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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BIOSOURCE TECHNOLOGIES, INC.
(A CALIFORNIA CORPORATION),
LARGE SCALE BIOLOGY CORPORATION
(A DELAWARE CORPORATION),
N. LEIGH ANDERSON, CONSTANCE L. SENIFF
AND ROBERT J. WALDEN
AND
[INSERT LSB SHAREHOLDER HERE]
AS OF JANUARY 25, 1999
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TABLE OF CONTENTS
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ARTICLE 1 PURCHASE AND SALE OF SECURITIES....................................................1
1.1 PURCHASE, SALE AND SURRENDER OF SECURITIES................................1
ARTICLE 2 PURCHASE PRICE; PUT OPTION.........................................................1
2.1 CONSIDERATION..............................................................1
2.2 AMOUNT.....................................................................2
2.3 PUT OPTION.................................................................2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF LARGE SCALE AND THE MANAGEMENT GROUP............3
3.1 ORGANIZATION AND QUALIFICATION: SUBSIDIARIES...............................4
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS....................................4
3.3 CAPITALIZATION.............................................................4
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT.......................................6
3.5 NO CONFLICT: REQUIRED FILINGS AND CONSENTS.................................6
3.6 PERMITS; COMPLIANCE WITH LAWS..............................................6
3.7 FINANCIAL STATEMENTS.......................................................7
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.......................................8
3.9 EMPLOYEE BENEFIT PLANS; LABOR MATTERS......................................8
3.10 CERTAIN TAX MATTERS.......................................................11
3.11 CONTRACTS; DEBT INSTRUMENTS...............................................11
3.12 LITIGATION................................................................12
3.13 ENVIRONMENTAL MATTERS.....................................................12
3.14 INTELLECTUAL PROPERTY.....................................................13
3.15 TAXES.....................................................................15
3.16 PROPERTIES................................................................16
3.17 CONTRACTS.................................................................16
3.18 AFFILIATES................................................................18
3.19 BROKERS...................................................................18
3.20 CERTAIN BUSINESS PRACTICES................................................18
3.21 TRANSACTION EXPENSES......................................................18
3.22 INTERESTED PARTY TRANSACTIONS.............................................18
3.23 BUSINESS ACTIVITY RESTRICTIONS............................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SECURITYHOLDER..................................19
4.1 AUTHORIZATION.............................................................19
4.2 TITLE.....................................................................19
4.3 PURCHASE ENTIRELY FOR OWN ACCOUNT.........................................20
4.4 DISCLOSURE OF INFORMATION.................................................20
4.5 INVESTMENT EXPERIENCE.....................................................20
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TABLE OF CONTENTS (CONT'D)
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4.6 RESTRICTED SECURITIES.....................................................20
4.7 LEGENDS...................................................................20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BIOSOURCE.......................................20
5.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..............................20
5.2 ARTICLES OF INCORPORATION AND BYLAWS......................................21
5.3 CAPITALIZATION............................................................21
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT......................................22
5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS................................22
5.6 PERMITS; COMPLIANCE WITH LAWS.............................................23
5.7 PRIVATE PLACEMENT MEMO....................................................23
5.8 BROKERS...................................................................23
ARTICLE 6 COVENANTS.........................................................................23
6.1 CONDUCT OF BUSINESS BY LARGE SCALE PENDING THE CLOSING....................23
6.2 CONDUCT OF BUSINESS BY BIOSOURCE PENDING THE CLOSING......................25
6.3 NOTICES OF CERTAIN EVENTS.................................................26
6.4 ACCESS TO INFORMATION; CONFIDENTIALITY....................................27
6.5 NO SOLICITATION OF TRANSACTIONS...........................................27
6.6 FURTHER ACTION; CONSENTS; FILINGS.........................................28
6.7 EMPLOYEE MATTERS..........................................................28
ARTICLE 7 ADDITIONAL AGREEMENTS.............................................................29
7.1 PUBLIC ANNOUNCEMENTS......................................................29
7.2 BLUE SKY..................................................................29
7.3 DIRECTORS.................................................................29
ARTICLE 8 CONDITIONS TO THE TRANSACTION.....................................................29
8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE
TRANSACTION...............................................................29
8.2 CONDITIONS TO THE OBLIGATIONS OF LARGE SCALE, THE MANAGEMENT GROUP
AND THE SECURITYHOLDER....................................................30
8.3 CONDITIONS TO THE OBLIGATIONS OF BIOSOURCE................................30
8.4 EXPIRATION OF OFFER TO SECURITYHOLDER.....................................31
ARTICLE 9 CLOSING...........................................................................31
9.1 EFFECTIVE TIME............................................................31
9.2 DELIVERIES BY LARGE SCALE AND SECURITYHOLDER..............................31
9.3 DELIVERIES BY BIOSOURCE...................................................32
9.4 FURTHER ASSURANCES........................................................32
ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER................................................32
10.1 TERMINATION...............................................................32
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ii.
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TABLE OF CONTENTS (CONT'D)
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10.2 EFFECT OF TERMINATION.....................................................33
10.3 AMENDMENT.................................................................33
10.4 WAIVER....................................................................33
10.5 EXPENSES..................................................................34
ARTICLE 11 GENERAL PROVISIONS...............................................................34
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; MANAGEMENT GROUP
LIABILITY; ARBITRATION....................................................34
11.2 NOTICES...................................................................35
11.3 SEVERABILITY..............................................................35
11.4 ASSIGNMENT; BINDING EFFECT, BENEFIT.......................................36
11.5 INCORPORATION OF EXHIBITS.................................................36
11.6 GOVERNING LAW.............................................................36
11.7 WAIVER OF JURY TRIAL......................................................36
11.8 HEADINGS..................................................................36
11.9 COUNTERPARTS..............................................................36
11.10 ENTIRE AGREEMENT..........................................................36
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Exhibits
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A Certificate of Designations
B Large Scale Disclosure Schedule
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iii.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of January 25, 1999 by and among Large Scale Biology
Corporation, a Delaware corporation ("Large Scale") N. Leigh Anderson, Constance
L. Seniff, and Robert J. Walden (collectively, the "Management Group") and
[INSERT LSB SHAREHOLDER HERE] (the "Securityholder")] and Biosource
Technologies, Inc., a California corporation ("Biosource").
RECITALS
WHEREAS, Biosource desires to acquire all of the rights of equity
ownership of the Securityholder through the purchase by Biosource of a minimum
of 80% of the issued and outstanding shares of capital stock of Large Scale (the
"Transaction");
WHEREAS, in furtherance thereof, Biosource will pay to Securityholder
consideration in the form of shares of the capital stock of Biosource for his
shares of capital stock of Large Scale; and
WHEREAS, the parties intend for the transactions contemplated by this
Agreement to qualify as a plan of reorganization in accordance with the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Purchase, Sale and Surrender of Securities. Upon the terms and
subject to the conditions of this Agreement, the Securityholder shall sell to
Biosource and Biosource shall purchase from the Securityholder all of the shares
of capital stock of Large Scale (the "Large Scale Shares") held by the
Securityholder (each a "Tendered Large Scale Share", collectively, the "Tendered
Large Scale Shares") at the Closing (as defined in Section 9.1 hereof). Further,
each option or warrant held by Securityholder to purchase Large Scale Shares
("Large Scale Options") shall be exchanged by Biosource for an option or warrant
to purchase Biosource shares as further provided below. The Tendered Large Scale
Shares and the Large Scale Options shall collectively be referred to as the
"Large Scale Securities."
ARTICLE 2
PURCHASE PRICE; PUT OPTION
2.1 Consideration. Upon the terms and subject to the conditions
contained in this Agreement, in consideration for the Large Scale Securities and
in full payment therefor, Biosource will pay, or cause to be paid, the purchase
price set forth in Section 2.2 and agrees to the put option provided in Section
2.3.
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2.2 Amount. The purchase price ("Purchase Price") for the Tendered Large
Scale Shares shall consist of shares of Series G Preferred Stock of Biosource to
be issued directly from Biosource to the Securityholder (each share of stock of
Biosource Series G Preferred Stock a "Biosource Share," collectively, the
"Biosource Shares") with the rights, preferences, privileges and restrictions
set forth on the Certificate of Designations attached hereto as Exhibit A. At
the Effective Time (as defined below), the Securityholder shall receive in
exchange for each Tendered Large Scale Share, one-fourth (1/4) of a Biosource
Share. Fractional shares shall not be issued and each Securityholder shall
receive in exchange for each Tendered Large Scale Share the nearest number of
whole Biosource Shares. One hundred percent (100%) of the total number of
Biosource Shares payable to the Securityholder shall be issued and delivered at
the Effective Time. Further, each Large Scale Option held by the Securityholder
which is outstanding and unexercised immediately prior to the Effective Time
shall be cancelled and exchanged for an option or warrant to purchase shares of
Biosource Common Stock ("Biosource Common") in such number and at such exercise
price as follows hereafter and otherwise having the same terms and conditions as
in effect immediately prior to the Effective Time (except to the extent that
such terms, conditions and restrictions may be altered in accordance with their
terms as a result of the Transaction).
(a) The number of shares of Biosource Common to be subject to
the new option or warrant shall be equal to the product of (x) the number of
Large Scale Shares subject to the original option or warrant prior to the
Effective Time and (y) one-fourth (1/4).
(b) The exercise price per share of the shares of Biosource
Common under the new option or warrant shall be equal to (x) the exercise price
per share of Large Scale Options in effect under the original option or warrant
immediately prior to the Effective Time divided by (y) one-fourth (1/4)
(c) In effecting such assumption and conversion, the aggregate
number of shares of Biosource Common to be subject to each exchanged option or
warrant will be rounded down, if necessary, to the next whole share and the
aggregate exercise price shall be rounded up, if necessary, to the next whole
cent.
The foregoing will not result in any accelerated vesting of
those options or the shares purchasable thereunder, and the vesting schedule in
effect for each Large Scale Option immediately prior to the Effective Time shall
be replicated by the terms of the option to be issued by Biosource in exchange
therefore.
2.3 Put Option.
(a) If, at any time prior to the third anniversary of the Effective
Date, Biosource (i) sells at least fifty percent (50%) of its shares of capital
stock of Large Scale, or (ii) sells substantially all of the assets of Large
Scale to a third party other than an Affiliate (as defined in Section 3.18) of
Biosource, or (iii) combines Large Scale with Biosource or another wholly-owned
entity of Biosource and within six months thereafter sells substantially all of
the assets of Large Scale to a third party other than an Affiliate of Biosource,
then, in any such event (a "Put Qualification Event"), the Securityholder shall
have the right (but not the obligation) to require that Biosource purchase from
the Securityholder all of the Biosource Shares acquired by the
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Securityholder pursuant to this Agreement (the "Put Shares") for consideration
equal to ten dollars ($10) per share (as adjusted for subdivisions, stock
dividends, reclassifications, combinations, or consolidations) paid in the same
form and in the same proportion as the consideration received by Biosource
pursuant to the Put Qualification Event (the "Put Option"). Consideration other
than cash shall be deemed for purposes of the Put Option to have the same value
as it was deemed to have for the purpose of the Put Qualification Event. In any
event, the Securityholder's right to exercise the Put Option shall be contingent
upon the closing of the Put Qualification Event.
(b) Biosource shall notify the Securityholder no later than thirty (30)
days after the closing of the Put Qualification Event. Upon receipt of such
notice, the Securityholder shall provide written notice of its intent to
exercise the Put Option, which notice shall specify the number of Biosource
Shares to be sold (the "Put Option Exercise Notice").
(c) Within thirty (30) days of receipt of the Put Option Exercise
Notice, Biosource shall purchase the Put Shares for the consideration set forth
in Section 2.3(a) at a closing (the "Put Closing") to be held at the office of
Brobeck, Phleger and Harrison, One Market, Spear Street Tower, San Francisco,
California, 94105, or such other place as Biosource and the Securityholder may
agree. At the Put Closing, the Securityholder shall tender the certificates
representing the Put Shares and such other documents and certifications as
Biosource or its counsel may reasonably require.
(d) Notwithstanding the foregoing, the Put Option shall expire as of the
date of the final prospectus for an initial public offering of Biosource in
which shares are sold to the public at a price per share (determined without
regard to underwriter commissions and expenses) of not less than $9 (as adjusted
from the date hereof for stock splits, reverse stock splits and the like) and an
aggregate offering price of not less than $15,000,000. Further, in the event
that the registration filed in connection with such initial public offering is
withdrawn after completion of the final prospectus used in connection therewith,
the Put Option (and each subsection of this Section 2.3) shall be reinstated to
full force and effect.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LARGE SCALE
AND THE MANAGEMENT GROUP
Except as disclosed in the disclosure schedule dated as of January 25,
1999 and delivered by Large Scale and the Management Group to Biosource prior to
the execution and delivery of this Agreement (the "Large Scale Disclosure
Schedule"), attached hereto as Exhibit B, it being understood that no matter
disclosed in any section of the Large Scale Disclosure Schedule shall be deemed
disclosed with respect to any section of this Agreement (other than one under
which it is explicitly disclosed or incorporated by reference). Large Scale and
the Management Group, to the best of their knowledge and after reasonable
investigation, hereby represent and warrant to Biosource that the following
representations are true and correct in all material respects as of the date of
this Agreement and will continue to be true as of the Effective Time:
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3.1 Organization and Qualification: Subsidiaries.
(a) Large Scale has been duly organized and is validly existing
and in good standing (to the extent applicable) under the laws of the State of
Delaware and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
approvals is not reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. For the purpose of this Agreement, "Material Adverse
Effect" shall mean any circumstance, change in, or effect on the business
conduct or success or current state of technological competitiveness of the
parties to this Agreement and their respective subsidiaries (if any) that,
individually or in the aggregate with any other circumstances, changes in, or
effects on, parties to this Agreement and their respective subsidiaries (if any)
which: (i) is, or could reasonably be expected to be, in light of the facts
known at the time of this Agreement to the party suffering such Material Adverse
Effect as of the date of this Agreement, materially adverse to the business,
operations, assets or liabilities, employee relationships, customer or supplier
relationships, prospects, results of operations or the condition (financial or
otherwise) of the parties to this Agreement and their respective subsidiaries
(if any), taken as a whole, or (ii) could reasonably be expected to, in light of
facts known at the time of this Agreement to the party suffering such Material
Adverse Effect, have a Material Adverse Effect on the ability of Biosource or
Large Scale, taken as a whole, to operate or conduct the business and operations
of Large Scale in the manner in which the business and operations of Large Scale
are currently operated or conducted by Large Scale. Large Scale is duly
qualified or licensed to do business, and is in good standing (to the extent
applicable) in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that are not reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.
(b) Large Scale has no subsidiaries. Except as set forth in
Section 3.1 of the Large Scale Disclosure Schedule, Large Scale does not own any
equity interest in any partnership or joint venture arrangement or other
business entity that is material to the financial condition, results of
operations, business or prospects of Large Scale taken as a whole.
3.2 Certificate of Incorporation and Bylaws. Except as set forth in
Section 3.2 of the Large Scale Disclosure Schedule, the copies of Large Scale's
Certificate of Incorporation and Bylaws previously provided to Biosource, are
true, accurate, and complete copies thereof. Such Certificate of Incorporation
and Bylaws are in full force and effect. Large Scale is not in violation of any
of the provisions of its Certificate of Incorporation or Bylaws.
3.3 Capitalization. As of the date hereof, the authorized capital stock
of Large Scale consists of 30,000,000 shares of Common Stock, of which
20,000,000 shares are designated Class A Common Stock, and 10,000,000 shares are
designated Class B Common Stock and 12,000,000 shares of Preferred Stock, of
which 11,800,000 shares are designated Class A Preferred Stock and 200,000
shares are designated as Class B Preferred Stock. As of the date hereof (i) no
shares of Large Scale Class A Common Stock are issued and outstanding, (ii) no
shares of Large Scale Class A Common Stock are held in the treasury of the Large
Scale, (iii)
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161,500 shares of Large Scale Class A Common Stock are reserved for future
issuance pursuant to stock options or stock incentive rights granted by Large
Scale, (iv) 161,500 shares of Large Scale Class A Common Stock are reserved and
committed for issuance to individuals listed in Section 3.3 of Large Scale
Disclosure Schedule, (v) 9,895,081 shares of Large Scale Class B Common Stock
are issued and outstanding, (vi) no shares of Large Scale Class B Common Stock
are held in the treasury of Large Scale, (vii) no shares of Large Scale Class B
Common Stock are reserved for future issuance pursuant to employee stock options
or stock incentive rights granted under the stock option, equity, or similar
plans maintained by Large Scale, (viii) no shares of Large Scale Class A
Preferred Stock are issued and outstanding, (ix) no shares of Large Scale Class
A Preferred Stock are held in the treasury of the Large Scale, (x) no shares of
Large Scale Class A Preferred Stock are reserved for future issuance pursuant to
employee stock options or stock incentive rights granted under the stock option,
equity, or similar plans maintained by Large Scale, (xi) no shares of Large
Scale Class A Preferred Stock are reserved and committed for issuance, (xii)
163,800 shares of Large Scale Class B Preferred Stock are issued and
outstanding, (xiii) no shares of Large Scale Class B Preferred Stock are held in
the treasury of the Large Scale, (xiv) no shares of Large Scale Class B
Preferred Stock are reserved for future issuance pursuant to employee stock
options or stock incentive rights granted under the stock option, equity, or
similar plans maintained by Large Scale, and (xv) no shares of Large Scale Class
B Preferred Stock are reserved and committed for issuance. Except for shares of
Large Scale capital stock issuable pursuant to any and all employee, entity,
option or similar plans maintained by Large Scale, each of which is described in
detail (including the number of Large Scale Shares issuable pursuant thereto) in
Section 3.3 of the Large Scale Disclosure Schedule or pursuant to other
agreements or arrangements described in Section 3.3 of the Large Scale
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Large Scale is a party or
by which Large Scale is bound relating to the issued or unissued capital stock
of Large Scale or obligating Large Scale to issue or sell any shares of capital
stock of, or other equity interests in, Large Scale. Section 3.3 of the Large
Scale Disclosure Schedule sets forth a complete and accurate list as of the date
hereof of (w) the number of options and warrants to purchase shares of Common
Stock and Preferred Stock of Large Scale, (x) the exercise price of each such
outstanding stock option and warrant, (y) the vesting schedule of each such
outstanding stock option and warrant and (z) the grantee or holder of each such
option and warrant. All shares of Large Scale Common Stock subject to issuance
as aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of Large Scale to repurchase, redeem or
otherwise acquire any shares of Large Scale capital stock. Except as set forth
in Section 3.3 of the Large Scale Disclosure Schedule, there are no material
outstanding contractual obligations of Large Scale to provide funds to, or make
any material investment (in the form of a loan, capital contribution or
otherwise) in, any corporation, partnership, limited liability company, or other
entity.
5 of 39.
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3.4 Authority Relative to This Agreement. Large Scale has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the Transaction. The
execution and delivery of this Agreement by Large Scale has been duly and
validly authorized by all necessary corporate action, and, to Large Scale's and
the Management Group's knowledge, no other corporate proceedings on the part of
Large Scale or the Management Group are necessary to authorize this Agreement or
to consummate the Transaction except the tender by the Securityholder of the
Large Scale Shares and as further set forth in Article 8 hereof. This Agreement
has been duly executed and delivered by Large Scale and the Management Group and
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes the legal, valid and binding obligation of Large Scale and
the Management Group, enforceable against Large Scale and the Securityholder in
accordance with its terms.
3.5 No Conflict: Required Filings and Consents.
(a) The execution and delivery of this Agreement by Large Scale
and the Securityholder do not, and the performance by Large Scale and the
Management Group and the Securityholder of their obligations hereunder and the
consummation of the Transaction will not, (i) conflict with or violate any
provision of the Certificate of Incorporation or Bylaws of Large Scale, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 3.5(b) have been obtained and all filings and notifications described in
Section 3.5(b) have been made, conflict with or violate any law applicable to
the Securityholder (to the extent such laws apply to shares held by the
Securityholder), the Management Group, or Large Scale or by which any property
or asset of Large Scale, or the Management Group is bound or affected, or (iii)
except as set forth in Section 3.5(a) of the Large Scale Disclosure Schedule,
result in any breach of or constitute a default (or an event which, with the
giving of notice or lapse of time or both, could reasonably be expected to
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Large Scale pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which are not reasonably expected, individually or in the aggregate, (A) to have
a Material Adverse Effect or (B) to prevent or materially delay the performance
by Large Scale of its obligations pursuant to this Agreement or the consummation
of the Transaction. The foregoing representation as to the Securityholder shall
be limited to the acts of the Securityholder undertaken to deliver
Securityholder's shares, hereunder.
(b) The execution and delivery of this Agreement by Large Scale
and the Management Group do not, and the performance by Large Scale, the
Management Group and the Securityholder of their obligations hereunder and the
consummation of the Transaction will not, require any consent, approval,
authorization or permit of, or filing by Large Scale with or notification by
Large Scale to, any governmental entity other than as set forth in Section
3.5(b) of the Large Scale Disclosure Schedule.
3.6 Permits; Compliance With Laws. Large Scale is in possession of (i)
all franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals
6 of 39.
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and orders of any governmental entity necessary for Large Scale to own, lease
and operate its properties or to produce, store, distribute and market its
products or otherwise to carry on its business as it is now being conducted and
(ii) agreements from all federal, state, foreign and local governmental agencies
and accrediting and certifying organizations having jurisdiction over such
facility or facilities that are required to operate the facility or facilities
in the manner in which it or they are currently operated (collectively, the
"Large Scale Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Large Scale Permits could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, and, as of
the date of this Agreement, no suspension or cancellation of any of the Large
Scale Permits is pending or, to the knowledge of Large Scale, threatened, except
where the failure to have, or the suspension or cancellation of, any of the
Large Scale Permits are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. Large Scale is not in conflict with, or in
default or violation of, (i) any law applicable to Large Scale or by which any
property or asset of Large Scale is bound or affected or (ii) any Large Scale
Permits, except in the case of clauses (i) and (ii) for any such conflicts,
defaults or violations that are not reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect. Large Scale has not received notice
from the regulatory authorities that enforce the statutory or regulatory
provisions of any pending or threatened investigations or surveys, and no such
investigations or surveys are pending or, to the knowledge of the Large Scale,
threatened or imminent that are reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. Section 3.6 of the Large Scale
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of Large
Scale, threatened against Large Scale that could reasonably be expected to
result in (i) the loss or revocation of a Large Scale Permit or (ii) the
suspension or cancellation of any other Large Scale Permit. Except as set forth
in Section 3.6 of the Large Scale Disclosure Schedule, since September 30, 1998,
Large Scale has not received from any governmental entity any written
notification with respect to possible conflicts, defaults or violations of laws,
except for written notices relating to possible conflicts, defaults or
violations that are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.7 Financial Statements.
(a) Large Scale has provided to Biosource audited, consolidated
financial statements for the fiscal years ended October 31, 1997 and October 31,
1998 (collectively and as amended, the "Large Scale Reports").
(b) Each of the Large Scale Reports (including, in each case,
any notes thereto) was prepared in accordance with U.S. G.A.A.P. applied on a
consistent basis throughout the periods indicated and from period to period
(except as may be indicated in the notes thereto) and each presents fairly, in
all material respects, the financial position of Large Scale as of the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which did not have and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect).
(c) Except as and to the extent set forth or reserved against on
the balance sheet of Large Scale as reported in the Large Scale Reports,
including the notes thereto, Large
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Scale has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. G.A.A.P.,
except for liabilities or obligations incurred in the ordinary course of
business consistent with past practice since October 31, 1998 that have not had
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
3.8 Absence of Certain Changes or Events. Since October 31, 1998, except
as contemplated by or as disclosed in this Agreement or, as set forth in Section
3.8, (or, with respect to stock options, Section 3.3) of the Large Scale
Disclosure Schedule, Large Scale has conducted its business only in the ordinary
course consistent with past practice and, since such date, there has not been
(i) any Material Adverse Effect, (ii) any event that could reasonably be
expected to prevent or materially delay the performance of its obligations
pursuant to this Agreement and the consummation of the Transaction by Large
Scale, (iii) any material change by Large Scale in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Large Scale capital stock
or any redemption, purchase or other acquisition of any of Large Scale's
securities or (v) any increase in the compensation or benefits or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of Large
Scale except in the ordinary course of business consistent with past practice.
3.9 Employee Benefit Plans; Labor Matters.
(a) Section 3.9(a) of the Large Scale Disclosure Schedule lists
(i) all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, "ERISA") and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements, whether legally
enforceable or not, to which Large Scale is a party, with respect to which Large
Scale has any obligation or which are maintained, contributed to or sponsored by
Large Scale for the benefit of any current or former employee, officer or
director of Large Scale, (ii) each employee benefit plan for which Large Scale
could incur liability under Section 4069 of ERISA in the event such plan has
been or was to be terminated, (iii) any plan in respect of which Large Scale
could incur liability under Section 4212(c) of ERISA and (iv) any contracts,
arrangements or understandings between Large Scale or any of its Affiliates (as
such term is defined in Section 3.18 hereof) and any employee of Large Scale,
including, without limitation, any contracts, arrangements or understandings
relating to the sale of Large Scale (collectively, the "Large Scale Benefit
Plans"). With respect to each Large Scale Benefit Plan, Large Scale has
delivered or made available to Biosource a true, complete and correct copy of
(i) such Large Scale Benefit Plan and the most recent summary plan description
related to such Large Scale Benefit Plan, if a summary plan description is
required therefor, (ii) each trust agreement or other funding arrangement
relating to such Large Scale Benefit Plan, (iii) the most recent annual report
(Form 5500) filed with the IRS with respect to such Large Scale Benefit Plan,
(iv) the most recent actuarial report or financial
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statement relating to such Large Scale Benefit Plan and (v) the most recent
determination letter issued by the IRS with respect to such Large Scale Benefit
Plan, if it is qualified under Section 401(a) of the Code. Except as disclosed
on Section 3.9(a) of the Large Scale Disclosure Schedule, there are no other
employee benefit plans, programs, arrangements or agreements, whether formal or
informal, whether in writing or not, to which Large Scale is a party, with
respect to which Large Scale has any obligation or which are maintained,
contributed to or sponsored by Large Scale for the benefit of any current or
former employee, officer or director of Large Scale. Large Scale has no express
or implied commitment, whether legally enforceable or not, (i) to create and
incur liability with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) to enter into any contract or agreement to
provide compensation or benefits to any individual or (iii) to modify, change or
terminate any Large Scale Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) None of the Large Scale Benefit Plans is a multi-employer
plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
"Multi-employer Plan") or a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which Large Scale could incur liability under
Section 4063 or 4064 of ERISA. None of the Large Scale Benefit Plans provide for
or promise retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of Large Scale.
(c) Each Large Scale Benefit Plan has been administered in all
material respects in accordance with its terms, and all contributions required
to be made under the terms of any of the Large Scale Benefit Plans as of the
date of this Agreement have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Large Scale Reports prior to the date of this Agreement. Except as set forth in
Section 3.9(c) of the Large Scale Disclosure Schedule, with respect to the Large
Scale Benefit Plans, no event has occurred and, to the knowledge of Large Scale,
there exists no condition or set of circumstances in connection with which Large
Scale could be subject to any liability under the terms of such Large Scale
Benefit Plans, ERISA, the Code or any other applicable law which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. No legal action, suit or claim is pending or threatened with
respect to any Large Scale Benefit Plan (other than claims for benefits in the
ordinary course).
(d) Large Scale hereby represents that, other than as disclosed
in Section 3.9(d) of the Large Scale Disclosure Schedule or where the failure of
such representation to be true could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (i) each Large
Scale Benefit Plan which is intended to be qualified under Section 401(a) of the
Code or Section 401(k) of the Code has received a favorable determination letter
from the IRS that it is so qualified and each trust established in connection
with any Large Scale Benefit Plan which is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a determination
letter from the IRS that it is so exempt, and to Large Scale's knowledge no fact
or event has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Large Scale Benefit Plan or
the exempt status of any such trust; (ii) each trust maintained or contributed
to by Large Scale which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the
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Code has received a favorable determination letter from the IRS that it is so
qualified and so exempt, and to Large Scale's knowledge no fact or event has
occurred since the date of such determination by the IRS to adversely affect
such qualified or exempt status; (iii) to Large Scale's knowledge there has been
no prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Large Scale Benefit Plan; (iv) Large Scale
has not incurred any liability for any penalty or tax arising under Sections
4971, 4972, 4980, 4980B or 6652 of the Code or any liability under Section 502
of ERISA, and to Large Scale's knowledge no fact or event exists which could
give rise to any such liability; (v) no complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Large Scale Benefit Plan; (vi) no reportable event (within the meaning of
Section 4043 of ERISA) has occurred or is expected to occur with respect to any
Large Scale Benefit Plan subject to Title IV of ERISA; (vii) no Large Scale
Benefit Plan had an accumulated funding deficiency (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived, as of
the most recently ended plan year of such Large Scale Benefit Plan; (viii) none
of the assets of Large Scale is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code; Large Scale has not been required
to post any security under Section 307 of ERISA or Section 401(a)(29) of the
Code; and no fact or event exists which could give rise to any such lien or
requirement to post any such security; (ix) all contributions, premiums or
payments required to be made with respect to any Large Scale Benefit Plan have
been made on or before their due dates; (x) all such contributions have been
fully deducted for income tax purposes and no such deduction has been challenged
or disallowed by any government entity and no fact or event exists which could
give rise to any such challenge or disallowance; and (xi) as of the Effective
Time, no Large Scale Benefit Plan which is subject to Title IV of ERISA will
have an "unfunded benefit liability" (within the meaning of Section 4001(a)(18)
of ERISA).
(e) Except as set forth in Section 3.9(e) of the Large Scale
Disclosure Schedule, to Large Scale's knowledge, Large Scale is in compliance
with the requirements of the Americans With Disabilities Act.
(f) Large Scale is in compliance with the requirements of the
Workers Adjustment and Retraining Notification Act ("WARN") and has no
liabilities pursuant to WARN.
(g) Except as set forth in Section 3.9(g) of the Large Scale
Disclosure Schedule, Large Scale is not a party to any collective bargaining or
other labor union contract applicable to persons employed by Large Scale and no
collective bargaining agreement is being negotiated by Large Scale. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Large Scale pending or, to the knowledge of Large Scale, threatened
which may interfere with the respective business activities of Large Scale,
except where such dispute, strike or work stoppage could not reasonably be
expected to have a Material Adverse Effect. As of the date of this Agreement, to
the knowledge of Large Scale, none of Large Scale or any of its respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective businesses of Large Scale, and
there is no charge or complaint against Large Scale by the National Labor
Relations Board or any comparable governmental entity pending or threatened in
writing, except where such unfair labor practice, charge or complaint could not
reasonably be expected to have a Material Adverse Effect.
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(h) Large Scale has delivered to Biosource true, accurate, and
complete copies of (i) all employment agreements with officers and all
consulting agreements of Large Scale providing for annual compensation in excess
of $100,000, (ii) all severance plans, agreements, programs and policies of
Large Scale with or relating to their respective employees or consultants, and
(iii) all plans, programs, agreements and other arrangements of Large Scale with
or relating to their respective employees or consultants which contain "change
of control" provisions.
(i) Large Scale has approximately 16 full-time equivalent
employees and generally enjoys good employer-employee relations. Large Scale is
not delinquent in payments to any of its employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them to the date hereof or amounts required to be reimbursed to
such employees. Upon termination of the employment of any employees, neither
Large Scale nor Biosource will by reason of the Transaction or anything done
prior to the Effective Time be liable to any of such employees for severance pay
or any other payments (other than accrued salary, vacation or sick pay in
accordance with Large Scale's normal policies and as is provided in Section 3.9
(i) of the Large Scale Disclosure Schedule). True and complete information as to
all current directors, officers, employees or consultants of Large Scale,
including, in each case, name, current job title, base salary, bonus potential,
commissions and termination obligations has been previously furnished to
Biosource.
(j) Section 3.9(j) of the Large Scale Disclosure Schedule lists
the name, place of employment, the current annual salary rates, bonuses,
deferred or contingent compensation, pension, accrued vacation, "golden
parachute" and other like benefits paid or payable (in cash or otherwise) in
1997 and 1998, the date of employment and a description of position and job
function of each current salaried employee, officer, director, consultant or
agent of Large Scale whose annual compensation exceeded in 1997 and 1998 (or, in
1999, is expected to exceed) $100,000.
3.10 Certain Tax Matters. Except as disclosed in the Large Scale
Reports, neither Large Scale nor, to the knowledge of Large Scale, any of its
Affiliates (as such term is defined in Section 3.18 hereof) has taken or agreed
to take any action (other than actions contemplated by this Agreement) that
could reasonably be expected to prevent the Transaction from constituting a
transaction qualifying under Section 368 of the Code. Large Scale is not aware
of any agreement, plan or other circumstances that could reasonably be expected
to prevent the Transaction from so qualifying under Section 368 of the Code.
3.11 Contracts; Debt Instruments. Except as disclosed herein or in
Section 3.11 of the Large Scale Disclosure Schedule, there is no contract or
agreement that is material to the business, financial condition or results of
operations of Large Scale taken as a whole (each, a "Material Contract"). Except
as disclosed herein or in Section 3.11 of the Disclosure Schedule, Large Scale
is not in violation of or in default under (nor does there exist any condition
which with the passage of time or the giving of notice could reasonably be
expected to cause such a violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture or lease, or any other contract,
license, agreement, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound other than such violation
or default that could not reasonably be expected to result in a Material Adverse
Effect.
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3.12 Litigation. Except as disclosed in Section 3.12 of the Large Scale
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Large Scale, threatened against
Large Scale before any governmental entity. Except as disclosed in Section 3.12
of the Large Scale Disclosure Schedule, Large Scale is not subject to any
outstanding order, writ, injunction or decree which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
3.13 Environmental Matters. (a) Except as disclosed in Section 3.13 of
the Large Scale Disclosure Schedule (i) Large Scale is in compliance with all
applicable Environmental Laws (as defined in Section 3.13(b)); (ii) all past
noncompliance of Large Scale with Environmental Laws (as defined in Section
3.13(b)) or Environmental Permits (as defined in Section 3.13(b)) has been
resolved without any pending, ongoing or future obligation, cost or liability
(though Section 3.13 of the Large Scale Disclosure Schedule contains a complete
description of any such past noncompliance); and (iii) Large Scale has not
released a Hazardous Material (as defined in Section 3.13(d)) at, or transported
a Hazardous Material (as defined in Section 3.13(d)) to or from, any real
property currently or formerly owned, leased or occupied by Large Scale, in
violation of any Environmental Law.
(b) "Environmental Law" shall mean any law, now or hereafter in
effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, the CERCLA; the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33
U.S.C. Sections 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Sections 2601 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq.; the Atomic Energy Act,
42 U.S.C. Sections 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq.; and the Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq. and analogous state, provincial and
foreign laws.
(c) "Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law.
(d) "Hazardous Material" for the purpose of this Agreement,
shall mean (a) petroleum and petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain polychlorinated biphenyls, and
radon gas, (b) any other chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants",
or words of similar import, under any applicable Environmental Law, and (c) any
other chemical, material or substance the use, handling, generation, treatment,
storing, release or exposure to which is regulated by any governmental
authority.
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3.14 Intellectual Property.
(a) Large Scale Intellectual Property. All patents, trademarks,
trade names, service marks, trade dress, Internet domain names, copyrights and
any renewal rights therefor, technology, supplier lists, trade secrets,
know-how, computer software programs or applications in both source and object
code form, technical documentation of the foregoing registrations and
applications for any of the foregoing and all other tangible or intangible
proprietary information or materials that are or have been used (including
without limitation in the development of) Large Scale's business and/or in any
product, technology or process (i) currently being or formerly manufactured,
published or marketed by Large Scale or (ii) previously or currently under
development for possible future manufacturing, publication, marketing or other
use by Large Scale are hereinafter referred to as the "Large Scale Intellectual
Property."
(b) Applications and Registrations. Section 3.14 (b) of the
Large Scale Disclosure Schedule contains a true and complete list of all of
Large Scale's patents, patent applications, trademarks, trademark applications,
trade names, service marks, service mark applications, Internet domain names,
Internet domain name applications, copyrights and copyright registrations and
applications and other filings and formal actions made or taken pursuant to
federal, state, local and foreign laws by Large Scale to protect its interests
in the Large Scale Intellectual Property, as well as all descriptions of all
contracts and agreements concerning the Large Scale Intellectual Property.
(c) Rights to Large Scale Intellectual Property. The Large Scale
Intellectual Property consists solely of items and rights which are: (i) owned
by Large Scale; (ii) in the public domain; or (iii) rightfully used by Large
Scale and its successors pursuant to a valid license. Large Scale has all rights
in the Large Scale Intellectual Property necessary to carry out Large Scale's
current activities (and had all rights necessary to carry out its former
activities at the time such activities were being conducted), including without
limitation, to the extent required to carry out such activities, rights to make,
use, have made, reproduce, modify, adopt, create derivative works based on,
translate, distribute (directly and indirectly), transmit, display and perform
publicly, license, rent, lease, assign, import, distribute, license or
sublicense, offer for sale and sell the Large Scale Intellectual Property.
(d) Third Party Claims. To Large Scale's or the Management
Group's knowledge, reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Large Scale
Intellectual Property, product, work, technology or process as now used or
offered or proposed for use, licensing or sale by Large Scale does not infringe
on any patent, copyright, trade secret, trademark, service mark, trade name,
trade dress, firm name, Internet domain name, logo, mask work or of any person
or the patent of any person. No claims (i) challenging the validity,
effectiveness or ownership by Large Scale of any of the Large Scale Intellectual
Property, or (ii) to the effect that the use, distribution, licensing,
sublicensing, sale or any other exercise of rights in any product, work,
technology or process as now used or offered or proposed for use, licensing,
sublicensing or sale by Large Scale infringes or will infringe on any
intellectual property or other proprietary right of any person have been
asserted or, to the knowledge of Large Scale, are threatened by any person, nor
are there, to Large Scale's or the Management Group's knowledge, any valid
grounds for any bona fide claim of any such kind; provided that with respect to
the third-party software listed in Section 3.14 (d) of the Large Scale
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Disclosure Schedule, the foregoing shall apply only to the best of Large Scale's
knowledge. All registered, granted or issued patents, trademarks, Internet
domain names and copyrights held by Large Scale are enforceable and subsisting.
To the best of Large Scale's or the Management Group's knowledge, there is no
unauthorized use, infringement or misappropriation of any of the Large Scale
Intellectual Property by any third party, employee or former employee.
(e) Royalties. Except as set forth in Section 3.14 (e) of the
Large Scale Disclosure Schedule, there are no royalties, fees, honoraria or
other payments payable by Large Scale to any person or entity by reason of the
ownership, development, use, license, sale or disposition of the Large Scale
Intellectual Property, other than salaries and sales commissions paid to
employees and sales agents in the ordinary course of business.
(f) Personnel. Except as set forth in Section 3.14(f) of the
Large Scale Disclosure Schedule, all personnel, including employees, agents,
consultants and contractors, who have contributed to or participated in the
conception and development of the Large Scale Intellectual Property on behalf of
Large Scale, have executed nondisclosure agreements in the form set forth on the
Large Scale Disclosure Schedule and either (i) have been a party to a
"work-for-hire" arrangement or agreements with Large Scale in accordance with
applicable national and state law that has accorded Large Scale full, effective,
exclusive and original ownership of all tangible and intangible property thereby
arising, or (ii) have executed appropriate instruments of assignment in favor of
Large Scale as assignee that have conveyed to Large Scale effective and
exclusive ownership of all tangible and intangible property thereby arising.
(g) Third Party Agreements. Large Scale is not, nor as a result
of the execution or delivery of this Agreement, or performance of Large Scale's
obligations hereunder, will Large Scale be, in violation of any license,
sublicense, agreement or instrument to which Large Scale is a party or otherwise
bound, nor will execution or delivery of this Agreement, or performance of Large
Scale's obligations hereunder, cause the diminution, termination or forfeiture
of any Large Scale Intellectual Property except as would not result in a
Material Adverse Effect.
(h) Third-Party Technology. Section 3.14 (h) of the Large Scale
Disclosure Schedule contains a complete list of (i) material and licenses used
in the development of its proprietary ProGEx(TM) technology platform and (ii)
material software systems and applications used by Large Scale in the operation
of its business. The Large Scale Disclosure Schedule lists all license
agreements for the use of all such material and, if any such material is not
licensed, the basis of the use of such material by Large Scale. All use of each
of such material by Large Scale has been in full compliance with the respective
license agreement or other right of use listed on the Disclosure Schedule.
(i) Contract Performance. Large Scale has observed all material
provisions of, and performed all of their material obligations under, all
license agreements. Large Scale has not taken any action that could cause, or
failed to take any action, except that Large Scale has not filed any copyright
registrations or patent applications with respect to the Large Scale
Intellectual Property, the failure of which could cause, (i) any source code,
trade secret or other Large Scale Intellectual Property to be released from an
escrow or otherwise made available to
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any person or entity other than those persons described in Section 3.14,
dedicated to the public or otherwise placed in the public domain or (ii) any
other material adverse effect on the protection of the Large Scale Intellectual
Property under trade secret, copyright, patent or other intellectual property
laws.
3.15 Taxes. Large Scale hereby represents that, other than as disclosed
in Section 3.15 of the Large Scale Disclosure Schedule: (a) Large Scale has
filed all United States federal income Tax and all other material Tax returns
required to be filed by it, and Large Scale has paid and discharged all Taxes
due in connection with or with respect to the filing of all Tax Returns and have
paid all other Taxes as are due, except such as are being contested in good
faith by appropriate proceedings (to the extent any such proceedings are
required) and with respect to which Large Scale is maintaining reserves to the
extent currently required in all material respects adequate for their payment;
(b) neither the IRS nor any other Taxing authority or agency is now asserting
or, to the best of Large Scale's knowledge, threatening to assert against Large
Scale any deficiency or claim for additional Taxes other than additional Taxes
with respect to which Large Scale is maintaining reserves in all material
respects adequate for their payment, and there are no requests for information
currently outstanding that could affect the Taxes of Large Scale; (c) Large
Scale is not currently being audited by any Taxing authority; (d) there are no
Tax liens on any assets of Large Scale other than for current Taxes not yet
payable; (e) Large Scale has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax; (f) the accruals and reserves for taxes reflected in the audited
balance sheet as of October 31, 1998 are in all material respects adequate to
cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with U.S.
G.A.A.P. and there are no material unpaid Taxes that have accrued since the date
of such balance sheet; (g) Large Scale is not required to include in income any
amount in respect of any adjustment under Section 481 of the Code; and (h) Large
Scale is not a party to any agreement, contract or arrangement that may result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code, determined without regard to
Section 280G(b)(4) of the Code. Within ten days after the date hereof, Large
Scale will make available to Biosource or its legal counsel for inspection
copies of all income and sales and use Tax Returns for all periods since the
date of Large Scale's incorporation. Large Scale has delivered to Biosource true
and complete copies of federal, state, local and foreign Tax Returns for each of
the years ended December 31, 1997, 1996 and 1995 and all revenue agent's reports
and other written assertions of deficiencies or other liabilities for Taxes.
Large Scale will provide to Biosource copies of any such reports or written
assertions received after the date hereof within ten days of their first being
received by Large Scale. None of the Tax Returns filed by Large Scale is or has
been subject of an audit. Large Scale has complied with all applicable laws,
rules and regulations relating to the withholding of Taxes and has timely
collected or withheld and paid over (and up to the Effective Time will have
timely collected or withheld and paid over) to the proper governmental entities
all amounts required to be so collected or withheld and paid over for all
periods up to the Effective Time under all applicable laws. There are not
currently in effect any waivers or extensions of any applicable statute of
limitations for the assessment or collection of Taxes with respect to any Tax
Return that relates to Large Scale, and no request for any such waiver or
extension is pending. There are no Tax rulings, requests for rulings or closing
agreements relating to Large Scale that could affect its liability for Taxes for
any period after the Effective Time. Large Scale does not have any contractual
obligation to indemnify any other person with
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respect to Taxes, or any obligation to make distributions in respect of Taxes.
No claim has ever been made by a taxing authority in a jurisdiction where Large
Scale does not file Tax Returns that Large Scale is or may be subject to
taxation by such jurisdiction. No power of attorney has been granted by Large
Scale with respect to any matter relating to Taxes, which power of attorney is
currently in force. Large Scale has not filed a consent under Section 341(f) of
the Code or any comparable provision of state law. For purposes of this
Agreement, the following terms have the following meanings: "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental entity (a "Tax Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person. As used herein, "Tax Return" shall mean any return, statement, report or
form, including, without limitation, estimated tax returns and reports,
withholding tax returns and reports and information reports and returns required
to be filed with respect to Taxes.
3.16 Properties. Except as set forth in Section 3.16 of the Large Scale
Disclosure Schedule, Large Scale has good and marketable title, free and clear
of all liens, to all their material properties and assets, whether tangible or
intangible, real, personal or mixed, except (i) as would not result in a
Material Adverse Effect, and (ii) liens arising in the ordinary course of
business. All buildings, and all fixtures, equipment and other property and
assets that are material to its business on a consolidated basis, held under
leases or sub-leases by Large Scale are held under valid instruments enforceable
in accordance with their respective terms, subject to applicable laws of
bankruptcy, insolvency or similar laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). Substantially all of Large Scale's equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
3.17 Contracts. Section 3.17 of the Large Scale Disclosure Schedule sets
forth a list of the following written agreements, contracts, instruments,
guaranties, or commitments to which Large Scale is a party or by which or to
which any of such company's assets or properties are bound or subject
("Contracts"), true and complete copies of which have been provided to
Biosource:
(a) Contracts in effect on the Effective Date with any current
or former officer, director, employee, consultant, agent, representative or
security holders, including any employment, consulting or deferred compensation
agreement and any executive compensation, bonus or incentive plan agreement;
(b) Contracts for the purchase, sale or lease of materials,
supplies, equipment, goods, research and development, or capital assets, or the
receipt of services, the performance of
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which will extend over a period of more than one year or involve consideration
in excess of $50,000;
(c) Contracts currently in effect that were entered into in the
ordinary course of business and that involve payment of consideration to or by
Large Scale in excess of $50,000;
(d) Contracts for the sale of any assets or properties of Large
Scale other than in the ordinary course of business or for the grant to any
person or entity of any preferential rights to purchase any assets or properties
of Large Scale;
(e) Contracts establishing joint ventures or partnerships;
(f) Contracts establishing franchise, distribution or sales
agency arrangements;
(g) Contracts under which Large Scale agrees to indemnify any
party other than Contracts entered into in the ordinary course of business;
(h) Contracts containing obligations or liabilities of any kind
to holders of the capital stock of Large Scale as such;
(i) Contracts relating to the acquisition by Large Scale of any
operating business or any capital stock of any other person or entity;
(j) Contracts containing options for the purchase of any asset,
tangible or intangible, for an aggregate purchase price of more than $50,000;
(k) Contracts requiring the payment to any person of any
override or similar commission or fee;
(l) Contracts for the borrowing of money;
(m) Contracts calling for an aggregate purchase price or
payments by Large Scale in any one year of more than $50,000 in any one case (or
in the aggregate, in the case of any related series of Contracts); and
(n) any other Contracts that were not made in the ordinary
course of business and that are, individually or in the aggregate, material to
Large Scale.
Each Contract conforming to any of 3.17(a)-3.17(n) shall
constitute a "Material Contract," and with respect to each such Material
Contract:
(A) each is legal, valid and binding, is enforceable in
accordance with its terms, and is in full force and effect;
(B) each will continue to be legal, valid and binding,
enforceable in accordance with its terms, and in full force and effect
on identical terms following the Transaction;
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(C) neither Large Scale nor, to the knowledge of the Management
Group, Large Scale or any officer or director of Large Scale, or any
other party to the Material Contract is in breach or default under the
terms of such Material Contract, and no event has occurred which with
notice or lapse of time would constitute a material breach or default by
Large Scale, or, to the knowledge of Large Scale, the Management Group
or any officer or director of Large Scale, by any other party, or permit
termination, modification or acceleration under the Material Contract;
and
(D) neither Large Scale nor, to the knowledge of the Management
Group, Large Scale or any officer or director of Large Scale, or any
other party to the Material Contract has repudiated any material
provision of the Contract.
3.18 Affiliates. Section 3.18 of the Large Scale Disclosure Schedule
sets forth the name and address of each person who is, in Large Scale's
reasonable judgment, an Affiliate of Large Scale. For the purpose of this
Agreement, "Affiliate" shall mean, with respect to any specified party, any
other person or party that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such specified party.
3.19 Brokers. Except as set forth in Section 3.19 of the Large Scale
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transaction based upon arrangements made by or on behalf of Large Scale.
3.20 Certain Business Practices. None of Large Scale or any directors,
officers, agents or employees of Large Scale (in their capacities as such) has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any agreement or arrangement or taken any other
action in violation of Section 1128B(b) of the Social Security Act, as amended,
or (iv) made any other unlawful payment.
3.21 Transaction Expenses. Section 3.21 of the Large Scale Disclosure
Schedule sets forth Large Scale's current, good faith, itemized estimate of the
fees and expenses Large Scale will incur in connection with consummating the
Transaction and the other transactions contemplated hereby.
3.22 Interested Party Transactions. Except as set forth in Section 3.22
of the Large Scale Disclosure Schedule, since October 31, 1998 no executive
officer, director or stockholder of Large Scale has engaged in any business
dealings with Large Scale. Except for normal compensation received as employees
or directors, no officer, director or stockholder of Large Scale, and no entity
known by Large Scale to be controlled by any officer, director or stockholder of
Large Scale:
(a) is directly or indirectly engaged in business as a
competitor, lessor, lessee, customer or supplier of Large Scale; owns directly
or indirectly any interest (excepting no more
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<PAGE> 23
than five percent stockholdings for investment purposes in securities of
publicly held companies) in any Person that is directly or indirectly engaged in
business as a competitor, lessor, lessee, franchisee, customer or supplier of
Large Scale; or is an officer, director, employee or consultant of any such
person;
(b) owns directly or indirectly, in whole or in part, any
material tangible or intangible property that Large Scale uses;
(c) has any cause of action or other claim whatsoever against,
or owes any amount to, Large Scale, except for claims in the ordinary course of
business, such as for accrued vacation pay, and similar matters in agreements
existing on the date hereof; or
(d) has made any payment or commitment to pay any commission,
fee or other amount to, or purchase or obtain or otherwise contract to purchase
or obtain any goods or services from, any Person of which any officer or
director of Large Scale is a partner or stockholder (excepting no more than five
percent stockholdings for investment purposes in securities of publicly held
companies).
3.23 Business Activity Restrictions. There is no agreement
(noncompetition or otherwise), commitment, judgment, injunction, order or decree
to which Large Scale or any officer, employee or consultant of Large Scale is a
party or that otherwise is binding upon Large Scale or such officer, employee or
consultant that has or reasonably could be expected to have the effect of
prohibiting or impairing any business practice of Large Scale, any acquisition
of property (tangible or intangible) by Large Scale or the conduct of business
by Large Scale. Large Scale has not entered into any agreement under which Large
Scale is restricted from selling, licensing or otherwise distributing any of its
technology or products to, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market or line of business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SECURITYHOLDER
The Securityholder hereby represents to Biosource that:
4.1 Authorization. Securityholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby (to the extent such transactions involve the Securityholder). This
Agreement has been (or upon execution will have been) duly executed and
delivered by Securityholder, has been effectively authorized by all necessary
action, corporate or otherwise, and constitutes (or upon execution will
constitute) legal, valid and binding obligations of Securityholder, enforceable
against Securityholder in accordance with its terms.
4.2 Title. The Securityholder owns _______ shares of Common Stock of
Large Scale free and clear of any liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances or options or claims of any kind
or nature whatsoever and there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or commitments
obligating Securityholder in any respect in connection with any shares of LSB.
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4.3 Purchase Entirely for Own Account. This Agreement is made with
Biosource, Large Scale, the Management Group and the Securityholder in reliance
upon Securityholder's representation that the Biosource Shares to be received by
Securityholder will be acquired for investment for the Securityholder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Securityholder has no present
intention of selling, granting any participation in, or otherwise distributing
the same, except in each case for any subsequent resale or distribution effected
pursuant to an effective registration statement under the Securities Act of
1933, as amended, (the "Securities Act") or an available exemption from the
registration requirements thereof.
4.4 Disclosure of Information. The Securityholder believes that he has
received all of the information he considers necessary or appropriate for
deciding whether to acquire the Biosource Shares.
4.5 Investment Experience. The Securityholder can bear the economic risk
of his investment, and has such knowledge and experience in financial or
business matters that he is capable of evaluating the merits and risks of the
investment in the Biosource Shares.
4.6 Restricted Securities. The Securityholder understands that the
Biosource Shares he is receiving are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, the
Securityholder is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
4.7 Legends. It is understood that the certificates evidencing the
Biosource Shares may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to Biosource Technologies, Inc. that such registration is not
required or unless sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of any applicable
jurisdiction or any other state.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BIOSOURCE
Biosource hereby represents and warrants to Large Scale, the
Management Group, and the Securityholder that:
5.1 Organization and Qualification; Subsidiaries. Biosource and each
subsidiary of Biosource (the "Biosource Subsidiaries") have been duly organized
and are validly existing and in good standing (to the extent applicable) under
the laws of the jurisdictions of their respective incorporation or organization,
as the case may be, and have the requisite corporate power and
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authority and all necessary governmental approvals to own, lease and operate
their properties and to carry on their business as it is now being conducted,
except where the failure to be so organized, existing or in good standing or to
have such power, authority and governmental approvals are not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
Biosource and each Biosource Subsidiary are duly qualified or licensed to do
business, and are in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
them or the nature of their business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
5.2 Articles of Incorporation and Bylaws. Biosource has heretofore
furnished Large Scale with true, complete and correct copies of its Articles of
Incorporation and Bylaws. Such Articles of Incorporation and Bylaws are in full
force and effect. Biosource is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
5.3 Capitalization. As of October 31, 1998, the authorized capital stock
of Biosource consists of 20,000,000 shares of common stock ("Biosource Common
Stock") of which 6,151,533 shares were issued and outstanding; and 10,000,000
shares of preferred stock ("Biosource Preferred Stock"), of which 666,667 shares
have been designated as Series A Preferred Stock, all of which were issued and
outstanding; 878,003 shares have been designated as Series B Preferred Stock,
all of which were issued and outstanding; 344,050 shares have been designated as
Series C Preferred Stock, 339,963 shares of which were issued and outstanding;
750,000 shares have been designated as Series D Preferred Stock, 435,173 of
which shares were issued and outstanding; 146,875 shares have been designated
Series E Preferred Stock, none of which were issued and outstanding; and
1,000,000 shares have been designated Series F Preferred Stock, all of which are
issued and outstanding. All of the issued and outstanding shares of Biosource
Common Stock and Biosource Preferred Stock are validly issued, fully paid and
nonassessable. As of December 31, 1998, the following warrants, options and
similar rights to purchase capital stock were outstanding: a warrant to purchase
29,322 shares of Common Stock; a warrant to purchase 1,232,061 shares of Common
Stock; warrants to purchase up to an aggregate of 146,875 shares of Series E
Preferred Stock; and options to purchase up to 1,439,231 shares of Common Stock
held by employees, directors, officers and consultants of Biosource. All shares
of Biosource Common Stock and Biosource Preferred Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. The shares of
Biosource Common Stock and Biosource Preferred Stock when issued and delivered
in accordance with this Agreement will be duly authorized, validly issued, fully
paid and nonassessable. Each outstanding share of capital stock of each
Biosource Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Biosource or another Biosource
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Biosource's or such
other Biosource Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever, except where the failure to own such shares free and
clear could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. There are no material outstanding
contractual obligations of Biosource or any Biosource Subsidiary to provide
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funds to, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any Biosource Subsidiary or any other entity.
5.4 Authority Relative to This Agreement. Biosource has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
their respective obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Biosource
and the consummation by Biosource of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Biosource are necessary to authorize this
Agreement or to consummate such transactions. This Agreement has been duly
executed and delivered by Biosource and, assuming the due authorization,
execution and delivery by Large Scale, the Management Group and the
Securityholder, constitutes the legal, valid and binding obligation of
Biosource, enforceable against Biosource in accordance with its terms.
5.5 No Conflict; Required Filings And Consents.
(a) The execution and delivery of this Agreement by Biosource
does not, and the performance by Biosource of their obligations hereunder and
the consummation of the Transaction will not, (i) conflict with or violate any
provision of the certificate or articles of incorporation, as the case may be,
or bylaws of Biosource or any equivalent organizational documents of any
Biosource Subsidiary, or (ii) assuming that all requisite consents, approvals,
authorizations and permits have been obtained and all filings and notifications
described in Section 5.5(b) have been made, conflict with or violate any law
applicable to Biosource or any Biosource Subsidiary or by which any property or
asset of Biosource or any Biosource Subsidiary is bound or affected, result in
any breach of or constitute a default (or an event which with the giving of
notice or lapse of time or both could reasonably be expected to become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Biosource or any Biosource Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which are not reasonably expected, individually or
in the aggregate, (A) to have a Material Adverse Effect or (B) to prevent or
materially delay the performance by Biosource of its obligations pursuant to
this Agreement or the consummation of the Transaction.
(b) The execution and delivery of this Agreement by Biosource
does not, and the performance by Biosource of its obligations hereunder and the
consummation of the Transaction will not, require any consent, approval,
authorization or permit for, or filing by Biosource with or notification by
Biosource to, any governmental entity, except (i) pursuant to applicable
requirements of the Securities Act, Blue Sky Laws, and state takeover laws, if
any, (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, could not reasonably be
expected, individually or in the aggregate, (A) to have a Material Adverse
Effect or (B) to prevent or materially delay the performance by Biosource of its
obligations pursuant to this Agreement or the consummation of the Transaction.
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5.6 Permits; Compliance with Laws. Biosource and each Biosource
Subsidiary is in possession of (i) all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, easements,
variances, exceptions, consents, certificates, identification and registration
numbers, approvals and orders of any governmental entity necessary for Biosource
or any Biosource Subsidiary to own, lease and operate its properties or to
store, distribute and market its products or otherwise to carry on its business
as it is now being conducted and (ii) agreements from all federal, state,
foreign and local governmental agencies and accrediting and certifying
organizations having jurisdiction over such facility or facilities that are
required to operate the facility or facilities in the manner in which it or they
are currently operated (collectively, the "Biosource Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Biosource
Permits is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect, and, as of the date of this Agreement, no suspension or
cancellation of any of the Biosource Permits is pending or, to the knowledge of
Biosource, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Biosource Permits is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.
5.7 Private Placement Memo. Biosource represents and warrants that, to
the best of its knowledge after reasonable investigation, the statements made in
the Information Statement distributed by Biosource to the Securityholder in
connection with the Transaction are true and correct in all material respects
and do not contain any untrue statements of material fact nor do such statements
omit to state any material fact necessary to make the statements therein not
misleading.
5.8 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transaction based upon arrangements made by or on behalf of Biosource.
ARTICLE 6
COVENANTS
6.1 Conduct of Business by Large Scale Pending the Closing. Large Scale
agrees that, between the date of this Agreement and the Effective Time, unless
Biosource shall otherwise agree in writing, (x) the business of Large Scale
shall be conducted only in, and Large Scale shall not take any action except in,
the ordinary course of business consistent with past practice, (y) Large Scale
shall use reasonable efforts to keep available the services of such of the
current officers, significant employees and consultants of Large Scale and to
preserve the current relationships of Large Scale with such of the corporate
partners, customers, suppliers and other persons with which Large Scale has
significant business relations in order to preserve substantially intact its
business organization. By way of amplification and not limitation, Large Scale
shall not, between the date of this Agreement and the Effective Time, directly
or indirectly, do, or agree to do, any of the following without the prior
written consent of Biosource, which consent shall not be unreasonably withheld
or delayed:
(a) amend or otherwise change its Certificate of Incorporation
or Bylaws;
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(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any shares
of capital stock of Large Scale of any class, or securities convertible into or
exchangeable or exercisable for any shares of such capital stock, or any
options, warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of Large Scale except for (A) issuances of Large Scale
Common Stock pursuant to options, warrants and convertible Large Scale capital
stock outstanding on the date hereof and (B) stock option grants of Large Scale;
provided, however, that (x) such grants are at fair market value and at a level
consistent with past practice, (y) Biosource has received notice of Large
Scale's intention to grant such options and has consented thereto in writing
(which consent shall not be unreasonably withheld) and (z) the aggregate amount
of such granted options does not exceed 161,500 shares of Large Scale Common
Stock, or (ii) any material property or assets of Large Scale;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person for borrowed money or make
any loans or advances; (iii) terminate, cancel or request any material change
in, or agree to any material change in, any Large Scale Material Contract or
enter into any contract or agreement material to the business, results of
operations or financial condition of Large Scale taken as a whole; (iv) enter
into any contract or agreement that is not cancelable without penalty upon not
more than 60 days' notice; (v) make or authorize any capital expenditure, other
than capital expenditures in the ordinary course of business consistent with
past practice that have been budgeted for calendar year 1999 and disclosed to
Biosource prior to the date hereof; or (vi) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this Section 6.1(c);
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) amend or change the period (or permit any acceleration,
amendment or change to the period) of exercisability of options granted under
the Large Scale Stock Plans or authorize cash payments in exchange for any stock
options granted under any of such plans;
(f) amend the terms of, repurchase, redeem or otherwise acquire
any of its securities, or propose to do any of the foregoing;
(g) increase the compensation payable or to become payable to,
or pay or enter into any agreement or understanding to pay any bonus to, its
directors, officers, consultants or employees (other than increases in
compensation for non-officer employees that are in the ordinary course of
business consistent with past practice and the payment of bonuses to non-officer
employees that are in the ordinary course of business consistent with past
practice and pursuant to objective written criteria established by the board of
directors of Large Scale provided that Biosource has received notice of Large
Scale's intention to implement such increase and has consented thereto in
writing (which consent shall not be unreasonably
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<PAGE> 29
withheld)), or grant any rights to severance or termination pay to, or enter
into any employment or severance agreement which provides benefits upon a change
in control of Large Scale that would be triggered by the Transaction with, any
director, officer, consultant or other employee of Large Scale who is not
currently entitled to such benefits, or establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer, consultant or employee
of Large Scale, except to the extent required by applicable law or the terms of
a collective bargaining agreement, or enter into or amend any contract,
agreement, commitment or arrangement between Large Scale and any of Large
Scale's directors, officers, consultants or employees;
(h) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against on the consolidated balance sheet of Large Scale dated as of
October 31, 1998 and only to the extent of such reserves;
(i) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business consistent
with past practice or as required by U.S. GAAP;
(j) make any tax election or settle or compromise any material
federal, state or local United States income tax liability, or any income tax
liability of any other jurisdiction, other than those made in the ordinary
course of business consistent with past practice and those for which specific
reserves have been recorded on the consolidated balance sheet of Large Scale
dated as of October 31, 1998 and only to the extent of such reserves;
(k) enter into or amend any contract, agreement, commitment or
arrangement with, or enter into any transaction with, or make any payment to or
on account or behalf of, any Affiliate of Large Scale or of any principal
stockholder of Large Scale, other than any such transactions or payments
pursuant to the agreements set forth on Section 6.1(k) of the Large Scale
Disclosure Schedule; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of Large Scale
contained in this Agreement untrue or incorrect or prevent Large Scale from
performing or cause Large Scale not to perform its covenants hereunder or result
in any of the conditions to the Transaction set forth herein not being
satisfied.
6.2 Conduct Of Business by Biosource Pending the Closing. Biosource
agrees that, between the date of this Agreement and the Effective Time, unless
Large Scale shall otherwise agree in writing, (x) the business of Biosource and
the Biosource Subsidiaries shall be conducted only in, and Biosource and the
Biosource Subsidiaries shall not take any action except in, the ordinary course
of business consistent with past practice, (y) Biosource and the Biosource
Subsidiaries shall use reasonable efforts to keep available the services of such
of the current officers, significant employees and consultants of Biosource and
the Biosource Subsidiaries and
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to preserve the current relationships of Biosource and the Biosource
Subsidiaries with such of the corporate partners, customers, suppliers and other
persons with which Biosource or any Biosource Subsidiary has significant
business relations in order to preserve substantially intact its business
organization. By way of amplification and not limitation, neither Biosource nor
any Biosource Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of Large Scale, which consent shall not be
unreasonably withheld or delayed:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws (except as reasonably necessary to complete the Transaction);
(b) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except that Biosource may pay dividends or make other
distributions to any Biosource Subsidiary;
(c) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
pursuant to existing agreements;
(d) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under any stock option
plans or authorize cash payments in exchange for any stock options granted under
any of such plans;
(e) amend the terms of, repurchase, redeem or otherwise acquire,
or permit any Biosource Subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of any Biosource Subsidiary, or propose
to do any of the foregoing;
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business consistent
with past practice or as required by U.S. G.A.A.P.;
(g) make any tax election or settle or compromise any material
federal, state or local United States income tax liability, or any income tax
liability of any other jurisdiction, other than those made in the ordinary
course of business consistent with past practice and those for which specific
reserves have been recorded on the consolidated balance sheet of Biosource dated
as of December 31, 1998 and only to the extent of such reserves;
(h) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of Biosource contained
in this Agreement untrue or incorrect or prevent Biosource from performing or
cause Biosource not to perform its covenants hereunder or result in any of the
conditions to the Transaction set forth herein not being satisfied.
6.3 Notices of Certain Events. Each of Biosource and Large Scale shall
give prompt notice to the other of (i) any notice or other communication from
any person alleging that the consent of such person is or may be required in
connection with the Transaction; (ii) any notice or other communication from any
governmental entity in connection with the Transaction; (iii) any actions,
suits, claims, investigations or proceedings commenced or, to its knowledge,
threatened against, relating to or involving or otherwise affecting Biosource,
Biosource
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Subsidiaries, or Large Scale that relate to the consummation of the Transaction;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Material Contract; and
(v) any change that could reasonably be expected to have a Material Adverse
Effect or to delay or impede the ability of either Large Scale or Biosource to
perform its obligations pursuant to this Agreement and to effect the
consummation of the Transaction.
6.4 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement
or similar agreement or arrangement to which Biosource, the Biosource
Subsidiaries or Large Scale is a party or pursuant to applicable law or the
regulations or requirements of any stock exchange or other regulatory
organization with whose rules a party hereto is required to comply, from the
date of this Agreement to the Effective Time, Biosource and Large Scale shall
(and Biosource shall cause the Biosource Subsidiaries to) (i) provide to the
other (and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, "Representatives"))
access at reasonable times upon prior notice to its and its subsidiaries'
officers, employees, agents, properties, offices and other facilities and to the
books and records thereof, and (ii) furnish promptly such information concerning
its and its subsidiaries' business, properties, contracts, assets, liabilities
and personnel as the other party or its Representatives may reasonably request.
No investigation conducted pursuant to this Section 6.4 shall affect or be
deemed to modify any representation or warranty made in this Agreement.
(b) Biosource and Large Scale shall comply with, and shall cause
their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreements with respect to the information
disclosed pursuant to this Section 6.4.
6.5 No Solicitation of Transactions. Through the earlier of the
Effective Time or February 28, 1999, Large Scale shall not, directly or
indirectly, and shall instruct its officers, directors, employees, subsidiaries,
agents or advisors or other representatives (including, without limitation, any
investment banker, attorney or accountant retained by it), not to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing nonpublic information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) that constitutes,
or may reasonably be expected to lead to, a transaction involving a change of
control of Large Scale, the sale of all or substantially all of Large Scale's
assets, a merger consolidation or reorganization of or with Large Scale or any
other party, the sale of 25% or more of Large Scale's stock or other similar
transaction (collectively, "Other Transaction"), or enter into or maintain or
continue discussions or negotiate with any person in furtherance of such
inquiries or to obtain an Other Transaction, or agree to or endorse any Other
Transaction, or authorize or permit any of the officers, directors or employees
of Large Scale, or any investment banker, financial advisor, attorney,
accountant or other representative retained by Large Scale, to take any such
action. Large Scale shall notify Biosource promptly, and in no event later than
three (3) business days after receipt, if any proposal or offer, or any inquiry
or contact with any person with respect thereto, regarding an Other Transaction
is made. Large Scale immediately shall
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cease and cause to be terminated all existing discussions or negotiations with
any parties conducted heretofore with respect to an Other Transaction. Large
Scale shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party. Large Scale
shall use its best efforts to ensure that its officers, directors, employees,
subsidiaries, agents and advisors or other representatives (including, without
limitation, any investment banker, attorney or accountant retained by it) are
aware of the restrictions described in this Section 6.5.
6.6 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Transaction, (ii) obtain from governmental entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Biosource, or Large Scale or any of their
respective subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Transaction and (iii)
make all necessary filings, and thereafter make any other required or
appropriate submissions, with respect to this Agreement and the Transaction
required under (A) the Securities Act, the Securities and Exchange Act of 1934,
as amended (the "Exchange Act") and any other applicable federal or state
securities laws, if any, and (B) any other applicable law. The parties hereto
shall cooperate and consult with each other in connection with the making of all
such filings, including by providing copies of all such documents to the
nonfiling parties and their advisors prior to filing, and none of the parties
shall file any such document if any of the other parties shall have reasonably
objected to the filing of such document. No party shall consent to any voluntary
extension of any statutory deadline or waiting period or to any voluntary delay
of the consummation of the Transaction at the behest of any Governmental Entity
without the consent and agreement of the other parties hereto, which consent
shall not be unreasonably withheld or delayed.
(b) Each of the parties hereto shall promptly give (or cause
their respective subsidiaries to give) any notices regarding the Transaction,
this Agreement or the transactions contemplated hereby or thereby to third
parties required under applicable law or by any contract, license, lease or
other agreement to which it or any of its subsidiaries is bound, and use, and
cause its subsidiaries to use, all reasonable efforts to obtain any third party
consents required under any such contract, license, lease or other agreement in
connection with the consummation of the Transaction or the other transactions
contemplated by this Agreement.
6.7 Employee Matters. To the extent permitted under the terms of the
applicable Biosource benefit plans, all Large Scale employees shall be eligible
to participate in the various benefit plans and programs maintained for
Biosource employees or in substantially similar programs. Large Scale employees
shall be given credit, for purposes of any service requirements for
participation, for their period of service with Large Scale prior to the
Effective Time, and the Large Scale employees shall also, with respect to any
Biosource plans or programs which have co-payment, deductible or other
co-insurance features, receive credit for any amounts such employees have paid
to date in the plan year of the Transaction in co-payments, deductibles or
co-insurance under comparable programs maintained by Large Scale prior to the
Effective Time.
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ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Public Announcements. Biosource and Large Scale shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Transaction and shall not issue
any such press release or make any such public statement without the prior
written approval of the other, except to the extent required by applicable law,
in which case the issuing party shall use all reasonable efforts to consult with
the other party before issuing any such release or making any such public
statement. The Securityholder shall not, except as an agent of Biosource or
Large Scale pursuant to the foregoing, make any public statement with respect to
this Agreement or the Transaction.
7.2 Blue Sky. Each of the parties hereto shall use all reasonable
efforts to obtain prior to the Effective Time all necessary blue sky permits and
approvals required under Blue Sky Laws to permit the distribution of the
securities of Biosource to be issued in accordance with the provisions of this
Agreement.
7.3 Directors. Immediately prior to the Effective Time, Norman G.
Anderson shall resign from and Robert L. Erwin shall be appointed to the Large
Scale Board of Directors, and Constance L. Seniff and John Taylor shall resign
and John S. Rakitan shall be appointed to the Board of Directors of Large Scale.
Immediately after the Effective Time, Biosource shall appoint N. Leigh Anderson
and Robert J. Walden to the Biosource Board of Directors, which, taking into
account such appointments, shall consist of 11 members. Thereafter, N. Leigh
Anderson and Robert J. Walden shall be included in the board slate for Biosource
nominated by Biosource management; provided, however, in order for N. Leigh
Anderson or Robert J. Walden to be so nominated, each such individual shall be
an employee of Large Scale and/or Biosource and a shareholder of Biosource .
ARTICLE 8
CONDITIONS TO THE TRANSACTION
8.1 Conditions to the Obligations of Each Party to Consummate the
Transaction. The obligations of the parties hereto to consummate the
Transaction, or to permit the consummation of the Transaction, are subject to
the satisfaction or, if permitted by applicable law, waiver of the following
conditions:
(a) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other governmental entity
shall have issued any order, which is then in effect and has the effect of
making the Transaction illegal or otherwise prohibiting its consummation;
(b) all consents, approvals and authorizations legally required
to be obtained to consummate the Transaction (including the obtaining of permits
to offer securities under all applicable Blue Sky laws and all necessary tax
clearance approvals from tax authorities having jurisdiction over the business
of Biosource or Large Scale) shall have been obtained from all governmental
entities, except where the failure to obtain any such consent, approval or
authorization could not reasonably be expected to result in a change in or have
an effect on the
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business of Large Scale or Biosource that is materially adverse to the business,
assets (including intangible assets), liabilities (contingent or otherwise),
condition (financial or otherwise) or results of operations of Biosource and its
subsidiaries, taken as a whole; and
8.2 Conditions to the Obligations of Large Scale, the Management Group
and the Securityholder. The obligations of Large Scale, the Management Group and
the Securityholder to consummate the Transaction, or to permit the consummation
of the Transaction, are subject to the satisfaction or, if permitted by
applicable law, waiver of the following further conditions:
(a) each of the representations and warranties of Biosource
contained in this Agreement that is qualified by materiality shall be true,
accurate, and complete on and as of the Effective Time as if made at and as of
the Effective Time (other than representations and warranties which address
matters only as of a certain date which shall be true, complete and correct as
of such certain date) and each of the representations and warranties that is not
so qualified shall be true, complete and correct in all material respects on and
as of the Effective Time as if made at and as of the Effective Time (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by this
Agreement, and Large Scale shall have received a certificate of the Chairman or
President of Biosource to such effect; and
(b) Biosource shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
Large Scale shall have received a certificate of the Chairman or President of
Biosource to that effect.
8.3 Conditions to the Obligations of Biosource. The obligations of
Biosource to consummate the Transaction, or to permit the consummation of the
Transaction, are subject to the satisfaction or, if permitted by applicable law,
waiver of the following further conditions:
(a) Each of the representations and warranties of Large Scale
and the Management Group contained in this Agreement that is qualified by
materiality shall be true, accurate, and complete on and as of the Effective
Time as if made at and as of the Effective Time (other than representations and
warranties which address matters only as of a certain date which shall be true,
complete and correct as of such certain date) and each of the representations
and warranties that is not so qualified shall be true, complete and correct in
all material respects on and as of the Effective Time as if made on and as of
the Effective Time (other than representations and warranties which address
matters only as of a certain date which shall be true, complete and correct in
all material respects as of such certain date), in each case except as
contemplated or permitted by this Agreement, and Biosource shall have received a
certificate of the Chairman or President of Large Scale and the Management Group
to such effect;
(b) Large Scale shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time and Biosource
shall have received a certificate of the Chairman or President and the
Management Group of Large Scale to that effect;
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(c) There shall not be pending any action, proceeding, claim or
counterclaim which seeks to or would, or any order, decree or injunction
(whether preliminary, final or appealable) which would, require Biosource to
hold separate or dispose of any of the stock or assets of Large Scale or impose
material limitations on the ability of Biosource to control in any material
respect the business, assets or operations of either Biosource or Large Scale;
(d) Biosource shall have received audited financial statements
of Large Scale for the fiscal year ended October 31,1998;
(e) The events contemplated by Section 7.3 shall have occurred;
(f) Biosource shall have procured at least eighty percent (80%)
of the voting capital stock of Large Scale pursuant to the Transaction; and
(g) Large Scale shall have redeemed all shares of its Class B
Preferred Stock.
8.4 Expiration of Offer to Securityholder. The offer contained in this
Agreement shall expire and become invalid as to each Securityholder on February
28, 1999 at 11:59 p.m.
ARTICLE 9
CLOSING
9.1 Effective Time. Unless sooner terminated pursuant to Section 10
hereof, the transactions contemplated by this Agreement shall be completed (the
"Closing") on the first business day on which the last of the conditions
contained in Article 8 hereof is fulfilled or waived (such day the "Closing
Date," the moment at which all such conditions are so satisfied (the "Effective
Time")). The Closing shall take place at the office of Brobeck, Phleger &
Harrison, One Market, Spear Street Tower, San Francisco, California or at such
other place or date as may be agreed to in writing by Biosource and Large Scale.
9.2 Deliveries by Large Scale and Securityholder. At the Closing, Large
Scale and the Securityholder, as applicable, shall deliver to Biosource, all
duly and properly executed, the following:
(a) Certificates representing the Tendered Large Scale
Securities endorsed over to Biosource or accompanied by duly executed stock
powers or similar instruments of transfer or, in the case of Tendered Large
Scale Securities to be surrendered, instruments effecting such surrender;
(b) A certificate from the Chairman or President of Large Scale
and the Management Group, dated the Closing Date, containing the information
required pursuant to Section 8.3;
(c) Evidence reasonably satisfactory to Biosource of the
cancellation of each Large Scale Option;
(d) Proprietary Rights and Invention Assignment Agreements, in
form mutually satisfactory to Large Scale and Biosource, executed by all Large
Scale employees; and
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(e) Such other documents and instruments as the Securityholder,
Large Scale or their counsel reasonably and in good faith shall deem necessary
to consummate the transactions contemplated hereby.
All documents delivered to Biosource under this Agreement shall
be in form and substance satisfactory to Biosource.
9.3 Deliveries by Biosource. At the Closing, Biosource, shall deliver,
or cause to be delivered, to Large Scale and/or the Securityholder, as
applicable, all duly and properly executed, the following:
(a) The payment set forth in Section 2.2.
(b) Certificates from the Chairman or President of Biosource,
dated the Closing Date, containing the information required pursuant to Section
8.2.
(c) Such options or warrants to purchase Biosource Shares as are
required pursuant to Section 2.2 hereof.
(d) Such other documents and instruments as Biosource or its
counsel reasonably and in good faith shall deem necessary to consummate the
transactions contemplated hereby.
All documents delivered to Large Scale under this Agreement
shall be in form and substance satisfactory to Large Scale.
9.4 Further Assurances. At or after the Effective Time, each party shall
prepare, execute, and deliver, at the preparer's expense, such further
instruments of conveyance, sale, assignment, or transfer, and shall take or
cause to be taken such other or further action, as any party shall reasonably
request of any other party at any time or from time to time in order to perfect,
confirm, or evidence title to all or any part of the Large Scale Securities or
to consummate, in any other manner, the terms and provisions of this Agreement.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated and the Transaction
may be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Biosource and Large Scale;
(b) by either Biosource or Large Scale, if the Effective Time
shall not have occurred on or before February 28, 1999; provided, however, that
the right to terminate this Agreement under this Section 10.1 shall not be
available to any party whose failure to fulfill an obligation under this
Agreement has been the cause of the failure of the Transaction to occur on or
before such date;
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(c) by either Biosource or Large Scale, if any governmental
order, writ, injunction or decree preventing the consummation of the Transaction
shall have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Biosource, if the Board of Directors of Large Scale
withdraws, modifies or changes its recommendation of this Agreement or the
Transaction in a manner adverse to Biosource or its shareholders or shall have
resolved to do so (which shall also constitute a material breach hereof);
(e) by Biosource, upon a breach of any representation, warranty,
covenant or agreement on the part of Large Scale or the Securityholder set forth
in this Agreement, or if any representation or warranty of Large Scale or the
Securityholder shall have become untrue, incomplete or incorrect, in either case
such that the conditions set forth in Section 8.3 would not be satisfied (a
"Terminating Large Scale Breach"); provided, however, that if such Terminating
Large Scale Breach is curable by Large Scale through the exercise of its
reasonable efforts within 10 days and for so long as Large Scale continues to
exercise such reasonable efforts, Biosource may not terminate this Agreement
under this Section 10.1 and provided, further that the preceding proviso shall
not in any event be deemed to extend any date set forth in paragraph (b) of this
Section 10.1; and
(f) by Large Scale or the Securityholder, upon breach of any
representation, warranty, covenant or agreement on the part of Biosource set
forth in this Agreement, or if any representation or warranty of Biosource shall
have become untrue, incomplete or incorrect, in either case such that the
conditions set forth in Section 8.2 would not be satisfied (a "Terminating
Biosource Breach"); provided, however, that if such Terminating Biosource Breach
is curable by Biosource through the exercise of its reasonable efforts within 10
days and for so long as Biosource continues to exercise such reasonable efforts,
neither Large Scale nor the Securityholder may terminate this Agreement under
this Section 10. 1; and provided further that the preceding proviso shall not in
any event be deemed to extend any date set forth in paragraph (b) of this
Section 10.1.
10.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 10.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party hereto
or any of its Affiliates or any of its or their officers or directors, and all
rights and obligations of each party hereto shall cease, subject to each party's
ability to pursue remedies for breach; provided, however, that nothing herein
shall relieve any party hereto from liability for the willful or intentional
breach of any of its representations and warranties or the willful or
intentional breach of any of its covenants or agreements set forth in this
Agreement.
10.3 Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective boards of directors at any time
prior to the Effective Time. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
10.4 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for or waive compliance with the performance of any
obligation or other act of any
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other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
10.5 Expenses. All expenses incurred in connection with this Agreement
and the Transaction shall be paid by the party incurring such expenses, whether
or not the Transaction is consummated.
ARTICLE 11
GENERAL PROVISIONS
11.1 Survival of Representations and Warranties; Management Group
Liability; Arbitration.
(a) Each of the representations and warranties of Biosource and
the representations and warranties of Large Scale and the Management Group found
in Sections 3.1, 3.2, 3.3, 3.4, 3.7, 3.8, 3.9(a)(i), 3.12, 3.14, and 3.23 (the
"Surviving Large Scale Representations") of this Agreement, and all statements
related to said Biosource representations and warranties and Surviving Large
Scale Representations contained in this Agreement, the Exhibits to this
Agreement, the Large Scale Disclosure Schedule and any certificate, financial
statement, interim financial statement or report or other document delivered
pursuant to this Agreement including, but not limited to, the Information
Statement, or in connection with the transactions contemplated by this Agreement
(collectively, the "Acquisition Documents"), shall survive the Closing until two
(2) years after the date of this Agreement (the "Representation Survival
Period"). If written notice of a claim has been given prior to the expiration of
the applicable representations and warranties, then the relevant representations
and warranties shall survive as to such claim, until such claim has been finally
resolved.
(b) Subject to the following limitations, the individuals
comprising the Management Group shall jointly and severally indemnify Biosource
against any loss which Biosource may suffer as a result of the breach of any of
the Surviving Large Scale Representations occurring within the Representation
Survival Period. Notwithstanding the foregoing, Biosource may not make any
claims against the individuals comprising the Management Group unless and until
an officers' certificate approved by the Biosource Board of Directors, executed
by any officer of Biosource and identifying damages which exceed two million
dollars ($2,000,000) (a "Qualifying Claim") has been delivered to Robert J.
Walden, as agent for the Management Group, or his successor. Upon receipt of an
officers' certificate establishing a Qualifying Claim, Mr. Walden (or his
successor) shall within fifteen (15) days either (i) provide for satisfaction of
the Qualifying Claim, including all amounts set forth in such claim, up to but
not exceeding, on a cumulative basis for all Qualifying Claims, five million
dollars ($5,000,000), by the Management Group or (ii) if the Management Group,
or any individual thereof, disputes in good faith the facts and/or damages which
support the Qualifying Claim, submit a written notice of contest to the Chairman
of the Board or President of Biosource (a "Contest Notice"). In the event that
the Management Group chooses to provide satisfaction of the Qualifying Claim,
the Management Group shall remit payment in satisfaction of the Qualifying Claim
to Biosource in the form of the Biosource shares tendered to the Management
Group pursuant to this Agreement, which shall be valued at the higher of (i) the
fair market value
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of such shares on the date of transfer, or (ii) ten dollars ($10) per share (as
adjusted for stock splits, dividends, etc.). Further, the Management Group shall
have no liability to Biosource pursuant to this Section 11.1 hereof upon: (i)
the sale of shares by Biosource to the public in an initial public offering;
(ii) the acquisition of Biosource by another entity by means of merger (other
than a merger which solely effects a change of domicile), tender offer or
consolidation, where, after such merger, tender offer or consolidation, less
than fifty percent (50%) of the surviving entity is held by persons who were
shareholders of Biosource prior to such merger, tender offer, or consolidation;
or (iii) as to any individual member of the Management Group, the termination of
such individual by Biosource other than for cause.
(c) Upon receipt of a Contest Notice, Biosource and the
Management Group shall attempt in good faith to resolve the dispute forming the
basis of the Contest Notice (the "Indemnification Dispute") with five (5)
calendar days. If after such time, Biosource and the Management Group are unable
to resolve the Indemnification Dispute, the parties shall submit to arbitration
conducted by JAMS/Endispute in San Francisco, California (which submission shall
be accompanied by a demand for arbitration under applicable arbitration rules).
Such arbitration shall be conducted before a single arbitrator selected by
agreement of the parties hereto in accordance with the rules of JAMS/Endispute
Comprehensive Rules of Commercial, Real Estate and Construction Cases
(www.jamsendispute.com). If the parties are unable to agree to a single
arbitrator within three (3) calendar days of demand for arbitration,
JAMS/Endispute shall appoint the arbitrator who shall be experienced with
resolving corporate acquisition-related disputes. The arbitrator shall not be
empowered to award damages in excess of compensatory damages and the arbitration
shall be resolved with thirty (30) calendar days of its initiation. Judgement
upon any decision rendered by the arbitrator may be entered by any court having
jurisdiction. The procedures set forth in this Section 11.1 (c) are the sole and
exclusive procedures for the resolution of disputes among the parties arising
out of or related to this Section 11.1 of the Agreement and no other Section of
this Agreement shall be governed by this Section 11.1 (c); provided, however,
that any party may seek a preliminary injunction or other provisional judicial
relief if, in its sole judgement, such action is necessary to avoid irreparable
damage or to preserve the status quo. All pending court action shall be stayed
and all applicable statutes of limitation and defenses based on the passage of
time shall be tolled while alternative dispute resolution efforts are pursued.
The parties shall take such action, if any, necessary to effectuate such stay or
tolling
11.2 Notices.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at their
addresses set forth on the signature pages to this Agreement (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 11.2).
11.3 Severability.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this
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Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transaction is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable law in order that the
Transaction may be consummated as originally contemplated to the fullest extent
possible.
11.4 Assignment; Binding Effect, Benefit.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties hereto; provided, however, that Biosource may assign its rights,
interests and obligations hereunder to any successor or parent entity of
Biosource whose shares are registered under Section 12 of the Exchange Act (or
will be so registered at the Effective Time). Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors and permitted assigns any
rights or remedies under or by reason of this Agreement.
11.5 Incorporation of Exhibits The Large Scale Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part of this Agreement for all purposes as if fully set forth
herein.
11.6 Governing Law This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware without
reference to conflict of law principles.
11.7 Waiver of Jury Trial Each party hereto hereby irrevocably waives
all right to trial by jury in any proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or any transaction or
agreement contemplated hereby or the actions of any party hereto in the
negotiation, administration, performance or enforcement hereof.
11.8 Headings The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.9 Counterparts This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
11.10 Entire Agreement This Agreement (including the Exhibits and the
Large Scale Disclosure Schedule) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties
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with respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
"hereunto duly authorized.
BIOSOURCE TECHNOLOGIES, INC. LARGE SCALE BIOLOGY CORPORATION
By: /s/ Robert L. Erwin By: /s/ N. Leigh Anderson
----------------------------- ----------------------------
Name: Robert L. Erwin Name: N. Leigh Anderson
Title: Chairman Title: President and CEO
3333 Vaca Valley Parkway 9620 Medical Center Drive
Vacaville, California 95688 Rockville, Maryland 20850
Telephone: (707) 446-5501 Telephone: (301) 424-5989
Telecopy: (707) 446-3917 Telecopy: (301) 762-4892
Attention: Robert L. Erwin Attention: N. Leigh Anderson
with a copy to: with a copy to:
Brobeck, Phleger & Harrison Steptoe & Johnson
One Market, Spear Street Tower 1330 Connecticut Avenue, N.W
San Francisco, California 94105 Washington, DC 20036
Telephone: (415) 442-0900 Attention: Terence P. Quinn
Telecopy: (415) 442-1010
Attention: Ronald B. Moskovitz
SECURITYHOLDER MANAGEMENT GROUP
Signature: Signature:
---------------------- -----------------------
Name: Name: N. Leigh Anderson
---------------------------
Signature:
Address: -----------------------
------------------------ Name: Constance L. Seniff
------------------------ Signature:
-----------------------
------------------------ Name: Robert J. Walden
------------------------
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