any
and all Agreed Claims that have not been offset against the Net Amount Holdback
exceeds the Holdback Amount, Omni and the Shareholder shall on a joint and
several basis, subject to Section 7.7(b) and Section 7.7(c), pay the amount of
such excess in accordance with Section 7.4(d).
(c) Not later than two business days following the first
anniversary of the Closing Date (the "FIRST RELEASE DATE"), Buyer and the
Shareholder shall jointly instruct the Escrow Agent to release from the Escrow
Account and disburse to the Shareholder in accordance with the terms of the
Escrow Agreement an amount equal to fifty percent (50%) of the difference
between (i) the amount then on deposit in the Escrow Account (i.e., net of any
previously-paid Agreed Claims, any amounts paid in respect of a Negative Price
Adjustment, and/or any amounts paid in respect of an Adjustment Excess) and (ii)
any amounts in respect of any then unpaid Agreed Claims, unresolved Disputed
Claims or unresolved claims that are the subject of a Certificate as provided in
Article VII (in each case to the extent not offset against the Net Amount
Holdback), plus any amounts (not to exceed $100,000) to be paid in respect of a
Negative Price Adjustment that has been determined pursuant to Section 2.5(b) or
Section 2.5(c) (to the extent not offset against the Net Amount Holdback) and/or
any Adjustment Excess that has been determined pursuant to Section 2.6, together
with interest accrued to such time on the amount so distributed. Any amounts
retained in the Escrow Account after the First Release Date shall continue to be
so retained until (1) the resolution of the claims in respect of which such
funds are being held (at which time such funds shall be disbursed pursuant to
the resolution of such claims), (2) the amount (not to exceed $100,000) of any
Negative Price Adjustment has been paid out of such funds, (3) the amount of any
Adjustment Excess has been paid out of such funds, and/or (4) disbursed pursuant
to Section 2.4(d) below, as applicable.
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(d) Not later than two business days following the date that is
18 months after the Closing Date (the "SECOND RELEASE DATE"), Buyer and the
Shareholder shall jointly instruct the Escrow Agent to release from the
Escrow Account and disburse to the Shareholder in accordance with the terms
of the Escrow Agreement all funds (including, without limitation, any accrued
interest then on deposit) then remaining in the Escrow Account (i.e., net of
any previously paid Agreed Claims, any amounts (not to exceed $100,000) paid
in respect of a Negative Price Adjustment, and/or any amounts paid in respect
of an Adjustment Excess), less any amounts in respect of any then unpaid
Agreed Claims, unresolved Disputed Claims, unresolved claims that are the
subject of a Certificate as provided in Article VII, any amounts (not to
exceed $100,000) to be paid in respect of a Negative Price Adjustment that
has been determined pursuant to Section 2.5(b) or Section 2.5(c) and/or any
amounts to be paid in respect of an Adjustment Excess that has been
determined pursuant to Section 2.6; provided, however, that no undisbursed
accrued interest on the funds in the Escrow Account shall be available to
satisfy Buyer's indemnification claims or retained in the Escrow Account
after the Second Release Date. Any amounts retained in the Escrow Account
after the date that is 18 months after the Closing Date as contemplated by
the immediately prior sentence of this Section 2.4(d) shall continue to be so
retained until the resolution of the claims in respect of which such funds
are being held (at which time Buyer and the Shareholder shall jointly
instruct the Escrow Agent to disburse such funds pursuant to the resolution
of such claims), until the amount (not to exceed $100,000) in respect of a
Negative Price Adjustment has been paid from such funds, and/or until the
amount of any Adjustment Excess has been paid from such funds.
2.5 POST-CLOSING AUDIT; PURCHASE PRICE ADJUSTMENT
(a) ESTIMATE STATEMENT; POST-CLOSING AUDIT. The Shareholder has
delivered to Buyer a written statement (the "ESTIMATE STATEMENT") setting
forth the Shareholder's estimate (which shall in each case have been made in
accordance with this Section 2.5(a)) of the Company's cash, accounts
receivable, plasma inventory and total liabilities, in each case as of the
Closing. The Shareholder represents that each such estimate was made in good
faith, in accordance with GAAP and in a manner consistent with the Company's
past practice in accordance with the year-end financial statements prepared
by the Company; PROVIDED that (i) the estimate of the amount of cash is the
book value of the Company's cash (reflecting all outstanding debits to cash,
regardless of whether such debits have actually been paid out of cash); (ii)
the estimate of the amount of the Company's accounts receivable includes only
the value of trade accounts receivable (net of reserves for collectibility of
such receivables) and no other receivables whatsoever; (iii) the estimate of
the value of the Company's plasma inventory is based on the Shareholder's
good faith estimate of the realizable fair market value of such plasma
inventory (net of any spoiled, obsolete or unusable plasma inventory); and
(iv) the estimate of total liabilities includes all liabilities of the
Company of any kind whatsoever (whether accrued or unaccrued, matured or
unmatured) and reflects the absence of any Excluded Liabilities (as defined
in Section 2.7). Each such estimate shall, subject to adjustment in the
manner provided in Section 2.5(b), be binding and conclusive for purposes of
Section 2.3. The term "ESTIMATED NET AMOUNT" refers to the difference
between (1) the sum of the estimated cash, trade accounts receivable and
plasma inventory of the Company as set forth on the Estimate Statement and
(2) the estimated total liabilities of the Company as set forth on the
Estimate Statement.
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(b) INITIAL DETERMINATION STATEMENT. Not later than 30 days
after the Closing, Buyer and the Shareholder shall cause to be commenced an
audit (the "POST-CLOSING AUDIT") for the purposes of determining the actual
value of the cash, accounts receivable, plasma inventory and total
liabilities of the Company as of the Closing. The Post-Closing Audit shall
be conducted by Grant Thornton, Certified Public Accountants. The costs and
expenses associated with the Post-Closing Audit shall be borne equally by
Buyer and the Shareholder. Buyer and the Shareholder shall instruct Grant
Thornton to deliver to each of them, as soon as practicable following the
Closing (but in any event not later than 90 days after the Closing) a
statement (the "INITIAL DETERMINATION STATEMENT") of the actual value of the
cash, accounts receivable, plasma inventory and total liabilities of the
Company as of the Closing, which determination shall be made in accordance
with GAAP, in a manner consistent with the Company's past practice in
connection with the year-end financial statements prepared by the Company;
PROVIDED, that (i) the determination of the amount of cash shall be based on
the book value of the Company's cash (reflecting all outstanding debits to
cash, regardless of whether such debits have actually been paid out of cash);
(ii) the determination of the amount of the Company's accounts receivable
shall include only the value of trade accounts receivable as of the Closing
(net of reserves for collectibility of such receivables) and no other
receivables whatsoever; (iii) the determination of the value of the Company's
plasma inventory as of the Closing shall be based on the realized or
realizable fair market value of such plasma inventory (net of any spoiled,
obsolete or unusable plasma inventory) and shall involve a physical
inspection on the Closing Date by Grant Thornton of such plasma inventory
located at the Company's donor centers on North 19th Avenue in Phoenix,
Arizona and on Canal Street in Houston, Texas; and (iv) the determination of
the total liabilities of the Company shall include all liabilities of any
kind whatsoever, whether accrued or unaccrued, matured or unmatured. The
Company, Buyer and the Shareholder shall mutually cooperate to the extent
reasonably necessary in the Post-Closing Audit. If either of Buyer or the
Shareholder has any objection to the Initial Determination Statement, it
shall deliver written notice (an "OBJECTION NOTICE") thereof to the other
Party within 10 business days after receiving the Initial Determination
Statement. The Objection Notice shall describe in detail such Party's
objections to the determinations set forth on the Initial Determination
Statement. The determination of any item set forth in the Initial
Determination Statement and not objected to by either or both of Buyer and
the Shareholder in an Objection Notice shall be binding on the Parties.
Buyer and the Shareholder shall use their reasonable, good faith efforts to
resolve any such objections. If Buyer and the Shareholder are able to reach
agreement as to any item that is the subject of an Objection Notice (a
"DISPUTED ITEM"), then such determination as agreed upon as to such Disputed
Item shall become binding upon the Parties at such time. If a final
resolution of any Disputed Item is not obtained within 30 days after the date
that the applicable Objection Notice is received by the Party to which it is
sent pursuant to this Section 2.5(b), Buyer and the Shareholder shall submit
the unresolved Disputed Items for resolution as provided in Section 2.5(c)
for a determination that shall be binding on the Parties.
(c) DISPUTE RESOLUTION. Buyer and the Shareholder shall
promptly, but in no event more than 15 days after the end of the 30-day
period referred to in Section 2.5(b) above, cause the Houston, Texas office
of Arthur Andersen LLP, or if such firm declines or is unable to act in this
capacity, another nationally recognized independent accounting firm mutually
selected by Buyer and the Shareholder (the "ACCOUNTING FIRM"), such firm
acting as an expert and not as an arbitrator, to resolve the unresolved
Disputed Items. Subject to the provisos set forth in Section 2.5(b) above,
the Accounting Firm shall make a determination only of the Disputed
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Items not resolved by Buyer and the Shareholder and in the case of all other
items shall use the amounts which were agreed upon by Buyer and the
Shareholder or to which no objection was made.
The Accounting Firm shall deliver to Buyer and the Shareholder, as
promptly as practicable, a report (a "FINAL DETERMINATION STATEMENT") setting
forth its resolution of the Disputed Items submitted to it for determination,
taking into account any Disputed Items resolved previously by agreement of
Buyer and the Shareholder and the items set forth on the Initial
Determination Statement to which no objection was made. Such report of the
Accounting Firm shall be final and binding on the Parties. The cost of such
review and report of the Accounting Firm shall be borne equally by Buyer and
the Shareholder.
If the sum of the Company's cash, trade accounts receivable and
plasma inventory (each as finally determined pursuant to Section 2.5(b) or
2.5(c), as the case may be) minus the amount of the Company's total
liabilities (as finally determined pursuant to Section 2.5(b) or Section
2.5(c), as the case may be) (the "FINAL NET AMOUNT") is greater than the
Estimated Net Amount, the Purchase Price shall be increased by the exact
amount of such difference (a "POSITIVE PRICE ADJUSTMENT"). If the Final Net
Amount is less than the Estimated Net Amount, the Purchase Price shall be
reduced by the exact amount of such difference (a "NEGATIVE PRICE
ADJUSTMENT"). Within two business days after the determination of the Final
Net Amount, Buyer shall pay to the Shareholder, via wire transfer of
immediately available funds, the amount of any Positive Price Adjustment. If
there is a Negative Price Adjustment, Buyer shall first offset such amount
from the then-remaining amount, if any, of the Net Amount Holdback. Within
two business days after the determination of the Final Net Amount, Buyer and
the Shareholder shall jointly instruct the Escrow Agent to deduct up to the
first $100,000 of any portion of the Negative Price Adjustment not offset
against the Net Amount Holdback from the funds then on deposit in the Escrow
Account and distribute such funds to Buyer. Omni and/or the Shareholder
shall be jointly and severally liable to pay to Buyer, via wire transfer of
immediately available funds, the amount of any Negative Price Adjustment to
the extent not paid from the Escrow Account pursuant to the immediately
preceding sentence or offset against the Net Amount Holdback.
2.6 CERTAIN FURTHER ADJUSTMENTS.
(a) ADJUSTMENT STATEMENT. Within three business days of the
date that is six months after the Closing (the "CUT-OFF DATE"), Buyer shall
cause to be prepared and delivered to the Shareholder a statement (the
"ADJUSTMENT STATEMENT") identifying (i) the accounts receivable (the "CLOSING
ACCOUNTS RECEIVABLE") reflected in the Initial Determination Statement (or,
if objected to, in a Final Determination Statement) as to which the Company
and/or Buyer has received, at any time from and after the Closing until the
Cut-Off Date, a written letter or other correspondence (a "CHARGE-BACK
NOTICE") from the account obligor stating that a portion or all of such
receivable is being charged back to the Company (or otherwise reduced by the
account obligor) for any reason and setting forth, for each such receivable,
the net amount realized therefor through the Cut-Off Date after giving effect
to such charge-back; (ii) any debits or reductions to the Company's cash
balance as of the Closing Date that were not reflected in the value ascribed
to the Company's cash on the Initial Determination Statement (or, if objected
to, on a Final Determination Statement) (the "CLOSING CASH"), together with
appropriate supporting
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documentation, (iii) all applicant donor plasma ("APPLICANT PLASMA") included
among the Company's plasma inventory as of the Closing as to which no
subsequent plasma donation was received by the Company through the Cut-Off
Date and setting forth, for each such item of Applicant Plasma, the net
amount realized therefor through the Cut-Off Date; and (iv) all source plasma
other than Applicant Plasma (the "CLOSING SOURCE PLASMA") that was included
among the Company's plasma inventory as of the Closing and as to which the
Company and/or Buyer has received, at any time from and including the Closing
until the Cut-Off Date, a written letter or other correspondence (a "SOURCE
PLASMA NOTICE") from the party to which such Closing Source Plasma was sold
or otherwise delivered stating that such Closing Source Plasma was defective
or otherwise unacceptable to such party, and setting forth, for each such
item of Closing Source Plasma, the net amount realized by the Company
therefor through the Cut-Off Date. The Adjustment Statement shall be
accompanied by true and correct copies of any Charge-Back Notices, Source
Plasma Notices and/or supporting documentation relating to the Closing Cash,
as well as a certification, duly executed by Buyer's Chief Executive Officer,
to the effect that the listing of the Applicant Plasma and debits to Closing
Cash set forth on the Adjustment Statement as contemplated in clauses (ii)
and (iii) above are true, correct and complete. The Shareholder hereby
agrees that, in the absence of fraud or manifest error, (A) the existence and
amount of any reductions in the realized value of the Closing Accounts
Receivable shall be conclusively established by reference to the applicable
Charge-Back Notice, (B) the existence and amount of any reductions in the
realized value of the Closing Source Plasma shall be conclusively established
by reference to the applicable Source Plasma Notice, and (C) Buyer's
certification shall conclusively establish the truth, correctness and
completeness of the list of Applicant Plasma and debits to Closing Cash set
forth on the Adjustment Statement, as well as the net value realized
therefor. Except for such modifications as reflect changes in the price paid
by customers of Western States Plasma Group, Inc. for Applicant Plasma, Buyer
shall not modify the pricing arrangement in effect as of the date hereof
between the Company and Western States Plasma Group, Inc. with respect to
sales of Applicant Plasma in a manner that would reduce the net value
realized by the Company therefor.
(b) BUYER'S RECOVERY OF AGGREGATE ADJUSTMENT. Buyer shall be
entitled to offset from the Net Amount Holdback an amount (the "AGGREGATE
ADJUSTMENT") equal to the sum of (i) the aggregate amounts subject to a
Charge-Back Notice through the Cut-Off Date, (ii) the difference between (1)
the value of the Closing Source Plasma identified in the Adjustment Statement
as reflected in the Initial Determination Statement (or, if objected to, in a
Final Determination Statement) and (2) the actual value realized by the
Company therefor through the Cut-Off Date as set forth in the Adjustment
Statement, (iii) the difference between (1) the value of the Applicant Plasma
identified in the Adjustment Statement as reflected in the Initial
Determination Statement (or, if objected to, in a Final Determination
Statement) and (2) the actual value realized by the Company therefor through
the Cut-Off Date as set forth in the Adjustment Statement, and (iv) the
difference between (1) the Closing Cash and (2) the actual value thereof net
of any debits or other reductions through the Cut-Off Date as set forth on
the Adjustment Statement. If the amount of the Aggregate Adjustment exceeds
the Net Amount Holdback (any such excess, an "ADJUSTMENT EXCESS"), Buyer and
the Shareholder promptly shall jointly instruct the Escrow Agent to deduct
from the Escrow Account and distribute to Buyer the amount of the Adjustment
Excess and, if the funds then on deposit in the Escrow Account are
insufficient to cover the full amount of the Adjustment Excess, Omni and/or
the Shareholder shall, within two business days after the determination of
the existence and amount
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of an Adjustment Excess, pay to Buyer via wire transfer an amount equal to
the portion of the Adjustment Excess not paid out of the Escrow Account.
2.7 EXCLUDED LIABILITIES.
Notwithstanding anything to the contrary herein, immediately prior
to the Closing, the liabilities (the "EXCLUDED LIABILITIES") set forth in
Schedule 2.7 shall be assigned, conveyed, distributed to, assumed by or
otherwise retained by the Shareholder or Omni, and shall not be transferred
or assigned to Buyer, and Buyer shall have no liability for or obligations
with respect to such Excluded Liabilities whatsoever.
2.8 CLOSING MATTERS.
(a) CLOSING. The Closing of the transactions contemplated by
this Agreement shall occur at the offices of O'Melveny & Myers LLP, 610
Newport Center Drive, Newport Beach, California 92660 at 10:00 a.m. Pacific
Daylight Savings Time on Friday, September 29, 1998, or at such other
location, time and date as the Parties hereto shall agree.
(b) DELIVERIES BY THE SHAREHOLDER. At the Closing, the
Shareholder shall deliver or cause to be delivered to Buyer the following,
against delivery of the items specified in Section 2.8(e):
(i) Certificates representing the Stock, duly endorsed in
blank or having affixed thereto stock powers executed in blank, and in proper
form for transfer, with all requisite stock transfer stamps, if any, affixed
to such certificates, all in form and substance reasonably satisfactory to
Buyer;
(ii) This Agreement, duly executed by the Shareholder,
Wilson and Wood;
(iii) The Escrow Agreement, duly executed by the Shareholder;
(iv) The opinion of counsel to the Shareholder and the
Company dated the Closing Date, in the form of Exhibit B hereto;
(v) The Certificate of Limited Partnership of the
Shareholder, duly certified by the Texas Secretary of State.
(c) DELIVERIES BY THE COMPANY. At the Closing, the Company
shall deliver or cause to be delivered to Buyer the following, against
delivery of the items specified in Section 2.8(e):
(i) This Agreement, duly executed by the Company;
(ii) The Secretary's Certificate of the Company in the form
of Exhibit D hereto;
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(iii) The Certificate of the Secretary of State of the State
of Texas evidencing the corporate good standing of the Company in Texas,
together with written evidence satisfactory to Buyer of the Company's tax
good standing in Texas and all other appropriate jurisdictions;
(iv) Written evidence of qualification to do business as a
foreign corporation in each jurisdiction identified on Schedule 4.1, in each
case in form reasonably satisfactory to Buyer;
(v) The Houghton Release and the Weaver Release, duly
executed by the Company and Evelyn Houghton and the Company and Ralph Weaver,
respectively;
(vi) Subject to Section 6.5, all Approvals required to be
obtained before consummation of the transactions contemplated hereby, each in
form and substance reasonably satisfactory to Buyer;
(vii) Uniform Commercial Code Release Statements or other
written documentation reasonably satisfactory to Buyer evidencing the
termination of all of all Uniform Commercial Code financing statements with
respect to the Company's property or assets (except those Uniform Commercial
Code financing statements pertaining to the security interests identified on
Schedule 4.6) and the release of such property and assets from the applicable
Encumbrance; and
(viii) A letter of resignation from each of the directors and
officers of the Company as of immediately prior to the Closing, duly executed
by each such director and officer.
(d) DELIVERIES BY OMNI. At the Closing, Omni shall deliver or
cause to be delivered to Buyer the following, in form and substance
reasonably satisfactory to Buyer and Buyer's counsel, against delivery of the
items specified in Section 2.8(e):
(i) This Agreement, duly executed by Omni;
(ii) The Certificate of the Secretary of State of the State
of Texas evidencing the corporate good standing of Omni in Texas; and
(iii) The Secretary's Certificate of Omni in the form of
Exhibit C hereto.
(e) DELIVERIES BY BUYER. At the Closing, Buyer shall deliver or
cause to be delivered the following, in form and substance reasonably
satisfactory to Shareholder and Shareholder's counsel, against delivery of
the items specified in Section 2.8(b):
(i) To the Shareholder as provided in Section 2.3, the
Closing Cash Payment;
(ii) To the Escrow Agent as provided in Sections 2.3(b) and
2.4, the Holdback Amount;
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(iii) To the Shareholder, Wilson and Wood, this Agreement, duly
executed by Buyer;
(iv) To the Shareholder, the Escrow Agreement, duly executed by
Buyer;
(v) To the Shareholder, the Secretary's Certificate of Buyer
in the form of Exhibit E hereto; and
(vi) To the Shareholder, the Certificate of the Secretary of
State of the State of Delaware evidencing the corporate good standing of Buyer
in Delaware.
(f) SIMULTANEOUS DELIVERY. All acts with respect to the Closing
shall be considered as having taken place simultaneously, and no delivery or
payment shall be considered as having been made until all deliveries, payments
and Closing transactions have been accomplished.
(g) DELIVERY OF CLOSING DOCUMENTS. Each party shall cooperate with
the other to the fullest extent possible in exchanging instruments and documents
required to be delivered at or before the Closing, or drafts thereof, in
sufficient time in advance of the Closing to provide to the other party a
reasonable opportunity to examine such documents or drafts thereof.
(h) EFFECTIVE DATE FOR FINANCIAL STATEMENT PURPOSES; NO EQUITABLE
CONVERSION. Notwithstanding anything to the contrary herein, the Parties hereby
agree that, (i) in accordance with paragraph 9 (Conduct of Business) of that
certain letter of intent dated July 6, 1998 between Buyer and the Shareholder
relating to the transactions contemplated hereby, effective control of the
strategic and business operations of the Company transferred to Buyer on July 6,
1998, (ii) the terms of the agreement were firmly established as of this date
and only legal considerations were needed to complete the sale, and (iii)
accordingly, it is hereby agreed that the effective date (the "EFFECTIVE DATE")
of this transaction for financial statement purposes is July 6, 1998.
Notwithstanding the foregoing, neither the execution of this Agreement nor the
performance of any provision contained herein shall cause Buyer to become liable
for (i) the operations of the Company or the business of the Company prior to
the Effective Date; (ii) the condition of the Company's assets prior to the
Effective Date; (iii) the cost of any labor or materials furnished to any such
property prior to the Effective Date; (iv) compliance with any laws,
requirements, or regulations of, or Taxes, or assessments or other charges now
or hereafter due to, any Governmental Entity for any period or for the conduct
of the business of the Company prior to the Effective Date; or (v) for any other
Encumbrances or expenses whatsoever pertaining to the conduct of the Business or
the ownership, title, possession, use or occupancy of the property of the
Company prior to the Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND OMNI
3.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder hereby represents and warrants to Buyer as follows:
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(a) ORGANIZATION. The Shareholder is a duly formed and validly
existing limited partnership under the laws of the State of Texas, with power
under the Texas Revised Limited Partnership Act, its Certificate of Limited
Partnership and Agreement of Limited Partnership, as amended and/or restated
through the date hereof, to own its property and assets, to enter into this
Agreement and any related agreements to which it is a party, and to perform
its obligations hereunder and thereunder.
(b) OWNERSHIP OF STOCK. The Shareholder is the legal and
beneficial owner of all of the Stock, with good and marketable title thereto,
free of any Encumbrances whatsoever, other than restrictions on transfer, if
any, imposed by federal and state securities laws.
(c) DELIVERY OF GOOD TITLE. Other than those that have been
obtained prior to the date hereof, there are no Approvals necessary for the
sale and delivery of the Stock to Buyer pursuant to this Agreement, and the
Shareholder has, and immediately before the Closing will have, full right,
power, authority and capacity to sell, assign, transfer and deliver the Stock
owned by it pursuant to this Agreement. Upon delivery by the Shareholder of
the stock certificates evidencing the Stock to Buyer and payment of the
consideration therefor pursuant to this Agreement, good and valid title to
the Stock, free and clear of any and all Encumbrances whatsoever (other than
restrictions on transfer, if any, imposed by federal and state securities
laws), will pass to Buyer.
(d) EXECUTION AND DELIVERY. All Approvals necessary for the
execution and delivery by the Shareholder of this Agreement have been
obtained, and the Shareholder has full right, power, authority and capacity
to enter into and perform fully under this Agreement. This Agreement has
been duly executed and delivered by the Shareholder and constitutes a legal,
valid and binding agreement of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors'
rights generally.
(e) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any term or
provision of, or (with or without notice or passage of time, or both)
constitute a default under, the Shareholder's Certificate of Limited
Partnership or its Agreement of Limited Partnership, each as amended and/or
restated through the date hereof, or any Contract to which the Shareholder is
a party or by which the Shareholder or any of the Shares is bound, or violate
the provisions of any Law or Order of any Governmental Entity or any
arbitrator having jurisdiction over the Shareholder or the property of the
Shareholder, nor will such action result in the creation or imposition of any
lien, claim, charge or other Encumbrance upon any of the Shares.
3.2 REPRESENTATIONS AND WARRANTIES OF OMNI.
(a) ORGANIZATION; STATUS AS GENERAL PARTNER. Omni is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. The Company has
all necessary corporate power and corporate
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authority to execute, deliver and perform this Agreement and any related
agreements to which it is a party. Omni is the sole general partner of the
Shareholder.
(b) EXECUTION AND DELIVERY. All Approvals necessary for the
execution and delivery by Omni of this Agreement have been obtained. This
Agreement has been duly executed and delivered by Omni and constitutes a
legal, valid and binding agreement of Omni, enforceable against Omni in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally.
(c) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any term or
provision of, or (with or without notice or passage of time, or both)
constitute a default under, Omni's Bylaws or Certificate of Incorporation,
each as amended through the date hereof, the Certificate of Limited
Partnership or the Agreement of Limited Partnership of the Shareholder, each
as amended through the date hereof, or any Contract to which Omni is a party
or by which Omni is bound, or violate the provisions of any Law or Order of
any Governmental Entity or any arbitrator having jurisdiction over Omni or
the property of Omni, nor will such action result in the creation or
imposition of any lien, claim, charge or other Encumbrance upon any of the
Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder each hereby represents and warrants
to Buyer as follows:
4.1 ORGANIZATION, GOOD STANDING AND RELATED MATTERS.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization. The Company has all necessary corporate power and corporate
authority to execute, deliver and perform this Agreement and any related
agreements to which it is a party. The Company has no Subsidiaries and does
not own, directly or indirectly, an equity interest in any other Person. The
Company has all necessary corporate power and corporate authority to own its
properties and assets and to carry on its Business as now conducted and is
duly qualified or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which the character or the location of the
assets owned or leased by the Company or the nature of the Business conducted
by the Company requires licensing or qualification, except where the failure
to be so qualified would not have a material adverse effect on the Company or
the Business. Schedule 4.1 lists the jurisdiction in which the Company was
organized and each jurisdiction in which the Company is licensed to do
business as a foreign corporation. Schedule 4.1 also correctly lists the
current directors and executive officers of the Company. True, correct and
complete copies of the respective charter documents of the Company, each as
amended and in effect through and as of immediately prior to the Closing,
have been delivered to Buyer. The Company is not a registered or reporting
company under the Securities Exchange Act of 1934, as amended.
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4.2 CAPITALIZATION MATTERS.
The authorized capital stock of the Company consists of 20,000,000
shares, of which 10,000,000 shares are designated as Common Stock and
10,000,000 shares are designated as Preferred Stock, each par value $.01 per
share. The Stock consists of 1,000,000 shares of Common Stock and
constitutes all of the issued and outstanding capital stock of the Company as
of the date hereof. Except as set forth on Schedule 4.2, there are no
outstanding Contracts or other rights to subscribe for or purchase, or
Contracts or other obligations to issue or grant any rights to acquire, any
Equity Securities of the Company, or to restructure or recapitalize the
Company. There are no outstanding Contracts or other obligation of the
Company to repurchase, redeem or otherwise acquire any Equity Securities
(including, without limitation, the Shares) of the Company. Each of the
Shares is duly authorized and validly issued, is fully paid and nonassessable
and was issued in conformity with applicable Laws. There are no preemptive
rights in respect of any Equity Securities (including, without limitation,
the Shares) of the Company.
4.3 FINANCIAL STATEMENTS; CHANGES; CONTINGENCIES.
(a) AUDITED FINANCIAL STATEMENTS. Schedule 4.3(a) hereto
contains true and complete copies of the audited balance sheets of the
Company as of December 31, 1997 and 1996, and the related statements of
operations, changes in shareholder's equity and changes in financial position
or cash flow for the period then ended. All such financial statements have
been examined and audited by the auditors whose reports thereon are included
with such financial statements. All such financial statements have been
prepared in accordance with GAAP applied on a consistent basis (except for
changes, if any, required by GAAP and disclosed therein). Such statements of
operations and cash flow present fairly the results of operations and cash
flows of the Company for the periods covered, and the balance sheets present
fairly the financial condition of the Company as of their respective dates.
(b) UNAUDITED INTERIM FINANCIAL STATEMENTS. Schedule 4.3(b)
hereto contains true and correct copies of the unaudited balance sheet of the
Company as of June 30, 1998, and the related statements of operations and
cash flows and changes in shareholder's equity for the six-month period then
ended, together with an unaudited balance sheet as of August 31, 1998 (the
"AUGUST BALANCE SHEET") and the related statements of operations and cash
flows and changes in shareholder's equity for the eight-month period then
ended. Such interim financial statements have been prepared from the books
and records of the Company consistent with past practice. The statements of
operations and cash flows present fairly the results of operations and cash
flows of the Company for the respective periods covered, and such balance
sheets present fairly the financial condition of the Company as of the
respective dates thereof, respectively. Except as set forth in Schedule
4.3(b), all of such interim financial statements reflect all adjustments
(which consist only of normal recurring adjustments not material in amount
and include, but are not limited to, estimated provisions for year-end
adjustments) necessary for a fair presentation. As of August 31, 1998, the
Company had no material liability (actual, contingent or accrued) that, in
accordance with GAAP applied on a consistent basis, should have been shown or
reflected in the interim financial statements but was not.
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(c) AUDITORS' LETTERS. The Company has delivered to Buyer
copies of each management letter or other letter delivered to the Shareholder
or the Company by the auditors in connection with the audited, reviewed
and/or unaudited financial statements delivered to the Buyer or relating to
any review by the auditors of the internal controls of the Company during
either of the two years ended December 31, 1997 and 1996, or thereafter, and
has made available for inspection by Buyer all reports produced or developed
by the auditors or management in connection with their audit, examination or
review of such financial statements, as well as all such reports for prior
periods for which any tax liability of the Company has not been finally
determined or barred by applicable statutes of limitation.
(d) NO MATERIAL ADVERSE CHANGES. Since December 31, 1997 there
has not been, occurred or arisen any change in or event affecting the
Company, the Business or the Stock that has had or would reasonably be
expected to have a material adverse effect on the Company, the Business, or
the Stock, and, except for actions required to be taken by this Agreement or
as set forth on Schedule 4.3(d), the Company has not done any of the
following:
(i) issued any notes, bonds or other debt securities, any
equity securities, any profits interests, or any securities exchangeable for
or convertible into any Equity Securities or profits interests;
(ii) declared, set aside or made any payment or distribution
of cash or other property, or any Equity Securities or profits interests, to
any Person with respect to its capital stock or purchased or redeemed any
shares of its capital stock held by any Person or made any interest,
principal or other payments to any Person with respect to any amounts owing
to such Person;
(iii) borrowed any amounts or entered into any other
liabilities exceeding $10,000 individually or $50,000 in the aggregate;
(iv) sold, assigned or transferred any of its assets, other
than sales of the Products in the ordinary course of the Business, consistent
with past practice;
(v) (1) compromised any debt or claim of the Company,
except for debts or claims compromised with customers, contractors or
subcontractors of the Company in the ordinary course of the Business,
consistent with past practice, none of which were in excess of $10,000
individually and $50,000 in the aggregate; (2) suffered any extraordinary
Losses or intentionally waived any rights of the Company, except for rights
waived with respect to customers, contractors or subcontractors of the
Company in the ordinary course of the Business, consistent with past
practice, none of which were in excess of $10,000 individually or $50,000 in
the aggregate; or (3) suffered any theft, destruction, damage or casualty
loss in excess of $10,000 individually or $50,000 in the aggregate;
(vi) authorized any general increase in the compensation of
the Company's employees (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or any general increase
in the compensation payable or to become payable to any employee of the
Company, in each case other than in the ordinary course of the Business,
consistent with past practice;
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(vii) made any material change in any method of accounting or
accounting practice;
(viii) split, combined or reclassified any of its capital
stock or issued or authorized the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
(ix) amended any material term of any outstanding security
of the Company;
(x) acquired any Person or division of any corporation, or
purchased, leased or otherwise acquired any material assets;
(xi) paid any Person any severance or termination pay;
(xii) entered into, or renewed, amended or modified, any
employment, consulting, severance or termination agreement with any Person or
any Material Contract; or
(xiii) agreed, whether in writing or otherwise, to take any
action described in this Section 4.3(d).
(e) NO OTHER LIABILITIES OR CONTINGENCIES. The Company has no
obligations or liabilities of any kind or nature whatsoever, whether known or
unknown, accrued, absolute, contingent or otherwise, and whether due or to
become due, except liabilities that (i) are reflected on the August Balance
Sheet, or (ii) were incurred after August 31, 1998 in the ordinary course of
the Business, consistent with past practice, and in the aggregate do not
exceed $20,000, or (iii) are set forth on Schedule 4.3(e) hereto.
4.4 TAX AND OTHER RETURNS AND REPORTS.
The Company has and any predecessors of the Company have timely
filed or will timely file all required Tax Returns, and the Company has and
any predecessors of the Company have paid all Taxes due for all periods
ending on or before the Closing Date. Adequate provision has been or, as of
the Closing Date, will be made in the books and records of the Company and in
the Financial Statements, for all Taxes accrued or accruing as of the Closing
Date whether or not due and payable and whether or not disputed. All
required Tax Returns, including amendments to date, have been prepared in
good faith and are complete and accurate. No Governmental Entity has, since
the Company's inception, examined or, to the knowledge of the Company, is in
the process of examining any Tax Returns of the Company and, to the knowledge
of the Company, no Governmental Entity has examined or is in the process of
examining any state or United States federal income tax returns (or any tax
returns of any foreign country or jurisdiction) of any predecessor of the
Company, and no Governmental Entity has proposed (tentatively or
definitively), or asserted or assessed or, to the knowledge of the Company,
threatened to propose, assert or assess, any deficiency, assessment or claim
for Taxes for which the Company is or could become liable.
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4.5 MATERIAL CONTRACTS.
Schedule 4.5 lists each Contract to which the Company is a party or
to which the Company or any of its properties is subject or by which any
thereof is bound that is deemed a Material Contract (as defined in the next
sentence). For purposes of this Agreement, a "MATERIAL CONTRACT" shall be
defined as any Contract that, immediately prior to the Closing, has not been
fully performed by the parties thereto and represents a contract upon which
the Business is substantially dependent or which is otherwise material to the
Business; provided, however, that the following, without limiting the
Contracts that might otherwise constitute Material Contracts, shall be deemed
to be Material Contracts: Any Contract that, immediately prior to the
Closing, has not been fully performed by the parties thereto (or is otherwise
still in effect) and that (a) after the Closing, obligates the Company to pay
an amount of $10,000 or more; or (b) has an unexpired term as of immediately
prior to the Closing in excess of one year; or (c) provides for an extension
of credit other than consistent with normal vendor trade credit terms; or (d)
limits or restricts the ability of the Company to compete or otherwise to
conduct its Business in any manner or place; or (e) provides for a guaranty
or indemnity by the Company; or (f) grants a power of attorney, agency or
similar authority to another Person or entity; or (g) contains a right of
first refusal; or (h) provides for a right or obligation of any Affiliate,
officer or director or any Associate, of the Company to the Company; or (i)
requires the Company to buy or sell goods or services with respect to which
it is reasonably likely there will be material losses or will be costs and
expenses materially in excess of expected receipts; or (j) was not made in
the ordinary course of business. True and complete copies of the agreements
appearing on Schedule 4.5, including all amendments, supplements, exhibits,
attachments and appendices thereto, have heretofore been delivered to Buyer.
Each Material Contract is valid and in full force and effect; the Company has
duly performed all of its obligations thereunder to the extent that such
obligations to perform have accrued; and no breach or default, alleged breach
or default, or event which would (with the passage of time, notice or both)
constitute a breach or default thereunder by the Company, or, to the
knowledge of the Company, any other party or obligor with respect thereto,
has occurred or as a result of this Agreement or performance thereof will
occur. Consummation of the transactions contemplated by this Agreement will
not (and will not give any person a right to) terminate or modify any rights
of, or accelerate or augment any obligation of the Company under any Material
Contract.
4.6 REAL AND PERSONAL PROPERTY; TITLE; LEASES.
Schedule 4.6 (a) lists all real and personal property, except for
Intangible Property, of the Company, which is material to the Business, (b)
properly identifies each of such properties as real property (or an interest
in real property) or personal property, and (c) designates any leasehold
interests therein. Except as set forth on Schedule 4.6, the Company has good
and marketable title to, free of any and all Encumbrances, all such items of
real property, including fees, leaseholds and all other interests in real
property, and all such other assets and properties, including, but not
limited to, all assets that the Company purports to own or has the right to
use, except for Encumbrances consisting solely of liens for Taxes not yet
due. The items of real and personal property identified on Schedule 4.6
constitute all of the real and personal property necessary to operate and
conduct the Business as conducted immediately prior to the Closing. To the
knowledge of the Company, all material tangible properties of the Company are
in a good state of maintenance and repair (except for ordinary wear and
tear). All material
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leasehold properties held by the Company as lessee are held under valid,
binding and enforceable leases. There is no pending or, to the knowledge of
the Shareholder, threatened Action that would materially interfere with the
quiet enjoyment of any such leasehold by the Company.
4.7 INTELLECTUAL PROPERTY.
(a) Schedule 4.7(a) hereto lists all of the Intellectual
Property owned, licensed or otherwise used in connection with the Business.
The Intellectual Property identified on Schedule 4.7(a) is the only
Intellectual Property necessary to operate and conduct the Business as
conducted immediately prior to the Closing. Except as set forth on Schedule
4.7(a), the Company owns or otherwise has the right to use all of its
Intellectual Property, free and clear of any Encumbrance or other adverse
claim. The Company does not use any of such Intellectual Property by consent
of any other Person and is not required to and does not make any payments to
others with respect thereto. The Company has not received any written notice
to the effect (or is otherwise aware that) that the Intellectual Property or
its use by the Company conflicts with any rights of any Person, and the
Company has not received any notice of infringement with respect to the use
of the Company's Intellectual Property. The execution, delivery and
performance of this Agreement and the consummation of the other transactions
contemplated hereby will not cause the forfeiture or termination or give rise
to a right of forfeiture or termination of, or in any way impair the right of
the Company to use, sell, license or dispose of or to bring any action for
the infringement of, any Intellectual Property or any portion thereof.
(b) Schedule 4.7(b) sets forth a complete and accurate
description of all products, technology and services, sold, licensed, or
otherwise exploited by the Company in connection with the Business
(collectively, the "PRODUCTS"). To the knowledge of the Shareholder, the sale
of the Products by Seller does not infringe any Intellectual Property right
of any other Person, and there is no pending or, to the knowledge of the
Shareholder, threatened Action against the Company contesting the Company's
right to sell the Products.
4.8 AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance of this Agreement and any
related agreements by the Company has been duly and validly authorized by the
Board of Directors of the Company and by all other necessary corporate action
on the part of the Company. This Agreement and any related agreements
constitutes the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery
and performance of this Agreement by the Company and the execution, delivery
and performance of any related agreements or contemplated transactions by the
Company will not violate, or, except as set forth on Schedule 4.8, constitute
a breach or default (whether upon lapse of time and/or the occurrence of any
act or event or otherwise) under, the charter documents or bylaws of the
Company or any Contract of the Company, or, except as expressly set forth on
Schedule 4.8, give rise to (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) any right of any Person to cancel,
terminate, increase the obligations of the Company under or otherwise change
the terms of any Contract of the Company, or result in the imposition of any
Encumbrance against any asset or properties of
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the Company, or violate any Law. Schedule 4.8 lists all Approvals required
to be obtained by the Company and the Shareholder to consummate the
transactions contemplated by this Agreement. Except for matters identified
in Schedule 4.8 as requiring that certain actions be taken by or with respect
to a third party or Governmental Entity, the execution and delivery of this
Agreement by the Company and the performance of this Agreement and any
related or contemplated transactions by the Company will not require filing
or registration with, or the issuance of any permit by, any other third party
or Governmental Entity. Except as contemplated by Section 6.5, all Approvals
set forth (or required to be set forth) on Schedule 4.8 have been obtained.
4.9 LEGAL PROCEEDINGS.
There is no Order or Action pending or, to the knowledge of the
Shareholder, threatened against or affecting the Company or the Business or
that might adversely affect the Company's or the Shareholder's ability to
perform this Agreement or the consummation of any of the transactions
contemplated hereby. Except as set forth on Schedule 4.9, there is no claim,
Order or Action as to which the Company or the Shareholder has received any
written notice or which, to the knowledge of the Shareholder, otherwise has
been threatened in writing or is reasonably expected to be threatened or
initiated, against or affecting the Company or any director, officer,
employee, agent or representative of the Company or any other Person, nor to
the knowledge of the Shareholder is there any reasonable basis therefor, in
connection with which any such Person has or may reasonably be expected to
have any right to be indemnified by the Company.
4.10 LABOR RELATIONS.
Except as set forth on Schedule 4.10, with respect to the Company
and its respective employees, independent sales representatives, consultants,
agents, officers and directors, (i) to the extent required by agreement
and/or law, the Company has paid and performed all material obligations with
respect to its respective employees, independent sales representatives,
consultants, agents, officers and directors, including, without limitation,
all wages, salaries, commissions, bonuses, severance pay, vacation pay,
accrued vacation pay, benefits and other direct compensation reimbursed to
such persons; (ii) the Company is in compliance in all material respects with
all federal, state, local and foreign laws and regulations respecting
employment and employment practices, terms and conditions of employment and
wages and hours; (iii) there is no pending, or to the Shareholder's
knowledge, threatened, Action, charge, complaint, allegation, or other
process against the Company before any federal, state, local or foreign court
or agency alleging any unlawful employment practice including, but not
limited to, allegations of employment discrimination, harassment, wrongful
discharge, or wage and hour violations; (iv) there is no pending, or to the
Shareholder's knowledge, threatened, charge, complaint, allegation,
application or other process against the Company before the National Labor
Relations Board or any comparable state, local or foreign agency,
governmental or administrative; (v) there is no labor strike, dispute,
slowdown or work stoppage or other job action pending, or, to the
Shareholder's knowledge, threatened against or otherwise affecting or
involving the Company; (vi) no employees of the Company are covered by any
collective bargaining agreements, no union has been certified as the
exclusive bargaining representative of any employees of the Company, and, to
the knowledge of the Company, no effort is being made
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by any union to organize any of the Company's employees; and (vii) except as
set forth on Schedule 4.10, no employee of the Company has a contract, either
express or implied, which restricts the Company from terminating the
employment of any employee with or without cause.
4.11 MINUTE BOOKS.
The Company has made available to Buyer the complete and original
minute books of the Company. Such minute books accurately reflect all
actions and proceedings taken to date by the shareholders, board of directors
and committees of the Company, and such minute books contain true and
complete copies of the charter documents of the Company and all related
amendments. The stock record books of the Company reflect accurately all
transactions in the capital stock of all classes.
4.12 ACCOUNTING RECORDS; INTERNAL CONTROLS.
(a) ACCOUNTING RECORDS. The Company has accounting records that
accurately reflect its transactions in accordance with GAAP.
(b) DATA PROCESSING; ACCESS. Such accounting records, to the
extent they contain important information that is not easily and readily
available elsewhere, have been duplicated or backed-up, and such duplicates
or back-ups are stored safely and securely pursuant to procedures and
techniques utilized by companies of comparable size in similar lines of
business.
4.13 INSURANCE.
The Company is, and at all times since its inception has been,
insured with reputable insurers against all risks normally insured against by
companies in similar lines of business. Schedule 4.13 lists all insurance
policies and bonds that are material to the Business, and all of such
insurance policies and bonds maintained by the Company are in full force and
effect and complete and correct copies thereof have been provided to Buyer.
The Company is not in default under any such policy or bond. The Company has
timely filed claims with its insurers with respect to all matters and
occurrences for which it believes it has coverage. Except as set forth on
Schedule 4.13, all insurance policies maintained by the Company will remain
in full force and effect, and the Company has not received written notice or
other indication from any insurer or agent of any intent to cancel or not so
renew any of such insurance policies. The Company has complied with and
implemented all outstanding (i) requirements and recommendations of any
insurance company that has issued a policy with respect to any of the
properties and assets of the Company and (ii) requirements and
recommendations of any Governmental Entity that the Company or the
Shareholder has actual knowledge of with respect to any such insurance policy.
4.14 COMPLIANCE WITH LAW; STATUS OF LICENSES.
(a) The conduct of the Business has not violated, and as
presently conducted does not violate, any federal, state or local laws,
including, but not limited to, the Clinical Laboratories Improvements Act of
1988 ("CLIA"), rules, regulations or ordinances, or judgments, injunctions,
writs, decrees, orders or guidance documents and memos of any court or
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Governmental Entity, including, but not limited to, the Occupational Safety
and Health Administration ("OSHA"), the Environmental Protection Agency, the
Department of Transportation, the Health Care Financing Administration
("HCFA") and Food and Drug Administration ("FDA"), similar state agencies, or
any industry standards, nor has the Company received any notice of any such
violation that remains outstanding. The Company is not subject to any Order
currently in effect.
(b) The Company has sole and exclusive possession, free of any
claim or right of any other Person and from free of any Encumbrance (other
than any restrictions or limitations that may be imposed by the Governmental
Entity issuing such License) of all Licenses. The Company is in full
compliance with the terms thereof, and all of such Licenses are valid, in
good standing and in full force and effect. Schedule 4.14(b) sets forth a
complete and accurate list of all such Licenses, together with the date of
expiration for each such License, and includes copies of all QPP Certificates
related to the Business. Upon the Closing, all of the Licenses listed or
required to be listed on Schedule 4.14(b) will continue to be owned or held
by the Company and will be valid, in good standing, and in full force and
effect for use in connection with Buyer's operation of the Company.
(c) The Company has adhered to standard operating procedures
accepted by the FDA and required by its customers (copies of which standard
operating procedures have previously been delivered to Buyer) and has
properly tested and/or secured appropriate testing of all blood and plasma
products necessary for the conduct of the Business. There are no FDA or
other recall, warning or other letters or notices or correspondence received
by or relating to the Business, and there are no notices of adverse findings
or similar correspondence received from or given by CLIA with respect to the
Business or any location owned or operated by the Company.
4.15 EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PLANS, COLLECTIVE BARGAINING AND EMPLOYEE
AGREEMENTS, AND SIMILAR ARRANGEMENTS.
(i) Schedule 4.15 lists all employee benefit plans and
collective bargaining, employment or severance agreements or other similar
arrangements to which the Company is or ever has been a party or in which it
participates or ever has participated or by which it is or ever has been
bound, legally or otherwise, including, without limitation, (a) any
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive
plan, agreement or arrangement, (b) any plan, agreement or arrangement
providing for "fringe benefits" or perquisites to employees, officers,
directors or agents, including, but not limited to, benefits relating to
Company automobiles, clubs, vacation, child care, parenting, sabbatical, sick
leave, medical, dental, hospitalization, life insurance and other types of
insurance, (c) any employment agreement, or (d) any other "employee benefit
plan" (within the meaning of Section 3(3) of ERISA).
(ii) The Company has delivered to Buyer true and complete
copies of all (a) plan documents, (b) summary plan descriptions, (c) annual
reports (Form 5500 series) and accompanying schedules, (d) financial
statements, and (e) actuarial valuation reports, with
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respect to such plans, agreements and arrangements, or summary descriptions
of any such plans, agreements or arrangements not otherwise in writing.
(iii) There are no negotiations, demands or proposals that
are pending or have been made which concern matters now covered, or that
would be covered, by plans, agreements or arrangements of the type described
in this section.
(iv) The Company is in material compliance with the
applicable provisions of ERISA and the Code (as amended through the Closing
Date), the regulations and published authorities thereunder, and all other
Laws applicable with respect to all such employee benefit plans, agreements
and arrangements. The Company has performed all of its material obligations
under all such plans, agreements and arrangements. There are no Actions
(other than routine claims for benefits) pending or, to the knowledge of the
Company, threatened against such plans or their assets, or arising out of
such plans, agreements or arrangements, and all such plans, agreements and
arrangements have been operated in material compliance with their terms. To
the knowledge of the Company, no facts exist which could give rise to any
such Actions.
(v) Except as specified in Schedule 4.15, each of the plans,
agreements or arrangements can be terminated by the Company within a period
of 30 days following the Closing Date, without payment of any additional
compensation or amount or the additional vesting or acceleration of any such
benefits.
(vi) All obligations of the Company under each such plan,
agreement or arrangement (x) that are due prior to the Closing Date have been
paid or will be paid prior to that date, and (y) that have accrued prior to
the Closing Date have been or will be paid prior to the Closing Date or
properly accrued on the Company's balance sheet.
(vii) Except as set forth on Schedule 4.15, no employee,
consultant or agent of the Company is entitled to any severance, accelerated,
parachute or other form of payment or benefit from the Company or its
successors or assigns arising or becoming due as a result of the consummation
of the transactions contemplated hereby.
(b) QUALIFIED PLANS. No Plan listed in Schedule 4.15 is a stock
bonus, pension or profit-sharing plan within the meaning of Section 401(a) of
the Code.
(c) TITLE IV PLANS. No plan listed in Schedule 4.15 is a plan
subject to Title IV of ERISA.
(d) MULTIEMPLOYER PLANS. No plan listed in Schedule 4.15 is a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA). The
Company has not ever contributed to or had any obligation to contribute to
any multiemployer plan.
(e) FINES AND PENALTIES. There has been no act or omission by
the Company that has given rise to or may give rise to fines, penalties,
taxes, or related charges under Section 502(c) or (k) or Section 4071 of
ERISA or Chapter 43 of the Code.
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4.16 CERTAIN INTERESTS; INTERCOMPANY SERVICES.
(a) Except as set forth on Schedule 4.16(a), no Affiliate of the
Company, nor any officer or director of the Company, nor Associate of any
such individual, has any material interest in any property used in or
pertaining to the Business; no such Person is indebted or otherwise obligated
to the Company; and the Company is not indebted or otherwise obligated to any
such Person, except for amounts due under normal arrangements applicable to
all employees generally as to salary or reimbursement of ordinary business
expenses not unusual in amount or significance. Except as set forth on
Schedule 4.16(a), the consummation of the transactions contemplated by this
Agreement will not (either alone, or upon the occurrence of any act or event,
or with the lapse of time, or both) result in any benefit or payment
(severance or other) arising or becoming due from the Company or the
successor or assign of the Company to any Person.
(b) The Company has not engaged in any transaction with the
Shareholder or any other Affiliate of the Shareholder. The Company does not
have any liabilities or obligations of any kind or nature whatsoever to the
Shareholder or any other Affiliate of the Shareholder and none of the
Shareholder or such Affiliates has any obligations to the Company. The
consummation of the transactions contemplated by this Agreement will not
(either alone, or upon the occurrence of any act or event, or with the lapse
of time, or both) result in any payment arising or becoming due from the
Company or the successor or assign of the Company to the Shareholder or any
Affiliate of the Shareholder, other than obligations arising under this
Agreement. Following consummation of the Closing, neither the Shareholder
nor any of its Affiliates will have any right, title or interest in or to any
of the Company's assets or properties, including, without limitation, any
Intellectual Property of the Company or any Contract to which the Company is
a party or by which it is bound.
(c) Except as set forth on Schedule 4.16(c), the Shareholder
does not provide, and has not at any time in the past provided, any corporate
or administrative services or performed any other functions or tasks for the
Company of any kind whatsoever.
4.17 BANK ACCOUNTS AND POWERS.
Schedule 4.17 lists each bank, trust company, savings institution,
brokerage firm, mutual fund or other financial institution with which the
Company has an account or safe deposit box, together with the applicable
branch or office address thereof, and the names and identification of all
Persons authorized to draw thereon or to have access thereto, and lists the
names of each Person holding powers of attorney or agency authority from the
Company and a summary of the terms thereof.
4.18 NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker, or
other Person or firm engaged by or acting on behalf of the Shareholder, the
Company or any of their respective Affiliates in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to receive any
brokerage or
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finder's or similar fee or other commission from Buyer as a result of this
Agreement or such transactions.
4.19 ACCURACY OF INFORMATION.
No representation, warranty or statement made by the Company or the
Shareholder in this Agreement, the Schedules attached hereto or in any other
written materials furnished or to be furnished by the Company to Buyer or its
representatives, attorneys and accountants pursuant to or in connection with
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact required to be stated
herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
4.20 INVENTORIES.
All inventories of the Company are of good merchantable quality,
reasonably in balance, have been recorded in accordance with GAAP, and are
saleable (in the case of inventory held for sale) or currently usable (in the
case of other inventory) in the ordinary course of the Business. All plasma
included among the inventories of the Company has been collected or taken in
accordance with standard operating procedures prescribed by the FDA or
otherwise by Law, tested in accordance therewith, and constitutes first
quality plasma in accordance with FDA and QPP requirements. The value of
obsolete, damaged or excess inventory and of inventory below standard quality
has been written down on the most recent balance sheet delivered to Buyer
pursuant to Section 4.3(b) or, with respect to inventories purchased since
such balance sheet date, on the books and records of the Company, to
ascertainable market value, or adequate reserves described on such balance
sheet have been provided therefor, and the value at which inventories are
carried reflects the customary inventory valuation policy of the Company
(which fairly reflects the value of obsolete, spoiled or excess inventory)
for stating inventory, in accordance with GAAP consistently applied.
4.21 RECEIVABLES AND COMMISSIONS PAYABLE.
Except as listed on Schedule 4.21, all receivables of the Company
reflected on the balance sheets referred to in Section 4.3 are current and
represent sales actually made in the ordinary course of business, and the
reserves shown on such balance sheets were calculated on a basis consistent
with GAAP and past practices. The Company has delivered to Buyer a complete
and accurate aging list of all receivables of the Company. All Commissions
payable to sales agents of the Company reflected on the Financial Statements
represent commissions actually made in the ordinary course of business, and
are properly recorded and current. The Company has no commissions payable.
4.22 CUSTOMERS AND SUPPLIERS; DONORS.
(a) Schedule 4.22(a) lists the names of and describes all
Contracts with, and the appropriate percentage of Business attributable to,
the 10 largest customers of the Business at the date of this Agreement, and
any sole-source suppliers of significant goods or services (other than
electricity, gas, telephone or water) to the Company with respect to which
alternative sources of supply are not readily available on comparable terms
and conditions. To the best
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knowledge of the Company and the Shareholder, except as set forth in Schedule
4.22(a), there have been no adverse changes in the relationships between the
Company and its customers or suppliers since January 1, 1998.
(b) The records of the Company identify all donors of
hyperimmune plasma to the Business during 1997 and through September 11, 1998
(the final date of the Company's tetanus hyperimmune plasma program),
together with the aggregate quantity of such plasma donated during each such
year by each such donor. There have been no adverse changes in the
relationships between the Company and any of the donors identified in such
records.
4.23 ENVIRONMENTAL COMPLIANCE.
Except as set forth in Schedule 4.23, (a) neither the Company nor
any predecessor of the Company has generated, used, transported, treated,
stored, released or disposed of, or has suffered or permitted anyone else to
generate, use, transport, treat, store, release or dispose of any Hazardous
Substance in violation of any Laws; (b) there has not been any generation,
use, transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the Business or the use of any
current or former property or facility of the Company or any predecessor of
the Company, and no Hazardous Substances are present at any current or former
property or facility of the Company, in each case which has created or might
reasonably be expected to create any liability of the Company or which would
require reporting by the Company to or notification of any Governmental
Entity; (c) no asbestos or polychlorinated biphenyl or underground storage
tank is contained in or located at any facility of the Company or any
predecessor of the Company; (d) neither the Company nor any predecessor of
the Company has disposed of any Hazardous Substance at any off-site facility
that has created or might reasonably be expected to create any liability of
the Company; and (e) any Hazardous Substance handled or dealt with in any way
in connection with the Business of the Company or of any predecessor of the
Company, has been and is being handled or dealt with in all respects in
compliance with applicable Laws. To the knowledge of the Company, there are
no environmental reports and/or studies concerning the Business and/or the
current or former properties or facilities of the Company or any predecessor
of the Company.
4.24 CORPORATE NAMES.
Schedule 4.24 sets forth a complete and accurate list of the names
used by the Company in addition to its corporate name.
4.25 CORPORATE BOOKS AND RECORDS.
The Shareholder and/or the Company has, or as of the Closing will
have, delivered or caused to be delivered to Buyer originals of all of the
books and records of or pertaining to the Company and/or the Business,
including, without limitation, all stock ledgers, stock books, minute books,
and tax and accounting records.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholder that:
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5.1 ORGANIZATION AND RELATED MATTERS.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Buyer has all necessary
corporate power and authority to carry on its business as it is now being
conducted. Buyer has the necessary corporate power and authority to execute,
deliver and perform this Agreement and any related agreements to which it is
a party.
5.2 AUTHORIZATION.
The execution, delivery and performance of this Agreement and any
related agreements by Buyer have been duly and validly authorized by the
Board of Directors of Buyer and by all other necessary corporate action on
the part of Buyer. This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
5.3 NO CONFLICTS.
The execution, delivery and performance of this Agreement and any
related agreements by Buyer will not violate the provisions of, or constitute
a breach or default, whether upon lapse of time and/or the occurrence of any
act or event or otherwise, under (a) the charter documents or bylaws of Buyer
or (b) any Law to which Buyer is subject.
5.4 NO BROKERS OR FINDERS.
No agent, broker, finder or investment or commercial banker, or
other Person or firms engaged by or acting on behalf of Buyer or its
Affiliates in connection with the negotiation, execution or performance of
this Agreement or the transactions contemplated by this Agreement, is or will
be entitled to receive any broker's or finder's or similar fees or other
commissions from the Company or the Shareholder as a result of this Agreement
or such transactions.
ARTICLE VI
CERTAIN COVENANTS
6.1 NON-COMPETITION.
(a) RESTRICTIONS ON COMPETITIVE ACTIVITIES. Each of Omni and
the Shareholder agrees that after the Closing, Buyer and the Company shall be
entitled to the goodwill and going concern value of the Business and to
protect and preserve the same to the maximum extent permitted by law. Each
of Omni and the Shareholder also acknowledges that it and its respective
officers, directors, employees and representatives have extensive knowledge
of proprietary information concerning the Business and operations of the
Company and that it would be competitively unfair to make such information
available to any competitor of the Company. Accordingly, each of Omni and
the Shareholder agrees that, for a period of five years following the Closing
Date (the "NON-COMPETITION PERIOD"), it will not, directly or indirectly, and
will cause its respective Affiliates not to, directly or indirectly, own,
operate, invest in or serve as a
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consultant, employee or other paid assistant or in any like role or capacity
with, or otherwise materially participate in the management of, any other
company or enterprise that owns, operates or manages plasma collection
centers and does business within a 100-mile radius of any of the locations
set forth on Schedule 6.1(a) hereto. Each of Omni and the Shareholder
acknowledges and agrees that the restrictions contained in this Section 6.1
are a material inducement to Buyer to enter into this Agreement. For the
purposes of this Agreement, the Affiliates of the Shareholder shall be deemed
to be Wilson and Wood.
(b) EXCEPTIONS. Nothing contained herein shall limit the right
of the Shareholder as an investor to hold and make investments in securities
of any Person, provided the Shareholder's equity interest therein (including,
without limitation, any interest convertible into equity) does not exceed 5%
of the outstanding shares or interests in such Person.
(c) RESTRICTIONS ON SOLICITING EMPLOYEES. In addition to the
foregoing covenants, to protect Buyer against any efforts by the Shareholder
and/or Omni to cause employees of the Company to terminate their employment,
each of Omni and the Shareholder agrees that until the end of the
Non-Competition Period, it will not directly or indirectly (i) induce any
employee of the Company with a then current compensation of more than $20,000
annually to leave the Company or to accept any other employment or position,
or (ii) assist any other entity in hiring any such employee.
(d) SPECIAL REMEDIES AND ENFORCEMENT. Each of Omni and the
Shareholder recognizes and agrees that a breach by it of any of the covenants
set forth in this Section 6.1 could cause irreparable harm to Buyer, that
Buyer's remedies at law in the event of such breach would be inadequate, and
that, accordingly, in the event of such breach a restraining order or
injunction or both may be issued against breaching Omni and/or the
Shareholder, in addition to any other rights and remedies which are available
to Buyer. If this Section 6.1 is more restrictive than permitted by the Laws
of the jurisdiction in which Buyer seeks enforcement hereof, this Section 6.1
shall be limited to the extent required to permit enforcement under such
Laws. Without limiting the generality of the foregoing, the Parties intend
that the covenants contained in the preceding portions of this Section 6.1
shall be construed as a series of separate covenants, one for each county,
state and city or other location specified. Except for geographic coverage,
each such separate covenant shall be deemed identical in terms. If, in any
judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this Section 6.1, then such unenforceable
covenant shall be deemed eliminated from these provisions for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants to be enforced.
6.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
Neither Omni nor the Shareholder, nor any of their respective
Affiliates or representatives, shall, at any time, make use of, divulge or
otherwise disclose (other than to Buyer), directly or indirectly, any
Confidential Information concerning the business or policies of the Company
that Omni, the Shareholder or any of their respective Affiliates or
representatives may have learned as a shareholder, employee, officer or
director of the Company, or otherwise.
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6.3 TAX COOPERATION.
After the Closing, each of Omni and the Shareholder shall, and
shall cause its Affiliates to, cooperate fully with Buyer and the Company in
the preparation of all Tax Returns and shall provide, or cause to be provided
at the Shareholder's sole cost and expense, to Buyer and the Company any
records and other information requested by such parties in connection
therewith as well as access to, and the cooperation of, the accountants of
Omni and/or the Shareholder. Each of Omni and the Shareholder shall, and
shall cause its Affiliates to, cooperate fully with Buyer and the Company in
connection with any Tax investigation, audit or other proceeding relating to
periods ending on or prior to the Closing. Any information obtained pursuant
to this Section 6.3 or pursuant to any other Section hereof providing for the
sharing of information or the review of any Tax Return or other Schedule
relating to Taxes shall be subject to Section 9.9. Omni and/or the
Shareholder shall cause to be prepared and timely filed all Tax Returns for
the Company for any period ending on the Closing Date, and the Shareholder
and/or Omni shall pay and be solely responsible for all costs and expenses
associated therewith.
6.4 RELEASE.
(a) Effective as of the Closing, each of Omni, the Shareholder,
Wilson and Wood agrees not to sue and fully releases and discharges the
Company, including, without limitation, its directors, officers, employees,
shareholders, representatives, agents, assigns and successors, past and
present (collectively "RELEASEES"), with respect to and from any and all
claims, issuances of the Company's stock, notes or other securities, any
demands, rights, liens, agreements, contracts, covenants, actions, suits,
causes of action, obligations, debts, costs, expenses, damages, judgments,
orders and liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, and whether or not concealed or
hidden, all of which Omni, the Shareholder, Wilson and/or Wood now own or
owns or hold or holds or has or have at any time owned or held against
Releasees.
(b) It is the intention of the Parties that such release be
effective as a bar to each and every claim, demand and cause of action
hereinabove specified. In furtherance of this intention, each of Omni, the
Shareholder, Wilson and Wood hereby expressly waives, effective as of the
Closing, any and all rights and benefits conferred upon Omni, the
Shareholder, Wilson and/or Wood by the provisions of Section 1542 of the
California Civil Code and expressly consents that this release shall be given
full force and effect according to each and all of its express terms and
provisions, including as well, those related to unknown and unsuspected
claims, demands and causes of action, if any, as those relating to any other
claims, demands and causes of action hereinabove specified, but only to the
extent such section is applicable to releases such as this. Section 1542
provides:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected
his settlement with the debtor."
(c) Nothing in this Section 6.4 shall in any way affect any
rights that the Shareholder may have against Buyer under this Agreement,
including, without limitation, any right of indemnification pursuant to
Article VII hereof.
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6.5 POST-CLOSING APPROVALS.
The Company and the Shareholder, jointly and severally, represent
and warrant to Buyer that Schedule 6.5 identifies all Contracts (i) that are
set forth or required to be set forth on Schedule 4.8 and as to which the
Approval of the other party or parties thereto has not, as of the Closing,
been obtained or (ii) of the Company that are in the name of "American Plasma
Services, L.P." or any other entity other than the Company, require the
Approval of the other party or parties thereto to assign or transfer such
Contract, and with respect to which such Approval has not been obtained in
connection with the transfer or assignment of such Contract to the Company.
(Hereinafter, the Approvals required to be obtained in connection with the
Contracts set forth or required to be set forth on Schedule 6.5 are referred
to as the "OUTSTANDING APPROVALS".) Notwithstanding the Shareholder's failure
to procure, as of the Closing, the Outstanding Approvals, Buyer has agreed,
in reliance on the Shareholder's covenants in this Section 6.5, to proceed
with the Closing as scheduled. The Shareholder shall use its best efforts to
obtain all of the Outstanding Approvals as quickly as practicable following
the Closing, but in any event not later than 30 days after the Closing (such
period, the "POST-CLOSING PERIOD"). Promptly after obtaining each Outstanding
Approval, the Shareholder shall so notify Buyer in writing and include with
such notice a copy of the relevant approval documentation executed by the
Person giving such approval. In addition, at reasonable intervals during the
Post-Closing Period, the Shareholder shall provide a written update to Buyer
with respect to the Shareholder's efforts to obtain all of the Outstanding
Approvals.
6.6 MAINTENANCE OF SHAREHOLDER'S NET WORTH; OTHER COVENANTS.
(a) MAINTENANCE OF NET WORTH. At all times and continuously
until the later of September 29, 2000 or the resolution of all claims of
Buyer for indemnification from Omni and/or the Shareholder that have been
made in accordance with Article VII of this Agreement (such period, the "NET
WORTH PERIOD"), each of Wilson and Wood shall cause the Shareholder to have
and maintain a tangible net worth as determined pursuant to GAAP ("TANGIBLE
NET WORTH") equal to at least One Million Five Hundred Thousand Dollars
($1,500,000). Wilson and Wood shall, as promptly as practicable, notify
Buyer in writing at any time such net worth of the Shareholder falls below
$1,500,000. In addition, Wilson and Wood shall cause the Shareholder to
deliver to Buyer all audited year-end and unaudited interim balance sheets of
the Shareholder prepared from time to time during the Net Worth Period, in
each case within three business days after such balance sheets have been
finalized.
(b) LIABILITY OF WILSON AND WOOD. If Buyer shall have failed to
recover the full amount of any Negative Price Adjustment, Aggregate
Adjustment and/or Agreed Claim (as defined in Section 7.4(d)) (in each case
to the extent not offset against the Net Amount Holdback or reimbursed out of
the Escrow Account and, with respect to Agreed Claims, subject to the
provisions of Article VII), as the case may be, from the Shareholder and/or
Omni within 30 days of making written demand to the Shareholder for payment
thereof from the Shareholder and/or Omni, Wilson and Wood shall (i)
automatically and without any further action or notification on the part of
any of the Parties, thereupon be and become directly liable with Omni and the
Shareholder, on a joint and several basis, for up to $1,500,000 of the
aggregate amount of any Negative Price Adjustment, Aggregate Adjustment
and/or any and all indemnification obligations of Omni and the Shareholder in
accordance with Article VII and (ii) subject to the
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$1,500,000 aggregate limitation specified in clause (i) of this Section
6.6(b) and the limitations on the Shareholder's and Omni's indemnification
obligations set forth in Section 7.7, within three business days of their
receipt of a written demand from Buyer, pay to Buyer via wire transfer of
immediately available funds the full amount of any such unpaid Negative Price
Adjustment, Aggregate Adjustment and/or indemnification claim. Each of
Wilson and Wood agree that their liability pursuant to this Section 6.6(b)
shall be without regard to whether the Shareholder's Tangible Net Worth is
greater or less than, or equal to, $1,500,000.
(c) OTHER COVENANTS. Each of Wilson and Wood covenants and
agrees that it shall cause the Shareholder to execute and deliver to the
Escrow Agent any and all joint written instructions to the Escrow Agent as
may be required pursuant to Sections 2.5, 2.6 and/or 7.4 of this Agreement.
If the Shareholder shall fail, within two business days after its receipt of
a written demand from Buyer that it comply with its covenant under this
Section 6.6(c), to cause the Shareholder to execute and deliver any such
joint written instruction that it is required hereunder to execute and
deliver, Wilson and Wood shall, automatically and without any further action
or notification on the part of any of the Parties, thereupon become liable
with Omni and the Shareholder, on a joint and several basis, for the full
amount to be released from the Escrow Account and disbursed to Buyer pursuant
to the joint written instruction that the Shareholder has failed to execute
and deliver pursuant to this Agreement. Notwithstanding any contrary
provision of this Agreement, neither Wilson nor Wood shall have any direct
liability to Buyer under this Section 6.6(c) until and unless Buyer shall
have failed, within 30 days after making written demand therefor to the
Shareholder, to recover from the Shareholder and/or Omni the full amount to
be released from the Escrow Account and disbursed to Buyer pursuant to the
joint written instruction that the Shareholder has failed to execute and
deliver pursuant to this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION OF BUYER.
Omni and the Shareholder covenant and agree, jointly and severally,
to indemnify and hold harmless Buyer, and its directors, officers, employees,
affiliates, agents, representatives and assigns, and the Company (only to the
extent applicable) and its respective directors, officers, employees,
Affiliates, agents, representatives and assigns (collectively, the "BUYER
INDEMNIFIED PARTIES"), from and against any and all Losses, directly or
indirectly, as a result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations or warranties made by the Shareholder or the Company in or
pursuant to this Agreement;
(b) the failure of any of the Shareholder, Omni or the Company
to perform or observe fully any covenant, provision or agreement to be
performed or observed by it pursuant to this Agreement or any agreement or
document executed by Shareholder, Omni and/or the Company in connection
herewith;
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(c) any Excluded Liabilities; and/or
(d) the failure of the Shareholder to obtain (i) any Approval
set forth or required to be set forth on Schedule 4.8 and/or (ii) any
Outstanding Approval.
7.2 INDEMNIFICATION OF THE SHAREHOLDER.
Buyer agrees to indemnify and hold harmless the Shareholder and its
partners, employees, Affiliates, agents, representatives and assigns (the
"SHAREHOLDER INDEMNIFIED PARTIES") from and against any and all Losses of the
Shareholder, directly or indirectly, as a result of, or based upon or arising
from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations or warranties made by Buyer in or pursuant to this Agreement;
(b) the failure of Buyer to perform or observe fully any
covenant, provision or agreement to be performed or observed by it pursuant
to this Agreement or any agreement or document executed by Buyer in
connection herewith.
(c) any actual or threatened claim, suit, action or proceeding
to the extent arising out of or resulting from the conduct by the Company of
its Business or operations from and after the Closing Date.
7.3 CERTAIN TAX MATTERS.
(a) INDEMNIFICATION OF BUYER. Omni and the Shareholder covenant
and agree, jointly and severally, to indemnify, defend and hold harmless the
Buyer Indemnified Parties against the following tax matters (the "TAX
MATTERS"): (i) any Tax payable by or on behalf of the Shareholder or any of
the Shareholder's Affiliates, or the Company, for any taxable period ending
on or prior to the Closing Date, (ii) any deficiencies in any Tax payable by
or on behalf of the Shareholder or any of the Shareholder's Affiliates, or
the Company arising from any audit by any taxing agency or authority with
respect to any period ending on or prior to the Closing Date, (iii) Taxes of
any member of a consolidated or combined tax group of which the Shareholder
or any of the Shareholder's Affiliates is, or was at any time, a member, for
which the Company is jointly or severally liable as a result of its inclusion
in such group with respect to any period on or prior to the Closing Date,
(iv) any Tax liabilities of the Shareholder arising out of the transfer of
the Stock, and (v) any Taxes due from the Company for the Tax period ending
as of the Closing Date (except to the extent that accruals for such Taxes
were reflected on the Initial Determination Statement or, if objected to,
reflected in a Final Determination Statement), and net of any applicable cash
reserves for such Taxes actually on deposit with the appropriate taxing
authority and reflected on the Initial Determination Statement (or, if
objected to, on a Final Determination Statement), calculated on the basis of
the Company's operating results through the Closing Date and as if the period
ended on the Closing Date.
(b) AUDIT MATTERS. The Shareholder shall have the
responsibility for and shall control (subject to the limitations set forth
herein), at the Shareholder's sole expense, the audit (and disposition
thereof) of any Tax Return relating to periods ending on or prior to the
Closing Date and the Shareholder shall participate in the disposition of the
audit of any Tax Return
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relating to the periods ending after the Closing Date if such audit or
disposition thereof could give rise to a claim for indemnification hereunder.
Buyer shall have the right directly or through its designated
representatives, to review in advance and comment upon all submissions made
in the course of audits or appeals thereof to any Governmental Entity
relating to periods on or prior to the Closing Date and consent to, which
consent shall be made in good faith and shall not be unreasonably withheld or
delayed, the disposition of any audit adjustment with respect to such periods
if such disposition will or might be expected to result in, directly or
indirectly, an increase in Taxes of Buyer or the Company for any period
beginning at or after the Closing.
(c) Any refunds or credits of Taxes to the Company or the
Shareholder that relate to taxable periods ending on or before the Closing
Date, shall be for the account of the Shareholder, and otherwise shall be for
the account of the Buyer. Buyer shall forward to or reimburse the
Shareholder for any refunds or credits due the Shareholder after receipt
thereof, and the Shareholder shall promptly forward to or reimburse Buyer for
any refunds or credits due Buyer after receipt thereof.
(d) If Buyer becomes aware of any assessment, official inquiry,
examination or proceeding that could give rise to an official determination
with respect to Taxes for which the Shareholder is required to indemnify the
Buyer hereunder, Buyer shall promptly so notify the Shareholder in writing.
If Omni and/or the Shareholder becomes aware of any assessment, official
inquiry, examination or proceeding that could give rise to an official
determination with respect to Taxes due or payable (or which reasonably could
be due or payable) by Buyer, Omni and/or the Shareholder, as the case may be,
shall promptly so notify the Buyer in writing.
7.4 INDEMNIFICATION PROCEDURES.
(a) CERTIFICATE. As soon as practicable after the incurrence of
a Loss or Losses by the party seeking indemnification (the "INDEMNIFIED
PARTY"), including, without limitation, any claim by a third party described
in Section 7.4(c) hereof, which might give rise to indemnification hereunder,
the Indemnified Party shall deliver to the party from which indemnification
is sought (the "INDEMNIFYING PARTY") a certificate (the "CERTIFICATE"). If
the Indemnified Party is Buyer and Buyer intends to seek reimbursement from
available funds in the Escrow Account for any part or all of the Losses set
forth in a Certificate, Buyer shall, in addition to and concurrently with its
delivery of such Certificate to the Shareholder, deliver a copy of such
Certificate to the Escrow Agent. Each such Certificate shall:
(i) state that the Indemnified Party has paid or properly
accrued Losses, or anticipates that it will incur liability for Losses;
(ii) specify in reasonable detail each individual item of
Loss included in the amount so stated, the date such item was paid or
properly accrued, the basis for any anticipated liability and the nature of
the misrepresentation, breach of warranty or breach of covenant or claim to
which each such item is related and the computation of the amount to which
such Indemnified Party claims to be entitled hereunder; and
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(iii) if such Certificate is to be delivered by Buyer
concurrently to the Escrow Agent hereunder, state that a copy of the
Certificate is being concurrently delivered to the Shareholder and the Escrow
Agent.
(b) DENIAL OF OBLIGATION TO INDEMNIFY. In case the Indemnifying
Party shall object to the indemnification of an Indemnified Party in respect
of any claim or claims specified in any Certificate, the Indemnifying Party
shall, within 15 business days after receipt by the Indemnifying Party of
such Certificate, deliver to the Indemnified Party and, if the Indemnifying
Party is the Shareholder and a copy of such Certificate has been delivered to
the Escrow Agent by Buyer pursuant to Section 7.4(a), the Shareholder shall,
concurrently with its delivery to Buyer, deliver to the Escrow Agent a
written notice stating that the Indemnifying Party objects to the claim
and/or claims set forth in the Certificate (or any portion thereof) and
specifying in reasonable detail the grounds for such objection. (Upon the
Indemnifying Party's dispatch of such notice to the Indemnified Party and, as
applicable, the Escrow Agent, the claim to which the Indemnifying Party
objects (to the extent of such objection) shall become a "DISPUTED CLAIM".)
The Indemnifying Party and the Indemnified Party shall, within the 20-day
period beginning on the date of receipt by the Indemnified Party of such
written objection, attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims to which the
Indemnifying Party shall have so objected. If the Indemnified Party and the
Indemnifying Party shall succeed in reaching agreement on their respective
rights with respect to any such claims, the Indemnified Party and the
Indemnifying Party shall promptly prepare and sign a memorandum setting forth
such agreement. Should the Indemnified Party and the Indemnifying Party be
unable to agree as to any particular item or items or amount or amounts, then
the Indemnified Party and the Indemnifying Party shall immediately submit
such dispute to arbitration pursuant to Article VIII hereof.
(c) THIRD PARTY CLAIMS. As soon as practicable after receipt by
an Indemnified Party of notice of any claim from any third party or the
commencement of any action by a third party, the Indemnified Party shall, if
a claim for indemnification in respect thereof is to be made by it under this
Article VII, notify the Indemnifying Party in writing of such claim or the
commencement of such action. If any such claim or action shall be brought
against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate therein,
and, to the extent that it wishes, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim, the Indemnifying Party shall not be liable to the
Indemnified Party under this Article VII for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, any
Indemnified Party shall have the right to employ separate counsel in any such
claim or action and to participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment thereof has been specifically authorized by the
Indemnifying Party, (ii) such Indemnified Party shall have been advised by
such counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the Indemnifying
Party and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel or (iii) the Indemnifying Party
has failed to assume the defense of such claim or action and employ counsel
reasonably satisfactory to the Indemnified Party, in which case, if such
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Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall promptly pay the fees, costs and expenses associated
with the employment of such separate counsel and shall not have the right to
assume the defense of such claim or action on behalf of such Indemnified
Party. Each Indemnified Party shall use its reasonable efforts to cooperate
with the Indemnifying Party in the defense of any such claim or Third Party
Claim. The Indemnifying Party shall not be liable for any settlement of any
such claim or action effected without its written consent (which consent
shall not be unreasonably withheld, conditioned or delayed), but if settled
with its written consent or if there be a final judgment in favor of the
plaintiff in any such claim, the Indemnifying Party agrees to indemnify and
hold harmless any Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
(d) AGREED CLAIMS. Claims for Losses specified in any
Certificate to which an Indemnifying Party shall not object in writing within
15 business days of receipt of such Certificate, claims for Losses covered by
a memorandum of agreement of the nature described in Section 7.4(b) hereof,
claims for Losses the validity and amount of which have been determined
through arbitration as contemplated by Section 7.4(b) hereof and claims for
Losses the validity and amount of which shall have been the subject of final
determination or settlement as described in Section 7.4(c) hereof are
hereinafter collectively referred to as "AGREED CLAIMS". Except to the
extent offset against the Net Amount Holdback pursuant to Section 2.3 or paid
out of the Escrow Account pursuant to Section 2.4 and subject to the
limitations set forth in Section 7.7, within ten (10) days of the
determination of the amount of any Agreed Claims for which any Buyer
Indemnified Party is entitled to indemnification hereunder, the Shareholder
shall pay such Buyer Indemnified Party an amount equal to the Agreed Claim by
wire transfer in immediately available funds to the bank account or accounts
designated in writing by such Buyer Indemnified Party not less than two days
prior to such payment. If an indemnification claim of Buyer set forth in a
Certificate duly delivered to the Shareholder and the Escrow Agent has become
an Agreed Claim by virtue of the Shareholder's failure to object to such
claim within 15 business days of its receipt of such claim, and if the
Shareholder shall have failed or refused to execute a joint written
instruction to the Escrow Agent pursuant to this Section 7.4(d) to disburse
from the Escrow Account funds in the amount of such Agreed Claim, then Buyer
shall have the right to execute and deliver to the Escrow Agent a written
instruction to reimburse Buyer for the amount of such Agreed Claim from the
funds then available therefor in the Escrow Account, and the Escrow Agent
shall be entitled to act on such sole written instruction of Buyer and the
Shareholder shall be deemed to have consented thereto. Within ten (10) days
of the determination of the amount of any Agreed Claims for which the
Shareholder is entitled to indemnification hereunder, Buyer shall pay the
Shareholder, by wire transfer in immediately available funds to the bank
account or accounts designated in writing by the Shareholder not less than
two days prior to such payment, an amount equal to the Agreed Claim.
(e) SUBROGATION OF INDEMNIFYING PARTY. If the Indemnified Party
receives payment or other indemnification from an Indemnifying Party
hereunder, the Indemnifying Party shall be subrogated to the extent of such
payment or indemnification to all rights in respect of the subject matter of
such claim to which the Indemnified Party may be entitled, to institute
appropriate action for the recovery thereof, and the Indemnified Party agrees
reasonably to assist and cooperate with the Indemnifying Party at no expense
to the Indemnified Party in enforcing such rights.
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7.5 TAX TREATMENT OF INDEMNITY PAYMENTS.
The Parties agree to treat any indemnity payment made pursuant to
this Article VII as an adjustment to the Purchase Price for federal, state,
local and foreign income tax purposes.
7.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder through September 29, 2000,
except for the representations and warranties set forth in (i) Sections 4.3,
4.4, 4.5 and 4.25, which shall survive until the expiration of the applicable
statute of limitations; and (ii) Sections 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 4.8,
5.1, 5.2, and 5.3, which shall each survive indefinitely. A claim for
indemnification under this Article VII for breach of a representation or
warranty may be brought at any time, PROVIDED that the representation or
warranty on which such claim is based continues to survive at the time a
Certificate with respect to such claim is given in accordance with Section
7.2(a) hereof, and if such notice is given within such period all rights to
indemnification with respect to such claim shall continue in force and effect
until such claim is finally terminated or resolved and any amounts payable
with respect thereto are finally determined and paid.
7.7 LIMITATIONS ON INDEMNITY.
Notwithstanding any contrary provision herein (but subject to the
provisos in Sections 7.7(a), 7.7(b) and 7.7(c)), the following provisions of
this Section 7.7 shall limit the Parties' indemnification obligations
hereunder:
(a) MINIMUM LOSS. Neither Omni nor the Shareholder shall be
required to indemnify a Buyer Indemnified Party, and Buyer shall not be
required to indemnify any Shareholder Indemnified Party, unless and until the
aggregate amount for which the Buyer Indemnified Party or the Shareholder
Indemnified Party, as the case may be, is otherwise entitled to
indemnification pursuant to this Article VII exceeds $1,000 (the "MINIMUM
LOSS"); provided, that the provisions of this Section 7.7(a) shall not apply
to the indemnification obligations of Omni and the Shareholder (i) under
Sections 7.1(c), 7.1(d) or 7.3(a) or (ii) arising out of the failure of the
representations of Omni and the Shareholder set forth in Section 4.4 or
Section 4.18 to be true and accurate or the breach by the Shareholder of its
covenants set forth in Section 7.3(b). After the Minimum Loss is exceeded,
the Buyer Indemnified Party and/or the Shareholder Indemnified Party, as the
case may be, shall be entitled to be paid the entire amount of its
indemnified losses, damages and/or costs (without deduction of the Minimum
Loss), subject to the proviso contained in the immediately preceding sentence
and to the limitations on recovery set forth in Section 7.7(b).
(b) LIABILITY CAP. The Parties hereby agree that the maximum
aggregate liability for Buyer, on the one hand, or Omni and the Shareholder,
on the other hand, under this Article VII shall in no event exceed Two
Million Dollars ($2,000,000), except that this limitation shall not apply to
the indemnification obligations of Omni and/or the Shareholder (i) under
Sections 7.1(c), 7.1(d) or 7.3(a) or (ii) arising out of the failure of the
Shareholder's
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representations set forth in Section 4.4 or Section 4.18 to be true and
accurate or the breach by the Shareholder of its covenants set forth in
Section 7.3(b).
(c) SOLE AND EXCLUSIVE REMEDY. The Parties each acknowledge and
agree that, notwithstanding any other provision of this Agreement to the
contrary (but subject to the proviso below), such Party's sole and exclusive
remedy with respect to the breach of any representation or warranty or the
breach or nonperformance of any covenant and any and all other claims
relating to the subject matter of this Agreement and the transactions
contemplated hereby and by any of the other agreements contemplated hereby
shall be in accordance with, and limited by, the provisions set forth in this
Article VII; PROVIDED, HOWEVER, that nothing in this Section 7.7(c) or in any
other provision of this Agreement shall in any way prevent, limit or
otherwise affect Buyer's right to recover the full amount of any Negative
Price Adjustment and/or any Aggregate Adjustment pursuant to this Agreement.
7.8 SURVIVAL OF INDEMNITY.
This Article VII shall survive the Closing and shall remain in
effect indefinitely.
7.9 WAIVER OF RIGHT TO COMPEL INDEMNIFIED PARTY TO PROCEED
AGAINST OTHERS; OFFSETS AGAINST NET AMOUNT HOLDBACK.
No Indemnified Party shall be required to proceed against any
particular Person for indemnification or otherwise in respect of any Losses
before enforcing such Indemnified Party's rights hereunder against any
Indemnifying Party, and the Buyer and the Shareholder expressly waive all
rights the Buyer and the Shareholder may respectively have, now or in the
future, under any statute, at common law, or at law or in equity, or
otherwise, to compel an Indemnified Party to proceed against any Person in
respect of any Losses before proceeding against, or as a condition to
proceeding against, any Indemnifying Party; PROVIDED, HOWEVER, that (i) Buyer
shall first offset against the Net Amount Holdback the amount of any Agreed
Claims, Negative Price Adjustment and/or Aggregate Adjustment before
proceeding against the Escrow Account and/or the Shareholder or Omni or, as
provided in Section 6.6, Wilson and/or Wood therefor and (ii) Buyer shall
seek recovery directly against Wilson and/or Wood for Agreed Claims, any
Negative Price Adjustment and any Adjustment Excess only as provided in
Section 6.6. Promptly after effecting any offset against the Net Amount
Holdback under Section 2.5 and/or Section 2.6, Buyer shall deliver to the
Shareholder a written notice specifying the amount of each such offset and
identifying the claim to which it pertains and stating the amount, if any, of
the Net Amount Holdback remaining for subsequent offsets under this
Agreement. In the absence of manifest error, Buyer's accounting with respect
to offsets against the Net Amount Holdback shall be conclusive and binding
upon the Parties. Notwithstanding the foregoing or any contrary provision of
this Agreement, the Escrow Agreement or any agreement entered into in
connection herewith or therewith, none of the Shareholder, Omni, Wilson or
Wood shall be entitled to fail or refuse to execute and deliver any required
joint written instruction to the Escrow Agent hereunder or under the Escrow
Agreement on the grounds that Buyer has not offset from the Net Amount
Holdback any part or all of the amount for which Buyer seeks reimbursement
from the Escrow Account.
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ARTICLE VIII
ARBITRATION
8.1 ARBITRATION.
Except as otherwise provided in this Agreement, any controversy or
claim arising out of or relating to this Agreement or the breach hereof shall
be settled by arbitration in Orange County, State of California.
8.2 JUDICIAL ARBITRATION AND MEDIATION SERVICES, THE COMPANY.
The arbitration shall be administered by Judicial Arbitration and
Mediation Services ("JAMS") in its Orange County office.
8.3 ARBITRATION PANEL.
The arbitration shall be conducted before a panel of three
arbitrators selected as follows: Buyer and the Shareholder shall each
appoint one arbitrator from the JAMS panel of retired judges, after which,
and within ten days of the appointment of such arbitrators, these two
arbitrators shall appoint a third arbitrator from the JAMS panel of retired
judges. If within 10 days the two arbitrators appointed by the Parties
cannot agree upon a third arbitrator, such third arbitrator shall be
appointed by JAMS in accordance with its rules.
8.4 PROVISIONAL REMEDIES.
Each of the Parties reserves the right to file with a court of
competent jurisdiction an application for temporary or preliminary injunctive
relief, writ of attachment, writ of possession, temporary protective order
and/or appointment of a receiver.
8.5 ENFORCEMENT OF JUDGMENT.
Judgment upon the award rendered by the arbitration panel may be
entered in any court having jurisdiction thereof.
8.6 DISCOVERY.
The Parties may obtain discovery in aid of the arbitration to the
fullest extent permitted under law, including California Code of Civil
Procedure Section 1283.05. All discovery disputes shall be resolved by the
arbitration panel.
8.7 CONSOLIDATION.
Any arbitration hereunder may be consolidated by JAMS with the
arbitration of any other dispute arising out of or relating to the same
subject matter when the arbitration panel determines that there is a common
issue of law or fact creating the possibility of conflicting rulings by more
than one arbitration panels. Any disputes over which the arbitration panel
shall hear any consolidated matter shall be resolved by JAMS.
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8.8 POWER AND AUTHORITY OF ARBITRATOR.
The arbitration panel shall not have any power to alter, amend,
modify or change any of the terms of this Agreement nor to grant any remedy
which is either prohibited by the terms of this Agreement or not available in
a court of law.
8.9 LAW TO BE APPLIED.
All questions in respect of procedure to be followed in conducting
the arbitration as well as the enforceability of this agreement to arbitrate
which may be resolved by state law shall be resolved according to the law of
the State of California. Any action brought to enforce the provisions of
this Section shall be brought in a court of competent jurisdiction in Orange
County.
8.10 COSTS.
The costs of the arbitration, including any JAMS administration
fee, and arbitrator's fee, and costs of the use of facilities during the
hearings, shall be borne equally by the Parties. Costs and attorneys' fees
shall be awarded to the prevailing party as contemplated by Section 9.14
hereof.
ARTICLE IX
GENERAL
9.1 AMENDMENTS; WAIVERS.
This Agreement and any schedule or exhibit attached hereto may be
amended only by agreement in writing of all Parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed
by the party to be bound and then only to the specific purpose, extent and
instance so provided.
9.2 SCHEDULES; EXHIBITS; INTEGRATION.
Each schedule and exhibit delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement,
although schedules need not be attached to each copy of this Agreement. This
Agreement, together with such schedules and exhibits, constitutes the entire
agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings of the Parties in
connection therewith, including, but not limited to, any letter or letters of
intent between Buyer, the Company and the Shareholder.
9.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) STANDARD. Each Party shall use its best efforts to cause
all conditions to its obligations to be timely satisfied and to perform and
fulfill all obligations on its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this Agreement
shall be effected substantially in accordance with its terms as soon as
reasonably
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practicable. The Parties shall cooperate with each other in such actions and
in securing requisite Approvals. Each party shall execute and deliver both
before and after the Closing such further certificates, agreements and other
documents and take such other actions as the other party may reasonably
request to consummate or implement the transactions contemplated hereby or to
evidence such events or matters.
(b) LIMITATION. As used in this Agreement, the term "best
efforts" shall not mean efforts which require the performing party to do any
act that is unreasonable under the circumstances, to make any capital
contribution or to expend any funds other than reasonable out-of-pocket
expenses incurred in satisfying its obligations hereunder, including, but not
limited to, the fees, expenses and disbursements of its accountants,
actuaries, counsel and other professionals.
9.4 GOVERNING LAW.
(a) This Agreement, the legal relations between the Parties and
any Action, whether contractual or non-contractual, instituted by any party
with respect to matters arising under or growing out of or in connection with
or in respect of this Agreement, including, but not limited to, the
negotiation, execution, interpretation, coverage, scope, performance, breach,
termination, validity, or enforceability of this Agreement, shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts made and performed in such State and without regard
to conflicts of law doctrines, except to the extent that certain matters are
preempted by federal law or are governed as a matter of controlling law by
the law of the jurisdiction of incorporation of the respective Parties.
(b) Each party hereby irrevocably submits to and accepts for
itself and its properties, generally and unconditionally, the exclusive
jurisdiction of and service of process pursuant to the laws of the State of
California and the rules of its courts, waives any defense of forum non
conveniens and agrees to be bound by any judgment rendered thereby arising
under or out of in respect of or in connection with this Agreement or any
related document or obligation.
9.5 NO ASSIGNMENT.
Neither this Agreement nor any rights or obligations under it are
assignable; however, this Agreement and all rights and obligations under it
shall be binding with respect to all of the respective successors of the
Shareholder and Buyer.
9.6 HEADINGS.
The descriptive headings of the Articles, Sections and subsections
of this Agreement are for convenience only and do not constitute a part of
this Agreement.
9.7 COUNTERPARTS.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more
counterparts and by different Parties in separate counterparts. All of such
counterparts shall constitute one and the same agreement (or other document)
and shall become effective (unless otherwise provided therein) when one or
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more counterparts have been signed by each party and delivered to the other
party. Fax signatures shall constitute original signatures for all purposes
of this Agreement.
9.8 PUBLICITY AND REPORTS.
The Shareholder and Buyer shall coordinate all publicity relating
to the transactions contemplated by this Agreement and no party shall issue
any press release, publicity statement or other public notice relating to
this Agreement, or the transactions contemplated by this Agreement, without
obtaining the prior consent of the Shareholder and Buyer except to the extent
that a particular action is required by applicable law.
9.9 CONFIDENTIALITY.
All information disclosed by any party (or its representatives)
whether before or after the date hereof, in connection with the transactions
contemplated by, or the discussions and negotiations preceding, this
Agreement to any other party (or its representatives) shall be kept
confidential by such other party and its representatives and shall not be
used by any Persons other than as contemplated by this Agreement, except to
the extent that such information (a) was known by the recipient when
received, (b) it is or hereafter becomes lawfully obtainable from other
sources, (c) is necessary or appropriate to disclose to a Governmental Entity
having jurisdiction over the Parties, (d) as may otherwise be required by law
or (e) to the extent such duty as to confidentiality is waived in writing by
the other party. If this Agreement is terminated, each party shall use all
reasonable efforts to return upon written request from the other party all
documents (and reproductions thereof) received by it or its representatives
from such other party (and, in the case of reproductions, all such
reproductions made by the receiving party), unless the recipients provide
assurances reasonably satisfactory to the requesting party that such
documents have been destroyed.
9.10 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure to the benefit of
each of the Parties, and nothing in this Agreement, express or implied, other
than the provisions regarding the rights of certain Indemnified Parties not
parties to this Agreement, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing in this Agreement is intended to relieve or discharge the
obligation of any third person to any party to this Agreement.
9.11 NOTICES.
Any notice or other communication hereunder must be given in
writing and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism provided that any notice so given is also mailed
as provided in clause (c) or (c) mailed by certified or registered mail,
postage prepaid), receipt requested as follows:
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IF TO BUYER, ADDRESSED TO:
SeraCare, Inc.
1925 Century Park East, Suite 1970
Los Angeles, California 90067
Facsimile: (310) 772-7770
Attn: Mr. Barry Plost
WITH A COPY TO:
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660-6429
Facsimile: (949) 823-6994
Attn: David A. Krinsky, Esq.
IF TO WILSON, WOOD, OMNI OR THE SHAREHOLDER, ADDRESSED TO (PROVIDED
THAT ANY NOTICE TO WILSON OR WOOD SHALL BE ADDRESSED TO SUCH INDIVIDUAL):
Uro-Tech, Ltd.
1500 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
Attention: Gary B. Wood, Ph.D.
Facsimile: (972) 701-0530
WITH A COPY TO:
Vinson & Elkins L.L.P.
2001 Ross Avenue
Suite 3700
Dallas, Texas 75214
Attention: Michael D. Wortley
Facsimile: (214) 220-7716
or to such other address or to such other Person as either party shall have
last designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 9.11 and an appropriate answerback is received, (ii) if given by
mail, three days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when actually delivered at such address.
9.12 EXPENSES.
The Shareholder, Omni, Wilson and Wood, on the one hand, and Buyer,
on the other hand, shall each pay their own expenses incident to the
negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby, including, but not
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limited to, the fees, expenses and disbursements of their respective
investment bankers, accountants and counsel.
9.13 REMEDIES; WAIVER.
Except to the extent this Section 9.13 is inconsistent with any
other provision in this Agreement or applicable law, all rights and remedies
existing under this Agreement and any related agreements or documents are
cumulative to and not exclusive of, any rights or remedies otherwise
available. No failure on the part of any party to exercise or delay in
exercising any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such
or any other right.
9.14 ATTORNEYS' FEES.
In the event of any Action by any party arising under or out of, in
connection with or in respect of, this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and expenses incurred in
such Action. Attorneys' fees incurred in enforcing any judgement in respect
of this Agreement are recoverable as a separate item. The Parties intend
that the preceding sentence be severable from the other provisions of this
Agreement, survive any judgment and, to the maximum extent permitted by law,
not be deemed merged into such judgment.
9.15 KNOWLEDGE CONVENTION.
Whenever any statement herein or in any schedule, exhibit,
certificate or other document delivered to any party pursuant to this
Agreement is made "to its knowledge" or "to its best knowledge" or words of
similar intent or effect of any party or its representative, such person
shall be deemed to have knowledge of a fact or matter if (i) such individual
is actually aware of such fact or other matter; or (ii) such fact or matter
could reasonably be expected to be discovered by a prudent person in the
ordinary course of conducting the Business.
9.16 REPRESENTATION BY COUNSEL; INTERPRETATION.
The Parties each acknowledge that they have been represented by
counsel in connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of Law, including, but not limited
to, Section 1654 of the California Civil Code, or any legal decision that
would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and is expressly waived.
The provisions of this Agreement shall be interpreted in a reasonable manner
to effect the intent of the Parties.
9.17 SPECIFIC PERFORMANCE.
The Parties each acknowledge that, in view of the uniqueness of the
Business and the transactions contemplated by this Agreement, each Party
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed in accordance with its terms, and
therefore agrees that the other party shall be entitled to specific
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enforcement of the terms hereof in addition to any other remedy to which it
may be entitled, at law or in equity.
9.18 SEVERABILITY.
If any provision of this Agreement is determined to be invalid,
illegal or unenforceable by any Governmental Entity, the remaining provisions
of this Agreement shall remain in full force and effect provided that the
economic and legal substance of the transactions contemplated is not affected
in any manner materially adverse to any party. In event of any such
determination, the Parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof. To the extent permitted by Law, the Parties hereby to the same
extent waive any provision of Law that renders any provision hereof
prohibited or unenforceable in any respect.
9.19 CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter.
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IN WITNESS WHEREOF, each of the Parties hereto has executed or
caused this Agreement to be executed by its duly authorized officers as of
the day and year first above written.
"BUYER"
SERACARE, INC.,
a Delaware corporation
By:
-------------------------------------
Barry D. Plost
Chairman of the Board, President and
Chief Executive Officer
"SHAREHOLDER"
URO-TECH, Ltd.,
a Texas limited partnership
By: OmniMed Corporation, a Delaware
corporation, its general partner
By:
------------------------------
Name:
------------------------------
Title:
-----------------------------
"OMNI"
OMNIMED CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-i-
<PAGE>
"COMPANY"
AMERICAN PLASMA, INC.,
a Texas corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-----------------------------------
JOHN H. WILSON, III
-----------------------------------
GARY B. WOOD, Ph.D.
-ii-
<PAGE>
LIST OF OMITTED SCHEDULES AND EXHIBITS
The following Schedules and Exhibits to the Stock Purchase Agreement have
been omitted from this Exhibit and shall be furnished supplementally to the
Commission upon request:
SCHEDULES
SCHEDULE 2.7 Excluded Liabilities
SCHEDULE 4.1 Organization, Good Standing and Related Matters
SCHEDULE 4.2 Capitalization Matters
SCHEDULE 4.3(a) Audited Financial Statements
SCHEDULE 4.3(b) Unaudited Interim Financial Statements
SCHEDULE 4.3(d) No Material Adverse Changes
SCHEDULE 4.3(e) Liabilities or Contingencies
SCHEDULE 4.5 Material Contracts
SCHEDULE 4.6 Real and Personal Property; Title; Leases
SCHEDULE 4.7(a) Intellectual Property
SCHEDULE 4.7(b) Products
SCHEDULE 4.8 Authorization; No Conflicts
SCHEDULE 4.9 Legal Proceedings
SCHEDULE 4.10 Labor Relations
SCHEDULE 4.13 Insurance
SCHEDULE 4.14(b) Licenses
SCHEDULE 4.15 Employee Benefit Plans, and Collective Bargaining and
Employee Agreements
SCHEDULE 4.16(a) Certain Interests; Intercompany Services
SCHEDULE 4.17 Bank Accounts, Powers, etc.
SCHEDULE 4.21 Receivables and Commissions Payable
SCHEDULE 4.22(a) Customers and Suppliers; Donors
SCHEDULE 4.23 Environmental Compliance
SCHEDULE 4.24 Corporate Names
SCHEDULE 6.1(a) Non-Competition Locations
SCHEDULE 6.5 Outstanding Approvals
EXHIBITS
EXHIBIT A Escrow Agreement
EXHIBIT B Opinion of Counsel of the Shareholder and the Company
EXHIBIT C Secretary's Certificate of Omni
EXHIBIT D Secretary's Certificate of the Company
EXHIBIT E Secretary's Certificate of Buyer
EXHIBIT F Form of Houghton Release
EXHIBIT G Form of Weaver Release
E-1
