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Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 27, 1997
CN Biosciences, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-21281 33-0509785
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
10394 Pacific Center Court, San Diego, CA 92121
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (619) 450-5500
N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Effective as of December 27, 1997, CN Biosciences, Inc. (the "Registrant")
acquired all of the outstanding capital stock of Pel-Freez, Inc., an
Arkansas corporation ("Pel-Freez"), and all of the outstanding capital
stock of Pel-Freez's subsidiary Novagen, Inc., an Arkansas corporation
("Novagen"), pursuant to a Stock Purchase Agreement, dated as of November
25, 1997, by and among the Registrant, as Buyer, David W. Dubbell, Dennis
Almond, Corrine Fetherston, Lisa Johnson, Robert Mierendorf, Warren
Kroeker, Barbara Morris, Robert Novy and Tom Van Oosbree, as Sellers, and
Pel-Freez for $10,500,000 cash. On January 2, 1998, the Registrant paid
the purchase price from cash on hand. The purchase price was determined
through arm's length negotiation between the Registrant and the Sellers.
Subsequent to the closing of the acquisition of Pel-Freez and Novagen by
the Registrant, Pel-Freez's Articles of Incorporation were amended to
change its name to Novagen Holdings, Inc.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The required financial statements will be filed by amendment to this
Current Report on Form 8-K within the time period specified by Item
7(a)(4).
(b) Pro forma financial information.
The required pro-forma financial information will be filed by
amendment to this Current Report on Form 8-K within the time period
specified by Item 7(a)(4).
(c) Exhibits.
Exhibit No. Description
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2(b) Stock Purchase Agreement, dated as of November 25, 1997, by
and among CN Biosciences, Inc., as Buyer, David W. Dubbell,
Dennis Almond, Corrine Fetherston, Lisa Johnson, Robert
Mierendorf, Warren Kroeker, Barbara Morris, Robert Novy and
Tom Van Oosbree, as Sellers, and Pel-Freez, Inc.
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SIGNATURE
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.
CN Biosciences, Inc.
By: /s/ James G. Stewart
------------------------
James G. Stewart
Chief Financial Officer, Vice
President-Administration and
Secretary
Dated: February 3, 1998
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EXHIBIT INDEX
Exhibit No. Description
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2(b) Stock Purchase Agreement, dated as of November 25, 1997, by
and among CN Biosciences, Inc., as Buyer, David W. Dubbell,
Dennis Almond, Corrine Fetherston, Lisa Johnson, Robert
Mierendorf, Warren Kroeker, Barbara Morris, Robert Novy and
Tom Van Oosbree, as Sellers, and Pel-Freez, Inc.
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EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
CN BIOSCIENCES, INC.,
as Buyer,
DAVID W. DUBBELL, DENNIS ALMOND, CORRINE FETHERSTON,
LISA JOHNSON, ROBERT MIERENDORF, WARREN KROEKER,
BARBARA MORRIS, ROBERT NOVY and TOM VAN OOSBREE
as Sellers,
and
PEL-FREEZ, INC.
Dated as of
November 25, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS
ARTICLE II. SALE AND PURCHASE
SECTION 2.1. Agreement to Sell and to Purchase.............................10
SECTION 2.2. Closing.......................................................11
SECTION 2.3. Purchase Price; Promega Escrow; Earn-Out Amount...............11
SECTION 2.4. Preparation of Effective Date Financial Statements;
Purchase Price Adjustment.....................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.1. Ownership; Title to the Shares................................15
SECTION 3.2. Authority.....................................................15
SECTION 3.3. Corporate Organization........................................15
SECTION 3.4. Capitalization................................................15
SECTION 3.5. Subsidiaries..................................................16
SECTION 3.6. No Conflict or Violation......................................16
SECTION 3.7. Consents and Approvals........................................16
SECTION 3.8. Financial Statements..........................................17
SECTION 3.9. Liabilities for Borrowed Money; Absence of Undisclosed
Liabilities; Guarantees.......................................17
SECTION 3.10. Interests in Real Property...................................18
SECTION 3.11. Personal Property............................................18
SECTION 3.12. Intellectual Property; Intangible Assets.....................19
SECTION 3.13. Compliance with Law..........................................20
SECTION 3.14. Licenses, Permits and Governmental Approvals.................21
SECTION 3.15. Environmental Matters........................................21
SECTION 3.16. Litigation...................................................23
SECTION 3.17. Contracts....................................................23
SECTION 3.18. Accounts Receivable..........................................23
SECTION 3.19. Inventories..................................................24
SECTION 3.20. Catalogs, Brochures and Advertisements.......................24
SECTION 3.21. Warranties...................................................24
SECTION 3.22. Customers and Suppliers......................................25
SECTION 3.23. Products Liability...........................................25
SECTION 3.24. Insurance....................................................25
SECTION 3.25. Transactions with Directors, Officers and Affiliates.........26
SECTION 3.26. Propriety of Past Payments...................................27
SECTION 3.27. Employee Plans...............................................27
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SECTION 3.28. Labor Matters................................................27
SECTION 3.29. Absence of Certain Changes or Events.........................28
SECTION 3.30. Tax Matters..................................................30
SECTION 3.31. Accuracy of Information......................................31
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF DUBBELL
SECTION 4.1. Corporate Organization........................................32
SECTION 4.2. Capitalization................................................32
SECTION 4.3. Subsidiaries..................................................32
SECTION 4.4. Validity of Agreement.........................................32
SECTION 4.5. No Conflict or Violation......................................33
SECTION 4.6. Consents and Approvals........................................33
SECTION 4.7. Financial Statements..........................................33
SECTION 4.8. Tax Matters...................................................34
SECTION 4.9. Holding Company...............................................35
SECTION 4.10. Licenses, Permits and Governmental Approvals.................35
SECTION 4.11. Compliance with Law..........................................36
SECTION 4.12. Environmental Matters........................................36
SECTION 4.13. Litigation...................................................37
SECTION 4.14. Contracts....................................................38
SECTION 4.15. Intercompany Accounts........................................38
SECTION 4.16. Propriety of Past Payments...................................38
SECTION 4.17. Employee Plans...............................................39
SECTION 4.18. Absence of Certain Changes or Events.........................42
SECTION 4.19. Parent's Liabilities.........................................44
SECTION 4.20. Other Properties.............................................44
SECTION 4.21. Accuracy of Information......................................44
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
SECTION 5.1. Corporate Organization........................................45
SECTION 5.2. Validity of Agreement.........................................45
SECTION 5.3. No Conflict or Violation; No Defaults.........................45
SECTION 5.4. Consents and Approvals........................................45
SECTION 5.5. Investment Representation.....................................45
SECTION 5.6. Financial Capability..........................................46
ARTICLE VI. COVENANTS
SECTION 6.1. Redemption Transaction........................................46
SECTION 6.2. Continued Development of Novagen Brand Products...............46
SECTION 6.3. Non-Solicitation of Employees.................................46
SECTION 6.4. Access to Properties and Records..............................46
SECTION 6.5. Negotiations..................................................47
SECTION 6.6. Consents and Approvals........................................47
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SECTION 6.7. Commercially Reasonable Efforts...............................47
SECTION 6.8. Notice of Breach..............................................47
SECTION 6.9. Confidential Information......................................47
SECTION 6.10. Tax Covenants................................................48
SECTION 6.11. Release of Resigning Directors and Officers; Assumption
of Obligations................................................49
SECTION 6.12. Actions of Sellers...........................................50
SECTION 6.13. Change of Name of the Parent.................................50
SECTION 6.14. Transfer of Corporate Books and Records......................50
SECTION 6.15. Employee Relations and Benefits..............................50
SECTION 6.16. Further Assurances...........................................53
SECTION 6.17. Post-Closing Management of Promega Dispute...................53
SECTION 6.18. Intercompany Accounts........................................53
SECTION 6.19. Continuation of Company's Business...........................54
SECTION 6.20. Releases from Liability......................................54
SECTION 6.21. Ancillary Agreements.........................................54
SECTION 6.22. Closing Documentation........................................54
SECTION 6.23. Actions of Buyer.............................................54
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF THE BUYER
SECTION 7.1. Representations and Warranties of the Sellers.................55
SECTION 7.2. Performance of the Sellers' Obligations.......................55
SECTION 7.3. Redemption Transaction........................................55
SECTION 7.4. Receipt of Documents..........................................55
SECTION 7.5. Consents and Approvals........................................56
SECTION 7.6. No Violation of Orders........................................56
SECTION 7.7. No Material Adverse Change....................................56
SECTION 7.8. Discharge of Indebtedness; Release of Liens...................56
SECTION 7.9. Opinion of Counsel............................................57
SECTION 7.10. Legal Matters.................................................57
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF THE SELLERS
SECTION 8.1. Representations and Warranties of the Buyer...................57
SECTION 8.2. Performance of the Buyer's Obligations........................57
SECTION 8.3. Consents and Approvals........................................57
SECTION 8.4. No Violation of Orders........................................58
SECTION 8.5. Opinion of Counsel............................................58
SECTION 8.6. Legal Matters.................................................58
ARTICLE IX. INDEMNIFICATION
SECTION 9.1. Indemnification by the Sellers and the Buyer..................58
SECTION 9.2. Procedures....................................................61
SECTION 9.3. Procedures Relating to Tax Claims.............................62
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SECTION 9.4. Limitations on Indemnity......................................63
SECTION 9.5. Set Off Against Earn-Out Payments.............................63
SECTION 9.6. Purchase Price Adjustment.....................................63
SECTION 9.7. Insurance.....................................................63
SECTION 9.8. Exclusive Remedies............................................63
SECTION 9.9. Disclaimer....................................................64
ARTICLE X. TERMINATION AND ABANDONMENT
SECTION 10.1. Methods of Termination; Upset Date...........................64
SECTION 10.2. Procedure Upon Termination...................................65
ARTICLE XI. MISCELLANEOUS PROVISIONS
SECTION 11.1. Representation of Sellers by Sellers' Agents.................65
SECTION 11.2. Nature and Survival of Representations, Etc..................66
SECTION 11.3. Publicity....................................................66
SECTION 11.4. Successors and Assigns; No Third-Party Beneficiaries.........67
SECTION 11.5. Brokers, Finders and Financial Advisors......................67
SECTION 11.6. Fees and Expenses............................................67
SECTION 11.7. Notices......................................................67
SECTION 11.8 Release under Seller's Escrow Agreement.......................69
SECTION 11.9. Entire Agreement.............................................69
SECTION 11.10. Waivers and Amendments......................................70
SECTION 11.11. Severability................................................70
SECTION 11.12. Titles and Headings.........................................70
SECTION 11.13. Signatures and Counterparts.................................70
SECTION 11.14. Enforcement of the Agreement................................70
SECTION 11.15. Governing Law...............................................71
SECTION 11.16. Knowledge...................................................71
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Exhibits
Exhibit A-1 Shareholders of Novagen, Inc.
Exhibit A-2 Shareholders of Novagen, Inc. as of the Closing Date
Exhibit B Form of Opinions of Counsel to the Parent, Dubbell and the
Company Minority Shareholders
Exhibit C Form of Opinion of Buyer's Counsel
Exhibit D Form of Certificate of Non-Foreign Status
Exhibit E Sellers' Escrow Agreement
Exhibit F Promega Escrow Agreement
Exhibit G Mierendorf Employment Agreement
Exhibit H rRTF Assignment and License Agreement
Exhibit I BEVSCO Agreement
Exhibit J CIMPRO Agreement
Exhibit K Terms of Agreements
Disclosure Schedule
Company
Section 3.3 Corporate Organization
Section 3.6 Conflicts or Violations
Section 3.7 Consents and Approvals
Section 3.8 Financial Statements
Section 3.9 Liabilities for Borrowed Money
Section 3.10 Real Property Interests
Section 3.11 Personal Property
Section 3.12 Intellectual Property; Intangible Assets
Section 3.13 Compliance with Laws
Section 3.14 Licenses, Permits and Governmental Approval
Section 3.15 Environmental Matters
Section 3.16 Litigation
Section 3.17 Contracts
Section 3.18 Accounts Receivable
Section 3.20 Catalogs, Brochures and Advertisements
Section 3.21 Warranties
Section 3.22 Customers and Suppliers
Section 3.24 Insurance
Section 3.25 Transactions with Directors, Officers and Affiliates
Section 3.26 Past Payments
Section 3.28 Labor Matters
Section 3.29 Certain Changes or Events
Section 3.30 Tax Matters
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Parent
Section 4.1 Corporate Organization
Section 4.2 Options
Section 4.3 Subsidiaries
Section 4.5 Conflicts or Violations
Section 4.6 Consents and Approvals
Section 4.8 Taxes
Section 4.9 Parent Lease
Section 4.10 Licenses
Section 4.11 Compliance with Laws
Section 4.12 Environmental Matters
Section 4.13 Litigation
Section 4.14 Contracts
Section 4.16 Past Payments
Section 4.17 Employee Plans
Section 4.18 Certain Changes or Events
Other
Section 6.15 Employee Relations and Benefits
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of November 25, 1997,
by and among
CN BIOSCIENCES, INC., a Delaware corporation (the "Buyer");
DAVID W. DUBBELL ("Dubbell");
DENNIS ALMOND, CORRINE FETHERSTON, LISA JOHNSON, ROBERT MIERENDORF, WARREN
KROEKER, BARBARA MORRIS, ROBERT NOVY and TOM VAN OOSBREE (collectively, the
"Company Minority Shareholders" and, together with Dubbell, the "Sellers"); and
PEL-FREEZ, INC., an Arkansas corporation (the "Parent").
W I T N E S S E T H:
WHEREAS, Dubbell is the owner of all of the issued and outstanding capital
stock of the Parent;
WHEREAS, immediately prior to the Closing (as defined herein), the Parent
shall (a) contribute the outstanding capital stock of Pel-Freez Rabbit Meat,
Inc., an Arkansas corporation ("PFRM"), to Tri-State Industrials, Inc., an
Arkansas corporation ("Tri-State") and (b) purchase from Dubbell 52,800 shares
of Common Stock, par value $.01 per share, of the Parent (the "Parent Common
Stock") in consideration for the transfer to him of all of the outstanding
capital stock of Tri-State (all of such redeemed shares of Parent Common Stock
are hereinafter referred to as the "Redeemed Shares" and such transfers of
capital stock and redemptions of the Redeemed Shares are hereinafter
collectively referred to as the "Redemption Transaction");
WHEREAS, the Parent and the Company Minority Shareholders are the
respective owners of the shares of issued and outstanding capital stock of
Novagen, Inc., an Arkansas corporation (the "Company"), listed after their names
on Exhibit A-1 hereto (such shares owned by the Company Minority Shareholders,
the "Company Minority Shares"), which shares constitute all of the issued and
outstanding capital stock of the Company;
WHEREAS, the Buyer desires to purchase the Parent Common Stock other than
the Redeemed Shares (the "Remaining Parent Shares") from Dubbell, and Dubbell
desires to sell the Remaining Parent Shares to the Buyer, in each case upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Buyer desires to purchase the Company Minority Shares from
the Company Minority Shareholders, and the Company Minority Shareholders desire
to sell the
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Company Minority Shares to the Buyer, in each case upon the terms and subject to
the conditions set forth in this Agreement; and
WHEREAS, as a result of the purchase by the Buyer of the Remaining Parent
Shares and the Company Minority Shares, each of the Parent and the Company shall
become wholly owned subsidiaries of the Buyer.
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"Adjustment Amount" shall have the meaning set forth in Section 2.3.
"Affiliate" shall mean any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with such Person. As used in this definition, "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Agreement, together with the Exhibits and
Disclosure Schedules referred to herein.
"Aggrieved Party" shall have the meaning set forth in Section 9.2.
"Ancillary Document" shall have the meaning given thereto in Section 9.1.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which banks in the State of New York are required or authorized to close.
"Buyer" shall have the meaning set forth in the recitals to this
Agreement.
"Buyer Indemnified Parties" shall mean the Buyer, any Affiliate of the
Buyer, and their respective officers, directors and employees.
"Buyer's Proposed Purchase Price Adjustment" shall have the meaning set
forth in Section 2.4(c).
"C&L" shall have the meaning set forth in Section 2.4(b).
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"Cell Lines" shall mean all cell lines, sibling cell lines, strains,
cultures and other biological or biochemical source stocks used by the Company
in its business.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended.
"Certification of Novagen Brand Net Sales" shall mean, for each of the
years ending December 31, 1998, 1999 and 2000, a certificate, signed by an
officer of the Buyer, setting forth the dollar amount of Novagen Brand Net Sales
for the respective fiscal year and the dollar amount of any Earn-Out Amount
payable for such fiscal year.
"Claim" shall have the meaning set forth in Section 9.2.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"COBRA" shall mean Section 4908B of the Code and Section 601 et seq. of
ERISA, and the proposed or final regulations thereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the recitals to this
Agreement.
"Company Audited Financial Statements" shall have the meaning set forth in
Section 3.8.
"Company Common Stock" shall have the meaning set forth in Section 3.1.
"Company Effective Date Stockholders Equity" shall have the meaning set
forth in Section 2.4(b).
"Company Financial Statements" shall have the meaning set forth in Section
3.8.
"Company Minority Shares" shall have the meaning set forth in the recitals
to this Agreement.
"Company Minority Shareholders" shall have the meaning set forth in the
recitals to this Agreement.
"Company September 27 Stockholders Equity" shall have the meaning set
forth in Section 2.4(a).
"Company Unaudited Interim Financial Statements" shall have the meaning
set forth in Section 3.8.
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"Confidential Information" shall have the meaning set forth in Section
6.9.
"Corporate Records" shall have the meaning set forth in Section 6.14.
"DB Plan" shall have the meaning set forth in Section 6.15(g).
"Disclosing Party" shall have the meaning set forth in Section 6.9.
"Disclosure Schedule" means, collectively, the respective schedules
provided by the Sellers in accordance with the terms of this Agreement.
"Dispute Notice" shall have the meaning set forth in Section 2.4(c).
"Dubbell" shall have the meaning set forth in the recitals to this
Agreement.
"Dubbell's Agent" shall have the meaning set forth in Section 11.1.
"E&Y" shall have the meaning set forth in Section 2.4(b).
"Earn-Out Amount" shall mean, with respect to each of the fiscal years
ending December 31, 1998, 1999 and 2000, the dollar amount, if any, equal to the
product of (x) 0.20 and (y) the amount by which Novagen Brand Net Sales for such
year exceeds the Threshold Amount applicable to such year.
"Earn-Out Period" shall mean the period commencing on January 1, 1998 and
ending on December 31, 2000.
"Effective Date" shall mean December 27, 1997.
"Effective Date Financial Statements" shall have the meaning set forth in
Section 2.4(b).
"Employment and Labor Agreements" shall have the meaning set forth in
Section 3.28.
"Environmental Laws" shall have the meaning set forth in Section 3.15.
"Environmental Permits" shall have the meaning set forth in Section 3.15.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is or has ever been treated as a single employer with the
Parent, the Company or any Subsidiary of the Parent, under Section 414(b), (c),
(m), or (o) of the Code, but only during the period in which such trade or
business was so treated.
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"Final Determination" shall have the meaning set forth in Section 6.17.
"Final Purchase Price Adjustment" shall have the meaning set forth in
Section 2.4(c).
"Furniture, Fixtures and Equipment" shall have the meaning set forth in
Section 3.11.
"Furniture, Fixtures and Equipment Leases" shall have the meaning set
forth in Section 3.11.
"GAAP" shall mean United States generally accepted accounting principles
as in effect from time to time.
"Hazardous Materials" shall have the meaning set forth in Section 3.15.
"Indemnifying Parties" shall have the meaning set forth in Section 9.2.
"Initial Payment" shall mean $10,500,000, which, in the aggregate, shall
be paid to the Sellers' Agents on the Closing Date on the terms and subject to
the conditions of this Agreement to be held and distributed by the Sellers'
Agents in accordance with the terms of the Sellers' Escrow Agreement.
"Intangible Assets" shall mean all intangible personal property rights
(including Intellectual Property) owned or held by the Company and relating to
the operation of its business, including, without limitation, all goodwill of
the Company relating to its business, all know-how relating to the manufacture
or development of Novagen Brand Products by the Company at any time up to and
including the Closing Date, trade secrets, all software, software systems,
databases and all other information systems used in its business, the current
toll free "800" and "888" telephone numbers utilized by the Company in
connection with its business, DNA and RNA sequences, expression strains and
vectors, production formulations, manufacturing methods, laboratory methods, and
all rights on the part of the Company to proceeds of any insurance policies and
all claims on the part of the Company for recoupment, reimbursement and coverage
under any insurance policies, in each case arising in connection with the
operation of its business.
"Intellectual Property" shall mean (i) trademarks and service marks
(registered or unregistered), trade dress, trade names and other names and
slogans embodying business or product goodwill or indications of origin, all
applications or registrations in any jurisdiction pertaining to the foregoing
and all goodwill associated therewith, including, without limitation, the
copyrights to all Product catalogs of the Company, product guides, user
instructions, technical notes and other supplements published in connection with
the Company's business, advertising copy used in connection with the Company's
business and art work related to the business; (ii) patents, patentable
inventions, discoveries, improvements, ideas, formula methodology, processes,
technology and computer programs, software and databases (including source code,
object code, development documentation, programming tools, drawings,
specifications and data) and all applications or registrations in any
jurisdiction pertaining to the foregoing, including all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof; (iii) trade
secrets,
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know-how, including confidential and other non-public information, and the right
in any jurisdiction to limit the use or disclosure thereof; and (iv) Internet
Web sites, domain names and registrations or applications for registrations
thereof and those other items listed in Section 3.12 of the Disclosure Schedule.
"IRCA" shall mean the Immigration Reform and Control Act of 1986 and all
rules and regulations adopted pursuant thereto or in connection therewith.
"Kunz and Olander Notes" shall mean, together, the Promissory Note dated
August 28, 1997 issued by the Parent in the name of Linda Kunz in the principal
amount of $59,072.00 and the Promissory Note dated October 28, 1997 issued by
the Parent in the name of Charyl Olander in the principal amount of $3,584.22.
"License" shall have the meaning set forth in Section 3.14.
"Loss" shall have the meaning set forth in Section 9.1.
"Material Contract" shall have the meaning set forth in Section 3.17.
"Mierendorf" shall have the meaning set forth in Section 6.17.
"Minority Shareholders' Agents" shall have the meaning set forth in
Section 11.1.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"1998 Short Period Federal Tax Return" shall have the meaning set forth in
Section 6.10.
"1997 Federal Tax Returns" shall have the meaning set forth in Section
6.10.
"NLRB" shall mean the National Labor Relations Board.
"Novagen Brand Net Sales" shall mean, as to any given fiscal year, the
gross amount received by the Buyer and its Subsidiaries on a consolidated basis
from sales to any Person of Novagen Brand Products, including but not limited to
sales to third party manufacturers for use in products with another label or
brand and intercompany sales to Buyer or its Affiliates, after deducting, where
applicable, the following:
(a) normal and customary trade discounts actually allowed and
taken;
(b) returns and credits;
(c) taxes (the legal incidence of which is on a purchase and
separately shown on a shipping invoice); and
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(d) transportation, insurance and postage charges (if prepaid and
invoiced as a separate item).
Sales to related parties shall be priced as if made on an arm's length basis to
an outside third party at the Company's or the Buyer's published sales price.
"Novagen Brand Product" shall mean any Products having a Novagen Part
Number or Novagen Label, whether or not sold under the Novagen Label by the
Company, the Buyer or its Subsidiaries, including any Product currently sold by
the Company, together with any new Product which the Company may develop or
cause to be developed. Products sold by the Buyer and its Subsidiaries shall be
classified as "Novagen Brand Products" by reference to their having a Novagen
Part Number or Novagen Label without regard to the catalog or other type of
sales media in which they are listed.
"Novagen Label" shall mean the label attached to a Product which
identifies the Company.
"Novagen Part Number" shall mean the number attributed by the Company to a
Product.
"Occurrence" shall have the meaning set forth in Section 3.23.
"Parent" shall have the meaning set forth in the recitals to this
Agreement.
"Parent Audited Financial Statements" shall have the meaning set forth in
Section 4.7.
"Parent Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"Parent Contract" shall have the meaning set forth in Section 4.14.
"Parent Employee Benefit Plans" has the meaning set forth in Section
4.17(a).
"Parent Financial Statements" shall have the meaning set forth in Section
4.7.
"Parent Lease" shall mean the Lease Agreement dated June 3, 1983, between
the Parent and Teachers Insurance and Annuity Association of America, as last
amended by the Sixth Amendment to Lease, dated January 31, 1997 (as the same may
be amended, supplemented and modified from time to time).
"Parent Liabilities" shall mean all of the debts, obligations, or
liabilities, if any, of the Parent as of the Closing Date, of whatsoever kind,
whether contingent or otherwise, whether known or unknown.
"Parent Pension Plan" has the meaning set forth in Section 4.17(a).
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"Parent Shares" shall mean, as of the date of this Agreement, the issued
and outstanding shares of Parent Common Stock.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereof.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint-stock company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
"PFRM" shall have the meaning set forth in the recitals to this Agreement.
"Policies" shall have the meaning set forth in Section 3.24.
"Pre-Closing Tax Period" shall mean any taxable period ending on or before
the Effective Date and the portion ending on and including the Effective Date of
any Straddle Period.
"Product" shall mean any component, substance or material manufactured by
Novagen or any third party manufacturer under contract to Novagen, whether sold
separately or combined to form a kit with other articles.
"Promega Costs" shall have the meaning set forth in Section 9.1(c).
"Promega Dispute" shall mean the dispute involving patent infringement and
other matters in the case of Promega Corporation v. Novagen, Incorporated, No
96-C-0164-C, in the United States District Court for the Western District of
Wisconsin, including all appeals therefrom and other actions relating to the
causes of action and underlying facts and patents involved in such case.
"Promega Escrow" shall mean the portion of the Purchase Price escrowed
pursuant to the provisions of Section 2.3.
"Promega European Application Matter" shall mean the actions by the
Company in opposition to patent EPO 566714B1 of Promega Corporation.
"property Taxes" shall have the meaning set forth in Section 6.10.
"Purchase Price" shall mean the sum of (a) the Initial Payment and, (b)
any Earn-Out Amounts, including Adjustment Amounts, if any, (x) plus the Final
Purchase Price Adjustment if such amount is payable to the Sellers or (y) minus
the Final Purchase Price Adjustment if such amount is payable to the Buyer.
"Real Property Leases" shall have the meaning set forth in Section 3.10.
"Receiving Party" shall have the meaning set forth in Section 6.9.
"Redeemed Shares" shall have the meaning set forth in the recitals to this
Agreement.
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"Redemption Transaction" shall have the meaning set forth in the recitals
to this Agreement.
"Remaining Parent Shares" shall have the meaning set forth in the recitals
to this Agreement.
"Reset Threshold Target for 1999" shall have the meaning set forth in the
definition of Threshold Amount.
"Retention Bonus Pool" shall have the meaning set forth in Section
6.15(i).
"Sellers" shall have the meaning set forth in the recitals to this
Agreement.
"Sellers' Agents" shall have the meaning set forth in Section 11.1.
"Sellers' Escrow Agreement" shall mean the Sellers' Escrow Agreement in
the form attached hereto as Exhibit E.
"Sellers' Proposed Purchase Price Adjustment" shall have the meaning set
forth in Section 2.4(b).
"Severance Agreements" shall mean the Employment Termination Agreement
dated June 23, 1997 between the Parent and Linda Kunz, including all exhibits
thereto, and the Employment Termination Agreement dated July 31, 1997 between
the Parent and Charyl Olander, including all exhibits thereto.
"Shares" shall mean the Remaining Parent Shares and the Company Minority
Shares.
"STP Family Product" shall mean any single product, or instructions given
on the joint use of more than one product, which are used to perform
transcription and translation in a eukaryotic system and which, under any
circumstances, could be used to create any amount of simultaneous transcription
and translation.
"Straddle Period" shall mean any taxable period of the Parent or the
Company that includes (but does not end on) the Effective Date.
"Straddle Tax Return" shall mean any Tax Return required to be filed by
the Parent or the Company covering a taxable period commencing prior to the
Effective Date and ending after the Effective Date.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which a majority of the combined voting power of all
voting stock or other interests entitled (without regard to the occurrence of
any contingency) to vote in the election of
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directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, through one or more intermediaries, or both, by such
Person.
"Tax" or "Taxes" shall mean any and all federal, state, local, foreign and
other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on the Parent or the
Company, including, without limitation, taxes imposed on, or measured by,
income, franchise, profits or gross receipts, and also ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and customs duties.
"Tax Claim" shall have the meaning set forth in Section 9.3.
"Tax Returns" shall mean returns, reports, information statements and
other documentation (including any additional or supporting material) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax and shall
include any amended returns required as a result of examination adjustments made
by the Internal Revenue Service or other Tax authority.
"Threshold Amount" shall mean (a) $5,400,000 for the year ending December
31, 1998, (b) $7,200,000 for the year ending December 31, 1999, and (c)
$9,700,000 for the year ending December 31, 2000; provided, however, that if
Novagen Brand Net Sales are less than $5,400,000 for the year ending December
31, 1998, then the amount set forth in (b) above shall be the product of Novagen
Brand Net Sales for the year ending December 31, 1998 multiplied by 1.34 (the
"Reset Threshold Target for 1999") and the amount set forth in (c) above shall
be the product of the Reset Threshold Target for 1999 multiplied by 1.35.
"Tri-State" shall have the meaning set forth in the recitals to this
Agreement.
"Vector Agreements" shall mean the letter agreements, dated August 1,
1997, between the Parent and Vector Securities International, Inc.
"WARN" means the Worker Adjustment and Retraining Notification Act and any
similar state or local "plant closing" law.
ARTICLE II.
SALE AND PURCHASE
SECTION 2.1. Agreement to Sell and to Purchase. On the Closing Date and
upon the terms and subject to the conditions set forth in this Agreement, (i)
Dubbell shall sell, assign, transfer, convey and deliver the Remaining Parent
Shares, free and clear of any liens, claims, charges, security interests or
other legal or equitable encumbrances, limitations or restrictions, to the
Buyer, and the Buyer shall purchase and accept the Remaining Parent
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Shares from Dubbell, and (ii) the Company Minority Shareholders shall sell,
assign, transfer, convey and deliver the Company Minority Shares, free and clear
of any liens, claims, charges, security interests or other legal or equitable
encumbrances, limitations or restrictions, to the Buyer, and the Buyer shall
purchase and accept the Company Minority Shares from the Company Minority
Shareholders.
SECTION 2.2. Closing. The closing of such purchases and sales (the
"Closing") shall take place at 10:00 A.M., on January 2, 1998 or such later date
that is the next Business Day after the Business Day on which each condition
described in Articles VII and VIII are satisfied or waived (the "Closing Date"),
other than those conditions that can be satisfied only on the Closing Date, at
the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, New York 10022, or at such other place as the Buyer and the
Sellers' Agents shall agree in writing. The Closing Date may be postponed to
such other time and date as the Buyer and the Sellers' Agents shall agree in
writing. At the Closing, (i) Dubbell shall deliver to the Buyer or its designees
stock certificates representing the Remaining Parent Shares, duly endorsed in
blank for transfer or accompanied by appropriate stock powers duly executed in
blank, with all taxes, direct or indirect, attributable to the transfer of the
Remaining Parent Shares paid or provided for and (ii) the Company Minority
Shareholders shall deliver to the Buyer or its designees stock certificates
representing the Company Minority Shares, duly endorsed in blank for transfer or
accompanied by appropriate stock powers duly executed in blank, with all taxes,
direct or indirect, attributable to the transfer of the Company Minority Shares
paid or provided for. In full consideration and exchange for the Remaining
Parent Shares and the Company Minority Shares, the Buyer shall thereupon pay to
the Sellers the Purchase Price in accordance with the provisions of Section 2.3
hereof.
SECTION 2.3. Purchase Price; Promega Escrow; Earn-Out Amount. The Purchase
Price for the Shares shall be paid as follows:
(a) On the Closing Date, the Buyer shall pay to the Sellers' Agents
an amount equal to the Initial Payment, less the sum of $500,000 (the
"Promega Escrow"), which payment shall be made by wire transfer in
immediately available funds to the bank account specified by the Sellers'
Agents in written instructions to the Buyer at least five (5) Business
Days prior to the Closing Date and shall be held and distributed by the
Sellers' Agents pursuant to the terms of the Sellers' Escrow Agreement.
The Promega Escrow shall be distributed according to the terms of the
Promega Escrow Agreement substantially in the form attached hereto as
Exhibit F for the sole purpose of paying the Promega Costs.
(b) (i) On or prior to the March 31 following each of the years
ending December 31, 1998, 1999 and 2000, the Buyer shall deliver to the
Sellers' Agents a Certification of Novagen Brand Net Sales for the most
recently completed fiscal year. If a Certification of Novagen Brand Net
Sales indicates that an Earn-Out Amount is due to the Sellers, then
simultaneously with the delivery of such Certification, the Buyer shall
deliver to the Sellers' Agents a certified check in an amount equal to the
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aggregate Earn-Out Amount due to the Sellers, such amount to be held and
distributed by the Sellers' Agents pursuant to the terms of the Sellers'
Escrow Agreement.
(ii) During the Earn-Out Period, the Buyer shall keep complete
and accurate records of Novagen Brand Net Sales in sufficient detail to
enable the Sellers' Agents to verify payments owed to the Sellers under
this Agreement in respect of any Earn-Out Amount. The Buyers shall permit
Sellers' Agents to have reasonable access to such records annually,
including the Buyer's detailed sales reports identifying sales by
individual product, at the offices of the Buyer. If Dubbell's Agent
notifies the Buyer that he has reasonable grounds to believe that the
amount due in respect of an Earn-Out Amount is greater than the amount
specified in the Certification of Novagen Brand Net Sales (which notice
shall be delivered to the Buyer within sixty (60) days after the delivery
of the applicable Certification of Novagen Brand Net Sales), the Buyer
shall permit a certified public accountant appointed by the Sellers'
Agents at Sellers' expense, to examine the Buyer's books, ledgers and
records covering Novagen Brand Net Sales during regular business hours for
the purpose of verifying, and only to the extent necessary to verify,
whether any additional amount is due to each Seller (the "Adjustment
Amount"), but in no event shall such procedure be conducted more than once
for each calendar year period. The accountant shall maintain all
information received during such examination in strict confidence, and
shall report to the Sellers' Agents only with respect to the accuracy of
any Earn-Out Amount. In the event the records examined reveal that the
Buyer has paid less than the amount due the Sellers in respect of the
Earn-Out Amount in question, the Buyer shall pay the appropriate
Adjustment Amount due to the Sellers based on such audit plus accrued
interest on such additional amount at the base, prime, or similar interest
rate in effect for the period covered by the audit as set by Citibank,
N.A. and if the records examined reveal that the Buyer has paid less than
ninety-five percent (95%) of the amount due the Sellers in respect of the
Earn-Out Amount in question, the Buyer shall also pay the reasonable costs
of the audit. In the event the records examined reveal that the Buyer has
paid more than the amount due in respect of the Earn-Out Amount in
question, the Sellers shall not be obligated to return any amounts to the
Buyer. Payment of the amount due to the Sellers in respect of any
Adjustment Amount shall be made by delivering a certified check payable to
the order of the Sellers' Agents to be held and distributed by the
Sellers' Agents pursuant to the terms of the Sellers' Escrow Agreement.
SECTION 2.4. Preparation of Effective Date Financial Statements; Purchase
Price Adjustment.
(a) (i) Prior to the execution of this Agreement, the Sellers have
caused to be prepared and have delivered to the Buyer: the unaudited
interim consolidated balance sheet of the Parent and its Subsidiaries as
of September 27, 1997, and the unaudited interim balance sheet of the
Company as of September 27, 1997, together with the related unaudited
consolidated statements of income for the Parent and the Company for the
period then ended and (ii) at the time of execution of this Agreement, the
Sellers shall cause to be prepared and delivered to the Buyer a
certificate signed by the Sellers' Agents certifying the amount of the
stockholders' equity of the Company as of September 27, 1997 as reflected
in such financial statements (the "Company
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September 27 Stockholders Equity"). Such financial statements and the data
reflected in such certificate shall have been derived from the Company
Unaudited Interim Financial Statements, which financial statements are
subject to any year-end adjustments which appropriately apply to such
unaudited interim financial statements.
(b) Promptly after the Closing Date, the Sellers shall cause to be
prepared the consolidated balance sheet of the Parent, together with a
supplemental consolidating balance sheet of Parent and the Company, as of
December 27, 1997, together with the respective related consolidated and
supplemental consolidating statements of income, shareholders' equity and
cash flows for the year then ended, which financial statements shall
reflect the consummation of the Redemption Transaction (the "Effective
Date Financial Statements"). The Effective Date Financial Statements shall
be prepared in accordance with GAAP applied on a basis consistent with
that used in, and in accordance with the same accounting principles
applied in, the preparation of the Parent Audited Financial Statements and
shall include all such information and schedules as are required by
Regulation S-X of the Securities and Exchange Commission to permit their
inclusion in the securities law filings of the Buyer. The Sellers shall
cause Coopers & Lybrand L.L.P. ("C&L") to audit the Effective Date
Financial Statements and shall cause C&L to issue, on or prior to February
28, 1998, an opinion containing no qualifications or exceptions with
respect to the scope of its audit or otherwise, on the Effective Date
Financial Statements that such accountants have audited the Effective Date
Financial Statements in accordance with generally accepted auditing
standards and that the Effective Date Financial Statements were prepared
in accordance with GAAP. The Sellers shall cause the Effective Date
Financial Statements together with the opinion of C&L referenced above to
be delivered to the Buyer on or prior to February 28, 1998. Ernst & Young,
LLP ("E&Y") shall have access to C&L's work papers and personnel, subject
to an officer of the Buyer and a partner of E&Y signing an appropriate
hold harmless letter. Simultaneously with the delivery of the Effective
Date Financial Statements, Sellers shall deliver to Buyer a certificate
signed by the Sellers' Agents setting forth a schedule sufficient to
permit an analysis of the stockholders' equity of the Company as of the
Effective Date and certifying (i) such schedule has been properly derived
from the Effective Date Financial Statements, (ii) the amount of the
stockholders equity of the Company as of the Effective Date as reflected
on such schedule (the "Company Effective Date Stockholders Equity") and
(iii) a calculation of the difference between the Company September 27
Stockholders Equity and the Company Effective Date Stockholders Equity
(the "Sellers' Proposed Purchase Price Adjustment"). After the Closing,
Buyer shall give Sellers and C&L such access to personnel and books and
records as may be required for Sellers to fulfill their obligation under
this Section 2.4(b).
(c) The Buyer shall have the right to dispute Sellers' Proposed
Purchase Price Adjustment during a fifteen (15) day period following the
delivery of the certificate described in Section 2.4(b) by delivering a
dispute notice to the Sellers' Agents (a "Dispute Notice") setting forth
in reasonable detail its disputes with the
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Sellers regarding the amount of the Company Effective Date Stockholders
Equity or the calculation of the purchase price adjustment, and setting
forth Buyer's proposed purchase price adjustment (the "Buyer's Proposed
Purchase Price Adjustment"). In the absence of the delivery of a Dispute
Notice, or if the Buyer affirmatively notifies the Sellers' Agents that it
agrees with Seller's Proposed Purchase Price Adjustment, the Sellers'
Proposed Purchase Price Adjustment shall be deemed to be final and shall
become the "Final Purchase Price Adjustment." If a Dispute Notice is
delivered, the parties shall have a period of thirty (30) days after
delivery of the Dispute Notice in which they shall seek, in good faith,
together with their respective accountants to resolve the matters in
dispute. If such matters are resolved by the parties, the Company
Effective Date Stockholders Equity and the Final Payment Price Adjustment
shall be as so agreed. If at the conclusion of such thirty (30) day
period, the parties have been unable to resolve such dispute, the dispute
shall be referred to a third firm of independent public accountants of
recognized national standing that is not then engaged by either the
Sellers or the Buyer to resolve such dispute. Such firm shall be
instructed that it shall have authority to resolve the dispute only by
selecting either the Sellers' Proposed Purchase Price Adjustment or the
Buyer's Proposed Purchase Price Adjustment, whichever such firm considers
as most closely reflecting the correct determination consistent with this
Agreement. The purchase price adjustment selected by such third firm of
accountants shall become the Final Purchase Price Adjustment, the amount
of the Company Effective Date Stockholders Equity shall be adjusted
accordingly and each shall be binding on all parties hereto. The parties
shall cooperate fully with such third party accountants and provide such
firm with access to personnel and work papers, with a view to permitting
such firm to make its determination within thirty (30) days after
submission to it of the dispute. The fees of such firm shall be paid by
the party whose proposed purchase price adjustment is not selected by such
firm.
(d) Within five (5) days after the determination of the Final
Purchase Price Adjustment as called for in the foregoing paragraphs:
(i) if the Company Effective Date Stockholders Equity exceeds
the Company September 27 Stockholders Equity, the Buyer shall deliver a
certified check in an amount equal to the Final Purchase Price Adjustment
payable to the order of the Sellers' Agents to be held and distributed by
the Sellers' Agents pursuant to the terms of the Sellers' Escrow
Agreement; and
(ii) if the Company September 27 Stockholders Equity exceeds
the Company Effective Date Stockholders Equity, the Sellers shall cause
the Sellers' Agents to deliver a certified check to the Buyer, payable to
the order of the Buyer, in an amount equal to the Final Purchase Price
Adjustment.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby jointly and severally represents, warrants and
agrees (except with respect to Sections 3.1 and 3.2 to which each severally
represents, warrants and agrees) as follows:
SECTION 3.1. Ownership; Title to the Shares. Dubbell owns the Parent
Shares and will own at and as of the Closing the Remaining Parent Shares, in
each case free and clear of any lien, charge or encumbrance, and at and as of
the Closing there shall be no issued and outstanding shares of capital stock of
the Parent other than the Remaining Parent Shares. Each of the Company Minority
Shareholders and the Parent owns, free and clear of any lien, charge or
encumbrance, all of the shares of common stock, no par value, of the Company
(the "Company Common Stock") set forth after the name of such Minority
Shareholder and the Parent on Exhibit A-1 hereto and will own at and as of the
Closing Date, free and clear of any lien, charge or encumbrance, all of the
shares of Company Common Stock set forth after the name of such Minority
Shareholder and the Parent on Exhibit A-2 hereto.
SECTION 3.2. Authority. This Agreement constitutes a valid and binding
obligation of each Seller (subject to normal equitable principles and subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the
rights of creditors) and this Agreement and all transactions contemplated hereby
will not result in a violation of any of the terms and provisions of any
agreement to which such Seller is a party or by which such Seller is otherwise
bound.
SECTION 3.3. Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority and all
governmental licenses, authorizations, permits, consents and approvals to own
its properties and assets and to conduct its businesses as now conducted. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction where the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except in any jurisdiction where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or the condition (financial or otherwise) of the Company. Section 3.3
of the Disclosure Schedule sets forth all of the jurisdictions in which the
Company is qualified to do business. The copies of the articles of incorporation
and by-laws of the Company included as part of Section 3.3 of the Disclosure
Schedule constitute accurate and complete copies of such organizational
instruments and accurately reflect all amendments thereto through the date
hereof.
SECTION 3.4. Capitalization. The authorized capital stock of the Company
consists of 5,000 shares of Company Common Stock, all of which are issued and
outstanding. As of the date hereof, such shares of Company Common Stock are
owned of record and beneficially by the Persons in the amounts set forth
opposite their names on Exhibit A-1 hereto, and at and as of to the Closing
Date, such shares of Company Common Stock will be owned of record and
beneficially by the Persons in the amounts set forth on Exhibit A-2 hereto. Such
shares
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of Company Common Stock represent all of the issued and outstanding shares of
capital stock of the Company. All shares of Company Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
outstanding options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for, purchase or otherwise acquire any shares of
Company Common Stock, and there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire outstanding shares of Company Common
Stock.
SECTION 3.5. Subsidiaries. The Company does not own any shares of, or
control, directly or indirectly, or have any equity interest in, any Person.
SECTION 3.6. No Conflict or Violation.
(a) Except as set forth in Section 3.6 of the Disclosure Schedule,
the execution, delivery and performance by the Sellers of this Agreement
and the transactions contemplated hereby do not and will not: (i) violate
or conflict with any provision of the articles of incorporation or by-laws
of the Company; (ii) violate any provision of law, statute, judgment,
order, writ, injunction, decree, award, rule, or regulation of any court,
arbitrator, or other governmental or regulatory authority applicable to
the Company; (iii) violate, result in a breach of, constitute (with due
notice or lapse of time or both) a default or cause any obligation,
penalty, premium, right of termination or acceleration to arise, accrue or
occur under any material contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to
which the Company is a party or by which the Company is bound or to which
its properties or assets are subject; (iv) result in the creation or
imposition of any lien, charge or encumbrance of any kind whatsoever upon
any of the properties or assets of the Company; or (v) result in the
cancellation, modification, revocation or suspension of any License.
(b) Except as set forth in Section 3.6 of the Disclosure Schedule,
to the best of each Seller's knowledge, neither the purchase of the
Remaining Parent Shares and the Company Minority Shares by the Buyer nor
the consummation of the transactions contemplated by this Agreement will
result in any material adverse change in the business operations of the
Company or in the loss of the benefits of any relationship with any
customer or supplier.
SECTION 3.7. Consents and Approvals. Section 3.7 of the Disclosure
Schedule sets forth a true and complete list of each consent, waiver,
authorization or approval of any governmental or regulatory authority, domestic
or foreign, or any other Person, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required of or to be made by the Company in connection with the execution,
delivery and performance of this Agreement.
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SECTION 3.8. Financial Statements.
(a) Section 3.8 of the Disclosure Schedule includes copies of (x)
the audited balance sheet of the Company as of December 28, 1996, together
with the related statements of income, shareholders' equity and cash flows
for the year then ended and the notes thereto (the "Company Audited
Financial Statements") and (y) the unaudited interim balance sheet of the
Company as of September 27, 1997, together with the related unaudited
statement of income for the nine-month period then ended (the "Company
Unaudited Interim Financial Statements" and, together with the Company
Audited Financial Statements, the "Company Financial Statements"). The
Company Financial Statements, including the notes thereto: (i) were
prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby; (ii) present fairly the financial position,
results of operations and cash flows of the Company as of such dates and
for the periods then ended (subject, in the case of the Company Unaudited
Interim Financial Statements, to normal year-end audit adjustments
consistent with prior periods and to possible damages related to the
Promega Dispute); and (iii) are complete in all material respects, correct
and in accordance with the books of account and records of the Company.
(b) Except as set forth in Section 3.8 of the Disclosure Schedule,
the Company has no commitments to make any capital expenditures or to
invest, advance or loan any monies to any Persons in excess of $10,000.
SECTION 3.9. Liabilities for Borrowed Money; Absence of Undisclosed
Liabilities; Guarantees.
(a) Section 3.9 of the Disclosure Schedule sets forth as of the date
hereof a true and complete list of all indebtedness for borrowed money due
from the Company to any Person.
(b) The Company has no indebtedness or liability, direct or
indirect, absolute or, to the knowledge of any Seller, contingent, which
is required by GAAP to be shown or provided for on the balance sheet of
the Company included in the Company Unaudited Interim Financial Statements
other than as shown on such balance sheet and other than liabilities
incurred or accrued in the ordinary course of business (including liens
for current Taxes and assessments not in default) since September 27, 1997
and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability except
for the Promega Dispute. Except as disclosed in Section 3.9 of the
Disclosure Schedule or as shown in such balance sheet or in the notes to
the Company Unaudited Interim Financial Statements, the Company is not,
directly or indirectly, liable upon or with respect to (by discount,
repurchase agreements or otherwise), or obligated in any other way to
provide funds in respect of, or to guarantee or assume, any debt,
obligation or dividend of any person, except endorsements in the ordinary
course of business in connection with the deposit of items for collection.
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SECTION 3.10. Interests in Real Property.
(a) The Company does not own and has never owned any real property.
Section 3.10 of the Disclosure Schedule sets forth a true and complete
list of all real properties leased by the Company. Except as disclosed in
Section 3.10 of the Disclosure Schedule, the Company has good and
transferable leaseholds in all real property shown in Section 3.10 of the
Disclosure Schedule as leased by it (all such leases being referred to
herein as "Real Property Leases"). To any Seller's knowledge each of the
Real Property Leases is valid and enforceable. To any Seller's knowledge
there does not exist under any Real Property Lease any default by the
Company or any landlord or any event which with notice or lapse of time or
both would constitute a default by either the Company or the landlord.
Except as disclosed in Section 3.10 of the Disclosure Schedule, none of
the Company's interests in real property leased by the Company is subject
to any liens (other than a lien of current property Taxes and assessments
not in default, if any), mortgages or encumbrances; and none of such real
properties is subject to any easement, right of way, license, grant,
building or use restriction, exception, reservation, limitation or other
impediment which materially and adversely affects the value thereof to the
Company or which interferes with or impairs the present and continued use
thereof in the usual and normal conduct of the business of the Company.
Sellers have no reason to believe, nor have they attempted to determine
whether improvements on all real property leased or used by the Company
and the operations therein conducted fail to conform in all material
respects to all applicable health, fire, environmental, safety, zoning and
building laws, ordinances and administrative regulations, except for
nonconforming uses or violations which do not and will not expose any
person or property to injury or damage, adversely affect any insurance
coverage, give rise to strict liability, penalties or fines, jeopardize
any Licenses or Environmental Permits, or interfere materially in any
respect with the present use, operation or maintenance thereof by the
Company as now used, operated or maintained, or which do not and will not
materially and adversely affect the value thereof. All buildings,
structures, improvements and fixtures owned, leased or used by the Company
in the conduct of its business are in good operating condition and repair.
(b) There are no outstanding requirements or recommendations by any
insurance company which has issued a policy covering any real property
leased or used by the Company, or by any board of fire underwriters or
other body exercising similar functions, requiring or recommending any
repairs or work to be done on any such property.
(c) None of the Company's leased real properties is subject to any
sublease, license or other agreement granting to any person any right to
the use, occupancy or enjoyment of such property or any portion thereof.
SECTION 3.11. Personal Property. Section 3.11 of the Disclosure Schedule
sets forth a complete and correct list and brief description of each item of
equipment, furniture, fixtures and other tangible personal property (the
"Furniture, Fixtures and Equipment")
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<PAGE> 26
individually having an original purchase cost or aggregate lease cost exceeding
$5,000 owned or leased by the Company, including vehicles, if any. Except as set
forth in Section 3.11 of the Disclosure Schedule, the Company owns outright and
has good title, free and clear of all title defects and objections, security
interests, liens, charges and encumbrances of any nature whatsoever (other than
the lien of current property Taxes and assessments not in default, if any) to
the Furniture, Fixtures and Equipment owned by it and to all the machinery,
equipment, furniture and fixtures reflected on the balance sheet included in the
Company Unaudited Interim Financial Statements and all such property acquired
since the date thereof, except for any of such property which has been sold or
disposed of in the ordinary course of business. None of the title defects,
objections, security interests, liens, charges or encumbrances (if any) listed
in Section 3.11 of the Disclosure Schedule materially and adversely affects the
value of any of the items of personal property to which it relates or interferes
with its use in the conduct of business of the Company. Except as set forth in
Section 3.11 of the Disclosure Schedule, the Company holds good and transferable
leaseholds under valid and enforceable leases in all of the Furniture, Fixtures
and Equipment leased by it, and none of such Furniture, Fixtures and Equipment
leased by the Company is subject to any sublease, license or other agreement
granting to any person any right to use such property (all such leases,
subleases, licenses and other agreements are collectively referred to herein as
"Furniture, Fixtures and Equipment Leases"). To the knowledge of any Seller, all
Furniture, Fixtures and Equipment Leases are valid and enforceable. The Company
is not in breach of or default (and no event has occurred which, with due notice
or lapse of time or both, may constitute such a lapse or default) of any
provision of any of the Furniture, Fixtures and Equipment Leases. The Furniture,
Fixtures and Equipment and other personal property now owned, leased or used by
the Company is sufficient and adequate to carry on its business as presently
conducted and all items thereof are in good operating condition and repair. The
Company does not hold any personal property of any other person, firm or
corporation pursuant to any consignment or similar arrangement.
SECTION 3.12. Intellectual Property; Intangible Assets.
(a) Section 3.12 of the Disclosure Schedule sets forth a complete
and correct listing of the Intellectual Property. Except as described in
Section 3.12 of the Disclosure Schedule, all Intellectual Property listed
therein is owned by the Company, free and clear of all liens, security
interests and encumbrances of any nature whatsoever and is not known to be
the subject of any challenge. The Intellectual Property is valid,
subsisting, unexpired, in proper form and, to the knowledge of any Seller,
enforceable and all renewal fees and other maintenance fees which have
fallen due on or prior to the date of this Agreement have been paid. The
grants, registrations and applications for the Intellectual Property have
not lapsed, expired or been abandoned and no application or registration
thereof is the subject of any legal or governmental proceeding before any
governmental, registration or other authority in any jurisdiction. As of
the date hereof, except as described in Section 3.12 of the Disclosure
Schedule, there are no unresolved claims, suits or actions made and to the
knowledge of any Seller, there has not been communicated to the Company
the threat of any claim that the Company is in violation or infringement
of any Intellectual Property of any other Person. Except as disclosed in
Section 3.12 of the Disclosure
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Schedule, the Company is the owner of, or has a valid license to use, the
Intellectual Property necessary for the conduct of its business as now
conducted, without any known conflict with the rights of others, and the
Company has not knowingly forfeited or otherwise relinquished any
Intellectual Property necessary for the conduct of its business as now
conducted. The Company has not entered into any material consent,
indemnification, forbearance to sue, settlement agreement or
cross-licensing arrangement with any person relating to the Intellectual
Property of any third party other than as may be contained in the license
agreements listed in Schedule 3.12 of the Disclosure Schedule. Except as
disclosed in Section 3.12 of the Disclosure Schedule, the Company is not
under any obligation to pay any royalties or similar payments in
connection with any license to any of its Affiliates. Except as set forth
on Schedule 3.12 of the Disclosure Schedule, the Company is not, nor will
it be as a result of the execution and delivery of this Agreement or the
performance by the Sellers of their obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to the
Intellectual Property. The validity and enforceability of the Intellectual
Property and the registration thereof has not been impugned or otherwise
affected adversely as a result of the consummation of the transactions
contemplated by this Agreement. No present, and to the knowledge of any
Seller, no former, employees, officers or directors of the Company hold
any right, title or interest directly or indirectly, in whole or in part,
in or to any Intellectual Property.
(b) Except as shown in Section 3.12 of the Disclosure Schedule,
there is no restriction affecting the use of any of the Intangible Assets
(other than with respect to Intangible Assets that the Company holds by
virtue of license arrangements), and no license has been granted by the
Company with respect thereto. None of the Intangible Assets is currently
being challenged, is involved in any pending or threatened administrative
or judicial proceeding, or, to the knowledge of Company, conflicts with
any rights of any other person, firm or corporation. The Company owns or
has the right to use all computer software, software systems and databases
and all other information systems necessary for the conduct of its
business. The Company's rights in and to the Intangible Assets are
sufficient and adequate to permit the continued conduct of its business in
the manner now conducted, and, to the knowledge of each Seller, none of
the Products or operations of the Company's business involves any
infringement of any proprietary right of any other Person, except as may
be determined in the Promega Dispute.
SECTION 3.13. Compliance with Law. Except as set forth in Section 3.13 of
the Disclosure Schedule, the operations of the Company have been conducted, in
all material aspects, in accordance with all applicable laws, regulations,
orders and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Company and its assets, properties and
operations. None of the Sellers or the Company has received notice of any
violation of any such law, regulation, order or other legal requirement, or is
in default with respect to any order, writ, judgment, award, injunction or
decree of any federal, state or local court or governmental or regulatory
authority or arbitrator, domestic or foreign, applicable to the Company or any
of its assets, properties or operations. No Seller has knowledge of any proposed
change in any such laws, rules or regulations that would
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adversely affect the transactions contemplated by this Agreement or all or a
substantial part of the assets or the businesses or prospects of the Company.
SECTION 3.14. Licenses, Permits and Governmental Approvals.
(a) Section 3.14 of the Disclosure Schedule sets forth a true and
complete list of all material licenses of the Company (including, but not
limited to, any environmental licenses, permits, registrations or
authorizations), health or other permits, franchises, authorizations and
approvals issued or granted to the Company by the United States, any state
or local government, any foreign national or local government, or any
department, agency, board, commission, bureau or instrumentality of any of
the foregoing (each a "License" and, collectively, the "Licenses"), and
all pending applications therefor. Each License has been issued to, and
duly obtained and fully paid for by, the Company and is valid, in full
force and effect, and not subject to any pending or known threatened
administrative or judicial proceeding to suspend, revoke, cancel or
declare such License invalid in any respect.
(b) The Company has all Licenses required, and such Licenses are
sufficient and adequate in all material respects, to permit the continued
lawful conduct of the Company's business in the manner now conducted and
the ownership, occupancy and operation of its real and personal property
for their present uses. The Company is not in violation of any of the
Licenses in any material respect. The Licenses have never been suspended,
revoked or otherwise terminated, subject to any fine or penalty, or
subject to judicial or administrative review, for any reason other than
the renewal or expiration thereof nor has any application of the Company
for any License ever been denied. The Company's operations are not being
conducted in a manner that violates any of the material terms or
conditions under which any License was granted. Except as disclosed in
Section 3.14 of the Disclosure Schedule, to the best of Sellers'
knowledge, no License will in any way be materially or adversely affected
by, or terminate or lapse by reason of, the transactions contemplated by
this Agreement. The Sellers have delivered to the Buyer or its
representatives true and complete copies of all Licenses together with all
amendments and modifications thereto.
SECTION 3.15. Environmental Matters. Notwithstanding anything to the
contrary contained in this Agreement and in addition to the other
representations and warranties contained herein:
(a) To the knowledge of any of the Sellers, the Company and its
operations are, and in the past have been, in compliance in all material
respects with all applicable laws, regulations and other requirements of
governmental or regulatory authorities or duties under the common law
relating to toxic or hazardous substances, wastes, pollution or to the
protection of human health, safety, or the environment (collectively,
"Environmental Laws") and have obtained and maintained in effect all
Licenses, permits and other authorizations or registrations (collectively
"Environmental Permits") required under all Environmental Laws and are,
and in the past have been, in compliance with all such Environmental
Permits.
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(b) To the knowledge of any of the Sellers, the Company has not
performed or suffered any act which could give rise to, or has otherwise
incurred, liability to any person (governmental or other) under CERCLA, or
any other Environmental Laws, as amended, nor has the Company received
notice of any such liability or any claim therefor or submitted notice
pursuant to Section 103 of CERCLA to any governmental agency with respect
to any of its assets.
(c) To the knowledge of any of the Sellers, no hazardous substance,
hazardous waste, contaminant, pollutant or toxic substance (as such terms
are defined in any applicable Environmental Law and collectively referred
to herein as "Hazardous Materials") has been released, placed or dumped by
the Company or by action of the Company otherwise come to be located on,
at, beneath or near any of the assets or properties leased by the Company
or any surface waters or groundwaters thereon or thereunder.
(d) Except as disclosed in Section 3.15 of the Disclosure Schedule,
the Company does not own or operate, and has never owned or operated,
aboveground or underground storage tanks containing a regulated substance,
as such term is defined in Subchapter IX of the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6991 et seq., as amended, or a surface
impoundment, lagoon, landfill, PCB containing electrical equipment or
asbestos containing materials.
(e) To the knowledge of any of the Sellers, with respect to any or
all of the real properties leased by the Company: (i) there are no, nor
have there been in the past, asbestos-containing materials, urea
formaldehyde insulation, polychlorinated biphenyls or, to the knowledge of
any Seller, lead-based paints present at any such properties; and (ii)
there are no wetlands (as defined under any Environmental Law) located on
any such properties, nor have any been drained, filled or otherwise
altered.
(f) To the knowledge of any of the Sellers, except as disclosed in
Section 3.15 of the Disclosure Schedule, none of the real properties
leased by the Company (i) has been used or is now used for the generation,
transportation, storage, handling, treatment or disposal of any Hazardous
Materials or (ii) is identified on a federal, state or local listing of
sites which require or might require environmental cleanup.
(g) To the knowledge of any of the Sellers, there are no ongoing
investigations or negotiations, pending or threatened administrative,
judicial or regulatory proceedings, or consent decrees or other agreements
in effect that relate to environmental conditions in, on, under, about or
related to the Company, its operations or the real properties leased by
the Company.
(h) No Seller has been advised that, nor has any Seller sought
advice as to whether the Company or its operations is subject to reporting
requirements under the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. ss. 11001 et seq., or analogous state
statutes and related regulations, all as amended.
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SECTION 3.16. Litigation. Except as set forth in Section 3.16 of the
Disclosure Schedule and except for the Promega Dispute, there are no claims,
actions, suits, proceedings, labor disputes or investigations pending or, to the
knowledge of any of the Sellers, threatened before any federal, state or local
court or governmental, administrative or regulatory authority, domestic or
foreign, or before any arbitrator of any nature, brought by or against the
Company or its officers, directors, employees, agents or any of their respective
Affiliates involving, affecting or relating to any assets, properties or
operations of the Company or the transactions contemplated by this Agreement.
Section 3.16 of the Disclosure Schedule sets forth a list and a summary
description of all such pending or known threatened actions, suits, proceedings,
disputes or investigations. None of the Sellers or the Company nor any of their
or the Company's assets or properties is subject to, nor to any Seller's
knowledge, does any basis exist for, any order, writ, judgment, award,
injunction or decree of any federal, state or local court or governmental or
regulatory authority or arbitrator, that materially affects the Company's
assets, properties, operations, prospects, net income or financial condition or
which would interfere with the transactions contemplated by this Agreement.
SECTION 3.17. Contracts.
(a) Section 3.17 of the Disclosure Schedule sets forth a true and
complete list and a summary description showing the expiration dates
(exclusive of renewal terms) of all contracts, agreements, instruments,
commitments and other arrangements to which the Company is a party or
otherwise relating to or affecting any of its assets, properties or
operations including, without limitation, all written or oral, express or
implied contracts, which involve an obligation or commitment on the part
of the Company in excess of $10,000 (each, a "Material Contract"). To the
knowledge of any of the Sellers, each Material Contract is valid, binding
and enforceable against the parties thereto in accordance with its terms,
and in full force and effect on the date hereof. The Company has, in all
material respects, performed all obligations, including, but not limited
to, the timely making of any rental or other payments, required to be
performed by it under, and is not in default or breach of any material
provision in respect of, any Material Contract, and no event has occurred
which, with due notice or lapse of time or both, would constitute such a
default. The Sellers have delivered to the Buyer or its representatives
true and complete originals or copies of all the Material Contracts and a
copy of every default notice received by the Sellers or the Company during
the past three years with respect to any of the Material Contracts.
(b) Except as may be disclosed in Schedule 3.17 of the Disclosure
Schedule, to the knowledge of any of the Sellers, the Company is not a
party to any agreement or instrument, or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree,
rule or regulation which, insofar as it relates to the business of the
Company, materially adversely affects, or would in the future be
reasonably expected to materially adversely affect, its business,
prospects, operations, properties, assets or financial condition.
SECTION 3.18. Accounts Receivable. All notes and accounts receivable of
the Company reflected in the Company Unaudited Interim Financial Statements, or
arising since
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September 27, 1997, constitute bona fide receivables of the Company and have
arisen through the ordinary course operation of the Company's business. All
notes and accounts receivable payable to or for the benefit of the Company on
the date hereof are current and collectible in amounts not less than the
aggregate amount thereof (net of reserves established in accordance with GAAP
applied consistently with prior practice) carried on the books of the Company,
and to the best of each Seller's knowledge, are not subject to any counterclaims
or set-offs. Except as set forth in Schedule 3.18, none of such notes or
accounts receivable is more than 90 days past due.
SECTION 3.19. Inventories.
(a) The inventories of the Company reflected in the Company
Unaudited Interim Financial Statements, or acquired by the Company since
September 27, 1997, are carried at the lower of cost or net realizable
value determined in accordance with GAAP, and are of a type, quantity and
quality useable and salable in the ordinary conduct of the Company's
business. Except as disclosed in Schedule 3.19 of the Disclosure Schedule,
all inventory is owned by the Company free and clear of all liens and
encumbrances.
(b) Where necessary in connection with the manufacture of the
Company's products, the Cell Lines, or other biological products, taken as
a whole, are biologically active and provide the source material necessary
to generate the biological materials included in the Company's products.
Such Cell Lines have been properly maintained by the Company so as to
retain their viability, minimize deterioration and avoid contamination,
and the Company has established and maintained duplicate back-up stocks of
the most significant of such Cell Lines (from the point of view of volume
of sales of the Company's products they generate) to enable their
continued production in the event of the expiration or contamination of
the primary stocks of such Cell Lines. The Company has (i) manufactured or
prepared the other biological materials included in the Company's
inventory in accordance with what, to the knowledge of the Company
constitutes good standards generally utilized by its competitors in the
industry, (ii) maintained accurate quality control records by production
lot of all such biological materials and (iii) has maintained such
materials in a manner reasonably designed to preserve their viability and
to avoid contamination and deterioration.
SECTION 3.20. Catalogs, Brochures and Advertisements. Section 3.20 of the
Disclosure Schedule sets forth a true and complete list of catalogs, catalog
supplements, advertisements, sales brochures and marketing brochures (whether
print or other media) designed, produced and/or distributed by or for the
Company since January 1, 1996. The Sellers have delivered to the Buyer or its
representatives true and complete originals or copies of all such catalogs,
catalog supplements, advertisements, sales brochures and marketing brochures.
SECTION 3.21. Warranties. Section 3.21 of the Disclosure Schedule sets
forth the written warranties given by the Company in connection with the sale of
its Products. To the
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best of each Seller's knowledge the Company has given no unwritten warranties in
such connection.
SECTION 3.22. Customers and Suppliers. Section 3.22 of the Disclosure
Schedule sets forth a complete and correct list of (a) the ten largest suppliers
by dollar volume of the Company and the aggregate dollar volume of purchases by
the Company from such suppliers for the last fiscal year of the Company and (b)
all customers or suppliers that within the last 24 months have terminated any
agreement, contract or other arrangement with the Company or with whom the
Company has terminated any agreement, contract or other arrangement, in each
case with or without cause, prior to the stated expiration thereof. Except as
set forth in Section 3.22 of the Disclosure Schedule, since January 1, 1997, the
Company has not at any time delivered to, or received from, any customer or
supplier any formal notice or written allegation of a default or breach with
respect to any agreement, contract or other arrangement and, to each Seller's
knowledge, none of such customers or suppliers has, or intends to terminate or
not exercise any option to renew or otherwise change significantly its
relationship with the Company. The Company has not granted any credit, rebate,
trade-in, free return or other sales terms to customers or others which
substantially differ from terms granted in the ordinary course of its business
consistent with past practice.
SECTION 3.23. Products Liability.
(a) There is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature before any court or governmental or
other regulatory or administrative agency, commission or authority against
or involving any Product, or class of claims or lawsuits involving the
same or similar Product produced, distributed or sold by or on behalf of
the Company which is pending or, to the knowledge of Sellers, threatened,
resulting from an alleged defect in design, manufacture, materials or
workmanship of any Product produced, distributed or sold by or on behalf
of the Company, or any alleged failure to warn, or from any breach of
implied warranties or representations, and there has not been any
Occurrence (as defined below) that is material to the business of the
Company.
(b) For purposes of this Section 3.23, the term "Occurrence" shall
mean any accident, happening or event which was caused or allegedly caused
by any alleged hazard or alleged defect in manufacture, design, materials
or workmanship including, without limitation, any alleged failure to warn
or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving,
a Product (including any parts or components) manufactured, produced,
distributed or sold by or on behalf of the Company which is likely to
result in a claim or loss.
SECTION 3.24. Insurance.
(a) Section 3.24 of the Disclosure Schedule sets forth a true and
complete list of all policies of title insurance, liability and casualty
insurance, property
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insurance, auto insurance, business interruption insurance, tenant's
insurance, workers' compensation, life insurance, disability insurance,
excess or umbrella insurance and any other type of insurance insuring the
properties, assets, employees and/or operations of the Company and
indicates whether such policies are in the name of the Company, the Parent
or an Affiliate (collectively, the "Policies"). The Sellers have furnished
true, complete and accurate copies of all the Policies to the Buyer. All
premiums payable under all such Policies have been timely paid and the
Company has complied fully with the terms and conditions of all such
Policies.
(b) Except as set forth in Section 3.24 of the Disclosure Schedule,
all such Policies are in full force and effect and will not in any way be
affected by or terminated or lapsed by reason of the consummation of the
transactions contemplated by this Agreement. The Sellers shall use their
respective best efforts to cause the Company or the Parent, as applicable,
to maintain the coverage under all Policies in full force and effect
through the Closing Date. Neither the Company nor the Parent is in default
under any provisions of the Policies, and there is no claim by the Company
or any other Person pending under any of the Policies as to which coverage
has been questioned, denied or disputed by the underwriters or issuers of
such Policies. Except as set forth in Section 3.24 of the Disclosure
Schedule, none of the Sellers, the Company or the Parent has received any
written notice from or on behalf of any insurance carrier or other issuer
issuing such Policies that insurance rates or other annual premium or fee
in effect as of the date hereof will hereafter be substantially increased
(except to the extent that insurance rates or other fees may be increased
for all similarly situated risks), that there will be a non-renewal,
cancellation or increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) of any of the Policies in effect
as of the date hereof, or that alteration of any equipment or any
improvements to real estate occupied by or leased to or by the Company,
purchase of additional equipment, or modification of any of the methods of
doing business of the Company, will be required or suggested after the
date hereof. The Policies maintained by the Company (and the Parent and
its Affiliates on behalf of the Company) are adequate in accordance with
the requirements of any applicable leases and are in at least the minimum
amounts required by, and are otherwise sufficient for purposes of, any
currently applicable law, rule, or regulation of any federal, state, local
or foreign government, agency or authority, including, without limitation,
environmental regulations.
SECTION 3.25. Transactions with Directors, Officers and Affiliates. Except
as disclosed in Section 3.25 of the Disclosure Schedule, since January 1, 1996,
there have been no transactions between the Company and any director, officer,
employee, stockholder or other Affiliate of the Company or loans, guarantees or
pledges to, by or for the Company from, to, by or for any of such persons in
excess of $50,000. Since January 1, 1996, to the Sellers' knowledge, none of the
officers, directors or employees of the Company, or any spouse or relative of
any of such persons, has been a director or officer of, or has had any direct or
indirect interest in, any firm, corporation, association or business enterprise
which during such period has been a supplier, customer or sales agent of the
Company or has competed with or been engaged in any business of the kind being
conducted by the Company,
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except for an investment in less than 5 percent of the outstanding equity of any
such firm, corporation, association or business enterprise, the equity of which
is publicly traded. Except with respect to their ownership interests in the
Company or the Parent, none of the Sellers or any of their Affiliates (other
than the Company) owns or has any rights in or to any of the assets, properties
or rights used by the Company in the ordinary course of its business except as
disclosed in Section 3.12 of the Disclosure Schedule.
SECTION 3.26. Propriety of Past Payments. Except as set forth in Section
3.26 of the Disclosure Schedule, no finder's fee or other payment has been, or
will be, made by or on behalf of the Company in respect of, or in connection
with, any Material Contract to any person, firm, corporation or other entity
which is not a party to such Material Contract. No funds or assets of the
Company have been used for illegal purposes; no unrecorded funds or assets of
the Company have been established for any purpose; no accumulation or use of the
Company's corporate funds or assets has been made without being properly
accounted for in the respective books and records of the Company; all payments
by or on behalf of the Company have been duly and properly recorded and
accounted for in its books and records; no false or artificial entry has been
made in the books and records of the Company for any reason; no payment has been
made by or on behalf of the Company with the understanding that any part of such
payment is to be used for any purpose other than that described in the documents
supporting such payment; and the Company has not made, directly or indirectly,
any illegal contributions to any political party or candidate, either domestic
or foreign.
SECTION 3.27. Employee Plans. There are no Parent Employee Benefit Plans
or Parent Pension Plans applicable to employees of the Company other than those
listed in Section 4.17 of the Disclosure Schedule.
SECTION 3.28. Labor Matters.
(a) Except as set forth in Section 3.28 of the Disclosure Schedule:
(i) the Company is not a party to any outstanding employment, consulting
or management agreements or contracts with officers or employees that are
not terminable at will, or that provide for the payment of any bonus or
commission; (ii) the Company is not a party to any agreement, policy or
practice that requires it to pay termination or severance pay to salaried,
non-exempt or hourly employees (other than as required by law); (iii) the
Company is not a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company nor
does any Seller know of any activities or proceedings of any labor union
to organize any such employees. The Sellers have furnished to the Buyer
complete and correct copies of all such agreements (the "Employment and
Labor Agreements"). The Company has not breached or otherwise failed to
comply with any provisions of any Employment and Labor Agreement, and is
in full compliance with all terms of any collective bargaining agreement
and there are no grievances outstanding thereunder.
(b) Except as set forth in Section 3.28 of the Disclosure Schedule
(i) the Company is in compliance with all applicable laws relating to
employment and employment practices, wages, hours, and terms and
conditions of employment and is
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not engaged in any unfair labor practice; (ii) there is no unfair labor
practice charge or complaint pending before the NLRB against the Company;
(iii) there is no labor strike, material slowdown or material work
stoppage or lockout actually pending or, to the Sellers' knowledge,
threatened against or affecting the Company, and the Company has not at
any time experienced any strike, material slowdown or material work
stoppage, lockout or other collective labor action by or with respect to
employees of the Company; (iv) there is no representation claim or
petition pending before the NLRB or any similar foreign agency and, to the
Sellers' knowledge, no question concerning representation exists relating
to the employees of the Company; (v) there are no charges with respect to
or relating to the Company pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices; and (vi) the Company has
received no formal notice from any federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of the Company and, to the Sellers'
knowledge, no such investigation is in progress.
(c) The Company at all times has been in compliance with all terms
and provisions of IRCA. All employees of the Company assigned to work at
sites pursuant to assignment by the Company have had and will have had
their identity and eligibility for work within the U.S. properly verified
by the Company. At or prior to Closing, when and if requested by the
Buyer, the Sellers shall cause the Company to provide copies of the I-9
Forms together with such other documentation as may be requested by the
Buyer from time to time in order to satisfy Buyer that the Company has
performed its obligations hereunder as required by the IRCA.
SECTION 3.29. Absence of Certain Changes or Events. Except as set forth in
Section 3.29 of the Disclosure Schedule, since September 27, 1997, the business
of the Company has been conducted in the ordinary course consistent with past
practices and there has not been any:
(a) amendment to the Company's articles of incorporation or by-laws;
(b) change made in the Company's authorized capital or outstanding
securities;
(c) issuance, sale, delivery of, or agreement to issue, sell, or
deliver, any capital stock, bonds, or other corporate securities of the
Company (whether authorized and unissued or held in treasury), or grant
of, or agreement to grant, any options, warrants, or other rights of the
Company calling for the issue, sale, or delivery thereof;
(d) borrowing of, or agreement to borrow, any funds by the Company,
and the Company has not incurred or become subject to any obligation or
liability (absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business, none of which, individually
or in the aggregate, are materially adverse to the
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business, assets, properties, operations, prospects, or condition,
financial or otherwise, of the Company;
(e) payment of any obligation or liability (absolute or contingent),
by the Company other than current liabilities reflected in or shown on the
Company Unaudited Interim Financial Statements and current liabilities
incurred in the ordinary course of business since September 27, 1997;
(f) increase in the salary or other compensation payable or to
become payable by the Company to any of its officers, directors, or
employees, or the declaration, payment, commitment, or obligation of any
kind for the payment of additional salary or compensation to any such
person exceeding $5,000;
(g) accrual or arrangement, whether direct or indirect, for, or
payment of, bonuses or special compensation of any kind, or any severance
or termination pay, to any present or former officer, director, or
employee of the Company;
(h) adoption of any new, or amendment of any existing, employee
benefit plan, program or arrangement;
(i) material adverse change in the business, assets, properties,
operations, or condition, financial or otherwise of the Company;
(j) destruction of, damage to, or loss of, any material asset of the
Company (whether or not covered by insurance);
(k) failure to keep in force and effect insurance comparable in
amount and scope to coverage maintained by the Company (or on its behalf)
on September 27, 1997;
(l) labor dispute or activity or proceeding by a labor union or
threat thereof;
(m) change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization methods, policies,
or rate) by the Company;
(n) failure by the Company to keep its books of account, records and
files in the ordinary course and consistent with past practice;
(o) amendment, modification, or termination of any contract, lease,
License, promissory note, commitment, or any other agreement, instrument,
indebtedness, or obligation to which the Company is a party, or by which
it or any of its assets or properties are bound, except those agreements,
amendments, or terminations effected in the ordinary course of business
consistent with past practices;
(p) waiver or release of any right or claim of the Company or
cancellation of any debts or claims, except in the ordinary course of
business;
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(q) declaration or making of, or agreement to declare or make, any
payment of dividends or distribution of any asset of any kind whatsoever
in respect to the Company's capital stock, nor any purchase, redemption,
or other acquisition or agreement to purchase, redeem, or otherwise
acquire, any of such outstanding capital stock;
(r) citation received by the Company for any violations of any act,
law, rule, regulation, or code of any governmental entity or agency;
(s) claim incurred by the Company for damages or alleged damages for
any actual or alleged negligence or other tort or breach of contract
(whether or not fully covered by insurance);
(t) sale, transfer, or disposal of any of the assets, properties, or
rights (tangible or intangible) of the Company, except in the ordinary
course of business;
(u) mortgage, pledge, or subjection to lien, charge, or other
encumbrance, of any of the assets, properties, or rights (tangible or
intangible) of the Company;
(v) agreement entered into granting any preferential rights to
purchase any of the assets, properties, or rights (tangible or intangible)
of the Company (including management and control thereof), or requiring
the consent of any party to the transfer and assignment of any such
assets, properties, or rights (including management and control thereof);
(w) capital expenditure by the Company exceeding $10,000;
(x) revaluation by the Company of any of its assets;
(y) failure by the Company to file, when due or required, any
federal, state, local, foreign or other Tax return or report required to
be filed or failure to pay when due any taxes, assessments, fees or other
charges lawfully levied against the Company unless the validity thereof
was contested in good faith and by appropriate proceedings diligently
conducted;
(z) loan by the Company to any Person, guaranty by the Company of
any loan, or incurrence by the Company of any indebtedness; or
(aa) agreement by the Company or the Sellers to do any of the things
described in the preceding clauses (a) through (z).
SECTION 3.30. Tax Matters.
(a) From the Company's inception through the date hereof, the
Company has been included with the Parent in its consolidated federal
income Tax Return as a member of an "affiliated group" (as defined in
Section 1504(a) of the Code) of which the Parent is the common parent.
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(b) Except as otherwise disclosed in Section 3.30 of the Company
Disclosure Schedule, (i) the Company has filed (or joined in the filing
of) when due all Tax Returns required by applicable law to be filed with
respect to the Company and all Taxes shown to be due on such Tax Returns
have been paid; (ii) all such Tax Returns were true, correct and complete
as of the time of such filing; (iii) all Taxes relating to periods ending
on or before the Closing Date owed by the Company (whether or not shown on
any Tax Return) or to which the Company may be liable under Treasury
Regulations ss. 1.1502-6 (or analogous state or foreign provisions) by
virtue of having been a member of any "affiliated group" (or other group
filing on a combined or unitary basis) at any time on or prior to the
Closing Date, if required to have been paid, have been paid (except for
Taxes which are being contested in good faith); (iv) any liability of the
Company for Taxes not yet due and payable, or which are being contested in
good faith, has been provided for on the Company Financial Statements in
accordance with GAAP; (v) there is no action, suit, proceeding,
investigation, audit or claim now pending against, or with respect to, the
Company in respect of any Tax or assessment, nor is any claim for
additional Tax or assessment asserted by any Tax authority; (vi) since
January 1, 1993, no claim has been made by any Tax authority in a
jurisdiction where the Company does not currently file a Tax Return that
it is or may be subject to Tax by such jurisdiction, nor to the knowledge
of the Company is any such assertion threatened; (vii) there is no
outstanding request for any extension of time within which to pay any
Taxes or file any Tax Returns; (viii) there has been no waiver or
extension of any applicable statute of limitations for the assessment or
collection of any Taxes of the Company; (ix) no property of the Company is
"tax-exempt use property" within the meaning of Section 168(h) of the
Code; (x) the Company is not a party to any lease made pursuant to former
Section 168(f)(8) of the Internal Revenue Code of 1954; (xi) no excess
loss account (within the meaning of Treasury Regulations ss. 1.1502-19)
exists with respect to the Company; (xii) the Company has no deferred gain
or loss arising from any intercompany transactions, within the meaning of
Treasury Regulations ss. 1.1502-13; (xiii) the Company has not filed any
agreement or consent under Section 341(f) of the Code; (xiv) the Company
is not a party to any agreement, whether written or unwritten, providing
for the payment of Taxes, payment for Tax losses, entitlements to refunds
or similar Tax matters; (xv) no ruling with respect to Taxes (other than a
request for determination of the status of a qualified pension plan) has
been requested by or on behalf of the Company; and (xvi) the Company has
withheld and paid all material Taxes required to be withheld in connection
with any amounts paid or owing to any employee, creditor, independent
contractor or other third party.
SECTION 3.31. Accuracy of Information. To the knowledge of each Seller,
none of the representations, warranties or statements of the Sellers contained
in this Agreement, or in the Disclosure Schedule or exhibits hereto, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make any of such representations, warranties or statements
not misleading.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DUBBELL
Dubbell hereby represents, warrants and agrees as follows:
SECTION 4.1. Corporate Organization. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority and all
governmental licenses, authorizations, permits, consents and approvals to own
its properties and assets and to conduct its businesses as now conducted. The
Parent is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction where the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except in any jurisdiction where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or the condition (financial or otherwise) of the Parent. Section 4.1
of the Disclosure Schedule sets forth all of the jurisdictions in which the
Parent is qualified to do business. The copies of the articles of incorporation
and by-laws of the Parent included as part of Section 4.1 of the Disclosure
Schedule constitute accurate and complete copies of such organizational
instruments and accurately reflect all amendments thereto through the date
hereof.
SECTION 4.2. Capitalization. The authorized capital stock of the Parent
consists of 1,000,000 shares of Parent Common Stock of which 480,000 shares are
issued and outstanding on the date of this Agreement and of which 427,200 shares
shall be outstanding at the Closing Date as a result of the redemptions of
Parent Common Stock in connection with the Redemption Transaction. The Parent
Shares represent, and at the Closing, the Remaining Parent Shares will
represent, all of the issued and outstanding shares of the capital stock of the
Parent and are owned of record and beneficially by Dubbell, free and clear of
any lien, charge or encumbrance. All the outstanding shares of Parent Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 4.2 of the Disclosure Schedule, on
the date of this Agreement there are no outstanding options, warrants,
agreements, conversion rights, preemptive rights or other rights to subscribe
for, purchase or otherwise acquire any shares of Parent Common Stock, and except
as contemplated by the Redemption Transaction, there are no outstanding
obligations or plans of the Parent to repurchase, redeem or otherwise acquire
outstanding shares of Parent Common Stock. On the Closing Date, there shall be
no outstanding options, warrants, agreements, conversion rights, preemptive
rights or other rights to subscribe for, purchase or otherwise acquire any
shares of Parent Common Stock.
SECTION 4.3. Subsidiaries. Except as set forth in Section 4.3 of the
Disclosure Schedule, the Parent does not own any shares of, or control, directly
or indirectly, or have any equity interest in, any Person.
SECTION 4.4. Validity of Agreement. The Parent has the corporate power to
enter into this Agreement and to carry out its obligations hereunder, including
in connection with the Redemption Transaction. The execution and delivery of
this Agreement and the performance by the Parent of its obligations hereunder,
including in connection with the
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Redemption Transaction have been duly authorized by the Board of Directors of
the Parent, and no other corporate proceedings on the part of the Parent are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by the Parent and constitutes the valid and binding
obligation of the Parent enforceable against the Parent in accordance with its
terms (subject to normal equitable principles and subject to bankruptcy,
insolvency, fraudulent conveyances and similar laws affecting the rights of
creditors).
SECTION 4.5. No Conflict or Violation. Except as set forth in Section 4.5
of the Disclosure Schedule, the execution, delivery and performance by Dubbell
and the Parent of this Agreement and the transactions contemplated hereby,
including the Redemption Transaction, do not and will not: (i) violate or
conflict with any provision of the articles of incorporation or by-laws of the
Parent; (ii) violate any provision of law, statute, judgment, order, writ,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
other governmental or regulatory authority applicable to the Parent; (iii)
violate, result in a breach of, constitute (with due notice or lapse of time or
both) a default or cause any obligation, penalty, premium, right of termination
or acceleration to arise, accrue or occur under any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which either Dubbell or the Parent is a party or by which
either of them is bound or to which any of their respective properties or assets
is subject; (iv) result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of the
Parent; (v) result in the cancellation, modification, revocation or suspension
of any License; or (vi) to the knowledge of Dubbell, otherwise result in the
loss of any right important or valuable to the Parent.
SECTION 4.6. Consents and Approvals. Section 4.6 of the Disclosure
Schedule sets forth a true and complete list of each consent, waiver,
authorization or approval of any governmental or regulatory authority, domestic
or foreign, or any other Person, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required of or to be made by the Parent or Dubbell in connection with the
execution, delivery and performance of this Agreement.
SECTION 4.7. Financial Statements.
(a) Dubbell has heretofore furnished to the Buyer copies of (i) the
audited consolidated balance sheet of the Parent and its Subsidiaries as
of December 28, 1996, together with the related statements of income,
stockholders' equity and cash flows for the year then ended and the notes
thereto (the "Parent Audited Financial Statements") and (ii) the Parent
Unaudited Interim Financial Statements (together with the Parent Audited
Financial Statements, the "Parent Financial Statements"). The Parent
Financial Statements, including the notes thereto: (i) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby; (ii) present fairly the consolidated financial position,
results of operations and cash flows of the Parent and its Subsidiaries as
of such dates and for the periods then ended (subject, in the case of the
Parent Unaudited Interim Financial Statements, to normal year-end audit
adjustments consistent with prior periods) and (iii) are in all
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s
material respects, complete, correct and in accordance with the books of
account and records of the Parent and its Subsidiaries.
(b) The Parent has no assets, properties or liabilities required by
GAAP to be set forth in the Parent Unaudited Interim Financial Statements
other than those reflected on the balance sheet included in the Parent
Unaudited Interim Financial Statements.
(c) The Parent has no commitments to make any capital expenditures
or to invest, advance or loan any monies to any Persons.
SECTION 4.8. Tax Matters.
(a) From the date of their inception through the date hereof, the
Parent has included the Company in its consolidated federal income Tax
Return as a member of an "affiliated group" (as defined in Section 1504(a)
of the Code) of which the Parent is the common parent.
(b) Except as otherwise disclosed in Section 4.8 of the Disclosure
Schedule, (i) beginning with the fiscal ended April 29, 1978, the Parent,
the Company and each other Subsidiary of the Parent have filed (or joined
in the filing of) when due all Tax Returns required by applicable law to
be filed with respect to the Parent, the Company and each other Subsidiary
of the Parent and all Taxes shown to be due on such Tax Returns have been
paid; (ii) all such Tax Returns were true, correct and complete as of the
time of such filing; (iii) all Taxes relating to periods ending on or
before the Closing Date owed by the Parent, the Company or any other
Subsidiary of the Parent (whether or not shown on any Tax Return) or to
which the Company or any Subsidiary of the Parent may be liable under
Treasury Regulations ss. 1.1502-6 (or analogous state or foreign
provisions) by virtue of having been a member of any "affiliated group"
(or other group filing on a combined or unitary basis) at any time on or
prior to the Closing Date, if required to have been paid, have been paid
(except for Taxes which are being contested in good faith); (iv) any
liability of the Parent, the Company or any other Subsidiary of the Parent
for Taxes not yet due and payable, or which are being contested in good
faith, has been provided for on the Parent Financial Statements in
accordance with GAAP; (v) there is no action, suit, proceeding,
investigation, audit or claim now pending against, or with respect to, the
Parent, the Company or any other Subsidiary of the Parent in respect of
any Tax or assessment, nor is any claim for additional Tax or assessment
asserted by any Tax authority; (vi) since January 1, 1993, no claim has
been made by any Tax authority in a jurisdiction where the Parent, the
Company or any other Subsidiary of the Parent does not currently file a
Tax Return that it is or may be subject to Tax by such jurisdiction, nor
to the knowledge of Dubbell, the Parent or the Company is any such
assertion threatened; (vii) there is no outstanding request for any
extension of time within which to pay any Taxes or file any Tax Returns;
(viii) there has been no waiver or extension of any applicable statute of
limitations for the assessment or collection of any Taxes of the Parent,
the Company or any other Subsidiary of the Parent; (ix) no property of the
Parent or the Company is
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"tax-exempt use property" within the meaning of Section 168(h) of the
Code; (x) neither the Parent nor the Company is a party to any lease made
pursuant to former Section 168(f)(8) of the Internal Revenue Code of 1954;
(xi) except with respect to Tri-State, no excess loss account (within the
meaning of Treasury Regulations ss. 1.1502-19) exists with respect to the
Company or any other Subsidiary of the Parent; (xii) neither the Company
nor any other Subsidiary of the Parent has any deferred gain or loss
arising from any intercompany transactions, within the meaning of Treasury
Regulations ss. 1.1502-13; (xiii) neither the Parent, the Company nor any
other Subsidiary of the Parent has filed any agreement or consent under
Section 341(f) of the Code; (xiv) Dubbell is not a "foreign person" within
the meaning of Section 1445 of the Code; (xv) neither the Parent, the
Company nor any other Subsidiary of the Parent is a party to any
agreement, whether written or unwritten, providing for the payment of
Taxes, payment for Tax losses, entitlements to refunds or similar Tax
matters; (xvi) no ruling with respect to Taxes (other than a request for
determination of the status of a qualified pension plan) has been
requested by or on behalf of the Parent, the Company or any other
Subsidiary of the Parent; (xvii) the Parent has not been a United States
real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (xviii) Since 1991, no member of the
consolidated group of which the Parent is the common parent has had
"personal holding company income" within the meaning of Section 542 of the
Code; and (xix) the Parent, the Company and each other Subsidiary of the
Parent has withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.
SECTION 4.9. Holding Company. The Parent is, and has always been,
primarily a holding company. Although the Parent has not engaged in any separate
business activity of its own, it has, from time to time, engaged in business as
an agent or representative of the Subsidiaries for various purposes, including,
but not limited to, provision of credit, obtaining licenses and permits and
entering into contracts. Except as set forth in Section 4.9 of the Disclosure
Schedule, the Parent does not lease any real property. The Parent does not own,
and has never owned, any real property. The Parent does not have, and has never
had, any employees.
SECTION 4.10. Licenses, Permits and Governmental Approvals.
(a) Section 4.10 of the Disclosure Schedule sets forth a true and
complete list of all material licenses of the Parent (including, but not
limited to, any environmental licenses, permits, registrations or
authorizations), health or other permits, franchises, authorizations and
approvals issued or granted to the Parent by the United States, any state
or local government, any foreign national or local government, or any
department, agency, board, commission, bureau or instrumentality of any of
the foregoing (each a "Parent License" and, collectively, the "Parent
Licenses"), and all pending applications therefor. Each Parent License has
been issued to, and duly obtained and fully paid for by, the Parent and is
valid, in full force and effect, and not
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subject to any pending or known threatened administrative or judicial
proceeding to suspend, revoke, cancel or declare such Parent License
invalid in any respect.
(b) The Parent has all Parent Licenses required, and such Parent
Licenses are sufficient and adequate in all respects, to permit the
continued lawful conduct of the Parent's business in the manner now
conducted and the ownership, occupancy and operation of its real and
personal property for their present uses. The Parent is not in violation
of any of the Parent Licenses in any material respect. The Parent Licenses
have never been suspended, revoked or otherwise terminated, subject to any
fine or penalty, or subject to judicial or administrative review, for any
reason other than the renewal or expiration thereof nor has any
application of the Parent for any Parent License ever been denied. The
Parent's operations are not being conducted in a manner that violate any
of the terms or conditions under which any Parent License was granted.
Except as disclosed in Section 4.10 of the Disclosure Schedule, no Parent
License will in any way be materially and adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Dubbell has delivered to the Buyer or its representatives true
and complete copies of all Parent Licenses together with all amendments
and modifications thereto.
SECTION 4.11. Compliance with Law. Except as set forth in Section 4.11 of
the Disclosure Schedule, the operations of the Parent have been conducted in all
material respects in accordance with all applicable laws, regulations, orders
and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Parent and its assets, properties and
operations. Neither Dubbell nor the Parent has received notice of any violation
of any such law, regulation, order or other legal requirement, or is in default
with respect to any order, writ, judgment, award, injunction or decree of any
federal, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to the Parent or any of its assets,
properties or operations. Neither Dubbell nor the Parent has knowledge of any
proposed changes in any such laws, rules or regulations that would adversely
affect the transactions contemplated by this Agreement or all or a substantial
part of the assets or the businesses of the Parent.
SECTION 4.12. Environmental Matters. Except as set forth in Section 4.12
of the Disclosure Schedule:
(a) The operations of the Parent and its Subsidiaries (other than
the Company) are, and in the past have been, in compliance in all material
respects with all Environmental Laws and they have obtained and maintained
in effect all Environmental Permits and are, and in the past have been, in
compliance with all such Environmental Permits.
(b) Neither the Parent nor any Subsidiary (other than the Company)
has performed or suffered any act which could give rise to, or has
otherwise incurred, liability to any person (governmental or other) under
CERCLA, or any other Environmental Laws, nor has the Company nor any
Subsidiary (other than the Company) received notice of any such liability
or any claim therefor or submitted
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notice pursuant to Section 103 of CERCLA to any governmental agency with
respect to any of its assets.
(c) No Hazardous Material has been released, placed, dumped or
otherwise come to be located on, at, beneath or near any of the assets or
properties owned or leased by the Parent or any of its Subsidiaries (other
than the Company) or any surface waters or groundwaters thereon or
thereunder.
(d) Neither the Parent nor any Subsidiary (other than the Company)
owns or operates, and has never owned or operated, aboveground or
underground storage tanks.
(e) With respect to any or all of the real properties owned or
leased by the Parent or any of its Subsidiaries (other than the Company)
(i) there are no, nor have there been in the past, asbestos-containing
materials, urea formaldehyde insulation, polychlorinated biphenyls or, to
the knowledge of Dubbell, lead-based paints present at any such
properties; and (ii) there are no wetlands (as defined under any
Environmental Law) located on any such properties, nor have any been
drained, filled or otherwise altered.
(f) None of the real properties owned or leased by the Parent or any
of its Subsidiaries (other than the Company) (i) has been used or is now
used for the generation, transportation, storage, handling, treatment or
disposal of any Hazardous Materials or (ii) is identified on a federal,
state or local listing of sites which require or might require
environmental cleanup.
(g) No condition exists on any of the real properties owned or
leased by the Parent or any of its Subsidiaries (other than the Company)
that upon the failure to act, the passage of time or the giving of notice
would give rise to liability under any Environmental Law.
(h) There are no ongoing investigations or negotiations, pending or
threatened administrative, judicial or regulatory proceedings, or consent
decrees or other agreements in effect that relate to environmental
conditions in, on, under, about or related to the Parent or any of its
Subsidiaries (other than the Company), any of their operations or the real
properties owned or leased by any of them.
(i) Neither the Parent nor any of its Subsidiaries (other than the
Company) nor any of their operations is subject to reporting requirements
under the federal Emergency Planning and Community Right-to-Know Act, 42
U.S.C. ss. 11001 et seq., or analogous state statutes and related
regulations, all as amended.
SECTION 4.13. Litigation. Except as set forth in Section 4.13 of the
Disclosure Schedule, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to the knowledge of Dubbell, threatened
before any federal, state or local court or governmental, administrative or
regulatory authority, domestic or foreign, or before any
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arbitrator of any nature, brought by or against Dubbell, the Parent or its
officers, directors, employees or agents or any of their respective Affiliates
involving, affecting or relating to any assets, properties or operations of the
Parent or the transactions contemplated by this Agreement. Section 4.13 of the
Disclosure Schedule sets forth a list and a summary description of all such
pending or known threatened actions, suits, proceedings, disputes or
investigations. None of Dubbell nor the Parent nor any of their assets or
properties is subject to, nor to Dubbell's knowledge, does any basis exist for
any order, writ, judgment, award, injunction or decree of any federal, state or
local court or governmental or regulatory authority or arbitrator, that
materially and adversely affects the Parent's assets, properties, operations,
net income or financial condition or which would interfere with the transactions
contemplated by this Agreement.
SECTION 4.14. Contracts.
(a) Section 4.14 of the Disclosure Schedule sets forth a true and
complete list and a summary description showing the expiration dates
(exclusive of renewal terms) of all material contracts, agreements,
instruments, commitments and other arrangements to which the Parent is a
party or otherwise relating to or affecting any of its assets or
properties including, without limitation, all written or oral, express or
implied (each, a "Parent Contract"). To the knowledge of Dubbell, each
Parent Contract is valid, binding and enforceable against the parties
thereto in accordance with its terms, and in full force and effect on the
date hereof. The Parent has performed in all material respects, all
obligations, including, but not limited to, the timely making of any
rental or other payments, required to be performed by it under, and is not
in default or breach of any material provision in respect of, any Parent
Contract, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default. Dubbell has delivered to
the Buyer or its representatives true and complete originals or copies of
all Parent Contracts and a copy of every default notice received by
Dubbell or the Parent during the past three years with respect to any of
the Parent Contracts.
(b) To the knowledge of Dubbell, except as disclosed in Section 4.14
of the Disclosure Schedule and the Parent is not a party to any agreement
or instrument, or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule or regulation which,
insofar as it relates to the businesses of the Parent, materially
adversely affects or would in the future materially adversely affect the
Parent's business, operations, properties, assets or financial condition.
SECTION 4.15. Intercompany Accounts. The Company has no obligations and no
amounts are due to the Parent or any of its Affiliates other than for goods and
services purchased or provided in the ordinary course of business.
SECTION 4.16. Propriety of Past Payments. Except as set forth in Section
4.16 of the Disclosure Schedule, no finder's fee or other payment has been, or
will be, made by or on behalf of the Parent in respect of, or in connection
with, any Parent Contract to any person, firm, corporation or other entity which
is not a party to such Parent Contract. To the
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knowledge of Dubbell, no funds or assets of the Parent have been used for
illegal purposes; no unrecorded funds or assets of the Parent have been
established for any purpose; no accumulation or use of the Parent's corporate
funds or assets has been made without being properly accounted for in the
respective books and records of the Parent; all payments by or on behalf of the
Parent have been duly and properly recorded and accounted for in its books and
records; no false or artificial entry has been made in the books and records of
the Parent for any reason; no payment has been made by or on behalf of the
Parent with the understanding that any part of such payment is to be used for
any purpose other than that described in the documents supporting such payment;
and the Parent has not made, directly or indirectly, any illegal contributions
to any political party or candidate, either domestic or foreign.
SECTION 4.17. Employee Plans.
(a) Section 4.17 of the Disclosure Schedule sets forth (i) any
"employee benefit plan", as defined in Section 3(3) of ERISA, and all
other employee benefit arrangements, policies or payroll practices,
including, without limitation, severance pay, sick leave, vacation pay,
salary continuation, disability, retirement, deferred compensation, bonus,
stock purchase, stock option or other equity-based compensation,
hospitalization, medical insurance, life insurance or scholarship
programs, maintained by the Parent, the Company or any Subsidiary of the
Parent or to which the Parent, the Company or any Subsidiary of the Parent
contributed or is obligated to contribute for or with respect to current
or former employees of the Parent, the Company or any Subsidiary of the
Parent, but excluding any such plan, arrangement, policy, practice or
program maintained or contributed to solely by a Subsidiary of the Parent
other than the Company, solely for the benefit of employees of such Parent
Subsidiary (the "Parent Employee Benefit Plans"), and (ii) all "employee
pension benefit plans", as defined in Section 3(2) of ERISA, which are
subject to Title IV of ERISA or Section 412 of the Code and at any time
during the six-year period ending on the date hereof were maintained or
contributed to by the Parent, the Company, any Subsidiary of the Parent or
any ERISA Affiliate (the "Parent Pension Plans").
(b) None of the Parent, the Company, any Subsidiary of the Parent or
any ERISA Affiliate has within the six-year period ending on the date
hereof contributed to, or been obligated to contribute to, any
Multiemployer Plan.
(c) The Parent Employee Benefit Plans intended to qualify and be
tax-exempt under Sections 401 and 501 of the Code, respectively, have been
determined by the Internal Revenue Service to be so qualified and
tax-exempt, and nothing has occurred with respect to the operation of such
Parent Employee Benefit Plans which could cause the loss of such
qualification or tax exemption or the imposition of any liability, penalty
or tax under ERISA or the Code. Any trust maintained or contributed to by
the Parent, the Company or any Subsidiary of the Parent which is intended
to be tax-exempt pursuant to Section 501(c)(9) of the Code has been
determined by the Internal Revenue Service to be so tax-exempt, and
nothing
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has occurred since such determination which could cause the loss of such
tax exemption or the imposition of any liability, penalty or tax under
ERISA or the Code.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under
any of the Parent Employee Benefit Plans or by law (without regard to any
waivers granted under Section 412 of the Code) to any funds or trusts
established thereunder or in connection therewith have been made by the
due date thereof (including any valid extension), and all contributions
for any period ending on or before the Closing Date which are not yet due
will have been paid or accrued on or prior to the Closing Date. No
accumulated funding deficiencies exist in any of the Parent Pension Plans.
(e) There is no "amount of unfunded benefit liabilities," as defined
in Section 4001(a)(18) of ERISA, in any of the Parent Pension Plans. The
"benefit liabilities", as defined in Section 4001(a)(16) of ERISA, of each
of the Parent Pension Plans do not exceed the fair market value of the
assets of such Parent Pension Plan.
(f) There has been no "reportable event," as that term is defined in
Section 4043 of ERISA and the regulations thereunder, with respect to any
Parent Pension Plan which would require the giving of notice or any event
requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA.
(g) There is no violation of ERISA with respect to the filing of
applicable reports, documents and notices regarding the Parent Employee
Benefit Plans with the Secretary of Labor or the Secretary of the Treasury
or the furnishing of such documents to the participants or beneficiaries
of the Parent Employee Benefit Plans.
(h) True, correct and complete copies of the following documents,
with respect to each of the Parent Employee Benefit Plans, have been
delivered to the Buyer: (i) all plans and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500; (iii) the most recent
actuarial report and audited financial statement; (iv) the last IRS
determination or opinion letter; (v) summary plan descriptions; (vi)
written communications to employees; and (vii) written descriptions of all
non-written agreements relating to the Parent Employee Benefit Plans.
(i) There are no pending actions, claims or lawsuits which have been
asserted or instituted against the Parent Employee Benefit Plans, the
assets of any of the trusts under such plans or the plan sponsor or, to
the knowledge of Dubbell, the plan administrator or any fiduciary of the
Parent Employee Benefit Plans with respect to the operation of such plans
(other than routine benefit claims), nor does the Parent or the Company,
or any Subsidiary of the Parent, or Dubbell, have knowledge of facts which
could form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the Parent Employee
Benefit Plans into conformity in all respects with all of the applicable
provisions of ERISA and other applicable laws have been made or taken
except to the extent that
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such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) Any bonding required with respect to the Parent Employee Benefit
Plans in accordance with applicable provisions of ERISA has been obtained
and is in full force and effect.
(l) The Parent Employee Benefit Plans have been maintained in
accordance with their terms and with all provisions of ERISA (including
rules and regulations thereunder) and other applicable federal and state
laws and regulations. Neither the Parent, the Company, any Subsidiary of
the Parent or, to the knowledge of Dubbell, the Parent, the Company and
each Subsidiary of the Parent, any "party in interest" (within the meaning
of Section 3(14) of ERISA) or "disqualified person" (within the meaning of
Section 4975 of the Code) with respect to any of the Parent Employee
Benefit Plans has engaged in a "prohibited transaction," within the
meaning of Section 4975 of the Code or Section 406 of ERISA, with respect
to which there is no statutory or administrative exemption. To the
knowledge of Dubbell, no fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any Parent Employee
Benefit Plan.
(m) None of the Parent, the Company, any Subsidiary of the Parent or
any ERISA Affiliate has terminated any Parent Pension Plan within the
six-year period ending on the date hereof, or incurred any outstanding
liability under Section 4062 of ERISA to the PBGC or to a trustee
appointed under Section 4042 of ERISA. All premiums due the PBGC with
respect to the Parent Pension Plans have been paid.
(n) None of the Parent, the Company or any Subsidiary of the Parent
maintains retiree life or retiree health insurance plans which provide for
continuing benefits or coverage for any participant or any beneficiary of
a participant, except as may be required under COBRA. Each of the Parent,
the Company, any Subsidiary of the Parent and any ERISA Affiliate which
maintains a "group health plan," within the meaning of COBRA, has complied
with the notice and health care continuation requirements of COBRA.
(o) None of the Parent, the Company or any ERISA Affiliate, or any
organization with respect to which the Parent or the Company is a
successor or parent corporation, within the meaning of Section 4069(b) of
ERISA, has engaged in any transaction described in Section 4069 of ERISA.
(p) No liability under any Parent Employee Benefit Plan has been
funded or satisfied with the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor's Corporation or the
equivalent by each other nationally recognized rating agency.
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(q) Except as set forth in Section 4.17 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby (including the Redemption
Transaction) will (i) result in any payment becoming due to any employee
(current, former or retired) of the Parent, the Company or any Subsidiary
of the Parent, (ii) increase any benefits otherwise payable under any
Parent Employee Benefit Plan or (iii) result in the acceleration of the
time of payment or vesting of any such benefits.
(r) None of the Parent, the Company or any Subsidiary of the Parent
has any contract, plan or commitment, whether legally binding or not, to
create any additional Parent Employee Benefit Plan or to modify any
existing Parent Employee Benefit Plan, other than contemplated amendments
thereto concerning withdrawal of the Parent and the Company as
participating employers thereunder and vesting of participants,
distributions to participants and related matters with respect to
participants affected by the transactions contemplated herein.
(s) No stock or other security issued by the Parent, the Company or
any Subsidiary of the Parent forms or has formed a material part of the
assets of any Parent Employee Benefit Plan.
(t) There has been no "mass layoff" or "plant closing," as each such
term is defined by WARN, with respect to the employees of the Parent, the
Company or any Subsidiary of the Parent, with respect to which there could
be any future liability to or in respect of such employees under WARN.
SECTION 4.18. Absence of Certain Changes or Events. Except as set forth in
Section 4.18 of the Disclosure Schedule, since September 27, 1997, there has not
been any:
(a) amendment to the Parent's articles of incorporation or by-laws;
(b) change made in the Parent's authorized capital or outstanding
securities;
(c) issuance, sale, delivery of, or agreement to issue, sell, or
deliver, any capital stock, bonds, or other corporate securities of the
Parent (whether authorized and unissued or held in treasury), or grant of,
or agreement to grant, any options, warrants, or other rights of the
Parent calling for the issue, sale, or delivery thereof;
(d) borrowing of, or agreement to borrow, any funds by the Parent,
and the Parent has not incurred or become subject to any obligation or
liability (absolute or contingent);
(e) payment of any obligation or liability (absolute or contingent),
by the Parent;
(f) increase in the salary or other compensation payable or to
become payable by the Parent to any of its officers or directors, or the
declaration, payment,
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commitment, or obligation of any kind for the payment of compensation to
any such person;
(g) accrual or arrangement, whether direct or indirect, for, or
payment of, bonuses or special compensation of any kind, or any severance
or termination pay, to any present or former officer or director of the
Parent, except for settlements of outstanding stock options of the Parent;
(h) adoption of any new, or amendment of any existing, employee
benefit plan, program or arrangement except as referred to in Section
4.17(r);
(i) material adverse change in the business, assets, properties,
operations, or condition, financial or otherwise of the Parent;
(j) destruction of, damage to, or loss of, any material asset of the
Parent (whether or not covered by insurance);
(k) failure to keep in force and effect insurance comparable in
amount and scope to coverage maintained by the Parent (or on its behalf)
on September 27, 1997;
(l) change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization methods, policies,
or rate) by the Parent;
(m) failure by the Parent to keep its books of account, records and
files in the ordinary course and consistent with past practice;
(n) amendment, modification, or termination of any contract, lease,
License, promissory note, commitment, indenture, mortgage, deed of trust,
employee benefit plan, or any other agreement, instrument, indebtedness,
or obligation to which the Parent is a party, or by which it or any of its
assets or properties are bound, except those agreements, amendments, or
terminations effected in the ordinary course of business consistent with
past practices;
(o) waiver or release of any right or claim of the Parent or
cancellation of any debts or claims, except in the ordinary course of
business;
(p) declaration or making of, or agreement to declare or make, other
than pursuant to the Redemption Transaction, any payment of dividends or
distribution of any asset of any kind whatsoever in respect to the
Parent's capital stock, nor, other than the Redemption Transaction, any
purchase, redemption, or other acquisition or agreement to purchase,
redeem, or otherwise acquire, any of such outstanding capital stock;
(q) citation received by the Parent for any violations of any act,
law, rule, regulation, or code of any governmental entity or agency;
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(r) claim incurred by the Parent for damages or alleged damages for
any actual or alleged negligence or other tort or breach of contract
(whether or not fully covered by insurance);
(s) sale, transfer, or disposal of any of the assets, properties, or
rights (tangible or intangible) of the Parent;
(t) mortgage, pledge, or subjection to lien, charge, or other
encumbrance, of any of the assets, properties, or rights (tangible or
intangible) of the Parent;
(u) agreement entered into granting any preferential rights to
purchase any of the assets, properties, or rights (tangible or intangible)
of the Parent (including management and control thereof), or requiring the
consent of any party to the transfer and assignment of any such assets,
properties, or rights (including management and control thereof);
(v) capital expenditure by the Parent;
(w) revaluation by the Parent of any of its assets;
(x) failure by the Parent to file, when due or required, any
federal, state, local, foreign or other tax return or report required to
be filed or failure to pay when due any taxes, assessments, fees or other
charges lawfully levied against the Parent unless the validity thereof was
contested in good faith and by appropriate proceedings diligently
conducted;
(y) loan by the Parent to any Person, guaranty by the Parent of any
loan, or incurrence by the Parent of any indebtedness; or
(z) agreement by the Parent or Dubbell to do any of the things
described in the preceding clauses (a) through (y).
SECTION 4.19. Parent's Liabilities. Immediately prior to the Closing,
Parent shall have no debts, obligations or liabilities of whatsoever kind,
whether contingent or otherwise, whether known or unknown except for any
liabilities under the Severance Agreements, the Parent Lease or the Kunz and
Olander Notes to the extent that the Parent is not released thereunder.
SECTION 4.20. Other Properties. Schedule 4.20 sets forth a true and
complete list of all real properties owned or leased by PFRM and Tri-State.
SECTION 4.21. Accuracy of Information. To the knowledge of Dubbell, none
of the representations, warranties or statements of Dubbell contained in this
Agreement, or in the Disclosure Schedule or exhibits hereto, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make any of such representations, warranties or statements not
misleading.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents, warrants and agrees as follows:
SECTION 5.1. Corporate Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted.
SECTION 5.2. Validity of Agreement. The Buyer has the corporate power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance by the Buyer of its
obligations hereunder have been duly authorized by the Board of Directors of the
Buyer, and no other corporate proceedings on the part of the Buyer are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly executed by the Buyer and constitutes the valid and binding obligation of
the Buyer enforceable against the Buyer in accordance with its terms.
SECTION 5.3. No Conflict or Violation; No Defaults. The execution,
delivery and performance by the Buyer of this Agreement and the transactions
contemplated hereby do not and will not violate or conflict with any provision
of its Amended and Restated Certificate of Incorporation or Amended and Restated
By-Laws and do not and will not violate any provision of law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator or other governmental or regulatory authority, nor violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Buyer is a party
or by which it is bound or to which any of its properties or assets is subject,
nor result in the creation or imposition of any lien, charge or encumbrance of
any kind whatsoever upon any of its properties or assets where such violations,
breaches or defaults in the aggregate would have a material adverse effect on
the transactions contemplated hereby or on the assets, properties, business,
operations, net income or financial condition of the Buyer.
SECTION 5.4. Consents and Approvals. Other than those which have been made
or obtained, no consent, approval or authorization of, or filing, registration
or qualification with, any governmental authority on the part of the Buyer or
any vote, consent or approval in any manner of the holders of any Security (as
defined in Section 2(1) of the Securities Act of 1933, as amended) of the Buyer
is required as a condition to the execution and delivery of this Agreement.
SECTION 5.5. Investment Representation. The Buyer is acquiring the
Remaining Parent Shares and the Company Minority Shares solely for its own
account for investment, and not with a view toward the resale, transfer or other
distribution thereof.
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SECTION 5.6. Financial Capability. The Buyer has available sufficient
funds to pay the aggregate Purchase Price, including the Earn-Out Amount,
payable to the Sellers on the terms and subject to the conditions contemplated
by this Agreement.
ARTICLE VI.
COVENANTS
SECTION 6.1. Redemption Transaction. Dubbell shall, and shall cause
the Parent to, take all actions necessary to effect the Redemption
Transaction on or immediately prior to the Closing Date.
SECTION 6.2. Continued Development of Novagen Brand Products. During the
Earn-Out Period, the Buyer intends to continue to offer the Company's product
portfolio of Novagen Brand Products and to further develop new Novagen Brand
Products (whether internally developed or externally sourced). During the
Earn-Out Period, the Buyer will not change the brand of any Product which the
Company has offered as a Novagen Brand Product prior to the Closing Date, and
the Buyer further agrees that all future Products developed or manufactured by
the Company will carry a Novagen Part Number or Novagen Label and that all
Products sold by the Company under the name of another manufacturer will carry a
Novagen Part Number or Label. During the Earn-Out Period, new products added to
the Buyer's product portfolio will be assigned a brand based upon the Buyer's
assessment of various factors, including the Buyer's historical branding
practices, the brand of the Buyer most recognized for reaching various markets,
the fit of new products into the Buyer's existing brand product portfolio and
other strategic factors designed to maximize overall sales of the Buyer's entire
product portfolio. During the Earn-Out Period, the Buyer intends to provide
financial, management and other corporate resources for development,
manufacturing and marketing of the Products in the same manner as it would
provide for similar products developed by the Buyer. As a general matter,
modification of resource allocations may be made as a result of such business,
economic, political and other factors which a reasonable business person would
take into consideration. However, the Buyer shall retain the right to
discontinue offering any Novagen Brand Product and to make final determinations
in connection with branding new products as Novagen Brand Products or as any of
the Buyer's other brands.
SECTION 6.3. Non-Solicitation of Employees. For the two-year period
commencing on the Closing Date, no Seller shall make, offer, solicit or induce
to enter into, any written or oral arrangement, agreement or understanding
regarding employment or retention as a consultant with any employee of the
Company, in each case without the written consent of the Buyer.
SECTION 6.4. Access to Properties and Records. The Sellers shall afford,
and shall cause the Parent and the Company to afford, to the Buyer and the
Buyer's accountants, counsel and representatives full access during normal
business hours, without disruption to the normal operation of the Parent or the
Company, throughout the period prior to the Closing Date (or the earlier
termination of this Agreement pursuant to Article X hereof) to all of the
Parent's and the Company's properties, books, contracts and records (including,
but not
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limited to, all environmental studies, reports and other environmental records,
all auditors' work papers relating to the Parent or the Company, supporting
information for Tax returns of the Parent and the Company and litigation files
of the Parent and the Company) and, during such period, shall furnish promptly
to the Buyer all information concerning the Parent's and the Company's business,
properties, liabilities and personnel as the Buyer may reasonably request;
provided, however that such access shall not be afforded to the properties,
books, contracts and records of PFRM, except when reasonable justification for
access is shown based on possible liability to the Parent, the Company or the
Buyer. The Buyer shall be permitted, subject to any required landlord consent,
which the Sellers will use commercially reasonable efforts to obtain, to conduct
testing and analysis of soil, groundwater, building components, tanks,
containers and equipment to confirm the condition of the real property owned or
leased by the Parent or its Subsidiaries and improvements thereon.
SECTION 6.5. Negotiations. From and after the date hereof, none of the
Sellers, the Parent, the Company or any officers or directors of the Parent or
the Company or anyone acting on behalf of the Sellers or such Persons shall,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any person, firm, or other
entity or group (other than the Buyer or its representatives) concerning any
merger, sale of assets, purchase or sale of shares of capital stock or similar
transaction involving the Parent or the Company. The Sellers shall promptly
reject any such offers concerning any such transaction which they may receive or
of which they may become aware.
SECTION 6.6. Consents and Approvals. The Buyer and the Sellers shall use
commercially reasonable efforts to obtain, and the Sellers shall cause the
Parent and the Company to obtain, all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other Persons required in connection with the
execution, delivery and performance by them of this Agreement and the
transactions contemplated hereby.
SECTION 6.7. Commercially Reasonable Efforts. Upon the terms and subject
to the conditions of this Agreement, each of the parties hereto will use
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby, including, without
limitation, the transfer or reissuance of any permit, license, or approval
required pursuant to Environmental Laws.
SECTION 6.8. Notice of Breach. Through the Closing Date, each of the
parties hereto shall promptly give to the other parties written notice with
particularity upon having knowledge of any matter that may constitute a breach
of any representation, warranty, agreement or covenant contained in this
Agreement.
SECTION 6.9. Confidential Information. No party hereto shall use for its
own benefit or disclose to any Person Confidential Information that is the
exclusive property of another party hereto without the prior written consent of
that party. "Confidential Information" shall include protocols, processes,
information regarding customers, vendors,
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suppliers, trade secrets, training programs, manuals or materials, technical
information, contracts, systems, procedures, mailing lists, know-how, trade
names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Parent's or the Company's
products or services), business plans, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and printouts,
plans (business, technical or otherwise), customer and industry lists,
correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used in the business of the
Parent, the Company, the Buyer or any of their respective Subsidiaries or
Affiliates. Confidential Information shall not include any information that can
be shown by clear and convincing documentary evidence to have been (1) public
knowledge at the time of disclosure by a party to this Agreement, its employees
or agents ("Disclosing Party") or thereafter made public knowledge through no
act or failure to act on the part of another party to this Agreement its
employees or agents ("Receiving Party") or (2) known independently by the
Receiving Party prior to disclosure by the Disclosing Party. Notwithstanding the
foregoing, each party acknowledges that technology which is public knowledge may
have specific applications to products or processes that are not public
knowledge. The possible utilization of such technology to these specific
applications developed by or for a party will be deemed confidential and
proprietary and are to be maintained as such.
SECTION 6.10. Tax Covenants.
(a) Dubbell shall prepare and the Parent shall file within five (5)
days of receipt from Dubbell all Tax Returns with the appropriate federal,
state, local and foreign governmental agencies relating to the Parent or
the Company for periods ending on or prior to the Closing Date, including
the consolidated federal income Tax Return for the year ending December
27, 1997 (the "1997 Federal Tax Return") and the consolidated federal
income Tax Return for the period ending on the Closing Date (the "1998
Short Period Federal Tax Return"). The Parent shall prepare and file, or
cause to be prepared and filed, all Straddle Tax Returns required to be
filed by the Parent or the Company and shall pay the Taxes shown to be due
thereon, provided, however, that Dubbell shall promptly reimburse the
Parent for the portion of such Taxes that constitutes a Pre-Closing Tax.
Buyer shall allow Dubbell and his accountants to review, comment upon and
reasonably approve without undue delay any Straddle Tax Return and Dubbell
shall allow Buyer to review, comment upon and reasonably approve without
undue delay the 1997 Federal Tax Return and the 1998 Short Period Federal
Tax Return, at any time during the forty-five (45) day period immediately
preceding the filing of such Tax Returns. Buyer and Dubbell agree to cause
the Parent and the Company to file all Tax Returns for any Straddle Period
on the basis that the relevant taxable period ended as of the close of
business on the Effective Date, unless the relevant Tax authority will not
accept a Tax Return filed on that basis.
(b) In the case of any Straddle Period, (i) real, personal and
intangible property Taxes ("property Taxes") of the Parent or the Company
for the Pre-Closing
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Tax Period shall be equal to the amount of such property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of which is
the number of days during the Straddle Period that are in the Pre-Closing
Tax Period and the denominator of which is the number of days in the
Straddle Period; and (ii) the Taxes of the Parent or the Company (other
than property Taxes) for the portion of the Straddle Period that
constitutes a Pre-Closing Tax Period shall be computed as if such taxable
period ended as of the close of business on the Effective Date.
(c) The Parent will cause any tax sharing agreement or similar
arrangement with respect to Taxes involving the Parent, the Company or any
other Subsidiary of the Parent to be terminated effective as of the
Effective Date, to the extent any such agreement or arrangement relates to
the Parent, the Company or any other Subsidiary of the Parent, and after
the Effective Date the Parent and the Company shall have no obligation
under any such agreement or arrangement for any past, present or future
period.
(d) The Buyer shall pay to Dubbell within ten (10) days of receipt
any Tax refunds received by the Buyer, the Parent or the Company that
relate solely to any Pre-Closing Tax Period, including any Tax refunds
related to the carryback of any losses incurred during the taxable year of
the Parent that includes the Closing Date.
(e) From and after the date hereof, neither the Parent, the Company
nor any other Subsidiary of the Parent shall, without the consent of
Buyer, (i) make, change or revoke, or permit to be made, changed or
revoked, any election or method of accounting with respect to Taxes; or
(ii) enter into, or permit to be entered into, any closing or other
agreement or settlement with respect to Taxes.
SECTION 6.11. Release of Resigning Directors and Officers; Assumption of
Obligations.
(a) On or prior to the Effective Date, each of the officers and
directors of the Parent and the Company designated by the Buyer shall
execute a resignation and cross release under which (i) he shall resign
effective on the Closing Date from any office held as an officer or
director of the Parent and/or the Company; (ii) he shall release the
Parent and/or the Company from any and all claims, costs, liabilities and
actions that he may have against them; (iii) the Parent and/or the Company
shall release such individual from any and all claims, costs, liabilities
and actions that it may have against such individual except (x) as to any
then unpaid loans made by the Parent or the Company to such individual,
and (y) any claims, costs, liabilities and actions that the Parent or the
Company may have against such individual by reason of his willful
malfeasance or criminal conduct; and (iv) the Parent and/or the Company
shall indemnify and hold harmless such individual from and against any and
all liabilities, losses, damages, claims, costs and expenses that such
individual may incur arising out of or related to his having served as an
officer or director of the Parent and/or the Company (except those arising
from his willful malfeasance or criminal conduct).
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(b) On or prior to the Effective Date, Dubbell shall cause PFRM to
assume all liabilities and the performance of all obligations under the
Severance Agreements, the Parent Lease, the Kunz and Olander Notes and any
and all instruments, agreements or documents to which the Parent is bound.
SECTION 6.12. Actions of Sellers. Between the date of this Agreement and
the Closing Date, the Sellers will not take or knowingly permit to be taken any
action or do or knowingly permit to be done anything in the conduct of the
business of the Parent or the Company, as applicable, or otherwise, which would
be contrary to or in breach of any of the terms, conditions or provisions of
this Agreement, or which would cause any of the representations herein to be
untrue, except as may be provided for in this Article VI. Except as otherwise
requested by the Buyer, but without making any commitment on behalf of the
Buyer, the Sellers will use commercially reasonable efforts to preserve the
businesses of the Parent and the Company, to keep the services of their present
officers and employees available and to preserve the good will of the suppliers
and customers and others having business relationships with the Parent, the
Company or the Buyer.
SECTION 6.13. Change of Name of the Parent. Prior to the Effective Date,
Dubbell shall cause the Parent to take all actions necessary to cause the name
of the Parent to be changed to Novagen Holdings, Inc. or such other name as the
Buyer and Dubbell shall mutually agree. Additionally, the Buyer shall execute
any license or assignment required in order to enable Dubbell to continue to use
the name "Pel-Freez" in connection with the operation of businesses not
purchased by the Buyer.
SECTION 6.14. Transfer of Corporate Books and Records. On the Closing
Date, Dubbell shall cause the Parent and the Sellers shall cause the Company to
transfer all minute books, stock registers, Tax Returns and other corporate and
business books and records (including employee personnel files) of the Parent
and the Company applicable to all periods prior to and ending on the Closing
Date (the "Corporate Records") to the Buyer. From and after the Closing Date
until the sixth year anniversary of the Closing Date, upon reasonable notice to
the Buyer and during regular business hours, the Sellers shall have access to
the Corporate Records. The Buyer shall give each of Dubbell's Agent and the
Minority Shareholders' Agent notice 30 days prior to the disposal of any
Corporate Records. Upon such notice, the Sellers' Agents, at their election, may
request the Buyer to deliver all such documents to the Sellers' Agents, or
either of them, and may retain the same with no obligation of any kind or nature
in respect thereof to the Buyer. The Buyer shall deliver such Corporate Records
to the Sellers' Agents at the place where they are regularly stored by the
Buyer.
SECTION 6.15. Employee Relations and Benefits.
(a) The Parent and Dubbell shall take, or cause to be taken, such
corporate action as is necessary to cause (i) the Parent Employee Benefit
Plans to be assumed by PFRM as of or prior to the Closing Date, (ii) the
Parent and the Company to cease as of the Closing Date to be participating
employers in any of the Parent Employee Benefit Plans and (iii) the Parent
and the Company to have no liability as of and after
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the Closing Date to PFRM or any other Person in respect of any Parent
Employee Benefit Plan.
(b) Dubbell shall cause PFRM and its Affiliates following the
Closing Date, and the Parent Employee Benefit Plans, to be responsible for
all claims of participants in the Parent Employee Benefit Plans (including
those persons who remain employed with the Company immediately following
the Closing Date (the "Post-Closing Company Employees")) for payments or
benefits thereunder. The Parent Employee Benefit Plans shall be
responsible for all claims of Post-Closing Company Employees for worker's
compensation, unemployment compensation and other government-mandated
benefits, and for weekly indemnity, life, hospital/medical/surgical,
disability, major medical and dental benefits, for expenses which were
incurred prior to the Closing Date and are payable under the terms and
conditions of any of the Parent Employee Benefit Plans. Those employee
benefit plans maintained by the Buyer and in which Post-Closing Company
Employees participate on the Closing Date, and which are analogous to a
plan or program described in the preceding sentence (the "Buyer Welfare
Plans"), shall be responsible for all claims for expenses incurred on or
following the Closing Date and which are payable under the terms and
conditions of any of the Buyer Welfare Plans.
(c) Service by Post-Closing Company Employees with the Company shall
be recognized under the Buyer Welfare Plans, and any other employee
benefit plans maintained by the Buyer for the benefit of Post-Closing
Company Employees, for all purposes, including but not limited to
participation, coverage, vesting and level of benefits, as applicable. The
Buyer shall waive or cause its insurance carriers to waive all limitations
as to preexisting conditions, if any, with respect to participation and
coverage requirements applicable to Post-Closing Company Employees under
the Buyer Welfare Plans except to the extent that such limitations (i)
prevented any person from participating in any Parent Employee Benefit
Plan immediately prior to the Closing Date and (ii) remain allowable
following the passage of the Health Insurance Portability and
Accountability Act.
(d) If the Closing Date is prior to December 31, Post-Closing
Company Employees shall be allowed to continue to participate for the
remainder of the calendar year in which the Closing Date occurs, on an
after-tax basis, in the Parent Employee Benefit Plan which provides a
health care flexible spending account and a dependent care spending
account.
(e) The Buyer shall cause Post-Closing Company Employees to be
provided with severance benefits in accordance with the arrangement
described in Section 6.15 of the Disclosure Schedule for terminations of
employment occurring within one year of the Closing Date.
(f) Dubbell shall cause PFRM or such other entity as may maintain
the Pel-Freez, Inc. 401(k) Plan (the "Pel-Freez 401(k) Plan") following
the Closing Date to cause all accounts of Post-Closing Company Employees
in the Pel-Freez 401(k) Plan to
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become fully vested and nonforfeitable as of the Closing Date. Provided a
favorable Private Letter Ruling is issued by the Internal Revenue Service,
Dubbell shall cause PFRM, or such other entity as may maintain the
Pel-Freez 401(k) Plan following the Closing Date, to allow Post-Closing
Company Employees having account balances therein to elect to receive lump
sum distributions of such account balances in accordance with Section
401(k)(10) of the Code until the end of the second calendar year following
the calendar year in which the Closing Date occurs. The Buyer shall cause
the Code Section 401(k) Plan maintained by it to accept rollover
contributions of such distributions in accordance with the requirements of
the Code. The account balances in the Pel-Freez 401(k) Plan which are not
distributed in accordance with Section 401(k)(10) of the Code shall be
treated in accordance with the terms of the Pel-Freez 401(k) Plan. Dubbell
shall cause PFRM or such other entity as may maintain the Pel-Freez 401(k)
Plan to apply to the Internal Revenue Service for the Private Letter
Ruling referred to above as soon as practicable following the date hereof,
and use its best efforts to obtain such Private Letter Ruling.
(g) Dubbell shall cause PFRM or such other entity as may maintain
the Pel-Freez, Inc. Retirement Plan (the "DB Plan") to cause all accrued
benefits of Post-Closing Company Employees in the DB Plan to become fully
vested and nonforfeitable as of the Closing Date. Such accrued benefits
shall be payable in accordance with the terms of the DB Plan. Dubbell
shall take, or cause to be taken, by the Parent (prior to the Closing
Date) or PFRM or such other entity, as applicable, (following the Closing
Date) any action required by the Pension Benefit Guaranty Corporation (the
"PBGC") to prevent a termination of the DB Plan by the PBGC in a manner or
under circumstances which could cause the Buyer, Parent, the Company or
any ERISA Affiliate of any of them to have any liability to or in respect
of the DB Plan following the Closing Date. Dubbell shall cause a
"reportable event" filing to be timely made with the PBGC in connection
with the transactions contemplated hereunder, if required pursuant to
Section 4043 of ERISA or the regulations thereunder. Dubbell shall cause
to be promptly forwarded to the Buyer any comments received from the PBGC
by the Sellers, the Parent, the Company or any ERISA Affiliate of any of
them (whether written or oral) following the date hereof regarding the DB
Plan.
(h) Prior to or as of the Closing Date, the Sellers and the Parent
shall take whatever action is necessary to cause any outstanding options,
warrants and other rights to purchase stock of the Parent or the Company
to cease to exist. The Sellers and the Parent shall obtain releases from
each of the holders of such options, warrants or other rights, addressed
to the Parent, confirming that such options ceased to exist no later than
the Closing Date, and that such holder maintains no rights against the
Parent, the Company or the Buyer, or any Affiliate of any of them, in
respect thereof on and following the Closing Date.
(i) Prior to the Closing Date, the Company shall set aside $25,000
into a bookkeeping account denominated the "Retention Bonus Pool." This
set-aside shall be recorded in the financial operations of the Company as
a charge to earnings prior to
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the Closing Date. Immediately following the Closing Date, the Buyer shall
cause the Retention Bonus Pool to be increased by an additional $25,000.
The resulting $50,000 Retention Bonus Pool shall be distributed at the
discretion of the person who is the General Manager of the Company ninety
(90) days following the Closing Date, to those Post-Closing Company
Employees who continue to be employed with the Company at such time.
SECTION 6.16. Further Assurances. Upon the request of a party or parties
hereto at any time after the Closing Date, the other party or parties will
forthwith execute and deliver such further instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and other documents as the
requesting party or parties or its or their counsel may reasonably request in
order to perfect title of the Buyer and its successors and assigns to the
Remaining Parent Shares and the Company Minority Shares or otherwise to
effectuate the purposes of this Agreement.
SECTION 6.17. Post-Closing Management of Promega Dispute.
(a) After the Closing and for so long as the Promega Costs have not
exceeded $1,300,000, Dubbell shall be authorized to make all decisions
regarding the Promega Dispute and the Promega European Application Matter
after reasonable consultation with representatives of the Buyer, provided,
however, that any decision that could reasonably be expected to result in
the Promega Costs exceeding $1,300,000, shall be made jointly by Dubbell
and the Buyer. From and after the time that the Promega Costs exceed
$1,300,000, all decisions regarding the Promega Dispute and the Promega
European Application Matter shall be made by the Buyer.
(b) The Buyer and the Company shall make Robert C. Mierendorf
("Mierendorf") and other employees of the Company available for
consultations, court appearances, settlement conferences and other
meetings with Dubbell and legal counsel regarding the Promega Dispute as
may be reasonably requested by Dubbell and shall make available to Dubbell
upon his reasonable request such books and records of the Company that
have relevance to the Promega Dispute.
(c) Neither the Company nor the Buyer nor any Affiliate of the
Company shall, without Dubbell's prior written consent, market any STP
Family Product if the Promega Dispute has not been settled or become
subject to a final nonappealable judgment by a court of competent
jurisdiction (the "Final Determination"), and such parties shall not
market any STP Family Product thereafter except in accordance with such
settlement or final judgment, to the extent applicable. Notwithstanding
any consent by Dubbell to market any STP Family Product, the Buyer shall
indemnify Dubbell and hold him harmless for any Losses caused by such
marketing and sales on or prior to the Final Determination, including any
treble damages assessed for willfulness and wantonness.
SECTION 6.18. Intercompany Accounts. The Buyer shall, within 90 days of
the Closing Date, pay or cause to be paid the Intercompany/Affiliate Account of
the Company
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outstanding as of the Closing Date, which amount shall not exceed $200,000, and
which shall bear interest from the Closing Date at a rate of 8% per annum on the
unpaid balance thereof. The Buyer shall be entitled to credit against such
outstanding Intercompany/Affiliate Account balance the amount of any payments
made prior to the Closing Date by the Parent or the Company to Vector Securities
International, Inc. or any other obligations of the Parent or the Company to
Vector Securities, Inc. in connection with the transactions contemplated by this
Agreement and to the extent such amounts exceed the amount of the
Intercompany/Affiliate Account, the Sellers shall reimburse the Buyer for such
amounts.
SECTION 6.19. Continuation of Company's Business. From and after the date
of this Agreement through the Effective Date, the Company shall operate the
business in the ordinary course consistent with past practice and prior to the
Closing in accordance with the business plans and budgets established by the
Company, including, without limitation, reducing the amounts due under the
Company's Intercompany/Affiliate account. From and after the Effective Date,
Dubbell shall not permit the Parent, and the Sellers and the Parent shall not
permit the Company, to take any actions with respect to their respective
operations, howsoever insignificant, without the prior consent of the Buyer,
except for the Redemption Transaction. From and after the Effective Date, the
operations of the Parent and the Company shall be conducted for the account and
benefit, and at the expense, of the Buyer as if the transactions contemplated
hereby had been consummated on the Effective Date.
SECTION 6.20. Releases from Liability. Dubbell shall use commercially
reasonable efforts to obtain, on behalf of the Parent, unconditional releases of
all liabilities or obligations of the Parent under the Severance Agreements, the
Parent Lease, the Kunz and Olander Notes and any and all other instruments,
agreements or documents to which the Parent is bound.
SECTION 6.21. Ancillary Agreements. On or prior to the Closing Date, the
Parent, the Company and PFRM, as applicable, shall enter into agreements
substantially in the forms of Exhibits H, I and J, and reasonably acceptable to
the Buyer. The Buyer and Dubbell shall negotiate in good faith agreements based
on the principal terms set forth on Exhibit K.
SECTION 6.22. Closing Documentation. (a) On or before December 30, 1997,
the Buyer shall cause to be prepared and submitted for review by the Sellers'
attorneys, fully executed copies of each of the certificates, agreements,
opinions and other documents required under Article VIII, dated as of the
Closing Date, to be held by such attorneys pending receipt of instructions from
the Buyer that they be delivered at the Closing.
(b) On or before December 30, 1997, the Sellers shall cause to be prepared
and submitted for review by the Buyer's attorneys, fully executed copies of each
of the certificates, agreements, opinions and other documents required under
Article VII, dated as of the Closing Date, to be held by such attorneys pending
receipt of instructions from the Sellers' Agents that they be delivered at the
Closing.
SECTION 6.23. Actions of Buyer. Between the date of the Agreement and the
Effective Date, the Buyer will not take, or knowingly permit to be taken, any
action which
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might reasonably be expected to adversely impact the day-to-day operations of
the business of the Company.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, at or before the Closing Date,
of the following conditions, any one or more of which may be waived by the Buyer
in its sole discretion:
SECTION 7.1. Representations and Warranties of the Sellers. All
representations and warranties made by the Sellers in this Agreement or in any
Ancillary Document delivered pursuant to the provisions of this Agreement in
connection with the transactions contemplated hereby that are qualified as to
materiality or as to a specified dollar amount shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of the Closing Date as if again made by the Sellers on and
as of such date, except for changes contemplated in Article VI hereof, and the
Buyer shall have received a certificate dated the Closing Date and signed by
each of the Sellers to that effect.
SECTION 7.2. Performance of the Sellers' Obligations. The Sellers shall
have performed all obligations required under this Agreement to be performed by
them on or before the Closing Date, and the Buyer shall have received a
certificate dated the Closing Date and signed by each of the Sellers to that
effect.
SECTION 7.3. Redemption Transaction. The Redemption Transaction shall have
been effected by Dubbell and the Parent.
SECTION 7.4. Receipt of Documents. The Sellers shall have delivered to the
Buyer all of the following, each duly executed by the parties thereto (other
than the Buyer) and dated the Closing Date (or an earlier date satisfactory to
the Buyer), in form and substance satisfactory to the Buyer:
(a) Employment Agreement. The Employment Agreement between
Mierendorf and the Company, substantially in the form of Exhibit G hereto;
(b) Resignations. The resignations and releases of those officers
and directors of the Parent and the Company designated by the Buyer,
effective the Closing Date;
(c) Certificate of Non-Foreign Status. The Buyer shall have received
a certificate from Dubbell substantially in the form of Exhibit D hereto;
(d) Stock Option Releases. The releases of persons formerly holding
options, warrants or other rights to purchase stock of the Parent or the
Company, as described in Section 6.15(h);
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(e) Evidence of Release of Liens. Documents evidencing the release
of all liens on assets of the Parent and the Company, including Form UCC-3
Termination Statements, and payoff letters from all appropriate lenders;
(f) Release under Vector Agreements. The release of the Parent from
any and all liabilities and obligations under the Vector Agreements,
including, without limitation, any indemnification obligations.
(g) Release under Annuity. The release of the Parent and the Company
by David Pelphrey from any and all liabilities or obligations and the
termination of any and all security interests and other liens on the
property of the Parent or the Company under any annuity for his benefit;
and
(h) Other. All documents the Buyer may reasonably require relating
to the existence of the Parent and the Company and the authority of the
Sellers to enter into this Agreement, all in form and substance reasonably
satisfactory to the Buyer.
SECTION 7.5. Consents and Approvals. All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other Person, including but not limited to, those required by
Environmental Laws, required in connection with the Parent's and the Sellers'
execution, delivery and performance of this Agreement shall have been duly
obtained and shall be in full force and effect on the Closing Date.
SECTION 7.6. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of the Company shall be in effect.
SECTION 7.7. No Material Adverse Change. During the period from the date
of this Agreement to the Closing Date, there shall not have been any material
adverse change in the assets, properties, business, operations, net income or
financial condition of the Parent or the Company. For purposes of this Section
7.7, any claim or lawsuit brought by Promega Corporation or its principal
stockholder or any of their respective Affiliates prior to the Closing Date
against the Company, the Parent, the Buyer or any party hereto shall not, in and
of itself, be considered a material adverse change unless it is related to a
material omission by the Company or any Seller.
SECTION 7.8. Discharge of Indebtedness; Release of Liens. The Parent shall
have paid, and shall have caused its Subsidiaries and Affiliates to have paid,
all amounts due and owing to the Company by the Parent and such Subsidiaries and
Affiliates. All amounts due and owing to the Parent by any of its Subsidiaries
(including the Company) immediately prior to the Redemption Transaction shall be
cancelled at such time and treated as a contribution to
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the capital of the respective Subsidiaries owing such amounts. The Sellers shall
have performed, or caused the Parent and the Company to perform, all acts
necessary to terminate and release all liens, security interests, charges,
interests or other encumbrances on the Remaining Parent Shares and the Company
Minority Shares and the assets of the Parent and the Company.
SECTION 7.9. Opinion of Counsel. The Buyer shall have received an opinion,
dated as of the Closing Date, from Conner & Winters, a Professional Corporation,
counsel to the Parent and Dubbell and Lathrop & Clark, counsel to the Minority
Shareholders, in form and substance reasonably satisfactory to the Buyer and its
counsel, substantially in the forms attached as Exhibit B hereto.
SECTION 7.10. Legal Matters. All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the
Sellers under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Sellers in furtherance
of the transactions contemplated hereby, shall be reasonably satisfactory in
form and substance to counsel for the Buyer.
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, at or before the Closing Date,
of the following conditions, any one or more of which may be waived by the
Sellers' Agents.
SECTION 8.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement or in any
Ancillary Document delivered pursuant to the provisions of this Agreement in
connection with the transactions contemplated hereby that are qualified as to
materiality or as to a specified dollar amount shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of the Closing Date as if again made by the Buyer on and as
of such date and the Sellers shall have received a certificate dated the Closing
Date and signed by an authorized officer of the Buyer to that effect.
SECTION 8.2. Performance of the Buyer's Obligations. The Buyer shall have
performed all obligations required under this Agreement to be performed by it on
or before the Closing Date, and the Sellers shall have received a certificate
dated the Closing Date and signed by an authorized officer of the Buyer to that
effect.
SECTION 8.3. Consents and Approvals. All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other Person required in connection with the Buyer's execution,
delivery and performance of this Agreement shall have been duly obtained and
shall be in full force and effect on the Closing Date.
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SECTION 8.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, domestic or foreign, that declares this Agreement invalid
or unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby shall be in effect.
SECTION 8.5. Opinion of Counsel. The Sellers shall have received a
favorable opinion, dated as of the Closing Date, from Willkie Farr & Gallagher,
counsel for the Buyer, in form and substance reasonably satisfactory to the
Sellers and their counsel. substantially in the form of Exhibit C.
SECTION 8.6. Legal Matters. All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the
Buyer under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Buyer in furtherance of
the transactions contemplated hereby, shall be reasonably satisfactory in form
and substance to counsel for the Sellers.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.1. Indemnification by the Sellers and the Buyer.
(a) The Sellers shall severally indemnify and hold the Buyer
Indemnified Parties harmless from and against and in respect of any and
all liabilities, losses, damages, judgments, settlements, claims, costs
and expenses, including but not limited to reasonable attorneys' fees
(each, a "Loss"), arising out of or due to (i) a breach of any covenant,
condition or agreement of the Sellers contained in this Agreement or any
representation or warranty contained in Article III of this Agreement and
any related certificate, schedule, exhibit or other document furnished by
such parties pursuant to this Agreement or in connection with the Closing
(each, an "Ancillary Document"), or (ii) any claim or cause of action by
or in respect of any person who is or was employed by the Company, the
circumstances giving rise to which arose prior to the Closing Date.
Notwithstanding the foregoing provisions of this Section 9.1(a), for
purposes of this Section 9.1(a), the term "Loss" shall not include any
amounts attributable to any Pre-Closing Taxes of the Company. The Losses
indemnified hereunder shall not include the Promega Costs referenced in
Section 9.1(c). Sellers' liability under this Section 9.1(a) shall not
exceed $3,000,000 in the aggregate.
(b) The Sellers shall severally indemnify and hold the Buyer
Indemnified Parties harmless from and against and in respect of any and
all Losses, arising out of or due to any claim or cause of action (1)
arising pursuant to Environmental Laws as a result of any act, omission,
or condition in existence or first occurring prior to the Closing Date at
any real property owned or leased by the Company, (2) arising out of the
presence prior to the Closing Date at any real property owned or leased by
the Company prior to the Closing Date of any Hazardous Material on, at,
beneath, or near
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any real property owned or leased by the Company prior to the Closing
Date, (3) any violation prior to the Closing Date of Environmental Law by
the Company, at any real property owned or leased by the Company prior to
the Closing Date, or (4) the disposal, arrangement for disposal, or
transportation of any Hazardous Materials, prior to the Closing Date by
the Company or from any real property owned or leased by the Company prior
to the Closing Date.
(c) With respect to any Losses specifically arising from the Promega
Dispute or the Promega European Application Matter after the Closing (the
"Promega Costs"):
(i) The Sellers, severally, on the one hand and the Buyer, on
the other hand, shall each bear 50% of the initial $300,000, the
appropriate amounts to be paid by the respective parties when invoiced or
otherwise determined;
(ii) The Sellers, severally, shall bear all Promega Costs
between $300,000 and $1,300,000; and
(iii) The Buyer shall bear all Promega Costs in excess of
$1,300,000.
Up to $400,000 of the Promega Costs to be paid by the Sellers under (i)
and (ii) above may be paid from the Promega Escrow Amount in accordance
with the terms of the Promega Escrow Agreement. Promega Costs shall not
include any amounts attributed by any party hereto to internal employee
time or overhead allocations or the Buyer's own expense of legal counsel
or other advisers to monitor the Promega Dispute or the Promega European
Application Matter.
(d) In addition to his obligations as a Seller, Dubbell shall
indemnify and hold the Buyer Indemnified Parties harmless from and against
and in respect of any and all Losses arising out or due to (i) a breach of
any representation or warranty contained in Article IV of this Agreement
and any related Ancillary Document, (ii) any failure of Dubbell to pay and
discharge when due any Parent Liabilities, (iii) any claim for payments or
benefits from or in respect of any of the Parent Employee Benefit Plans,
(iv) any claim or cause of action by or in respect of any person who is or
was employed by the Parent or any of its Subsidiaries, the circumstances
giving rise to which arose prior to the Closing Date or (v) any claim or
cause of action by any present or former shareholder of the Parent or its
Affiliates (other than Dubbell) in such present or former shareholder's
capacity as a shareholder of the Parent or its Affiliates against a Buyer
Indemnified Party, the Parent or the Company arising out of any
transactions in capital stock of the Parent or its Affiliates; provided,
however, that for purposes of this Section 9.1(d), the term "Loss" shall
not include any amounts attributable to Taxes of any Subsidiary of the
Parent other than the Company, whether accrued before or after the Closing
Date, and any Pre-Closing Taxes of the Parent; and provided, further, that
Dubbell's liability under this Section 9.1(d) shall not exceed $7,000,000
in the aggregate.
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(e) In addition to his obligations as a Seller, Dubbell shall
indemnify and hold the Buyer Indemnified Parties harmless from and against
and in respect of any and all Losses arising out or due to any claim or
cause of action by any party against a Buyer Indemnified Party, the Parent
or the Company with respect to liability from any claim or cause of action
(1) arising pursuant to Environmental Laws as a result of any act,
omission, or condition in existence or first occurring prior to the
Closing Date at any real property owned or leased by the Parent and any of
its Subsidiaries, (2) arising out of the presence prior to the Closing
Date of any Hazardous Material on, at, beneath, or near any real property
owned or leased by the Parent or its Subsidiaries prior to the Closing
Date, (3) any violation of Environmental Law prior to the Closing Date by
the Parent or its Subsidiaries or at any real property owned or leased by
the Parent or its Subsidiaries prior to the Closing Date, or (4) the
disposal, arrangement for disposal, or transportation prior to the Closing
Date of any Hazardous Materials by the Parent or its Subsidiaries or from
any real property owned or leased by the Parent or its Subsidiaries prior
to the Closing Date.
(f) In addition to his other indemnification obligations, Dubbell
shall indemnify the Buyer Indemnified Parties and hold them harmless from
all Losses attributable to Taxes of any Subsidiary of the Parent other
than the Company, whether accrued before or after the Closing Date, and
any Pre-Closing Taxes of the Parent or the Company. For purposes of this
Agreement, "Pre-Closing Taxes" shall mean, to the extent such liability
does not give rise to a reduction in the Purchase Price pursuant to
Section 2.4 of this Agreement, (i) all liability for Taxes of the Parent
or the Company for Pre-Closing Tax Periods; (ii) all liability resulting
by reason of the several liability of the Parent or the Company pursuant
to Treasury Regulations 1.1502-6 or any analogous state, local or foreign
law or regulation or by reason of the Parent or the Company having been a
member of any consolidated, combined or unitary group on or prior to the
Closing Date; (iii) all liability for Taxes resulting by reason of the
Redemption Transaction; (iv) all liability for real estate transfer Taxes
or real estate gains Taxes arising as a result of the sale of the Parent
Shares, the sale of the Company Minority Shares or the deemed transfer of
the stock of any of the Subsidiaries of the Parent under this Agreement;
(v) all liability attributable to any misrepresentation or breach of
warranty made by Dubbell in Section 4.8 of this Agreement; (vi) all
liability for Taxes attributable to any failure to comply with any of the
covenants or agreements of Dubbell or the Company under this Agreement;
(vii) all liability for Taxes resulting by reason of any item of income or
gain of a partnership reported by the Company as a partner, to the extent
such items are properly attributable to a Pre-Closing Tax Period of the
partnership; and (viii) all liability for Taxes of any other person
pursuant to any contractual agreement entered into on or before the
Closing Date.
(g) The Buyer shall indemnify and hold harmless the Sellers from and
against and in respect of any and all Losses arising out of or due to a
breach of any representation, warranty, covenant, condition or agreement
of the Buyer contained in this Agreement or any related Ancillary
Document.
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SECTION 9.2. Procedures.
(a) If an event giving rise to indemnification under this Agreement
occurs or is alleged and the party or parties entitled to receive the
benefits of the indemnification provisions hereunder (the "Aggrieved
Party") asserts that a party or parties has become obligated to the
Aggrieved Party pursuant to Section 9.1 hereof (the "Indemnifying Party"),
or if any suit, action, investigation, claim or proceeding (each a
"Claim") is begun, made or instituted as a result of which the
Indemnifying Party may become obligated to the Aggrieved Party hereunder,
the Aggrieved Party shall give written notice to the Indemnifying Party,
promptly after such Aggrieved Party has actual knowledge of any Claim as
to which indemnity may be sought; provided, however, that the failure of
any Aggrieved Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Section 9.2 except to
the extent the Indemnifying Party is materially prejudiced thereby. The
Indemnifying Party will have the right, at its option and at its sole cost
and expense, upon timely notice to the Aggrieved Party, to assume control
of the defense (or otherwise contest or protect the Aggrieved Party
against any such Claim) of any Claim by counsel of the Indemnifying
Party's choice, provided, however, such counsel is reasonably satisfactory
to the Buyer. Failure by the Indemnifying Party to notify the Aggrieved
Party of its election to defend any such action within a reasonable time,
but in no event more than fifteen days after notice thereof shall have
been given to the Indemnifying Party, shall be deemed a waiver by the
Indemnifying Party of its right to defend such Claim. If the Indemnifying
Party assumes the defense of any such Claim, the obligations of the
Indemnifying Party as to such Claim shall be limited to taking all steps
necessary in the defense or settlement of such Claim resulting therefrom
and to holding the Aggrieved Party harmless to the extent required under
Section 9.1 hereof, from and against any and all Losses caused by or
arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such Claim resulting therefrom. The Aggrieved
Party may participate, at its expense, in the defense of such Claim,
provided that the Indemnifying Party shall direct and control the defense
of such Claim. The Indemnifying Party shall not, in the defense of such
Claim resulting therefrom, consent to entry of any judgment, except with
the written consent of the Aggrieved Party, or enter into any settlement,
except with the written consent of the Aggrieved Party, which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Aggrieved Party of a release from all liability in
respect of such Claim. All awards and costs payable by a third party to
the Aggrieved Party or the Indemnifying Party shall belong to the
Indemnifying Party.
(b) If the Indemnifying Party shall not assume the defense of any
such Claim resulting therefrom, the Aggrieved Party may defend against
such Claim in such manner as it may deem appropriate and, unless the
Indemnifying Party shall deposit with the Aggrieved Party a sum equivalent
to the total amount demanded in such Claim, but not in excess of the
amounts required pursuant to Section 9.1, or shall deliver to the
Aggrieved Party a surety bond in form and substance reasonably
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satisfactory to the Aggrieved Party, but not for more than the amounts
required pursuant to Section 9.1, the Aggrieved Party may settle such
Claim on such terms as it may deem appropriate, and the Indemnifying Party
shall promptly reimburse the Aggrieved Party for the amount of all
expenses, legal or otherwise, incurred by the Aggrieved Party in
connection with the defense against or settlement of such Claim to the
extent provided in Section 9.1 hereof. If no settlement of such Claim is
made, the Indemnifying Party shall promptly reimburse the Aggrieved Party
for the amount of any judgment rendered with respect to such Claim and of
all expenses, legal or otherwise, incurred by the Aggrieved Party in the
defense against such Claim, to the extent so required pursuant to Section
9.1 hereof.
SECTION 9.3. Procedures Relating to Tax Claims. If any Tax authority
raises any issue with Buyer, including any Tax matters which could be subject to
Dubbell's indemnification under Section 9.1(d), related to the Company or other
Subsidiary of the Parent, the Company or the Parent, then Buyer shall promptly
notify Dubbell and offer him the right to confer with such Tax authority before
any claim for Tax deficiency is raised. In addition, notwithstanding the
provisions of Section 9.2, if a Claim is made by any Tax authority which, if
successful, is likely to result in an indemnity payment to Buyer or any of its
Affiliates pursuant to this Article IX, the Buyer shall notify Dubbell of such
claim (a "Tax Claim"), stating the nature and basis of such claim and the amount
thereof, to the extent known. Failure to give notice under the preceding two
sentences shall not relieve Dubbell from any liability which he may have on
account of this indemnification or otherwise, except to the extent that Dubbell
is materially prejudiced thereby. Dubbell will have the right, at his option and
at his sole cost and expense, upon timely notice to the Buyer, to assume control
of any defense of any Tax Claim (other than a Tax Claim relating solely to Taxes
of the Parent or the Company for a Straddle Period) with his own counsel,
provided, however, such counsel is reasonably satisfactory to the Buyer.
Dubbell's right to control a Tax Claim will be limited to amounts in dispute
which would be paid by Dubbell or for which Dubbell would be liable pursuant to
this Article IX. Costs of such Tax Claims are to be borne by Dubbell unless the
Tax Claim relates to taxable periods of the Parent or the Company beginning
after the Effective Date or to any Straddle Period, in which event such costs
will be born by the Buyer or, in the case of the Straddle Period, will be fairly
apportioned between Dubbell and the Buyer based upon their proportionate
interests. The Buyer Indemnified Parties shall cooperate with Dubbell in
contesting any Tax Claim, which cooperation shall include the retention and,
upon Dubbell's request, the provision of records and information which are
reasonably relevant to such Tax Claim and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder. Notwithstanding the foregoing, Dubbell shall
neither consent nor agree to the settlement of any Tax Claim with respect to any
liability for Taxes that may affect the liability for any state or federal
income tax of the Parent or the Company or any "affiliated group" (as defined in
Section 1504(a) of the Code) of which the Parent or the Company is a member for
any taxable period ending subsequent to the Effective Date without the prior
written consent of the Buyer, and neither Dubbell, nor any entity controlled by
Dubbell, shall file an amended Tax Return that may affect the liability for
Taxes of the Parent or the Company without the prior written
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consent of the Buyer. The Buyer and Dubbell shall jointly control all
proceedings taken in connection with any Tax Claims relating solely to a
Straddle Period.
SECTION 9.4. Limitations on Indemnity. Notwithstanding anything in this
Article IX to the contrary:
(a) No Indemnifying Party shall have any obligation to make any
payment under Section 9.1(a) hereof with respect to any Loss arising out
of any breach of a representation or warranty unless the Aggrieved Party
shall have suffered or incurred aggregate Losses indemnifiable under this
Agreement of $50,000, and then only to the extent such amount exceeds
$50,000.
(b) The total liability of each Seller under Section 9.1(a), (b) and
(c) for all claims and obligations under this Article IX shall not exceed
the respective Seller's percentage of the Purchase Price received or to be
received by such Seller under this Agreement as set forth on Exhibit A-2.
SECTION 9.5. Set Off Against Earn-Out Payments. If, pursuant to this
Agreement, an individual Seller becomes obligated to pay any sum of money to the
Buyer, then such sum may, at the election of the Buyer, be set off against and
shall apply to the Earn-Out Payments any other sums owed by the Buyer to such
Seller under Section 2.3 until such sums are completely set off. The rights of
set off and payment set forth herein shall not apply to any Tax refund due to
Dubbell hereunder, nor to payment of Promega Costs. The rights of set off and
payment set forth herein shall be in addition to, and not in limitation or a
waiver of, any rights or remedies of the Buyer under any provisions of this
Agreement, whether now or hereafter existing, at law or in equity or by Statute.
SECTION 9.6. Purchase Price Adjustment. The parties agree to treat any
payments received under this Article IX as an adjustment to the Purchase Price
for all federal, state and local income Tax purposes.
SECTION 9.7. Insurance. In calculating any Loss, there shall be deducted
any insurance recovery in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer). To the extent that an Aggrieved Party has
insurance coverage with respect to any Loss, such Aggrieved Party shall, and
agrees that it will, seek to collect its damages first against such Insurance
and only secondarily from an Indemnifying Party, and in the event that any
Indemnifying Party is required to indemnify any Aggrieved Party for any such
Loss, the Indemnifying Party shall have a right of subrogation with respect to
such insurer.
SECTION 9.8. Exclusive Remedies. Except as otherwise explicitly provided
in this Agreement, the sole and exclusive remedy of the Sellers and the Buyer
for breach of any of the respective representations, warranties or covenants of
the Buyer or the Sellers, respectively, in this Agreement are as set forth in
this Article IX, provided, however, that this Section 9.8 shall not limit
remedies for fraud. The Buyer acknowledges and agrees that no Seller would have
entered into this Agreement but for the inclusion herein of this Section 9.8.
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The Sellers each acknowledge and agree that the Buyer would not have entered
into this Agreement but for the inclusion of this Section 9.8.
SECTION 9.9. Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT AND ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED BY SELLERS IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY, THE SELLERS HEREBY EXPRESSLY DISCLAIM
AND NEGATE ANY REPRESENTATION OR WARRANTY INCLUDING WITHOUT LIMITATION ANY
REPRESENTATION OR WARRANTY AT COMMON LAW, BY STATUTE, OR OTHERWISE, INCLUDING
BUT NOT LIMITED TO THOSE RELATING TO (i) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, AND (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS.
ARTICLE X.
TERMINATION AND ABANDONMENT
SECTION 10.1. Methods of Termination; Upset Date. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
before the Closing:
(a) by the mutual written consent of the Sellers through Dubbell or
Dubbell's Agent and the Buyer;
(b) by the Buyer, if any Seller has materially breached any
representation, warranty, covenant or agreement and such breach is either
not capable of being cured prior to the Closing or, if such breach is
capable of being cured is not so cured within a reasonable amount of time
of such breach;
(c) by the Sellers through Dubbell or Dubbell's Agent, if the Buyer
has materially breached any representation, warranty, covenant or
agreement and such breach is either not capable of being cured prior to
the Closing or, if such breach is capable of being cured is not so cured
within a reasonable amount of time of such breach;
(d) by the Buyer, if any material adverse change in the assets,
properties, business, operations, net income or financial condition of the
Parent or the Company shall have occurred;
(e) by the Sellers through Dubbell or Dubbell's Agent or the Buyer
if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action (which order, decree or ruling the
parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits the transactions contemplated by
this Agreement; or
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(f) by the Sellers through Dubbell or Dubbell's Agent or the Buyer
at any time after February 28, 1998.
For purposes of this Section 10.1, any claim or lawsuit brought by Promega
Corporation or its principal stockholder or any of their respective Affiliates
prior to the Closing Date against the Company, the Parent, the Buyer or any
other party hereto shall not, in and of itself, be sufficient reason to
terminate this Agreement, provided, however, that the foregoing shall not
preclude the Buyer from terminating this Agreement as a result of a material
breach of any representation or warranty (other than Section 3.16 as it relates
to the Promega Dispute).
SECTION 10.2. Procedure Upon Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 10.1, written notice thereof
shall forthwith be given to the other party or parties and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned, without
further action by the Sellers or the Buyer.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
SECTION 11.1. Representation of Sellers by Sellers' Agents.
(a) Each of the Sellers hereby irrevocably appoints David W. Dubbell
(and his successors herein called "Dubbell's Agent") and Robert C.
Mierendorf (and his successors herein called the "Minority Shareholders'
Agent") (herein called the "Sellers' Agents") as his or her agents and
attorneys-in-fact to take any action required to be taken by the Sellers
under the terms of this Agreement, including, without limiting the
generality of the foregoing, the giving and receipt of any notices to be
delivered or received by or on behalf of any or all of the Sellers and the
right to waive, modify or amend any of the terms of this Agreement, and
agrees to be bound by any and all actions taken by such agents on their
behalf. The Buyer shall be entitled to rely exclusively upon any
communications given jointly by the Sellers' Agents, except where this
Agreement specifically refers to Dubbell's Agent or the Minority
Shareholder's Agent in which case the Buyer may rely on communications
given by the specified agent and the Buyer shall not be liable in any
manner whatsoever for any action taken or not taken in reliance upon the
actions taken or not taken or communications made by the Sellers' Agents
or either of them, as the case may be. The Buyer shall be entitled to
disregard any notices or communications given or made by the Sellers
unless given or made through the Sellers' Agents, or either of them, as
the case may be.
(b) In the event of the death or incapacity of either of the
Sellers' Agents or his inability to perform his functions hereunder, the
Buyer shall be entitled to rely upon any notices or communications given
or made solely by or to the remaining Shareholders' Agent until the
receipt of notice of the appointment of a new agent and attorney-in-fact.
If at any time the offices of one or both of the Sellers' Agents are
vacant, then Dubbell or his successors in interest shall appoint another
person to serve
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as Dubbell's Agent, and the Sellers other than Dubbell (herein called the
"Minority Shareholders") shall appoint another person to serve as the
Minority Shareholders' Agent. Such appointment or appointments shall be
deemed to have been made when the identities of the new Agent or Agents
have been communicated to the Buyer in writing.
(c) The manner and form by which the Sellers shall decide upon any
new agent and attorney-in-fact and the manner in which such decisions are
to be communicated to the remaining Sellers' Agents shall be decided
solely by the Sellers. The Sellers recognize, and hereby acknowledge, that
the Sellers' Agents have an interest in the subject matter of this
Agreement and that the appointment of such Agents as the Sellers' Agents
constitutes an irrevocable power-of-attorney coupled with an interest.
(d) The Sellers jointly and severally shall indemnify and hold
harmless each of the Sellers' Agents from and against any loss or cost
which they or either of them may sustain or incur while acting as Sellers'
Agents except that each Sellers' Agent shall bear his own liability and
expense arising out of activities that are fraudulent or grossly
negligent.
SECTION 11.2. Nature and Survival of Representations, Etc. All statements
contained in any Ancillary Document delivered by or on behalf of the Sellers or
the Buyer pursuant to this Agreement or in connection with the transactions
contemplated hereby shall be deemed representations and warranties by the
Sellers or the Buyer hereunder. All representations and warranties and
agreements made by the parties hereto in this Agreement or pursuant hereto shall
survive the Closing hereunder and any investigation at any time made by or on
behalf of the Sellers or the Buyer. No suit or action may be commenced for
Claims under Section 9.1 at any time more than fifteen (15) months after the
Closing Date except for a suit or action brought thereunder for a breach of the
representations and warranties set forth in Sections 3.1, 3.15, 3.16 and 3.30 or
a suit or action brought to enforce the obligations of Dubbell or the other
Sellers, as applicable, under Sections 9.1(a) (with respect to a breach of any
covenant, condition or agreement under Sections 6.2, 6.3, 6.6, 6.7, 6.9, 6.10,
6.15, 6.16, 6.17, 6.20, 11.2, 11.5, 11.6, or 11.8 or Article IX), 9.1(b),
9.1(c), 9.1(d), 9.1(e) or 9.1(f) (with respect to which the applicable statute
of limitations shall apply).
SECTION 11.3. Publicity. Prior to the Closing Date, the Sellers shall not,
nor shall they permit their respective Affiliates to, issue or cause the
publication of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby without the consent of the
Buyer. The Buyer shall consult with the Sellers before issuing any press release
or otherwise making any public statement with respect to the this Agreement and
the transactions contemplated hereby and shall not publicly disclose the names
of Pel-Freez, Inc. or David W. Dubbell, except in each case as required by law.
SECTION 11.4. Successors and Assigns; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns; provided, however, that no party
shall assign or delegate
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any of the obligations created under this Agreement without the prior written
consent of the other parties. Notwithstanding the foregoing, the Buyer shall
have the unrestricted right to assign this Agreement and/or to delegate all or
any part of its obligations hereunder to any Affiliate of the Buyer or to any
lender in connection with any financing, but in such event the Buyer shall
remain fully liable for the performance of all of such obligations in the manner
prescribed in this Agreement. Nothing in this Agreement shall confer upon any
Person not a party to this Agreement, or the legal representatives of such
Person, any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
SECTION 11.5. Brokers, Finders and Financial Advisors. The Buyer, on the
one hand, and the Sellers, on the other, represent and warrant to each other
that all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Buyer and the Sellers directly with
each other and that no person is entitled to any broker's, finder's or financial
advisor's fee in connection with or on account of this Agreement or any
transaction herein contemplated, except that Sellers have engaged Vector
Securities, Inc. as a financial advisor and shall be obligated for its fees and
costs.
SECTION 11.6. Fees and Expenses. All legal, accounting and other fees,
costs and expenses of the Parent, the Company and the Sellers incurred in
connection with, or arising out of their obligations contained in, this
Agreement and the transactions contemplated hereby shall be paid by the Sellers.
All legal, accounting and other fees, costs and expenses of the Buyer incurred
in connection with, or arising out of its obligations contained in, this
Agreement and the transactions contemplated hereby shall be paid by the Buyer.
SECTION 11.7. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if delivered personally or sent by registered or certified mail (postage
prepaid, return receipt requested) by facsimile or by air courier guaranteeing
second day delivery directed to the parties at the following addresses:
(a) If to the Buyer, to:
CN Biosciences, Inc.
10394 Pacific Center Court
San Diego, CA 92121
Attention: James G. Stewart
Fax: (619) 450-5522
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Peter H. Jakes, Esq.
Fax: (212) 821-8111
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(b) If to the Sellers' Agents, to:
David W. Dubbell
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Fax: (501) 636-4282
and:
Robert C. Mierendorf
Novagen, Inc.
601 Science Dr.
Madison, WI 53711
Fax: (608) 238-1388
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
and:
Lathrop & Clark
740 Regent Street
Suite 400
P.O. Box 1507
Madison, WI 53701
Attention: Michael J. Lawton, Esq.
Fax: (608) 257-1507
(c) If to the Parent, to:
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Attention: David W. Dubbell
Fax: (501) 636-4282
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<PAGE> 76
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
(d) If to Dubbell or Dubbell's Agent, to:
David W. Dubbell
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Fax: (501) 636-4282
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed.
SECTION 11.8. Release under Sellers' Escrow Agreement. Each Seller hereby
jointly and severally indemnifies, releases and holds harmless the Buyer from
and against any Losses arising from any and all actions taken under or in
connection with the Sellers' Escrow Agreement.
SECTION 11.9. Entire Agreement. This Agreement, together with the
Disclosure Schedule and the exhibits hereto, represent the entire agreement and
understanding of the parties with reference to the transactions set forth herein
and no representations or warranties have been made in connection with this
Agreement other than those expressly set forth herein or in the Disclosure
Schedule, exhibits, certificates and other documents delivered in accordance
herewith. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement and all prior drafts of
this Agreement, all of which are merged into this Agreement. No prior drafts of
this Agreement and no words or phrases from
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any such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.
SECTION 11.10. Waivers and Amendments. The Sellers through the Sellers'
Agents or the Buyer may by written notice to the other: (a) extend the time for
the performance of any of the obligations or other actions of the other; (b)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement; (c) waive compliance with any of the covenants of
the other contained in this Agreement; (d) waive performance of any of the
obligations of the other created under this Agreement; or (e) waive fulfillment
of any of the conditions to its own obligations under this Agreement. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provision at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party hereto to take
any action against any breach of this Agreement or default by another party
hereto shall constitute a waiver of the former party's right to enforce any
provision of this Agreement or to take action against such breach or default or
any subsequent breach or default by such other party. This Agreement may be
amended, modified or supplemented only by a written instrument executed by the
Buyer and the Sellers' Agents.
SECTION 11.11. Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 11.12. Titles and Headings. The Article and Section headings and
any table of contents contained in this Agreement are solely for convenience of
reference and shall not affect the meaning or interpretation of this Agreement
or of any term or provision hereof.
SECTION 11.13. Signatures and Counterparts. Facsimile transmission of any
signed original document and/or retransmission of any signed facsimile
transmission shall be the same as delivery of an original. At the request of any
party, the parties will confirm facsimile transmission by signing a duplicate
original document. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
SECTION 11.14. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto. Such remedies and all other
remedies provided for in this Agreement shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
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SECTION 11.15. Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of New York
without giving effect to the choice-of-law provisions thereof.
SECTION 11.16. Knowledge. As used in this Agreement, the terms "knowledge"
or "best knowledge" or words to that effect shall, as to any person, refer to
all facts of which such person shall have written notice or actual knowledge.
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<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLERS:
/s/ David W. Dubbell
---------------------------------
DAVID W. DUBBELL
/s/ Dennis Almond
---------------------------------
DENNIS ALMOND
/s/ Corrine Fetherston
---------------------------------
CORRINE FETHERSTON
/s/ Lisa Johnson
---------------------------------
LISA JOHNSON
/s/ Robert Mierendorf
---------------------------------
ROBERT MIERENDORF
/s/ Warren Kroeker
---------------------------------
WARREN KROEKER
/s/ Barbara Morris
---------------------------------
BARBARA MORRIS
/s/ Robert Novy
---------------------------------
ROBERT NOVY
/s/ Tom Van Oosbree
---------------------------------
TOM VAN OOSBREE
<PAGE> 80
PEL-FREEZ, INC.
By: /s/ David W. Dubbell
---------------------------------
Name: David W. Dubbell
Title: President
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
---------------------------------
Name: Stelios B. Papadopoulos
Title: Chief Executive Officer
<PAGE> 81
Exhibit A-1
Shareholders of Novagen, Inc.
<TABLE>
<CAPTION>
Number of Shares of
Name Company Common Stock
- --------------------------------------------------------
<S> <C>
Dennis Almond 50
Corrine Fetherston 25
Lisa Johnson 25
Warren Kroeker 50
Robert Mierendorf 250
Robert Novy 25
Barbara Morris 25
Pel-Freez, Inc. 4,500
Tom Van Oosbree 50
</TABLE>
<PAGE> 82
Exhibit A-2
Shareholders of Novagen, Inc. as of the Closing Date
<TABLE>
<CAPTION>
Number of Shares of Percentage of
Name Company Common Stock Purchase Price
- ---- -------------------- --------------
<S> <C> <C>
Dennis Almond 50 1.0%
Corrine Fetherston 40 0.8%
Lisa Johnson 40 0.8%
Warren Kroeker 50 1.0%
Robert Mierendorf 200 4.0%
Robert Novy 40 0.8%
Barbara Morris 40 0.8%
Pel-Freez, Inc. 4,500 90.0%
Tom Van Oosbree 40 0.8%
-------------------------------------------
5,000 100.0%
</TABLE>
<PAGE> 83
Exhibit B
Form of Opinion of Counsel to the Parent, the Company and Dubbell
1. Dubbell owns the Remaining Parent Shares on the date hereof, free and
clear of any lien, charge or encumbrance, and there are no issued and
outstanding shares of capital stock of the Parent other than the Remaining
Parent Shares.
2. The Stock Purchase Agreement constitutes a valid and binding obligation of
Dubbell and, to our knowledge, the Stock Purchase Agreement and all
transactions contemplated thereby will not result in a violation of any of
the terms and provisions of any agreement to which Dubbell may be a party
or by which Dubbell may otherwise be bound.
3. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arkansas and has all requisite
corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals to own its properties and
assets and to conduct its businesses as now conducted and as proposed to
be conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in the jurisdictions listed in Section
3.3 of the Disclosure Schedule, which includes every jurisdiction where
the character of the properties owned or leased by it or the nature of the
business conducted by it makes such qualification necessary.
4. The authorized capital stock of the Company consists of 5,000 shares of
Company Common Stock, all of which are issued and outstanding. Such shares
of Company Common Stock represent all of the issued and outstanding shares
of capital stock of the Company. All shares of Company Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding options, warrants, agreements,
conversion rights, preemptive rights or other rights to subscribe for,
purchase or otherwise acquire any shares of Company Common Stock, and
there are no outstanding obligations of the Company to repurchase, redeem
or otherwise acquire outstanding shares of Company Common Stock.
5. The Company does not own any shares of, or control, directly or
indirectly, or have any equity interest in, any Person.
6. The execution, delivery and performance by the Dubbell of the Stock
Purchase Agreement and the transactions contemplated thereby do not and
will not: (i) violate or conflict with any provision of the articles of
incorporation or by-laws of the Company; (ii) violate any provision of
law, statute, judgment, order, writ, injunction, decree, or award, or, to
our knowledge, rule, or regulation, of any
<PAGE> 84
court, arbitrator, or other governmental or regulatory authority
applicable to the Company; (iii) to our knowledge, violate, result in a
breach of, constitute (with due notice or lapse of time or both) a default
or cause any obligation, penalty, premium, right of termination or
acceleration to arise, accrue or occur under any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which the
Company is bound or to which its properties or assets is subject; (iv) to
our knowledge, result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of
the Company; or (v) to our knowledge, result in the cancellation,
modification, revocation or suspension of any License.
7. Except as have been made or obtained, no consent, waiver, authorization or
approval of any governmental or regulatory authority, domestic or foreign,
or any other Person, or declaration to or filing or registration with any
such governmental or regulatory authority, is required of or to be made by
the Company in connection with the execution, delivery and performance of
the Stock Purchase Agreement.
8. Except as set forth in Section 3.16 of the Disclosure Schedule, to our
knowledge, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to our knowledge, threatened before
any federal, state or local court or governmental, administrative or
regulatory authority, domestic or foreign, or before any arbitrator of any
nature, brought by or against the Company or its officers, directors,
employees, agents or any of their respective Affiliates involving,
affecting or relating to any assets, properties or operations of the
Company or the transactions contemplated by the Stock Purchase Agreement.
Neither Dubbell nor the Company nor any of his or the Company's assets or
properties is subject to, nor does any basis exist for, any order, writ,
judgment, award, injunction or decree of any federal, state or local court
or governmental or regulatory authority or arbitrator, that affects the
Company's assets, properties, operations, prospects, net income or
financial condition or which would interfere with the transactions
contemplated by the Stock Purchase Agreement.
9. The Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arkansas and has all requisite
corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals to own its properties and
assets and to conduct its businesses as now conducted and as proposed to
be conducted. The Parent is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction listed in
Section 4.1 of the Disclosure
<PAGE> 85
Schedule, which includes every jurisdiction where the character of the
properties owned or leased by it or the nature of the business conducted
by it makes such qualification necessary.
10. The authorized capital stock of the Parent consists of 1,000,000 shares of
Parent Common Stock of which 427,200 shares are outstanding on the date
hereof. The Remaining Parent Shares represent all of the issued and
outstanding shares of the capital stock of the Parent and are owned of
record and beneficially by Dubbell, free and clear of any lien, charge or
encumbrance. All the outstanding shares of Parent Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
There are no outstanding options, warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any shares of Parent Common Stock, and there are no outstanding
obligations or plans of the Parent to repurchase, redeem or otherwise
acquire outstanding shares of Parent Common Stock.
11. Except as set forth in Section 4.3 of the Disclosure Schedule, the Parent
does not own any shares of, or control, directly or indirectly, or have
any equity interest in, any Person.
12. The Parent has the corporate power to enter into the Stock Purchase
Agreement and to carry out its obligations thereunder, including in
connection with the Redemption Transaction. The execution and delivery of
the Stock Purchase Agreement and the performance by the Parent of its
obligations thereunder, including in connection with the Redemption
Transaction, have been duly authorized by the Board of Directors of the
Parent, and no other corporate proceedings on the part of the Parent are
necessary to authorize such execution, delivery and performance. The Stock
Purchase Agreement has been duly executed by the Parent and constitutes
the valid and binding obligation of the Parent enforceable against the
Parent in accordance with its terms.
13. The execution, delivery and performance by Dubbell and the Parent of the
Stock Purchase Agreement and the transactions contemplated hereby,
including the Redemption Transaction, do not and will not: (i) violate or
conflict with any provision of the articles of incorporation or by-laws of
the Parent; (ii) violate any provision of law, statute, judgment, order,
writ, injunction, decree, or award, or, to our knowledge, rule, or
regulations of any court, arbitrator, or other governmental or regulatory
authority applicable to the Parent; (iii) to our knowledge, violate,
result in a breach of, constitute (with due notice or lapse of time or
both) a default or cause any obligation, penalty, premium, right of
termination or acceleration to arise,
<PAGE> 86
accrue or occur under any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to
which either Dubbell or the Parent is a party or by which either of them
is bound or to which any of their respective properties or assets is
subject; (iv) result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of
the Parent; or (v) to our knowledge, result in the cancellation,
modification, revocation or suspension of any License.
14. Except as have been made or obtained, no consent, waiver, authorization or
approval of any governmental or regulatory authority, domestic or foreign,
or any other Person, and no declaration to or filing or registration with
any such governmental or regulatory authority, is required of or to be
made by the Parent or Dubbell in connection with the execution, delivery
and performance of the Stock Purchase Agreement.
15. Except as set forth in Section 4.13 of the Disclosure Schedule, to our
knowledge, there are no claims, actions, suits, proceedings, labor
disputes or investigations pending or, to our knowledge, threatened before
any federal, state or local court or governmental, administrative or
regulatory authority, domestic or foreign, or before any arbitrator of any
nature, brought by or against Dubbell, the Parent or the Parent's
officers, directors, employees or agents or any of their respective
Affiliates involving, affecting or relating to any assets, properties or
operations of the Parent or the transactions contemplated by the Stock
Purchase Agreement. None of Dubbell nor the Parent nor any of their assets
or properties is subject to, nor, to our knowledge, does any basis exist
for, any order, writ, judgment, award, injunction or decree of any
federal, state or local court or governmental or regulatory authority or
arbitrator, that affects the Parent's assets, properties, operations,
prospects, net income or financial condition or which would interfere with
the transactions contemplated by the Stock Purchase Agreement.
16. Opinions in similar form to the above with respect to the ancillary
agreements by Parent and the Company where rights are being transferred to
Parent or the Company as to due authorization, execution and delivery,
validity and enforceability and no conflicts or consents.
Form of Opinion of Counsel to the Company Minority Shareholders
1. Each of the Company Minority Shareholders owns, free and clear of any
lien, charge or encumbrance, all of the shares of Company Common Stock set
forth after the name of such
<PAGE> 87
Minority Shareholder and the Parent on Exhibit A-2 to the Stock Purchase
Agreement.
2. The Stock Purchase Agreement constitutes a valid and binding obligation of
each Company Minority Shareholder and, to our knowledge, the Stock
Purchase Agreement and all transactions contemplated thereby will not
result in a violation of any of the terms and provisions of any agreement
to which any Company Minority Shareholder may be a party or by which any
Company Minority Shareholder may otherwise be bound.
3. To our knowledge, none of the Company Minority Shareholders nor any of
their assets or properties is subject to, nor does any basis exist for,
any order, writ, judgment, award, injunction or decree of any federal,
state or local court or governmental or regulatory authority or
arbitrator, that which would interfere with the transactions contemplated
by the Stock Purchase Agreement.
4. Opinions in similar form to the above with respect to the Sellers' Escrow
Agreement and the Promega Escrow Agreement as to due authorization,
execution and delivery, validity and enforceability and no conflicts or
consents.
<PAGE> 88
EXHIBIT C
Form of Opinion of Buyer's Counsel
(a) The Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and the Buyer has
all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted;
(b) The Buyer has the corporate power to enter into the Purchase
Agreement and to carry out its obligations thereunder. The execution and
delivery of the Purchase Agreement by the Buyer and the performance of the
obligations thereunder have been duly authorized by the Board of Directors
of the Buyer and no other corporate proceedings on the part of the Buyer
are necessary to authorize such execution, delivery and performance. The
Purchase Agreement has been duly executed by the Buyer and constitute the
legal, valid and binding obligations of the Buyer enforceable against it
in accordance with their terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforceability of creditors' rights generally and except
that the remedy of specific performance or similar equitable relief may be
subject to equitable defenses and to the discretion of the court before
which enforcement is sought; and
(c) The execution, delivery and performance of the Purchase
Agreement by the Buyer do not and will not violate or conflict with any
provision of the Amended and Restated Certificate of Incorporation or
Amended and Restated By-Laws of the Buyer and do not and will not violate
any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate nor will result in
a breach of or constitute (with due notice or lapse of time or both) a
default under any material contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument known
to us (after inquiry of appropriate officers of the Buyer) to which the
Buyer is a party or by which it is bound or to which its properties or
assets is subject.
<PAGE> 89
Exhibit D
FORM OF CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. As required by Section
7.4(c) of the Stock Purchase Agreement, dated as of November __, 1997, by and
among CN Biosciences, Inc. as Buyer, David W. Dubbell, Dennis Almond, Corrine
Fetherston, Lisa Johnson, Robert Mierendorf, Warren Kroeker, Barbara Morris,
Robert Novy and Tom Van Oosbree, as Sellers and Pel-Freez, Inc. and in order to
inform Buyer that withholding of tax is not required upon the disposition of a
U.S. real property interest by the undersigned Seller, the undersigned hereby
certifies the following:
1. Such Seller is not a foreign person, as defined in the Code and the
Treasury regulations promulgated thereunder;
2. Such Seller's U.S. taxpayer identification number is _____________; and
3. Such Seller's address is ______________________________________.
Seller understands that this certification may be disclosed to the
Internal Revenue Service by Buyer and that any false statement contained herein
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
-------------------------
Name of Seller
Date: __________ __, 1998
<PAGE> 90
EXHIBIT E
SELLERS' ESCROW AGREEMENT
THIS SELLERS' ESCROW AGREEMENT (this "Agreement") is entered into as of
November 25, 1997, by and among DAVID W. DUBBELL ("Dubbell"), DENNIS ALMOND,
CORRINE FETHERSTON, LISA JOHNSON, ROBERT MIERENDORF ("Mierendorf"), WARREN
KROEKER, BARBARA MORRIS, ROBERT NOVY and TOM VAN OOSBREE (collectively, together
with Dubbell and Mierendorf, the "Sellers").
WHEREAS, Sellers, Pel-Freez, Inc., an Arkansas corporation (the "Parent")
and CN Biosciences, Inc., a Delaware corporation (the "Buyer") have entered into
a Stock Purchase Agreement dated as of November 25, 1997 (the "Purchase
Agreement"), pursuant to which, as a result of the transactions contemplated
thereby, the Parent and Novagen, Inc. will become wholly owned subsidiaries of
the Buyer; and
WHEREAS, Section 2.3 of the Purchase Agreement contemplates the execution
and delivery of this Agreement providing for the escrow of certain portions of
the Purchase Price (as such term is defined in the Purchase Agreement); and
WHEREAS, simultaneously with the closing of the transactions under the
Purchase Agreement (the "Closing") certain of the Sellers have indebtedness that
must be repaid from their respective interests in the Purchase Price in order to
permit the transactions contemplated by the Purchase Agreement to be consummated
(as to any Seller, a "Seller's Obligation");
WHEREAS, the Sellers, collectively, are responsible for certain closing
costs, including fees of investment bankers, attorneys and accountants involved
in representing the Sellers in connection with the Purchase Agreement (the
"Closing Costs"); and
WHEREAS, the Sellers wish to make provision for the payment of the various
Seller's Obligations and Closing Costs and for the appropriate allocation among
them of the net amount of the Purchase Price, including the net amount of the
Initial Payment and the Earn Out Amount, if any (as such terms are defined in
the Purchase Agreement); and
WHEREAS, pursuant to the terms of the Purchase Agreement, Dubbell and
Mierendorf were appointed to act as Sellers' Agents (as such term is defined in
the Purchase Agreement) and the parties now desire that Sellers' Agents also act
jointly as escrow agent pursuant to this Agreement and the Sellers' Agents are
willing to do so upon the terms and conditions hereinafter set forth;
<PAGE> 91
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1. Establishment of Escrow. At the Closing, the Buyer shall deposit with the
Sellers' Agents an amount equal to the difference between the Initial Payment of
$10,500,000, less $500,000 in connection with the Promega Escrow pursuant to
Section 2.3 of the Purchase Agreement ("Net Initial Payment") and the aggregate
amount of all discharged Seller's Obligations as contemplated in the following
paragraph (the "First Escrow Payment"). Seller's Agents shall acknowledge
receipt thereof, as well as receipt of amounts utilized to discharge Sellers'
Obligations, to Buyer. Sellers' Agents shall hold the First Escrow Payment and
any funds received by them relating to the Earn Out Amount (in the aggregate the
"Escrow Fund") in accordance with the terms of this Agreement. The Escrow Fund
shall be deposited in an interest bearing account with a commercial bank having
aggregate capital, surplus and undivided profits in excess of $100,000,000.
2. Instructions on Payment of Seller's Obligations. On or prior to the Closing
Date, any Seller having Seller's Obligation shall so notify the Sellers' Agents,
specifying the amount of such Obligation, calculated through the Closing Date,
and the name of the creditor to whom such obligation is due and account number
of such creditor to which funds should be delivered to discharge such
obligation, and such Seller shall instruct the Sellers' Agents, in turn, to
instruct the Buyer to deduct from the amount of the Initial Payment and pay
directly to the creditor such Seller's Obligation. No Seller shall so instruct,
nor shall the Sellers' Agents instruct, the Buyer to pay directly any amount in
excess of the Net Initial Payment multiplied by the individual Seller's
percentage in Schedule B.
3. Initial Disbursements of Escrow Funds
(a) The Sellers' Agents shall set aside separate funds out of the Escrow
Funds ("Segregated Cost Fund") in an amount equal to two hundred percent (200%)
of the estimated costs and expenses to be incurred in connection with the
transactions contemplated under the Purchase Agreement (the "Transaction Costs")
as set forth on Schedule A. Schedule A represents Sellers' Agents best current
estimates of Transaction Costs, but the items listed and the amounts related
thereto, as well as the list of advisors, may change prior to the Closing Date.
In all cases, amounts paid for actual Transaction Costs shall be paid only
against delivery of properly supported invoices from the appropriate advisor. To
the extent that any advisor acting on behalf of the Sellers demands partial
payment prior to the Closing Date for approved expenses or fees, such amounts
may be advanced by Pel-Freez Rabbit Meat, Inc. on behalf of the Sellers, with
appropriate approval of the Sellers' Agents, and any amounts so advanced will be
repaid following the Closing Date out of the Segregated Cost Fund.
-2-
<PAGE> 92
(b) Within three business days following the Closing Date, the Sellers'
Agents shall make payments to individual Sellers which payments as to each
individual Seller shall be calculated as follows:
(i) Net Initial Payment multiplied by such Seller's ownership
percentage as set forth in Schedule B, less
(ii) such Seller's pro rata share of Transaction Costs calculated by
multiplying Transaction Costs by the percentage interest set forth in Schedule
B, less
(iii) amounts paid directly by Buyer at closing for repayment of
such Seller's obligations as contemplated by paragraph 2 hereof.
The amounts so calculated shall be paid in accordance with
instructions of Sellers' Agents.
(c) Upon determination of the actual Transaction Costs by the parties
hereto, which shall be within 30 days following the closing date hereof, the
Sellers' Agents shall pay from the Segregated Cost Fund all actual Transaction
Costs. Immediately following the payment and settlement of all Transaction
Costs, the Sellers' Agents shall distribute the entire remaining balance of the
Segregated Cost Fund, including any investment gains, to Sellers in the
percentage interest set forth in Schedule B.
4. Deposit and Disbursement of Earn-Out Amount.
(a) In accordance with the Purchase Agreement, if an Earn-Out Amount is
due to the Sellers, including audit adjustments, then Buyer shall, on or prior
to the March 31 following each of the years ending December 31, 1998, 1999 and
2000, deposit with the Sellers' Agents the sum equal to the aggregate Earn-Out
Amount due to the Sellers, which such amount shall be held by Sellers' Agents in
the Escrow Fund.
(b) Within 10 business days following the receipt of any Earn-0ut Amount
Sellers' Agents shall distribute such amount to the Sellers as follows: (i) for
any Earn-Out Amount received for the year ending December 31, 1998, distribute
amounts up to the first $80,000, including any investment gains, to the Sellers
in the percentage interest set forth in Schedule C, and distribute any amounts
exceeding $80,000, including any investment gains, in the percentage interest
set forth in Schedule D; and (ii) for any Earn-Out Amount received for each of
the years ending December 31, 1999, and December 31, 2000, respectively,
distribute amounts up to the first $160,000 in each year, including any
investment gains in the percentage interest set forth in Schedule C, and
distribute any amounts exceeding $160,000 in each year, including any investment
gains, in the percentage interest set forth in Schedule D. Any amounts to be
distributed to the Sellers under this Section 4 and Section 3, above may be made
by wire transfer,
-3-
<PAGE> 93
certified check or any other mutually agreeable means between the Sellers'
Agents and the Sellers.
5. Net Worth Adjustment.
The Purchase Agreement provides for adjustments to the Purchase Price (as such
term is defined in the Purchase Agreement) which may be paid to the Sellers'
Agents. In the event that the adjustment to the purchase price results in
additional proceeds to Sellers, such amounts shall be distributed by the
Sellers' Agents in accordance with the percentage interest set forth in Schedule
B. In the event that the adjustment to the purchase price results in amounts
being owed to Buyers, upon the request of the Sellers' Agents, the Sellers shall
promptly pay to the Sellers' Agents their individual share of such amount owed
in accordance with the percentage interest set forth in Schedule B.
6. Termination.
Upon distribution to the Sellers of any final Earn-Out Amount earned for the
year ended December 31, 2000, including any investment gains, or upon
determination that no earnout amounts are due for such period, this Agreement
shall terminate in accordance with its own terms; provided, however, that if the
Promega Escrow Agreement is in effect at that time this Agreement shall not
terminate until the Promega Escrow Agreement has terminated and payments
received therefrom are distributed hereunder in accordance with Schedule B.
7. Duties of Sellers' Agents.
(a) Sellers' Agents shall invest any funds held hereunder only as directed
in or pursuant to this Agreement.
(b) Sellers' Agents shall not be liable, except for their own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Sellers' Agents, the other parties hereto shall jointly and severally
indemnify and hold harmless Sellers' Agents from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of or in connection with this
Agreement. Without limiting the foregoing, Sellers' Agents shall in no event be
liable in connection with their investment or reinvestment of any cash held by
them hereunder in good faith, in accordance with the terms hereof, including,
without limitation, any liability for any delays (not resulting from their gross
negligence or willful misconduct) in the investment, reinvestment or
distribution of the Escrow Fund, or any loss of interest incident to any such
delays.
(c) Sellers' Agents shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or
-4-
<PAGE> 94
other writing delivered to them hereunder without being required to determine
the authenticity or the correctness of any fact stated therein or the propriety
or validity of the service thereof. Sellers' Agents may act in reliance upon any
instrument or signature believed by them to be genuine and may assume that the
person purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so. Sellers' Agents may conclusively presume that the undersigned representative
of any party hereto which is an entity other than a natural person has full
power and authority to instruct Sellers' Agents on behalf of that party unless
written notice to the contrary is delivered to Sellers' Agents.
(d) Sellers' Agents may act pursuant to the advice of counsel with respect
to any matter relating to this Agreement and shall not e liable for any action
taken or omitted by them in good faith in accordance with such advice.
(e) In their capacity as Sellers' Agents, Sellers' Agents do not have any
interest in the Escrow Fund deposited hereunder and are serving as escrow holder
only while having only possession thereof. Any payments of income from this
Escrow Fund shall be subject to withholding regulations then in force with
respect to United States taxes. The Sellers will provide Sellers' Agents with
appropriate Internal Revenue Service Forms W-9 for tax identification number
certification. This Section 6(e)and Section 6(b) above shall survive
notwithstanding any termination of this Agreement.
(f) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Fund or in the event that Sellers' Agents are in doubt as to what action they
should take hereunder, Sellers' Agents shall be entitled to retain the Escrow
Fund until Sellers' Agents shall have received (i) a final non-appealable order
of a court of competent jurisdiction directing delivery of the Escrow Fund or
(ii) a written agreement executed by the other parties hereto directing delivery
of the Escrow Fund, in which event Sellers' Agents shall disburse the Escrow
Fund in accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to Sellers' Agents to the effect that the order is final and non-appealable.
Sellers' Agents shall act on such court order and legal opinion without further
question.
(g) The parties hereto agree that Sellers' Agents shall not receive a fee
for their services as escrow agent under this Agreement. Sellers' Agents shall
be entitled to reimbursement for all customary out of pocket expenses incurred
by them for acting as escrow agent hereunder. Such reimbursement shall be paid
from the Escrow Fund from time to time as such costs are incurred by Sellers'
Agents.
-5-
<PAGE> 95
(h) Sellers' Agents shall, upon request from any individual Seller, make
available to such Seller supporting documentation showing amounts computed
pursuant to this Agreement. If any Seller shall dispute any calculation made by
the Sellers' Agents under this Agreement, such Seller shall notify the Sellers'
Agents of the nature and amount of such dispute. If the Sellers' Agents and such
Seller, after reasonable efforts, are unable to resolve such dispute, such
Seller shall have the right to engage an independent accountant to examine and
opine on the calculations made hereunder. Costs of such independent accountant
shall be borne by the Seller, if such accountant confirms the calculations of
the Sellers' Agents, or by the Sellers' Agents if such accountant confirms in
favor of such Seller the amounts so disputed.
8. Limited Responsibility.
This Agreement expressly sets forth all the duties of Sellers' Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against Sellers' Agents.
9. Resignation of Sellers' Agents.
(a) A Sellers' Agent may resign as escrow agent and be discharged from his
duties or obligations hereunder by giving at least 30 days written notice to the
other parties hereto specifying a date when such resignation shall take effect;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as follows:
the parties hereto shall use their best efforts to mutually agree on a successor
escrow agent within 30 days after receiving such notice of resignation. If the
parties fail to agree on a successor escrow agent within such time, the
resigning Sellers' Agent shall have the right to appoint his successor escrow
agent.
(b) The successor escrow agent shall execute and deliver an instrument
accepting his appointment and agreeing to be bound by the terms and conditions
of this Agreement and shall, without further acts, be vested with all the
rights, powers, and duties of the predecessor escrow agent as if originally
named as escrow agent hereunder. Upon the effective appointment of a successor
escrow agent, the resigning Sellers' Agent shall be discharged from any further
duties under this Agreement.
10. Notices.
All notices, consents, waivers and other communications required or permitted to
be given under this Agreement must be in writing and will be deemed to have been
duly given (a) when delivered by hand (with written confirmation of receipt),
(b) when sent by facsimile (with electronic confirmation of receipt), or (c) on
the third day after being sent by a nationally recognized
-6-
<PAGE> 96
overnight delivery service (receipt requested), in each case to the appropriate
addressees and facsimile numbers set forth below (or to such other addresses ad
facsimile numbers as a party may designate by notice to the other parties):
Sellers' Agents or Sellers: David W. Dubbell
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, Arkansas 72757
Facsimile No.: (501) 636-4282
and
Robert C. Mierendorf
Novagen, Inc.
601 Science Drive
Madison, Wisconsin 53711
Facsimile No.: (608) 238-1388
With a copy to: Conner & Winters
3700 First Place Tower
15 East 5th Street
Tulsa, Oklahoma 74103-4344
Attention: Henry G. Will
Facsimile No.: (918) 586-8982
11. Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original land all of which, when taken together, will be
deemed to constitute one and the same.
12. Section Headings.
The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.
13. Waiver.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercises of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or
-7-
<PAGE> 97
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to e a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
13. Exclusive Agreement and Modification.
This Agreement supersedes all prior agreements among the parties with respect to
its subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not e
amended except by a written agreement executed by all of the parties hereto.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-8-
<PAGE> 98
14. Governing Law.
This Agreement shall be governed by the laws of the State of New York, without
regard to conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
SELLERS' AGENTS: SELLERS:
- ----------------------- --------------------------
David W. Dubbell David W. Dubbell
- ----------------------- ---------------------------
Robert Mierendorf Dennis Almond
--------------------------
Corrine Fetherston
---------------------------
Lisa Johnson
---------------------------
Robert Mierendorf
---------------------------
Warren Kroeker
---------------------------
Barbara Morris
---------------------------
Robert Novy
---------------------------
Tom Van Oosbree
-9-
<PAGE> 99
SCHEDULE A
TRANSACTION COSTS
Estimated Costs and Expenses:
<TABLE>
<S> <C>
Vector Securities International, Inc. $450,000
Conner and Winters 170,000
Coopers and Lybrand 170,000
Gary Speed 10,000
--------
TOTAL $800,000
========
</TABLE>
<PAGE> 100
SCHEDULE B
STOCK OWNERSHIP PERCENTAGE
<TABLE>
<CAPTION>
Name of Seller Seller's Stock Ownership Percentage
- -------------- -----------------------------------
<S> <C>
David W. Dubbell 90.0%
Corrine Fetherston 0.8%
Lisa Johnson 0.8%
Robert Mierendorf 4.0%
Barbara Morris 0.8%
Robert Novy 0.8%
Tom Van Oosbree 0.8%
Dennis Almond 1.0%
Warren Kroeker 1.0%
------
TOTAL 100.0%
======
</TABLE>
<PAGE> 101
SCHEDULE C
SELLERS' THRESHOLD PERCENTAGE
<TABLE>
<CAPTION>
Name of Seller Seller's Threshold Percentage
- -------------- -----------------------------
<S> <C>
David W. Dubbell 90%
Corrine Fetherston 1-1/3
Lisa Johnson 1-1/3
Robert Mierendorf 1-1/3
Barbara Morris 1-1/3
Robert Novy 1-1/3
Tom Van Oosbree 1-1/3
Dennis Almond 1
Warren Kroeker 1
----
TOTAL 100%
====
</TABLE>
<PAGE> 102
SCHEDULE D
SELLERS' INCENTIVE PERCENTAGE
<TABLE>
<CAPTION>
Name of Seller Seller's Incentive Percentage
- -------------- -----------------------------
<S> <C>
David W. Dubbell 50%
Corrine Fetherston 8
Lisa Johnson 8
Robert Mierendorf 8
Barbara Morris 8
Robert Novy 8
Tom Van Oosbree 8
Dennis Almond 1
Warren Kroeker 1
----
TOTAL 100%
====
</TABLE>
<PAGE> 103
EXHIBIT F
PROMEGA ESCROW AGREEMENT
AGREEMENT, dated as of_________ __, 199__, among CN Biosciences,
Inc., a Delaware corporation (the "Buyer"), David W. Dubbell ("Dubbell"), Dennis
Almond, Corrine Fetherston, Lisa Johnson, Robert Mierendorf ("Mierendorf"),
Warren Kroeker, Barbara Morris, Robert Novy and Tom Van Oosbree (collectively,
the "Sellers"), Dubbell and Mierendorf in their capacities as Sellers' Agents
(the "Sellers' Agents") and __________, as escrow agent (the "Escrow Agent").
Capitalized terms used in this Agreement without definition shall have the
respective meanings ascribed to them in the Stock Purchase Agreement, dated as
of November __, 1997 (the "Purchase Agreement"), by and among the Sellers,
Pel-Freez, Inc., an Arkansas corporation, and the Buyer.
W I T N E S S E T H :
WHEREAS, under Section 9.1(c) of the Purchase Agreement, the Sellers
have agreed to indemnify the Buyer Indemnified Parties for certain of the
Promega Costs (herein called the "Indemnities"); and
WHEREAS, to secure the performance of the Indemnities by the
Sellers, the Sellers have agreed to deposit with the Escrow Agent the aggregate
amount of $500,000, such amount, together with all interest earned thereon
pursuant to paragraph 7 of this Escrow Agreement, is hereinafter referred to as
the "Escrowed Amount"; and
WHEREAS, the Escrow Agent has agreed to hold the Escrowed Amount
pursuant to the terms of this Escrow Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ESCROW AGENT.
The Buyer and the Sellers hereby appoint and designate the Escrow
Agent to act as escrow agent for the purposes set forth herein and the Escrow
Agent does hereby accept such appointment under the terms and conditions set
forth herein.
2. DEPOSIT.
As security for the performance of the Indemnities, the Sellers
hereby deposit $500,000 with the Escrow Agent. Such amount has been deposited by
wire transfer to the Escrow Agent as follows:
<PAGE> 104
[Name of Escrow Agent Bank]
Name of Account: ___________
Account No.: _______________
Attention: _________________
____________________________
____________________________
____________________________
Re: ________________________
Bank ABA Number: ___________
All interest, other earnings and gains earned on the Escrowed Amount or on
reinvested interest, other earnings and gains on the Escrowed Amount, less all
reasonable and customary brokerage commissions and other investment charges
incurred in connection with the investment, reinvestment or sale of any portion
of the Escrowed Amount shall be added to the Escrowed Amount and become
available for the satisfaction of claims for indemnification pursuant to the
terms of this Agreement.
3. USE OF ESCROWED AMOUNT.
The Escrowed Amount shall be held in escrow hereunder by the Escrow
Agent as herein provided. The Escrow Agent shall not dispose of any portion of
the Escrowed Amount other than as provided in this Escrow Agreement.
4. DISBURSEMENT OF ESCROWED AMOUNT.
(a)(i) The Sellers' Agents may, at any time or from time to time,
for so long as the Escrowed Amount shall be greater than $100,000, assert a
claim (the "Sellers' Claim") against the Indemnity Amount by notice (the
"Sellers' Claim Notice") to the Escrow Agent for payment of Promega Costs. The
Sellers' Claim Notice shall briefly state the basis for the Sellers' Claim, the
dollar amount thereof, the party or parties to whom such amounts are due and
appropriate payment instructions. Upon receipt of a Sellers' Claim Notice, the
Escrow Agent shall promptly deliver a copy of such notice to the Buyer.
(ii) The Buyer shall have 10 calendar days from the date that the
Escrow Agent delivers to it a copy of a Sellers' Claim Notice in which to
determine whether the amounts subject to the Sellers' Claim are valid Promega
Costs and whether to approve such costs for payment (herein called the "Buyer's
Response Period").
(iii) If the Buyer does not respond to the Sellers' Claim Notice
within the Buyer's Response Period, then the Escrow Agent, within 5 Business
Days after the end of the Buyer's Response Period, shall pay to the parties set
forth in the notice and in accordance with the specified payment instructions
that
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<PAGE> 105
portion of the Escrowed Amount as is specified in the Sellers' Claim Notice, or
such lesser portion of the Escrowed Amount as shall then remain in escrow.
(iv) At any time within the Buyer's Response Period, the Buyer may
notify the Escrow Agent that the Sellers' Claim Notice is disputed by the Buyer
as a result of Buyer concluding that such claim is not for valid Promega Costs.
(Any such notice by the Buyer is hereinafter referred to as the "Buyer Dispute
Notice".) Upon receipt of a Buyer Dispute Notice, the Escrow Agent (a) shall
promptly deliver a copy of such notice to the Sellers' Agents; (b) shall
distribute to the parties specified in the notice that portion of the Escrowed
Amount equal to the amount of the Sellers' Claim, if any, which is not disputed
by the Buyer; and (c) shall designate as subject to Sellers' Claim the amount of
the Escrowed Amount equal to the amount of the Sellers' Claim which is disputed
by the Buyer. Thereafter, the Escrow Agent shall not dispose of such portion of
the Escrowed Amount subject to Sellers' Claim until the occurrence of one of the
following events:
(x) The Escrow Agent shall have been directed to distribute
such portion of the Escrowed Amount in accordance with the joint
written instructions of the Buyer and the Sellers' Agents; or
(y) The Escrow Agent shall have received a certified copy of a
final decision (from which no appeal may be taken, whether because
of lapsed time or otherwise) of court competent jurisdiction with
respect to the Sellers' Claim set forth in the Sellers' Claim
Notice, in which case the Escrow Agent shall dispose of such portion
of the Escrowed Amount in accordance with such final decision.
(b)(i) The Buyer may, at any time or from time to time, assert a
claim (the "Buyer Claim") against the Escrowed Amount by notice (the "Buyer
Claim Notice") to the Escrow Agent. The Buyer Claim Notice shall briefly state
the basis for the Buyer Claim and the dollar amount thereof. Upon receipt of a
Buyer Claim Notice, the Escrow Agent shall promptly deliver a copy of such
notice to the Sellers' Agents.
(ii) The Sellers' Agents shall have 15 calendar days from the date
that the Escrow Agent delivers to them a copy of a Buyer Claim Notice in which
to respond thereto (herein called the "Sellers' Response Period").
(iii) If the Sellers' Agents do not respond to the Buyer Claim
Notice within the Sellers' Response Period, then the Escrow Agent, within 5
Business Days after the end of the Sellers' Response Period, shall deliver to
the Buyer that portion of the Escrowed Amount as is specified in the Buyer Claim
Notice,
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<PAGE> 106
or such lesser portion of the Escrowed Amount as shall then remain in escrow.
(iv) At any time within the Sellers' Response Period, the Sellers'
Agents may notify the Escrow Agent that the Buyer Claim Notice is disputed by
the Sellers' Agents. (Any such notice by the Sellers' Agents is hereinafter
referred to as the "Sellers' Dispute Notice".) Upon receipt of a Sellers'
Dispute Notice, the Escrow Agent (a) shall promptly deliver a copy of such
notice to the Buyer; (b) shall distribute to the Buyer that portion of the
Escrowed Amount equal to the amount of the Buyer Claim, if any, which is not
disputed by the Sellers' Agents; and (c) shall designate as subject to Buyer
Claim the amount of the Escrowed Amount equal to the amount of the Buyer Claim
which is disputed by the Sellers' Agents. Thereafter, the Escrow Agent shall not
dispose of such portion of the Escrowed Amount subject to Buyer Claim until the
occurrence of one of the following events:
(x) The Escrow Agent shall have been directed to distribute
such portion of the Escrowed Amount in accordance with the joint
written instructions of the Buyer and the Sellers' Agents; or
(y) The Escrow Agent shall have received a certified copy of a
final decision (from which no appeal may be taken, whether because
of lapsed time or otherwise) of court competent jurisdiction with
respect to the Buyer Claim set forth in the Buyer Claim Notice, in
which case the Escrow Agent shall dispose of such portion of the
Escrowed Amount in accordance with such final decision.
(c) Promptly after the Promega Dispute is finally settled or a
final, nonappealable order of a court of competent jurisdiction is entered with
respect to the Promega Dispute, the Buyer and the Sellers' Agents shall notify
the Escrow Agent in writing as to such determination. If the Indemnities have
been fully satisfied, the Escrow Agent shall deliver to the Sellers' Agents that
portion of the Escrowed Amount, if any, as shall then remain in escrow, such
amounts to be paid in accordance with the Sellers' Escrow Agreement among the
Sellers and the Sellers' Agents, and if such Indemnities shall not have been
fully satisfied, the Buyer and the Sellers' Agents shall in writing jointly
direct the Escrow Agent as to the disbursement of the remaining Escrowed Amount.
5. RELEASE OF WAIVER OF CLAIMS.
The acceptance by the Buyer or the Sellers' Agents of any portion of
the Escrowed Amount from the Escrow Agent on account of any Buyer Claim or
Sellers' Claim shall not constitute a release of any of the rights of either
party against the other with respect to such claim except to the extent of such
portion
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<PAGE> 107
of the Escrowed Amount. Nothing herein contained, nor any act or failure to act
by the Buyer or the Sellers' Agents, including but not limited to consenting to
the release of all or a portion of the Escrowed Amount from escrow, shall
operate or be construed as a waiver of any rights of the respective party under
the Purchase Agreement or any other agreement executed in connection therewith,
nor shall anything herein contained prohibit the Buyer from pursuing any other
remedies which it may have for the breach of any representation, warranty or
covenant contained in the Purchase Agreement or other agreement executed in
connection therewith.
6. TERMINATION OF ESCROW AGREEMENT.
Upon distribution of all of the Escrowed Amount held by the Escrow
Agent, this Escrow Agreement shall automatically terminate.
7. PERMITTED INVESTMENTS.
(a) The Escrow Agent shall invest and reinvest the Escrowed Amount
in (i) securities issued or guaranteed by the United States Government or its
agencies or instrumentalities; (ii) repurchase agreements collateralized by U.S.
Treasury, federal agency, or mortgage backed securities; (iii) commercial paper
rated Prime-1 by Moody's Investors Service, Inc. ("Moody's) or A-1 or A-1+ by
Standard and Poor's Corporation ("S&P") or if not rated, issued by companies
having an outstanding unsecured debt issue rated Aa or better by Moody's or AA
or better by S&P; (iv) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that is a member of the Federal Reserve System and that has
combined capital and surplus and undivided profits of not less than
$300,000,000, whose debt has a rating, at the time as of which any investment
therein is made, of Prime-1 by Moody's, or A-1 or A-1+ by S&P; or (v) any money
market or demand deposit accounts issued or offered by a domestic commercial
bank having capital and surplus in excess of $300,000,000. The Escrow Agent may
use a broker-dealer of its own selection, including a broker-dealer owned by or
affiliated with the Escrow Agent or any affiliates of the Escrow Agent.
(b) The Escrow Agent shall have the right to liquidate any
investments held in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent shall not be liable for any loss
incurred as a result of such liquidation which is due to fluctuations in market
rates or penalties incurred because of early redemption.
8. LIABILITY OF ESCROW AGENT.
The duties and obligations of the Escrow Agent hereunder shall be
determined solely by the express provisions of this Escrow Agreement, and the
Escrow Agent shall be under no
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<PAGE> 108
obligation to refer to any other documents between or among the parties related
in any way to this Escrow Agreement, including but not limited to the Purchase
Agreement, it being specifically understood that the following provisions are
accepted by all of the parties hereto:
(a) The Escrow Agent shall not be liable to anyone whomsoever by
reason of any error of judgment or for any act done or step taken or omitted by
it, or for any mistake of fact or law or anything which it may do or refrain
from doing in connection herewith unless caused by or arising out of its own bad
faith, gross negligence or willful misconduct. The Buyer and the Sellers shall
indemnify and hold the Escrow Agent harmless from and against any and all
liability and expense which may arise out of any action taken or omitted by the
Escrow Agent in accordance with this Escrow Agreement, except such liability and
expense as may result from the bad faith, gross negligence or willful misconduct
of the Escrow Agent.
(b) The Escrow Agent may consult with counsel of its choice and
shall have full and complete authorization and protection for any actions taken
or omitted by it hereunder in good faith and in accordance with the opinion of
such counsel; provided, however, that nothing contained in this subparagraph
(b), nor any action taken by the Escrow Agent, or of any counsel, shall relieve
the Escrow Agent from liability for any claims which are occasioned by its bad
faith, gross negligence or willful misconduct, all as provided in subparagraph
(a) above.
(c) The Escrow Agent shall be entitled to rely on, and shall be
protected in acting in reliance upon, any instructions or directions furnished
to it in writing signed by both the Buyer and the Sellers' Agents pursuant to
any provision of this Escrow Agreement and shall be entitled to treat as
genuine, and as the document it purports to be, any letter, paper or other
document furnished to it by either the Buyer or the Sellers' Agents, and
believed by the Escrow Agent to be genuine and to have been signed and presented
by the proper party or parties.
9. COMPENSATION OF ESCROW AGENT.
The Escrow Agent shall receive its customary fee for the performance
of its services hereunder for each year or portion thereof without proration and
shall be reimbursed for reasonable costs and expenses incurred by it in
connection with the performance of such services. The fees, costs and expenses
(including legal fees) of the Escrow Agent shall be borne equally by the Buyer
on the one hand and the Sellers on the other hand.
10. RESIGNATION OF ESCROW AGENT.
(a) The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving at least 30 days written notice to the other
parties hereto specifying a date when
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<PAGE> 109
such resignation shall take effect; provided, however, that no such resignation
shall become effective until the appointment of a successor escrow agent which
shall be accomplished as follows: the parties shall use their best efforts to
mutually agree on a successor escrow agent within 30 days after receiving such
notice. If the parties fail to agree on a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow agent.
(b) The successor escrow agent shall execute and deliver an
instrument accepting its appointment and agreeing to be bound by the terms and
conditions of this Escrow Agreement and it shall, without further acts, be
vested with all the rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. Upon the effective appointment of a
successor escrow agent, the Escrow Agent shall be discharged from any further
duties under this Agreement.
(c) The Escrow Agent shall have the right to withhold an amount
equal to the amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow
Agent in connection with the termination of this Escrow Agreement.
11. TAX IDENTIFICATION NUMBER.
The Buyer and the Sellers' Agents, on behalf of each Seller, shall
provide the Escrow Agent with their Tax Identification Numbers (TIN) as assigned
by the Internal Revenue Service. All interest or other income earned under this
Escrow Agreement shall be allocated and paid as provided herein and reported by
the recipient to the Internal Revenue Service as having been so allocated and
paid.
12. DUTIES OF ESCROW AGENT.
The duties and responsibilities of the Escrow Agent hereunder shall
be determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities shall be implied.
13. ASSIGNABILITY.
This Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their respective successors and assigns; provided,
however, that no party shall assign or delegate any of the obligations created
under this Agreement without the prior written consent of the other parties.
Notwithstanding the foregoing, the Buyer shall have the unrestricted right to
assign this Agreement and/or to delegate all or any part of its obligations
hereunder to any Affiliate of the Buyer or to any lender in connection with any
financing, but in such event the Buyer shall remain fully liable for the
performance of all of such obligations in the manner prescribed
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<PAGE> 110
in this Agreement. Nothing in this Agreement shall confer upon any Person not a
party to this Agreement, or the legal representatives of such Person, any rights
or remedies of any nature or kind whatsoever under or by reason of this
Agreement.
14. NOTICES.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made if
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested) by facsimile or by air courier guaranteeing second day
delivery directed to the parties at the following addresses:
(a) If to the Buyer, to:
CN Biosciences, Inc.
10394 Pacific Center Court
San Diego, CA 92121
Attention: James G. Stewart
Fax: (619) 450-5522
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Peter H. Jakes, Esq.
Fax: (212) 821-8111
(b) If to the Sellers' Agents, to:
David W. Dubbell
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Fax: (501) 636-4282
and:
Robert C. Mierendorf
Novagen, Inc.
601 Science Dr.
Madison, WI 53711
Fax: (608) 238-1388
-8-
<PAGE> 111
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
and:
Lathrop & Clark
740 Regent Street
Suite 400
Madison, WI 53701
Attention: Michael J. Lawton, Esq.
Fax: (608) 257-1507
(c) If to the Parent, to:
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Attention: David W. Dubbell
Fax: (501) 636-4282
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
(d) If to Dubbell, to:
David W. Dubbell
Pel-Freez, Inc.
205 North Arkansas
P.O. Box 68
Rogers, AR 72757
Fax: (501) 636-4282
-9-
<PAGE> 112
with a copy to:
Conner & Winters, a Professional Corporation
15 E. Fifth Street
Suite 3700
Tulsa, OK 74103
Attention: Henry G. Will, Esq.
Fax: (918) 586-8982
(e) if to Meirendorf, to:
Robert C. Mierendorf
Novagen, Inc.
601 Science Dr.
Madison, WI 53711
Fax: (608) 238-1388
with a copy to:
Lathrop & Clark
740 Regent Street
Suite 400
Madison, WI 53701
Attention: Michael J. Lawton, Esq.
Fax: (608) 257-1507
(f) if to the Escrow Agent, to:
-------------------------
-------------------------
-------------------------
Attention:_______________
Fax: ___________________
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed.
15. LAW TO GOVERN.
This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflict of law provisions thereof.
16. COUNTERPARTS.
This Escrow Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 113
IN WITNESS WHEREOF, the parties hereto have duly executed this
Escrow Agreement as of the date first above written.
CN BIOSCIENCES, INC.
By: ___________________________
Name:
Title:
-------------------------------
DAVID W. DUBBELL
-------------------------------
DENNIS ALMOND
-------------------------------
CORRINE FETHERSTON
-------------------------------
LISA JOHNSON
-------------------------------
ROBERT MIERENDORF
-------------------------------
WARREN KROEKER
-------------------------------
BARBARA MORRIS
-------------------------------
ROBERT NOVY
-------------------------------
TOM VAN OOSBREE
________________, as Escrow Agent
By:_______________________________
Name:
Title:
-11-
<PAGE> 114
EXHIBIT G
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the ___ day of ________, 199_, between
CN Biosciences, Inc., a Delaware corporation (the "Company") and Robert C.
Mierendorf (the "Employee").
1. Effective Date. This Employment Agreement shall become effective on the
___ day of _______, 199_ (the "Effective Date").
2. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment all upon the terms and conditions herein set forth.
3. Duties. The Employee is engaged as President and General Manager of
Novagen, a wholly owned subsidiary of CN Biosciences, Inc. located in Madison,
WI, and will report to the Chairman and Chief Executive Officer of the Company
and hereby promises to perform and discharge well and faithfully all duties of
this position.
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during the
term of this Employment Agreement be engaged in any other business activity
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage; but this shall not be construed as preventing the Employee
from investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any services on the part of
the Employee in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, nor shall this be construed as preventing the Employee from purchasing
securities in any corporation whose securities are regularly traded provided
that such purchases shall not result in his collectively owning beneficially at
any time one percent (1%) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company, without the express
prior written consent of the Company.
5. Compensation.
(a) For services rendered under this Employment Agreement, the
Company shall pay the Employee a salary at the rate of $_______ per annum (the
"Base Salary"), payable (after deduction of applicable payroll taxes as an
employee in the State of Wisconsin) in equal bi-weekly installments. The
Employee shall also be eligible for and participate in such fringe benefits as
Initials: _________ ________
<PAGE> 115
shall be generally provided to executives of the Company, including medical
insurance and retirement programs which may be adopted from time to time during
the term hereof by the Company. On an annual basis, the Company shall review
Employee's salary and make such adjustment as may be warranted based upon
Employee performance, Company financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee shall be
eligible for, and the Company in its sole discretion, may award an executive
bonus up to a maximum of 30% of Base Salary, based upon a number of factors
including achievement of the Company's financial objectives, Employee
performance and achievement of mutually acceptable objectives and input from the
Compensation Committee of the Board of Directors.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to paid time off consistent with the Company's "Cal
Time" policy regarding vacation and sick time. For purposes of determining the
amount of such benefit, Employee's term of employment shall be determined based
upon the hire date at Novagen, prior to acquisition by the Company.
7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data.
8. Term.
(a) The Employee's employment under this Employment Agreement shall
commence on the Effective Date and shall expire on the two year anniversary date
thereof. Notwithstanding the foregoing, the Company may at its election,
terminate the Employee's employment hereunder as follows:
(i) Upon thirty (30) days notice if the Employee becomes
physically or mentally incapacitated or is injured so that he is unable to
perform the services required of him hereunder and such inability to perform
continues for a period in excess of ninety (90) days and is continuing at the
time of such notice; or
(ii) For "Cause" upon notice of such termination to the
Employee. For purposes of this Employment Agreement, the Company shall have
"Cause" to terminate its obligations hereunder upon (A) the reasonable
determination by the Chief Executive Officer that the Employee has ceased to
perform his duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an intentional
and extended neglect of his duties
Initials: ________ ________
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<PAGE> 116
hereunder, (B) the Chief Executive Officer's reasonable determination that the
Employee has engaged or is about to engage in conduct materially injurious to
the Company, (C) the Employee's having been convicted of a felony, or (D) A
material breach by the Employee of any of the other covenants or representations
herein; or
(iii) Without Cause by honoring the terms of a separate
Severance Agreement executed between the Company and Employee.
(iv) Upon the death of the Employee.
(b) Not later than ninety (90) days prior to the expiration of the
stated term of this Employment Agreement, the parties shall begin to negotiate
in good faith the terms of any extension of this Employment Agreement, provided
that neither party shall be under any obligation to enter into such an
extension. In the case of a renewal and unless otherwise agreed to in writing by
both parties, the terms and conditions of this Employment Agreement shall apply
to any renewals or extensions thereto.
9. Stock Options. The Company will grant incentive stock options to
Employee at the earliest practicable date following the Effective Date of this
Employment Agreement. The Company anticipates the granting of ________ options
to purchase the Company's common stock, at the fair market value of the stock on
the date which the Stock Option Committee of the Board of Directors meets to
finalize such grant. It is anticipated that such options will vest 20% per year
from the date of grant.
10. Representations. The Employee hereby represents to the Company that
(a) he is legally entitled to enter into this Employment Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to grant
to the Company the rights contemplated by paragraph 11 hereof, and (c) he does
not now have, nor within the last three years has he had, any ownership interest
in any business enterprise (other than interest in publicly traded corporations
where his ownership does not exceed one percent (1%) or more of the equity
capital) which is a customer of the Company, any of its subsidiaries, or from
which the Company or any of its subsidiaries purchases any goods or services or
to whom such corporations owe any financial obligations or are required or
directed to make any payments.
Initials: ________ ________
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<PAGE> 117
11. Inventions.
(a) The Employee hereby sells, transfers and assigns to the Company
or to any person, or entity designated by the Company all of the entire right,
title and interest of the Employee in and to all inventions, ideas, disclosures
and improvements, whether patented or unpatented, and copyrightable material,
made or conceived by the Employee, solely or jointly, during the term hereof
which relate to methods, apparatus, designs, products, processes or devices,
sold, leased, used or under consideration or development by the Company or any
of its subsidiaries, or which otherwise relate to or pertain to the business,
functions or operations of the Company or any of its subsidiaries or which arise
from the efforts of the Employee during the course of his employment for the
Company or any of its subsidiaries. The Employee shall communicate promptly and
disclose to the Company, in such form as the Company requests, all information,
details and data pertaining to the aforementioned inventions, ideas, disclosures
and improvements; and the Employee shall execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
necessary or required of the Employee to permit the Company or any person or
entity designated by the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereof. Any invention
relating to the business of the Company and its subsidiaries and disclosed by
the Employee within one year following the termination of this Agreement shall
be deemed to fall within the provisions of this paragraph unless proved to have
been first conceived and made following such termination.
(b) The Employee has been notified and understands that the
provisions of this Section 11 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement which provides
that an employee shall assign, or offer to assign, any of his or her rights in
an invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(a) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer.
(b) Result from any work performed by the employee for
the employer.
Initials: ________ ________
-4-
<PAGE> 118
(ii) To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subsection (i), the provision is against the
public policy of this state and is unenforceable.
12. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith. The Company will ensure that Employee, as an
officer of the Company, is added to the Company's insurance policy for Officers
and Directors Liability insurance.
13. Notices. Any notice required or permitted to be given under this
Employment Agreement shall be sufficient if in writing and if sent by registered
mail to Mr. Robert C. Mierendorf at his home address as reflected on the records
of the Company, in the case of the Employee, or Mr. Stelios B. Papadopoulos,
Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific Center Court, San
Diego, CA 92121, in the case of the Company.
14. Waiver of Breach. A waiver by the Company or the Employee of a breach
of any provision of this Employment Agreement by the other party shall not
operate or be construed as a waiver of any subsequent breach by the other party.
15. Governing Law. This Employment Agreement shall be governed by and
construed and enforce in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of laws provisions
thereof.
16. Assignment. This Employment Agreement may be assigned, without the
consent of the Employee, by the Company to any person, partnership, corporation,
or other entity which has purchased substantially all the assets of the Company,
provided such assignee assumes all the liabilities of the Company hereunder.
17. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of intent
or understandings between the Employee and (a) the Company, (b) any member of
the Calbiochem Novabiochem Group or (c) any of the Company's principal
shareholders, affiliates or subsidiaries regarding employment. This Employment
Agreement may be changed only by an agreement in writing signed by a party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
Initials: ________ ________
-5-
<PAGE> 119
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day first herein above written.
CN BIOSCIENCES, INC.
By:______________________________
Stelios B. Papadopoulos
Chief Executive Officer
By:______________________________
Robert C. Mierendorf
Employee
Initials: ________ ________
-6-
<PAGE> 120
EXHIBIT H
ASSIGNMENT AND LICENSE AGREEMENT
This Agreement is made this ___ day of ___________, 199__, by and among
NOVAGEN, INC. (the "Company"), a corporation organized and existing under the
laws of the State of Arkansas; PEL-FREEZ, INC. (the "Parent"), a corporation
organized and existing under the laws of the State of Arkansas; and PEL-FREEZ
RABBIT MEAT, INC. ("PFRM"), a corporation organized and existing under the laws
of the State of Arkansas.
RECITALS:
A. The Company or the Parent currently owns all right, title and interest
in and to the Patent Right and possesses the rRTF Technology.
B. The Company and the Parent are being acquired by CN Biosciences, Inc.
(the "Buyer") under a Stock Purchase Agreement, dated _____________ (the "SPA"),
pursuant to which the Buyer will acquire control of all of the issued and
outstanding stock of the Company (the transaction contemplated under the SPA is
hereinafter referred to as the "Transaction").
C. As part of the consideration under the SPA, the Company, or the Parent,
as applicable, agrees to transfer and/or assign all right, title and interest in
and to the rRTF Technology and the Patent Right to PFRM under the terms and
conditions hereinafter set forth.
D. The parties acknowledge that in order to practice the rRTF Technology
and the Patent Right and produce rRTF products, PFRM must obtain certain rights
to other technologies which the Company currently possesses under the Existing
Licenses. PFRM desires the Company's assistance in obtaining such rights and the
Company is willing to provide such assistance. Until PFRM can obtain such
rights, the Company is willing to enter into an agreement to manufacture and
sell rRTF products exclusively for PFRM.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth below and in the PSA, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I - DEFINITIONS
1.1 "Patent Right" means pending U.S. Patent Application 08/683,007,
entitled _____________, any patent issuing therefrom, any reissues,
reexaminations, or extensions thereof, and any corresponding foreign patents or
patent applications.
<PAGE> 121
1.2 "rRTF" shall mean recombinant rabbit tissue factor.
1.3 "rRTF Technology" means the production protocols, biological materials
and know-how necessary for the production of rRTF together with the process
disclosed in the Patent Right.
1.4 "Research Reagent Market" means the sale of packaged quantities of
rRTF in up to 1.0 mg containers for use in academic and commercial product
research applications.
1.5. "Licensed Products" means any products, except coagulation diagnostic
products, that employ or are in any way produced by the practice of an invention
claimed in the Patent Right or that would otherwise constitute infringement of
any claims of the Patent Right.
1.6 "Licensed Territory" is Worldwide.
1.7 "Existing Licenses" means the licenses entered into by the Company
granting it certain rights necessary to practice the rRTF Technology and produce
rRTF products and that are set forth on the attached Appendix 1.
ARTICLE II - ASSIGNMENT AND TRANSFER
2.1 The Company and/or Parent, as applicable, hereby sell, assign and
transfer to PFRM all right, title and interest in and to the Patent Right,
except as specifically provided herein, and agree to take all steps necessary to
record such assignment with the United States Patent and Trademark Office.
Furthermore, the Company and/or Parent, as applicable, agree to transfer all
right, title and interest in and to, and possession of any and all rRTF
Technology to PFRM as soon as practicable following the closing of the
Transaction, as set forth in the PSA.
2.2 Upon the assignment and transfer set forth in Section 2.1 above, the
Company and Parent shall be prohibited from practicing any part of the rRTF
Technology, except that the Company shall not be prohibited from using
generalized know-how also utilized in the manufacture of rRTF for manufacture of
non-rRTF products, provided that (i) such know-how was also used by Company in
the manufacture of such other products as of the date of the closing of the
Transaction or (ii) such know-how is now, or at any time in the future becomes,
generally known or available to the public through no fault of the Company or
the Parent.
ARTICLE III - EXISTING LICENSES AND SUPPLY AGREEMENT
3.1 The Company and PFRM hereby acknowledge and agree that the Company
shall continue to hold and benefit from the Existing Licenses, provided,
however, that the Company
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<PAGE> 122
agrees that it shall not exercise any rights under such licenses to do any of
the following, except with the prior written consent of PFRM:
(a) make or sell coagulation diagnostic products;
(b) sublicense rights to any third party to make, use or sell
coagulation diagnostic products; or
(c) assert rights to prevent PFRM from obtaining and exercising
rights to practice the technologies that are the subject of the Existing
Licenses to make, have made, use or sell coagulation diagnostic products or to
sublicense such rights.
3.2 The Company shall use its best efforts to assist PFRM in obtaining
licenses (or sublicenses) from the licensors of the Existing Licenses that are
necessary to practice the rRTF Technology and to make, use, and sell rRTF
products on terms comparable to those contained in the Existing Licenses. Upon
request by PFRM, the Company shall release any rights it has under the Existing
Licenses related to coagulation diagnostic products, provided that the Company
receive $5,000 as consideration for releasing such rights.
3.3 Recognizing that PFRM cannot practice the rRTF Technology and make,
use, and sell rRTF products until it can obtain the rights discussed in this
Article III, the parties agree to negotiate and execute a supply agreement,
pursuant to which the Company will manufacture and sell exclusively for PFRM
between 500 and 800 milligrams of rRTF product in accordance with agreed upon
specifications at a price to PFRM of $156/mg.
ARTICLE IV - LICENSE GRANT
4.1 PFRM hereby grants to the Company a nonexclusive license, limited to
the Research Reagent Market, under the Patent Right and the rRTF Technology to
make, use and sell Licensed Products in the Licensed Territory.
ARTICLE V - ROYALTY
5.1 In consideration for the license granted in Article IV, the Company
agrees to pay to PFRM a royalty on sales of Licensed Products equal to $54/mg.
If, however, the Licensed Product is purchased by the Company directly from PFRM
for resale, the cost of such product to the Company, including royalty, shall be
$156/mg.
ARTICLE VI - PAYMENTS AND REPORTS
6.1 The Company shall provide PFRM with a written report of all sales of
Licensed Products for which a royalty is due or payable under this Agreement.
Such report shall be due
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<PAGE> 123
within thirty (30) days of the end of each calendar quarter, whether or not
royalties are due, and shall be accompanied by a payment to PFRM of all earned
royalties due under Section 5.1.
6.2 The Company shall keep books and records sufficient to verify the
accuracy and completeness of the Company's accounting referred to above,
including without limitation, the manufacture, use and sale of Licensed Products
for which a royalty is due hereunder and shall make such books and records
available for inspection by PFRM, or its designee, upon reasonable notice and
during normal hours of operation.
ARTICLE VII - SUBLICENSING AND ASSIGNMENT
7.1 The Company is not granted the right to sublicense any rights under
the Patent Right or the rRTF Technology granted hereunder.
ARTICLE VIII - CHALLENGE TO VALIDITY
8.1 In the event the Company or a third party contests or otherwise
challenges the validity of the Patent Right, the Company shall continue to pay
royalties with respect to the patent as if such contest or challenge were not
underway until the patent is adjudicated invalid or unenforceable by a court of
last resort. In the event any such claims are ultimately held valid by a court
of last resort, then the Company shall reimburse PFRM for its actual expenses,
including reasonable attorneys fees, incurred in defending said contest of
validity.
ARTICLE IX - TERM AND TERMINATION
9.1 The term of the license granted hereunder shall begin on the effective
date of this Agreement and continue until the Patent Right is no longer an
enforceable patent unless this Agreement is otherwise terminated as provided
herein or as permitted by law.
9.2 If the Company at any time defaults in the timely payment of any
monies due to PFRM or commits any breach of any covenant herein contained, and
the Company fails to remedy any such breach or default within thirty (30) days
after written notice thereof, PFRM may, at its option, terminate this Agreement
and the license granted hereunder by giving written notice of such termination
to the Company.
9.3 This Agreement may be terminated at any time upon the mutual written
agreement of the parties.
ARTICLE X - WARRANTIES
10.1 The Company represents and warrants that as of the effective date of
this Agreement, it has the power to enter into this Agreement.
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<PAGE> 124
10.2 PFRM represents and warrants that it has the power to enter into this
Agreement and that, upon the assignment and transfer of the Patent Right and
rRTF Technology as provided herein, it has the right to grant the license
granted to the Company in this Agreement. However, nothing in this Agreement
shall be construed as:
(a) A warranty or representation by PFRM as to the validity or scope
of the Patent Right;
(b) A warranty or representation that anything made, used, or sold
under the license granted hereunder shall not infringe the patent rights of
third parties; or
(c) An obligation to furnish any know-how or any services other than
those specified in this Agreement.
10.3 The Company represents and warrants that it is relying solely on its
own technical expertise in the manufacture, use and sale of Licensed Products,
and is not relying on PFRM in any way.
ARTICLE XI - MISCELLANEOUS
11.1 This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by,
and completely expressed in this Agreement. Neither party shall be bound by any
definition, condition, warranty, or representation other than as expressly
stated in this Agreement or as subsequently set forth in a writing signed by the
party to be bound thereby.
11.2 If any provision of this Agreement shall be held unenforceable or
invalid, that provision shall be considered severable from this Agreement and
shall neither act to terminate this Agreement nor affect the validity of the
remaining provisions.
11.3 The parties hereto are independent contractors and not joint
venturers or partners.
11.4 This Agreement may not be amended or modified except by mutual
written agreement. Neither party may waive or release any of its rights or
interests in this Agreement except in writing. Failure to assert any right
arising from the Agreement shall not be deemed or construed as a waiver of such
right.
11.5 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
5
<PAGE> 125
11.6 Any notice or payment required to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been given at the earlier of the
time when actually received as a consequence of any effective method of
delivery, including but not limited to personal delivery, transmission by
facsimile or delivery by a professional courier service or the time when sent by
certified or registered mail, addressed to the other party at the appropriate
address below or at such changed address as the parties shall have specified by
written notice, provided that any notice of change of address shall be effective
only upon actual receipt:
To Company/Parent: Novagen, Inc.
Attn: _______________
---------------------
---------------------
---------------------
To PFRM: Pel-Freez Rabbit Meat, Inc.
Attn: _______________
---------------------
---------------------
---------------------
6
<PAGE> 126
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
NOVAGEN, INC.
By:___________________________
Its:__________________________
PEL-FREEZ, INC.
By:___________________________
Its:__________________________
PEL-FREEZ RABBIT MEAT, INC.
By:___________________________
Its:__________________________
7
<PAGE> 127
APPENDIX 1
1. Research License dated February 1, 1990, between Novagen, Inc. and
Associated Universities, Inc., operator of Brookhaven National Laboratory, for
technology represented by U.S. Patent Application Serial No. 002,408 (now U.S.
Patent ___________________ (Studier et al), issued ___________), entitled,
"Cloning and Expression of the Gene for Bacteriophage T7 RNA Plymerase."
2. License dated June 20, 1994, as amended July 11, 1995, between Novagen,
Inc. and Associated Universities, Inc., operator of Brookhaven National
Laboratory, for technology represented by U.S. Patent 4,952,496 (Studier et al),
issued August 28, 1990, entitled, "Cloning and Expression of the Gene for
Bacteriophage T7 RNA Polymerase."
3. License dated May 26, 1995, between Novagen, Inc. and Genetics
Institute, Inc., for certain patent rights relating to thioredoxin fusion
expression systems and recombinant enterokinase cleavage enzyme.
4. License dated May 11, 1995, between Novagen, Inc. and the President and
Fellows of Harvard College, for certain biological materials identified as the
trxB strain of E. coli developed by Dr. Jonathan Beckwith and Alan Derman
("Beckwith Plasmid Strain").
<PAGE> 128
EXHIBIT I
BEVSCO AGREEMENT
This Agreement is made this ___ day of ___________, 199__, by and among
NOVAGEN, INC. (the "Company"), a corporation organized and existing under the
laws of the State of Arkansas; PEL-FREEZ, INC. (the "Parent"), a corporation
organized and existing under the laws of the State of Arkansas; and PEL-FREEZ
RABBIT MEAT, INC. ("PFRM"), a corporation organized and existing under the laws
of the State of Arkansas.
RECITALS:
A. The Company and the Parent are being acquired by CN Biosciences, Inc.
(the "Buyer") under a Stock Purchase Agreement, dated _____________ (the "SPA"),
pursuant to which the Buyer will acquire control of all of the issued and
outstanding stock of the Company (the transaction contemplated under the SPA is
hereinafter referred to as the "Transaction").
B. The Parent entered into license agreements related to the baculovirus
expression vector system with: (i) BevsCo, Inc. ("BEVSCO"), dated August 30,
1995 (the "BEVSCO License"); and (ii) Texas A&M University System ("TAMUS"),
dated September 12, 1995 (the "TAMUS License"). (The BEVSCO License and the
TAMUS License are hereinafter collectively referred to as the "BEVS Licenses"
and BEVSCO and TAMUS are hereinafter referred to as the "BEVS Licensors".)
C. PFRM desires rights similar to those granted to the Company and/or the
Parent under the BEVS Licenses and further wishes to limit the Company's and the
Parent's exercise of their respective rights under such licenses.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth below and in the SPA, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. BEVS Licenses. The parties hereby acknowledge that the Company, or the
Parent, as applicable, shall retain the BEVS Licenses, provided, however, that
the Company and the Parent agree that neither shall exercise any rights under
such licenses to do any of the following, except with the prior written consent
of PFRM, such consent not to be unreasonably withheld:
(a) make, use or sell coagulation diagnostic products;
(b) sublicense rights to any third party to make, use or sell
coagulation diagnostic products; or
<PAGE> 129
(c) assert rights to prevent PFRM from obtaining and exercising
rights to use the technology that is the subject of the BEVS Licenses to make,
have made or sell coagulation diagnostic products or to sublicense such rights
(collectively, the "Licensed Rights").
2. Assistance. The Company or the Parent shall use its commercially
reasonable efforts to assist PFRM in obtaining licenses from the BEVS Licensors
to exercise the Licensed Rights on terms comparable to those contained in the
BEVS Licenses. Upon request by PFRM, the Company or the Parent shall use
commercially reasonable efforts to negotiate with BEVSCO and/or TAMUS to release
or assign, transfer or otherwise provide to PFRM all the Company's or the
Parent's rights under the BEVS Licenses related to coagulation diagnostic
products (but not with respect to any academic and commercial product research
applications), provided that PFRM shall pay to the Company $50,000 as
consideration for the transfer of such rights.
3. Supply Agreement. In the event that PFRM is unable to obtain a license
from BEVSCO or TAMUS to exercise the Licensed Rights on terms acceptable to
PFRM, the Company shall enter into good faith negotiations with PFRM regarding a
supply agreement, pursuant to which PFRM would release the Company from the
restrictions set forth in Section 1 and the Company would manufacture and sell
exclusively to PFRM any coagulation product requested by PFRM subject to the
BEVS Licenses at a price approximately equal to 1.5 times the direct cost to
develop and manufacture such product.
4. Term. The term of this Agreement shall begin on the effective date of
this Agreement and continue for a period of ________ years. This Agreement may
be renewed upon such termination by written notice signed by both parties.
5. Assignment. This Agreement may not be transferred or assigned by either
party, except with the prior written consent of the other party, which consent
shall not be unreasonably withheld, provided, however, the Company may assign
its rights under this Agreement in connection with the transfer of all or
substantially all of the assets of the Company or may assign such rights to any
affiliate.
6. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by,
and completely expressed in this Agreement. Neither party shall be bound by any
definition, condition, warranty, or representation other than as expressly
stated in this Agreement or as subsequently set forth in a writing signed by the
party to be bound thereby.
(b) If any provision of this Agreement shall be held unenforceable
or invalid, that provision shall be considered severable from this Agreement and
shall neither act to terminate this Agreement nor affect the validity of the
remaining provisions.
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<PAGE> 130
(c) The parties hereto are independent contractors and not joint
venturers or partners.
(d) This Agreement may not be amended or modified except by mutual
written agreement. Neither party may waive or release any of its rights or
interests in this Agreement except in writing. Failure to assert any right
arising from the Agreement shall not be deemed or construed as a waiver of such
right.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(f) Any notice given pursuant to this Agreement shall be in writing
and shall be deemed to have been given at the earlier of the time when actually
received as a consequence of any effective method of delivery, including but not
limited to personal delivery, transmission by facsimile or delivery by a
professional courier service or the time when sent by certified or registered
mail, addressed to the other party at the appropriate address below or at such
changed address as the parties shall have specified by written notice, provided
that any notice of change of address shall be effective only upon actual
receipt:
To Company/Parent: Novagen, Inc.
Attn: _______________
_____________________
_____________________
_____________________
To PFRM: Pel-Freez Rabbit Meat, Inc.
Attn: _______________
_____________________
_____________________
_____________________
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
NOVAGEN, INC.
By:_____________________________
Its:____________________________
PEL-FREEZ, INC.
By:_____________________________
Its:____________________________
PEL-FREEZ RABBIT MEAT, INC.
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<PAGE> 131
By:_____________________________
Its:____________________________
4
<PAGE> 132
Exhibit J
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT ("Assignment") is made as of this ____ day
of December, 1997 by and between MAI SYSTEMS CORPORATION ("MAI"), PEL-FREEZ,
INC. ("PFI"), PEL-FREEZ RABBIT MEAT, INC. ("PFRMI") and NOVAGEN, INC.
("NOVAGEN").
In consideration of the mutual promises and covenants contained
herein, MAI, PFI and NOVAGEN agree as follows:
1. Acquisition. On March 7, 1997 Oracle Corporation, through its
Datalogix International, Inc. division ("Datalogix"), sold to MAI certain of the
assets of Datalogix relating to the CIMPRO product line, including a Software
License and Support Agreement with PFI (the "CIMPRO Agreement"), by and between
PFI as licensee and Datalogix as licensor. MAI represents that it is the owner
of the CIMPRO Software and the authorized licensor under the CIMPRO Agreement.
2. Assignment of CIMPRO AGREEMENT. PFI has advised MAI that it
desires to assign to PFRMI and Novagen certain of its rights under the CIMPRO
Agreement as follows: PFI and Novagen shall receive one "Site License" and 30 PC
user licenses as defined in the CIMPRO Agreement, and (b) and PFRMI shall
receive two "Site Licenses," 66 PC user licenses and "40+" module as defined in
the CIMPRO Agreement.
3. Consent to Assignment to PFRMI and NOVAGEN. Conditioned upon
PFRMI's and NOVAGEN's agreement to be bound by the terms and conditions of the
CIMPRO Agreement, MAI hereby consents to the assignment of the CIMPRO Agreement
from PFI to PFRMI and NOVAGEN effective upon the full execution of this
assignment by all parties referenced in Section 1.
4. Acknowledgment by MAI That Software Support Fees Paid Through
September 30, 1998. MAI hereby acknowledges that all software support fees have
been paid for the CIMPRO Agreement (e.g. for all 3 site licenses and all 96 PC
user licenses and the 40+ module) through September 30, 1998.
5. Ability to Transfer License from NOVAGEN to PFRMI. MAI hereby
consents to the possible future transfer of the license assigned to NOVAGEN
herein, from NOVAGEN to PFRMI, provided that PFRMI agrees to be bound by all the
conditions of the CIMPRO Agreement.
[SIGNATURE BLOCKS ON NEXT PAGE]
<PAGE> 133
IN WITNESS WHEREOF, MAI, PFI, PFRMI and NOVAGEN have executed this
Assignment as of the dates set forth below.
PEL-FREEZ, INC. PEL-FREEZ RABBIT MEAT, INC.
By: _________________________ By: ________________________
Name: _______________________ Name: ______________________
Title: ______________________ Title: _____________________
Date: _______________________ Date: ______________________
MAI SYSTEMS CORPORATION NOVAGEN, INC.
By: _________________________ By: ________________________
Name: Luke Brown Name:
Title: Vice President Title:
Date: _______________________ Date: ______________________
2
<PAGE> 134
Exhibit K
The following are the principal terms of agreements to be negotiated in
good faith prior to the Closing.
1. Human Herpes Virus 6 Antibodies (HHV6 AB)
The parties will agree that all know-how, production protocols and
biological materials necessary for the production of Human Herpes Virus 6
antibodies (collectively, "HHV6 AB") and all patent rights to the process
disclosed in pending U.S. Application 08/683,060 shall be transferred from the
Parent to PFRM. The Company shall not be prohibited from using after Closing
generalized know-how also utilized in the manufacture of HHV6 for other non-HHV6
products if such know-how was also used to manufacture other products as of
Closing by the Company or if such know-how is in the public domain.
PFRM and the Company shall negotiate in good faith the terms of a
nonexclusive license for the use of the HHV6 AB rights in the manufacture and
sale of research reagents in the Research Reagent Market. The "Research Reagent
Market" shall constitute academic and commercial product research applications.
The Company shall not sell any kit containing the HHV6 AB or HHV6 AB as reagents
to be used for diagnostic purposes or for inclusion in a diagnostic kit.
2. OEM Supply Agreement for E. coli blocker, Pellet Paint(TM) and PCR marker.
PFRM and the Company shall negotiate in good faith the terms of a supply
agreement for the Company to manufacture on a nonexclusive OEM basis E. coli
blocker, Pellet Paint(TM) and PCR marker. The agreement shall be for the
following volumes and prices:
<TABLE>
<CAPTION>
Product Price Quantity
- ------- ----- --------
<S> <C> <C>
E. coli blocker $2,828.00/ from 100 liter
cell pellet fermentation
Pellet Paint(TM) $10.00 100 microliter package
PCR marker $46/Unit 50-300
$40/Unit 301-500
$35/Unit 501-800
</TABLE>
<PAGE> 135
All technology rights, not otherwise used by PFRM as of Closing for the
manufacture of other products or in the public domain, related to these products
shall remain with the Company, including rights to the trademark Pellet
Paint(TM). PFRM shall not be licensed to use the mark Pellet Paint(TM), except
with attribution on the same page in all product literature and labels that the
mark is found that it is the trademark of the Company.
3. Diagnostic Application Rights, Generally
The Company shall not be prohibited from using after Closing generalized
know-how also utilized in the manufacture of non-diagnostic products if such
know-how was also used to manufacture such products as of Closing by the Company
or if such know-how is in the public domain or independently developed. In any
event, the Company will agree that it shall not (1) use any such rights for the
manufacture or sale of transplantation and coagulation diagnostic products, (2)
sublicense such rights to any third party for transplantation and coagulation
diagnostic products or (3) assert such rights to prevent PFRM from using such
rights to make, have made or sell or sublicense others to make, have made or
sell such transplantation and coagulation diagnostic products.
4. Red Nova(R) Lysate Technology rights
The Company has developed a special protocol for the manufacture of a raw
material for the Company's Red Nova(R) Lysate (Red Nova(R) Technology). PFRM
agrees not to use the Company Red Nova(R) Lysate Technology (or the registered
trademark for such product), except however, that PFRM shall not be precluded
from using any (1) technology it previously used, (2) technology it
independently developed without reference to the Company Red Nova(R) Lysate
technology, (3) information in the public domain or (4) information lawfully
obtained without reference to the Company Red Nova(R) Lysate Technology or
confidential information of the Company. A copy of the Company Red Nova(R)
Lysate Technology shall be preserved for evidentiary purposes by counsel for the
parties.
PFRM and the Company shall negotiate in good faith the terms of a supply
agreement for the Company to supply the following quantities at the stated
price:
<TABLE>
<CAPTION>
Product Price/Quantity
- ------- --------------
<S> <C>
Red Nova(R) Lysate $15.26/milliliter
</TABLE>
5. Inter-Company Agreement
The parties shall negotiate in good faith the terms of a continuing
cooperation agreement related to shared leasehold
2
<PAGE> 136
space in Madison, Wisconsin, the use by the Company of a DNA sequencer, the use
by PFRM of the Company supplies and the reimbursement by PFRM of local telephone
expenses charged to the Company. PFRM shall continue to occupy the leasehold
space which consists of a maximum of the same area occupied at time of closing
for an additional six-month term and thereafter on a month-to-month basis,
provided that either party may give 90 days notice of termination following the
end of the six-month term. The rent (including appropriate utilities) shall be
determined on a pro rata basis based upon the relative square footage of usable
space occupied. PFRM will obtain appropriate insurance for its employee(s).
6. The Anthony Nolen Bone Marrow Trust rights
All contractual rights between the Parent and The Anthony Nolen Bone
Marrow Trust shall be transferred from the Parent to PFRM.
7. Molecular Biology Application Rights, Generally
PFRM will not assert any rights or any claim against the Company for the
Company products sold prior to the Closing.
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<PAGE> 137
All schedules listed in the Table of Contents have been intentionally omitted.
The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request.
