<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 12, 1996
AMBI Inc.
(Exact Name of Registrant as Specified in its Charter)
New York 1-12106 11-2653613
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification Number)
771 Old Saw Mill River Road, Tarrytown, New York 10591
- ------------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including Area Code: (914) 347-5767
--------------
Applied Microbiology, Inc.
- --------------------------------------------------------------------------------
Former Name if Changed Since Last Report
<PAGE>
Item 2. Disposition of Assets
1. On December 12, 1996, Applied Microbiology, Inc. ("Registrant") completed the
sale of its UK-based subsidiary, Aplin & Barrett Limited ("A&B") to Burns Philp
& Company Limited ("BP") for $13.5 million in cash and the return to the
Registrant of 2.42 million shares of the Registrant's Common Stock held by BP.
In addition, BP has provided Registrant with a revolving line of credit of up to
$2.5 million. Any borrowings under this line of credit can be forgiven under
certain circumstances. In accordance with a Share Purchase Agreement, an initial
payment of $8 million to Registrant was made on December 11, 1996 and a final
payment of $5.5 million will be made on June 12, 1997.
2. In connection with the transaction, Registrant and A&B entered into two
License Agreements. Pursuant to the first License Agreement, Registrant is
exclusively licensed by A&B for the use of nisin generally in pharmaceutical
products and animal healthcare products. Pursuant to the second License
Agreement, A&B is exclusively licensed by Registrant generally for the use of
nisin as a food preservative and for food preservation. In addition, Registrant
has entered into a Supply Agreement with A&B pursuant to which A&B will sell
nisin to Registrant while Registrant is establishing its own sources of supply.
3. In connection with the transaction, Registrant and BP have entered into an
Investors' Rights Agreement pursuant to which BP has agreed for a two year
period not to acquire, directly or indirectly, Registrant's securities, and to
refrain from selling Registrant's Common Stock, except under certain
circumstances through underwritten public offerings and private placement
transactions. For a period of two years and so long as BP owns at least 10% of
Registrant's outstanding common stock, BP will vote its shares in favor of
Fredric D. Price and one nominee of Fredric D. Price for election to
Registrant's Board. So long as BP owns at least 20% of Registrant's outstanding
common stock, BP is entitled to nominate one member for election to Registrant's
Board.
4. As a result of the return of 2.42 million shares of Registrant's Common
Stock, Registrant has reduced the number of its outstanding shares from
20,842,452 shares to 18,422,452 shares, and BP's ownership of Registrant Common
Stock is reduced from 10,183,837 shares (48.86%) to 7,763,837 shares (42.14%).
5. As of the date of sale, two of Registrant's Board members were
representatives of BP. BP's Board representatives did not participate in the
vote of Registrant's Board which approved the sale of A&B to BP. As a result of
the sale, BP's representation on Registrant's Board of Directors is reduced from
two members to one member. The amount of consideration for the sale was arrived
at through arms-length negotiation and a fairness opinion was obtained.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable
2
<PAGE>
(b) Pro Forma Financial Information
Number Description
------ -----------
P-1 Pro Forma Condensed Consolidated Financial
Statements - Summary
P-2 Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1996
P-4 Pro Forma Condensed Consolidated Statement
of Operations for the Three Months Ended
September 30, 1996
P-5 Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended June 30, 1996
P-6 Notes to Pro Forma Financial Information
(c) Exhibits
1. Share Purchase Agreement dated as of December 12, 1996, by and
among Applied Microbiology, Inc., Aplin & Barrett Limited and Burns
Philp (UK) plc.
2. License Agreement dated as of December 12, 1996 between Licensee
Applied Microbiology, Inc. and Licensor Aplin & Barrett Limited.
3. License Agreement dated as of December 12, 1996 between Licensee
Aplin & Barrett Limited and Licensor Applied Microbiology, Inc.
4. Supply Agreement dated as of December 12, 1996 between Aplin &
Barrett Limited and Applied Microbiology, Inc.
5. Investors' Rights Agreement dated as of December 12, 1996
between Applied Microbiology, Inc. and Burns Philp
Microbiology. Pty Limited.
6. Revolving Loan and Security Agreement dated as of
December 12, 1996 between Burns Philp Inc. as Lender and
Applied Microbiology, Inc. as Borrower.
7. Fairness Opinion dated December 10, 1996 from Chartered
Capital Advisers, Inc.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMBI Inc.
Date: December 27, 1996 By: /s/ Fredric D. Price
----------------------
Fredric D. Price
President and Chief Executive Officer
4
<PAGE>
AMBI INC.
Pro Forma Condensed Consolidated Financial Statements - Summary
AMBI Inc. (the "Company") consummated its agreement to sell Aplin & Barrett
Limited ("A&B"), the Company's wholly-owned food ingredient subsidiary, to Burns
Philp & Company Limited ("BP"), effective December 12, 1996 (the "Effective
Date").
Total consideration to the Company amounted to $13.5 million in cash and the
return to the Company of 2.42 million shares of the Company's Common Stock held
by BP. In accordance with the Share Purchase Agreement, an initial payment of $8
million to the Company was made on December 11, 1996 and a final payment of $5.5
million will be made on June 12, 1997 (the "Second Closing Date"). The 2.42
million shares of the Company's stock were returned to the Company on the
Effective Date. In addition, effective with the Second Closing Date, BP is to
provide the Company with a revolving line of credit of up to $2.5 million. Any
borrowings under this line of credit can be forgiven under certain
circumstances. At the Second Closing Date, the Company is also to redeem the
outstanding Redeemable Preferred Stock, which is held by BP, at the redemption
value of $1.5 million.
The following unaudited pro forma condensed consolidated balance sheet of the
Company as of September 30, 1996 was prepared assuming the transaction was
consummated as of the balance sheet date. The related unaudited pro forma
condensed consolidated statements of operations were prepared assuming the
transaction was consummated at the beginning of those periods.
The pro forma financial statements referred to above do not purport to represent
what the Company's financial position or results of operations actually would
have been if the transaction, in fact, occurred on the date referred to above or
to project the Company's results of operations for any period. These pro forma
financial statements and accompanying notes should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1996.
P-1
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AMBI INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Aplin & Pro Forma
Reported Barrett Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 4,606 (1,133) 8,546 (A) 12,019
Trade accounts receivable less allowance for doubtful
accounts of $81,000 5,098 (3,491) 1,607
Due to AMBI - 4,062 (4,062) (B) -
Inventories 2,861 (2,593) 627 (C) 895
Prepayments and other current assets 1,033 (812) 5,500 (D) 5,721
-------- ------- ------- -------
Total Current Assets 13,598 (3,967) 10,611 20,242
Property and equipment at cost less accumulated
depreciation 4,068 (3,363) 705
Patent costs and licensed technology at cost less
accumulated amortization 1,609 1,609
Other assets 113 113
-------- ------- ------- -------
TOTAL ASSETS $ 19,388 (7,330) 10,611 22,669
======== ======= ======= =======
</TABLE>
P-2
<PAGE>
AMBI INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Aplin & Pro Forma
Reported Barrett Adjustments Pro Forma
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable and lease obligation $ 175 (94) (E) 81
Accounts payable and accrued expenses 2,222 (952) 1,270
Other liabilities 83 (67) 1,026 (F) 1,042
Dividends payable 326 326
Taxes payable 299 (307) - (8)
-------- ------- -------- -------
Total current liabilities 3,105 (1,326) 932 2,711
Notes payable and lease obligation 894 (493) (E) 401
Long term loan 2,000 2,000
Deferred taxes payable 353 (353) - -
-------- ------- -------- -------
TOTAL LIABILITIES 6,352 (1,679) 439 5,112
REDEEMABLE PREFERRED STOCK 1,500 - - (G) 1,500
-------- ------- -------- -------
STOCKHOLDERS' EQUITY
Preferred stock
Common stock 104 - 104
Treasury stock (6,353) (H) (6,353)
Additional paid-in capital 51,674 (16,487) 16,487 (I) 51,674
Accumulated deficit (39,658) 10,252 38 (J) (29,368)
Currency translation adjustment (584) 584 -
-------- ------- -------- -------
-
TOTAL STOCKHOLDERS' EQUITY 11,536 (5,651) 10,172 16,057
-------- ------- -------- -------
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY $ 19,388 (7,330) 10,611 22,669
======== ======= ======== =======
</TABLE>
P-3
<PAGE>
AMBI INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
(Dollars in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Aplin & Pro Forma
Reported Barrett Adjustments Pro Forma
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 4,235 (2,717) 1,518
Other Operating Revenues 131 (11) 120
--------- -------- ------- --------
TOTAL REVENUES 4,366 (2,728) - 1,638
Cost of Sales (2,489) 1,491 - (998)
--------- -------- ------- --------
Gross Profit 1,877 (1,237) - 640
Selling, General & Administrative Expenses (4,605) 533 (4,072)
Research Costs (1,400) 220 (1,180)
Depreciation and Amortization (242) 117 - (125)
--------- -------- ------- --------
OPERATING LOSS (4,370) (367) - (4,737)
Interest Income 67 (8) 59
Interest Expense (37) 17 - (20)
Gain on sale of Aplin & Barrett - - 38 (K) 38
--------- -------- ------- --------
LOSS BEFORE TAX EXPENSE (4,340) (358) 38 (4,660)
Tax Expense (45) 43 - (L) (2)
--------- -------- ------- --------
NET LOSS $ (4,385) (315) 38 (4,662)
Preferred stock dividends (94) (94)
Net loss attributable to common stock (4,479) (4,756)
Loss per share $ (0.21) (M) $ (0.26)
</TABLE>
P-4
<PAGE>
AMBI INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Aplin & Pro Forma
Reported Barrett Adjustments Pro Forma
-------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 14,157 (12,614) 1,543
Other Operating Revenues 1,865 (77) 1,788
-------- -------- -------- --------
TOTAL REVENUES 16,022 (12,691) - 3,331
Cost of Sales (6,353) 5,114 - (1,239)
-------- -------- -------- --------
Gross Profit 9,669 (7,577) - 2,092
Selling, General & Administrative Expenses (11,177) 2,878 (8,299)
Research Costs (2,294) 716 (1,578)
Depreciation and Amortization (819) 396 (423)
-------- -------- -------- --------
OPERATING LOSS (4,621) (3,587) - (8,208)
Foreign exchange gain/loss 3 (3) -
Interest Income 317 (26) 291
Interest Expense (133) 65 - (68)
Loss on sale of Aplin & Barrett - - (561) (N) (561)
-------- -------- -------- --------
LOSS BEFORE TAX EXPENSE (4,434) (3,551) (561) (8,546)
Tax Expense (285) 267 (L) (18)
-------- -------- -------- --------
NET LOSS $ (4,719) (3,284) (561) (8,564)
Preferred stock dividends (502) 251 (O) (251)
Net loss attributable to common stock (5,221) (3,284) (310) (8,815)
Loss per share $ (0.27) (P) $ (0.53)
</TABLE>
P-5
<PAGE>
AMBI INC.
NOTES TO PRO FORMA FINANCIAL INFORMATION
A $8 million in cash received upon completion of sale, as well as A&B
remaining cash balance transferred through the intercompany account, less
amounts used to pay off equipment lease (see note E).
B Elimination of intercompany balance through the transfer of cash of $1,133
thousand, inventories of $627 thousand and satisfaction of the remainder as
part of the sale.
C Nisin pharmaceutical inventory transferred through intercompany account.
D $5.5 million receivable from BP for remainder of purchase price.
E Reflects AMBI's pay off of lease on A&B equipment.
F Reflects reserve accrual for expenses related to divestiture of A&B.
G Preferred stock is to be redeemed on the Second Closing Date for $1.5
million.
H Treasury Stock received. 2.42 million shares valued at $2.625 per share
(price as of the Effective Date).
I To properly state the legal capital of AMBI.
J Reflects gain on sale.
K Gain on sale of A&B which equals cash and receivables on the transaction of
$13,500 thousand plus the common shares redeemed valued at $6,353 thousand,
less write-off of initial investment of $16,487 thousand, amounts allocated
to satisfy remaining intercompany balances of $2,302 thousand and
anticipated expenses reserved for of $1,026 thousand.
L No tax expense is being accrued because gain on sale is expected to be
offset by operating losses and net operating loss carryforwards.
M Pro Forma net loss per share calculated on the basis of a weighted average
of 20.6 million shares outstanding less 2.42 million shares of treasury
stock.
N Loss on sale of A&B which equals cash and receivables on the transaction of
$13,500 thousand plus the common shares redeemed valued at $6,353 thousand,
less write-off of initial investment of $16,487 thousand, amounts allocated
to satisfy remaining intercompany balances of $2,901 thousand and
anticipated expenses reserved for of $1,026 thousand.
O Assumes preferred stock redeemed mid-year.
P Pro Forma net loss per share calculated on the basis of a weighted average
of 19.1 million shares outstanding less 2.42 million shares of treasury
stock.
P-6
<PAGE>
SHARE PURCHASE AGREEMENT
by and among
APPLIED MICROBIOLOGY, INC.,
a New York corporation,
APLIN & BARRETT LIMITED,
a company incorporated under
the laws of England and Wales,
and
BURNS PHILP (UK) plc,
a company incorporated under
the laws of England and Wales
December 12, 1996
<PAGE>
TABLE OF CONTENTS
Description Page
----------- ----
1. Certain Definitions; Sale and Purchase of Shares;
Closing................................................................. 1
1.1 Certain Definitions.............................................. 1
1.2 Sale and Purchase of Shares...................................... 7
1.3 Purchase Price................................................... 8
1.4 Payment on the Closing Date...................................... 8
1.5 Final Payment.................................................... 8
1.6 Adjustments to Final Payment..................................... 8
1.7 Closing Date Settlement.......................................... 9
1.8 Termination of Existing Agreement................................ 10
1.9 Redemption of New Preferred Stock................................ 10
1.10 Buyer Entitled to Rights Accruing to Shares...................... 10
1.11 Additional Consideration......................................... 10
2. Representations and Warranties of the Seller............................ 11
2.1 Corporate Status................................................. 11
2.2 Ownership of Shares.............................................. 12
2.3 Subsidiaries..................................................... 12
2.4 Title to Shares.................................................. 12
2.5 Authorization.................................................... 12
2.6 Financial Statements and Records................................. 13
2.7 Title to Personal Properties and Assets.......................... 13
2.8 Properties....................................................... 13
2.9 Real Property Matters............................................ 14
2.10 Accounts Receivable and Trade Discounts.......................... 14
2.11 Patents, Trademarks and Certain Intangibles...................... 15
2.12 Contracts........................................................ 16
2.13 Bank Accounts.................................................... 17
2.14 Insurance........................................................ 17
2.15 Taxation......................................................... 17
2.16 Litigation; Compliance with Laws................................. 19
2.17 Filings.......................................................... 20
2.18 Agreement Will Not Cause Breach.................................. 20
2.19 Conduct of Business.............................................. 21
2.20 Brokers.......................................................... 21
2.21 Environmental Laws............................................... 21
2.22 Liabilities...................................................... 22
2.23 Employees........................................................ 22
2.24 Disclosure....................................................... 23
2.25 Prohibited Payments.............................................. 24
2.26 Absence of Certain Changes or Events............................. 24
2.27 Business Relations............................................... 26
2.28 Compliance by Corporation with Other
Instruments and Laws. ........................................... 26
2.29 Permits.......................................................... 26
2.30 Covenants Performed.............................................. 26
2.31 Tortious Conduct................................................. 26
2.32 Regulatory Matters............................................... 27
2.33 Products......................................................... 27
2.34 Inventory........................................................ 27
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2.35 Computer Hardware and Software etc............................... 28
2.36 Data Protection Act.............................................. 29
3. Representations and Warranties of the Buyer............................. 29
3.1 Corporate Status................................................. 29
3.2 Authorization.................................................... 29
3.3 Litigation....................................................... 30
3.4 Noncontravention; Consents....................................... 30
3.5 Brokers.......................................................... 30
3.6 Material Misstatements or Omissions.............................. 30
3.7 Covenants Performed.............................................. 30
3.8 Title to Purchase Price Shares................................... 30
3.9 Filings.......................................................... 31
4. Covenants of the Buyer and the Seller................................... 31
4.1 Access and Confidential Information.............................. 31
4.2 Interim Operations............................................... 31
4.3 Legal Requirements and Filings................................... 33
4.4 Confidentiality Agreements Regarding
Intellectual Property Rights..................................... 33
4.5 Maintenance of Insurance......................................... 34
4.6 Additional Transactions.......................................... 34
4.7 Adverse Changes.................................................. 34
4.8 Indebtedness..................................................... 34
4.9 Intercompany Payables............................................ 35
4.10 GECC Lease....................................................... 35
4.11 Excluded Assets.................................................. 35
4.12 Intellectual Property............................................ 35
4.13 Mayacamas Agreement.............................................. 36
4.14 Regulatory Documentation......................................... 36
4.15 Withholding Tax.................................................. 37
5. Conditions to Obligations of the Buyer.................................. 37
5.1 Representations and Warranties................................... 37
5.2 Complete Performance by the Seller and the
Corporation...................................................... 37
5.3 Corporate Action................................................. 37
5.4 Related Documents................................................ 38
5.5 Opinion of Counsel............................................... 38
5.6 Absence of Changes............................................... 38
5.7 Litigation....................................................... 38
5.8 Delivery of Other Closing Documents.............................. 38
5.9 Board Meeting of the Corporation................................. 39
5.10 Board Approval................................................... 39
5.11 GECC Lease....................................................... 39
5.12 Gist-Brocades Distribution Agreement............................. 39
5.13 Board Approval of Seller......................................... 39
5.14 Management Services Agreement.................................... 40
5.15 Declaration of Trust............................................. 40
6. Conditions to Obligations of the Seller................................. 40
6.1 Representations and Warranties................................... 40
6.2 Complete Performance by the Buyer................................ 40
6.3 Corporate Action................................................. 40
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<PAGE>
6.4 Opinion of Counsel............................................... 40
6.5 Litigation....................................................... 40
6.6 Related Documents................................................ 41
6.7 Delivery of Other Closing Documents.............................. 41
6.8 Fairness Opinion................................................. 41
7. Indemnification......................................................... 41
7.1 Indemnification by the Seller.................................... 41
7.2 Indemnification by the Buyer..................................... 42
7.3 Notice and Right To Defend Third-Party Claims.................... 42
7.4 Survival of Indemnification...................................... 43
8. Termination............................................................. 44
8.1 Termination...................................................... 44
(a) Mutual Consent..................................... 44
(b) Default............................................ 44
(c) Upset Date......................................... 44
(d) Legal Restraint.................................... 44
8.2 Effect of Termination............................................ 44
8.3 Remedies for Breach by Seller.................................... 44
9. Miscellaneous........................................................... 45
9.1 Parties and Assignment........................................... 45
9.2 Confidentiality; Press Releases.................................. 45
9.3 Expenses......................................................... 45
9.4 Notices.......................................................... 46
9.5 Counterparts..................................................... 46
9.6 Headings......................................................... 46
9.7 Entire Agreement................................................. 46
9.8 Severability..................................................... 47
9.9 Governing Law.................................................... 47
9.10 Consent to Jurisdiction.......................................... 47
9.11 Resolution of Disputes........................................... 47
(a) Negotiation Between Executives..................... 47
(b) Arbitration........................................ 48
9.12 Waivers and Amendments........................................... 48
9.13 Further Acts..................................................... 48
9.14 Disclosure in Schedules.......................................... 48
9.15 Interpretation................................................... 48
9.16 Warranties Remain Notwithstanding Completion..................... 49
9.17 Information Supplied by Corporation Not Deemed
Warranty......................................................... 49
9.18 Representations and Warranties to the Seller's
Knowledge........................................................ 49
9.19 Restrictive Trade Practices...................................... 49
9.20 Right of Setoff.................................................. 49
9.21 Currency of Payments Due Under Agreement;
Currency Exchange................................................ 50
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<PAGE>
SCHEDULES
Schedule 1........................... Short Details of Aplin & Barrett, Limited
Schedule 1.1......................... Excluded Liabilities
Schedule 2.7......................... Title Exceptions
Schedule 2.8......................... Properties
Schedule 2.11........................ Intellectual Property
Schedule 2.12........................ Contracts
Schedule 2.13........................ Bank Accounts
Schedule 2.14........................ Insurance
Schedule 2.15........................ Tax Matters
Schedule 2.16........................ Litigation
Schedule 2.21........................ Environmental Disclosure
Schedule 2.23........................ Employee Matters
Schedule 2.26........................ Absence of Certain Changes or Events
Schedule 2.34........................ Inventory
Schedule 2.35........................ Computer Hardware and Software
Schedule 4.10........................ Corporation Equipment
Schedule 4.11........................ Excluded Assets
Schedule 4.12(a)..................... Intellectual Property of Corporation
Schedule 4.12(b)..................... Intellectual Property of Seller
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EXHIBITS
Exhibit A............................ Form of Deed of Tax Covenant
Exhibit B............................ June Pro Forma Financial Statements
Exhibit C-1.......................... Form of License Agreement between Seller
as Licensor and the Corporation as
Licensee
Exhibit C-2.......................... Form of License Agreement between the
Corporation as Licensor and Seller as
Licensee
Exhibit D............................ Form of Loan and Security Agreement
Exhibit E............................ Form of Deed of Termination
Exhibit F............................ Form of Investors' Rights Agreement
Exhibit G............................ Form of Supply Agreement
Exhibit H............................ Form of Opinion of Counsel to the Seller
and the Corporation
Exhibit I............................ Form of Opinion of Counsel to the Buyer
Exhibit J............................ Determination of Closing Net Book Value
Exhibit K............................ Termination Acknowledgement
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<PAGE>
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made this 12th day of
December, 1996, by and among APPLIED MICROBIOLOGY, INC., a New York corporation
(the "Seller"), APLIN & BARRETT LIMITED, a company incorporated under the laws
of England and Wales particulars of which are set out in Schedule 1 (the
"Corporation"), and BURNS PHILP (UK) PLC, a company incorporated under the laws
of England and Wales (the "Buyer").
WHEREAS, the Seller owns 2,128,514 of the issued ordinary shares of
(pound)1 each of the Corporation, which together with one ordinary share of
(pound)1 held in the name of Burns Philp International Investments Limited
constitute all of its issued share capital (the "Shares"); and
WHEREAS, Seller desires to sell the Shares to Buyer and Buyer desires to
purchase the Shares from Seller on the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS, Seller and Buyer's affiliate, Burns Philp Microbiology Pty
Limited, are parties to an Agreement for the Purchase and Sale of Stock, dated
June 30, 1992 (the "Existing Agreement"), which agreement shall be terminated as
of the consummation of the share purchase hereunder:
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Certain Definitions; Sale and Purchase of Shares; Closing.
1.1 Certain Definitions. The following definitions apply throughout this
Agreement:
"Affiliated Entity" means any individual, corporation, partnership,
association, trust or other entity or organization ("Person") directly or
indirectly controlling, controlled by or under common control with the
Corporation. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, in no event shall the Seller be deemed to be an
Affiliated Entity of the Corporation.
"Aged" shall have the meaning set forth in Section 2.34 hereof.
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<PAGE>
"Agreement" shall mean this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Applicable Claim Termination Date" shall have the meaning set forth in
Section 7.4 hereof.
"Auditors" means KPMG of 1 Cricklade Court, Cricklade Street, Swindon,
Wilts SN1 BEY, England.
"Burns Philp Inc." means Burns Philp Inc., a Delaware corporation
"Burns Philp Overseas" means Burns Philp Food Overseas Holdings Limited,
an Australian corporation.
"Buyer" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Cash Equivalents" means deposit accounts (including uncleared funds) with
banks or similar financial institutions, including, without limitation,
certificates of deposit.
"Citibank Prime Rate" means the rate of interest publicly announced from
time to time by Citibank, N.A. in New York City, New York, as its "prime rate."
Any change in the prime rate announced by Citibank N.A. shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Closing" means the consummation of the sale and purchase of the Shares
which shall take place at 2:00 p.m. New York time on the first business day
after satisfaction of the conditions set forth in Sections 5 and 6 hereof at the
offices of Pillsbury Madison & Sutro LLP or at such other place, time and date
as may be mutually agreed upon in writing by the Buyer and the Seller.
"Closing Date" means the date on which the Closing occurs.
"Closing Date Balance Sheet" shall have the meaning set forth in Section
1.6 hereof.
"Closing Net Book Value" means the difference between the assets of the
Corporation (other than the Excluded Assets) and the liabilities of the
Corporation (other than the Excluded Liabilities), as shown on the Closing Date
Balance Sheet, determined in accordance with Exhibit J.
"Companies Act" means the United Kingdom Companies Act 1985 (as amended or
re-enacted by the Companies Act 1989).
"Confidentiality Agreement" means the Undertaking, dated as of March 27,
1996, between the Seller and the Buyer.
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<PAGE>
"Corporation" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Corporation Equipment" shall have the meaning given such term in Section
4.10 hereof.
"Customers" shall have the meaning given such term in Section 2.27 hereof.
"Deed of Tax Covenant" means that certain Deed of Tax Covenant
substantially in the form of Exhibit A hereto, dated as of the Closing Date,
between Buyer and Seller, as the same may be amended, supplemented or otherwise
modified from time to time.
"Deed of Termination" means that certain Deed of Termination substantially
in the form of Exhibit E hereto, dated as of the Closing Date, between Burns
Philp International Investments Limited and Seller, as the same may be amended,
supplemented or otherwise modified from time to time.
"Dollars" or "$" means the lawful currency of the United States of
America.
"Effective Date" means the date of this Agreement.
"Environment" means all or any of the following media, namely land
(including without limitation surface water and sub surface strata), air and
water (including without limitation surface water and ground water).
"Environmental Laws" means all or any civil, administrative or criminal
European Community or United Kingdom statutes or other laws (including without
limitation common laws) or subordinate legislation (including without limitation
all or any directives, rules, decisions, orders, regulations or directions of
any competent authority) which relate to the pollution or contamination of the
Environment or the health and safety of any human or other living organism.
"Environmental Permits" means all or any permits, authorizations,
licenses, consents, approvals, certificates, registrations and other
authorizations required under any Environmental Law.
"Excess" shall have the meaning set forth in Section 2.34 hereof.
"Excluded Assets" shall have the meaning set forth in Section 4.11 hereof.
"Excluded Liabilities" means the liabilities listed in Schedule 1.1
hereof.
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"Existing Agreement" shall have the meaning set forth in the third recital
hereof.
"FDA" shall have the meaning set forth in Section 2.32 hereof.
"Final Payment" shall have the meaning set forth in Section 1.5 hereof.
"Final Payment Date" shall mean the day that is six (6) months after the
Closing Date or, if such day is not a business day, the next succeeding business
day.
"Financial Statements" means the audited balance sheet, profit and loss
account and statements of cash flow and recognized gains and losses for the
Corporation for the financial year ended June 30, 1996 and the Management
Accounts, together in each case with all notes, reports and statements annexed
to them.
"GAAP" means United Kingdom generally accepted accounting principles.
"GECC" means General Electric Capital Corporation, a New York corporation.
"GECC Lease" means that certain Master Lease Agreement, dated as of June
28, 1995, between GECC and Seller, together with Addendum to Master Lease
Agreement dated as of June 28, 1995, Equipment Schedule No. 001, dated as of
June 28, 1995, Equipment Schedule No. 002, dated as of June 28, 1995, Equipment
Schedule No. 003, dated as of June 28, 1995, Equipment Schedule No. 004, dated
as of June 30, 1995, Equipment Schedule No. 005, dated as of June 30, 1995,
Equipment Schedule No. 006, dated as of December 28, 1995, Equipment Schedule
No. 007, dated as of December 28, 1995, Equipment Schedule No. 008, dated as of
December 28, 1995, and Equipment Schedule No. 009, dated as of December 28,
1995, as the same may be further amended, supplemented or otherwise modified
from time to time.
"Hazardous Substances" means any materials or substances of any form
whether natural or artificial, solid or liquid, gas or vapor or any mixture
thereof which are present in such quantities or concentrations as may be harmful
or prejudicial to the Environment or the health of any human or other living
organism.
"Initial Payment" shall have the meaning set forth in Section 1.4 hereof.
"Intellectual Property Rights" means any patent, patent application,
know-how, trade secret, trademark, trademark application, service mark, service
mark application, trade name, business name, registered design, copyright,
proprietary method
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or process, or other similar industrial, intellectual or commercial rights.
"Investors' Rights Agreement" means that certain Investors' Rights
Agreement substantially in the form of Exhibit F hereto, dated as of the Closing
Date, between Seller and the affiliate of Buyer party thereto, as the same may
be amended, supplemented or otherwise modified from time to time.
"June Pro Forma Financial Statements" means the pro forma financial
statements prepared by Seller for the fiscal year ended June 30, 1996, a copy of
which is attached hereto as Exhibit B.
"License Agreements" means (i) that certain License Agreement
substantially in the form of Exhibit C-1 hereto, dated as of the Closing Date,
between Seller as licensor and the Corporation as licensee, as the same may be
amended, supplemented or otherwise modified from time to time, and (ii) that
certain License Agreement substantially in the form of Exhibit C-2 hereto, dated
as of the Closing Date, between the Corporation as licensor and the Seller as
licensee, as the same may be amended, supplemented or otherwise modified from
time to time.
"Lien" means any lien, encumbrance, security interest, pledge, equity,
charge, mortgage, claim or other contractual or preferential restrictions of any
kind or nature in respect of any property, including, without limitation, those
created by, arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessee under a capital lease or any
consignment or bailment for security purposes. The term "Lien" shall also
include, without limitation, reservations, exceptions, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property.
"Loan Agreement" means that certain Loan and Security Agreement
substantially in the form of Exhibit D hereto, dated as of the Closing Date,
between Burns Philp Inc. and Seller, as the same may be amended, supplemented or
otherwise modified from time to time.
"Management Accounts" means the unaudited balance sheet and profit and
loss account for the Corporation for the three-month period ended September 30,
1996.
"Material Adverse Effect" means a material adverse effect on the business
or condition (financial or otherwise), assets, liabilities, prospects or results
of operations of the applicable party.
"Material Contracts" shall have the meaning set forth in Section 2.12
hereof.
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"Material Permits" shall have the meaning set forth in Section 2.29
hereof.
"Mayacamas Agreement" shall have the meaning set forth in Section 4.13
hereof.
"New Preferred Stock" means the New Preferred stock of Seller issued to
Burns Philp Microbiology Pty pursuant to the Existing Agreement and currently
owned, beneficially and of record by Burns Philp Inc.
"Nisaplin Sales Amount" means the cumulative amount of sales by the
Corporation or an Affiliated Entity, in Dollars, directly or indirectly, to
purchasers which are either located in the United States or which sell to
subsequent purchasers in the United States under arrangements known or
reasonably expected to be known to the Corporation or such Affiliated Entity at
the time of sale, of nisin sold for food preservative uses, during the period
beginning on the Closing Date and continuing through June 30, 1999, but
excluding any sales pursuant to the Mayacamas Agreement. The cumulative amount
of such sales for purposes of determining the Nisaplin Sales Amount shall be
calculated by determining the aggregate amount of all such sales during such
period in accordance with past practices and GAAP and subtracting all returns
made during or in relation to sales made in such period.
"Properties" means the leasehold and freehold properties described in
Schedule 2.8.
"Purchase Price" shall mean the consideration payable for the Shares as
set forth in Sections 1.3 and 1.11.
"Purchase Price Shares" shall have the meaning set forth in Section 1.3
hereof.
"Rate of Exchange" means the spot rate on the relevant date on which
Dollars can be exchanged for British pounds sterling as published in the Wall
Street Journal, or if no such rate is published in the Wall Street Journal or if
the Wall Street Journal ceases publication, then in such other comparable
publication as shall be reasonably agreed by Seller and Buyer.
"Related Documents" means the Loan Agreement, the Deed of Tax Covenant,
the Supply Agreement, the Investors' Rights Agreement, the License Agreements
and any other documents or agreements executed and delivered in connection with
this Agreement and the transactions contemplated hereby.
"Relevant Accounting Standards" means any applicable statement of standard
accounting practice, financial reporting standard, consensus or statement of
recommended practice issued by the Accounting Standards Board in England and
Wales or any
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committee of it or body recognized by it in force on June 30, 1996.
"Seller" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Shares" has the meaning set forth in the first recital hereof.
"Sterling" or "(pound)" or "pounds" means the lawful currency of the
United Kingdom.
"Supply Agreement" means that certain Supply Agreement substantially in
the form of Exhibit G hereto, dated as of the Closing Date, between Seller and
the Corporation, as the same may be amended, supplemented or otherwise modified
from time to time.
"TA" means the United Kingdom Income and Corporation Taxes Act of 1988.
"Target Net Book Value" means the difference between the assets of the
Corporation (other than the Excluded Assets) and the liabilities of the
Corporation (other than the Excluded Liabilities), as shown on the June Pro
Forma Financial Statements.
"Tax Return" means any return, report, information return or other
document (including any related or supporting information) with respect to Taxes
that is either filed or required to be filed with a taxing authority or required
by applicable tax law to be provided to any other person.
"Taxes" means all taxes, duties, charges, fees, contributions,
impositions, levies or other assessments imposed by any Taxing Authority,
including, but not limited to, income, gross receipts, excise, property, sales,
use, transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, estimated, severance and stamp taxes (including any interest, fines,
penalties or additions to, or imposed on or with respect to, any such taxes,
duties, charges, fees, contributions, impositions, levies or other assessments).
"Taxing Authority" shall have the meaning given to that term in the Deed
of Tax Covenant.
"Termination Acknowledgment" shall have the meaning set forth in Section
1.8 hereof.
1.2 Sale and Purchase of Shares. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date the Seller agrees to sell with full
title guarantee to the Buyer, and the Buyer agrees to purchase from the Seller,
the Shares.
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1.3 Purchase Price. Subject to Sections 1.6 and 1.11 below, the
consideration to be paid for the Shares shall be (a) thirteen million five
hundred thousand Dollars ($13,500,000) and (b) the transfer back to Seller at
the request of and by the direction of Buyer of two million four hundred twenty
thousand (2,420,000) shares of common stock of Seller held by Burns Philp
Overseas (the "Purchase Price Shares").
1.4 Payment on the Closing Date.
(a) On the Closing Date, the Buyer shall (i) pay a portion of the Purchase
Price equal to eight million Dollars ($8,000,000) (the "Initial Payment")
(reduced by any amounts allocated to the satisfaction of unpaid intercompany
balances pursuant to Section 1.7) by wire transfer of same day Dollar funds to
an account designated by the Seller, and (ii) cause Burns Philp Overseas to
deliver to Seller the certificates representing the Purchase Price Shares.
(b) The Initial Payment will be allocated as follows:
(i) The Initial Payment, reduced by any amounts allocated to the
satisfaction of unpaid intercompany balances pursuant to Section
1.4(b)(ii), will represent a portion of the Purchase Price.
(ii) The Seller shall allocate a portion of the Initial Payment to
any unpaid intercompany balances between Seller and Corporation in
satisfaction of Section 4.9(b). The Seller shall treat such amounts as a
repayment and satisfaction of the intercompany debt owed by the
Corporation.
1.5 Final Payment. On the Final Payment Date the Buyer will pay to the
Seller, by wire transfer of same day Dollar funds to an account designated by
Seller, a portion of the Purchase Price equal to five million five hundred
thousand Dollars ($5,500,000), subject to adjustment pursuant to Section 1.6
below (the "Final Payment"), plus interest on the amount of the Final Payment as
so adjusted from and including the Closing Date to but excluding the Final
Payment Date at a rate of interest per annum equal to the Citibank Prime Rate.
1.6 Adjustments to Final Payment.
(a) The Final Payment shall be adjusted (the "Purchase Price Adjustment")
upward or downward, on a dollar-for-dollar basis, by the amount by which the
Closing Net Book Value exceeds or is less than the Target Net Book Value,
respectively. As soon as practicable after the Closing Date but in no event
later than ninety (90) days prior to the Final Payment Date, Buyer shall deliver
to Seller a balance sheet for the Corporation as of the Closing Date (the
"Closing Date Balance Sheet") prepared by Buyer and audited by the Auditors,
together with a
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determination of the Closing Net Book Value based on the Closing Date Balance
Sheet determined in accordance with Exhibit J. Seller shall review the Closing
Date Balance Sheet and shall notify Buyer within fifteen (15) days after receipt
thereof if Seller has any objections to the amount of the Purchase Price
Adjustment as determined by Buyer. If the Buyer and the Seller are unable to
resolve any dispute as to the Purchase Price Adjustment within fifteen (15) days
after receipt by Buyer of Seller's objections, the dispute shall be referred to
Price Waterhouse (UK Bristol office) for a final and conclusive determination of
the Purchase Price Adjustment. Such determination shall be made within thirty
(30) days after the referral. Seller and Buyer shall bear equally the expenses
arising in connection with such determination. If the Purchase Price Adjustment
has not been finally determined as of the Final Payment Date, (i) the Final
Payment shall be calculated using the Purchase Price Adjustment determined by
Buyer for purposes of making the Final Payment on the Final Payment Date, (ii)
if the final Purchase Price Adjustment is less than the Purchase Price
Adjustment used to calculate the Final Payment, Buyer shall pay Seller the
difference between such amounts within three (3) days after receipt of the final
determination of the Purchase Price Adjustment, plus interest on such amount at
a rate of interest per annum equal to the Citibank Prime Rate from and including
the Closing Date to but excluding the date such payment is made, and (iii) if
the final Purchase Price Adjustment is more than the Purchase Price Adjustment
used to calculate the Final Payment, Seller shall pay Buyer the difference
between such amounts within three (3) days after receipt of the final
determination of the Purchase Price Adjustment, plus interest on such amount at
a rate of interest per annum equal to the Citibank Prime Rate from and including
the Closing Date to but excluding the date such payment is made. Any payments
made pursuant to this Section 1.6 shall be made by wire transfer of same day
Dollar funds to an account designated by Seller or Buyer, as applicable.
(b) The parties shall cause all records, working papers and other
information as may be reasonably required by the Buyer, the Seller, Price
Waterhouse (UK Bristol office) and/or the Auditors for the purposes of this
Section 1.6 and Exhibit J to be made available upon a request for them and shall
generally render all assistance reasonably necessary in relation thereto.
1.7 Closing Date Settlement. On the Closing Date, in addition to payment
of the Initial Payment and delivery of the Purchase Price Shares pursuant to
Section 1.4 above, Buyer shall pay to Seller as further consideration for the
Shares an amount equal to the sum of (i) all cash, plus (ii) the fair market
value of all Cash Equivalents, in each case as shown on the books of the
Corporation as of the Closing Date to the extent that such cash and Cash
Equivalents have not previously been transferred to the Seller pursuant to
Section 4.11 hereof (less
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the amount of any transaction costs associated with such payment which shall be
for the account of Seller).
1.8 Termination of Existing Agreement. On the Closing Date, the Existing
Agreement shall be terminated and superseded in full by this Agreement and the
Related Documents and Buyer shall cause Burns Philp Microbiology Pty to deliver
to Seller an acknowledgement of such termination substantially in the form of
Exhibit K hereto (the "Termination Acknowledgement").
1.9 Redemption of New Preferred Stock. On the Final Payment Date, Seller
shall redeem the New Preferred Stock at the redemption value specified in
Seller's Certificate of Incorporation and shall pay to Burns Philp, Inc. any
accrued and unpaid dividends thereon, in each case by wire transfer of same day
U.S. Dollar funds to an account designated by Burns Philp, Inc.
1.10 Buyer Entitled to Rights Accruing to Shares. The Buyer shall be
entitled to exercise all rights attached or accruing to the Shares including,
without limitation, the right to receive all dividends, distributions or any
return of capital declared, paid or made by the Corporation on or after the
Closing Date, notwithstanding that the Purchase Price may not have been paid in
full on the Closing Date.
1.11 Additional Consideration.
(a) On June 30, 1999 (the "Earnout Payment Date"), Buyer shall pay to
Seller, by wire transfer of same day Dollar funds to an account designated by
Seller, as additional consideration for the Shares, an amount equal to the
amount specified below opposite the applicable Nisaplin Sales Amount (the
"Earnout Amount"):
Nisaplin Sales Amount in Earnout Amount in Millions
Millions of Dollars of Dollars
------------------------ --------------------------
< 7 0.0
7 to 8 0.5
8 to 11 1.0
11 to 14 1.5
14 to 17 2.0
> 17 2.5
(b) Buyer shall deliver to Seller on the Earnout Payment Date, a
statement, certified by the Buyer's Chief Financial Officer, setting forth in
reasonable detail the aggregate Nisaplin Sales Amount, together with the name of
the Corporation's Nisaplin customers to which sales included in the Nisaplin
Sales Amount were made, the aggregate amount of Nisaplin purchased by each such
customer and the aggregate amount of Nisaplin Sales Amount attributable to each
such customer. Seller shall review the Buyer's statement and shall notify Buyer
within fifteen (15) days after receipt thereof if
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Seller has any objections to the amount of the Earnout Amount as determined by
Buyer. If Buyer and Seller are unable to resolve any dispute as to the Earnout
Amount within fifteen (15) days after receipt by Buyer of Seller's objections,
the dispute shall be referred to Price Waterhouse (UK Bristol office) for a
final and conclusive determination of the Earnout Amount. Such determination
shall be made within thirty (30) days after the referral. Seller and Buyer shall
bear equally the expenses arising in connection with such determination. If the
Earnout Amount as determined by Buyer is less than the Earnout Amount determined
by Price Waterhouse (UK Bristol office) as provided herein, Buyer shall pay
Seller the difference between such amounts within three (3) days after receipt
of the final determination of the Earnout Amount by Price Waterhouse (UK Bristol
office), plus interest on such amount at a rate of interest per annum equal to
the Citibank Prime Rate from and including the Earnout Payment Date to but
excluding the date such payment is made. If the Earnout Amount as determined by
Buyer is more than the Earnout Amount determined by Price Waterhouse (UK Bristol
office) as provided herein, Seller shall pay Buyer the difference between such
amounts within three (3) days after receipt of the final determination of the
Earnout Amount by Price Waterhouse (UK Bristol office), plus interest on such
amount at a rate of interest per annum equal to the Citibank Prime Rate from and
including the Earnout Payment Date to but excluding the date such payment is
made.
2. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer as of the Effective
Date and as of the Closing Date as follows:
2.1 Corporate Status. The Corporation is a company duly incorporated under
the laws of England and Wales and has all necessary corporate powers to own or
lease its properties and assets and to carry on its business as now conducted,
and is authorized to transact business and is in good standing in each
jurisdiction in which its ownership of assets or conduct of business requires
such qualification except to the extent that failure to so qualify would not
have a Material Adverse Effect on the Corporation. True and complete copies of
the charter documents, minutes and share register of the Corporation, as written
up to date, have been made available to the Buyer for inspection. The Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has all necessary corporate powers to own or
lease its properties and assets and to carry on its business as now conducted,
and is authorized to transact business and is in good standing in each
jurisdiction in which its ownership of assets or conduct of business requires
such qualification, except to the extent that failure to so qualify would not
have a Material Adverse Effect on the Seller. The Corporation has in its
possession its register of members and other statutory books all of which have
been properly kept and contain a true and accurate
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and complete record of all matters with which they should deal. All returns,
resolutions and other documents necessary to be filed with the Registrar of
Companies in the United Kingdom have been duly filed and were correct when
filed. The copies of the Memorandum and Articles of Association of the
Corporation which have been supplied to the Buyer are complete and accurate in
all respects, have attached to them copies of all resolutions and other
documents required by law to be so attached, and fully set out the rights and
restrictions attaching to each class of share capital to which they relate.
2.2 Ownership of Shares. The Corporation has an authorized share capital
consisting of (pound)5,000,000 divided into 5,000,000 ordinary shares of
(pound)1 each, of which 2,128,515 of such ordinary shares are issued. The Shares
constitute all of such issued share capital of the Corporation and are all owned
beneficially by Seller. The Shares are duly authorized, validly issued and fully
paid and, with the exception of one ordinary share held in the name of Burns
Philp International Investments Limited, are all registered in the Seller's
name. There are no outstanding subscriptions, options, rights, warrants,
convertible securities or other agreements or commitments obligating the
Corporation, or the Seller or any other entity to acquire, sell, issue or allot
any additional shares in the capital of the Corporation.
2.3 Subsidiaries. The Corporation does not, directly or indirectly, own
any share capital, bonds or other securities of, or have any proprietary
interest in, any corporation, firm, partnership, joint venture, trust or other
entity.
2.4 Title to Shares. The Seller is the beneficial owner of and has good
and marketable title to the Shares, free and clear of all Liens and the transfer
and delivery of the Shares by Seller to Buyer as contemplated by this Agreement
will transfer good and marketable title to the Shares to Buyer free and clear of
all Liens.
2.5 Authorization. Each of the Seller and the Corporation has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement by Seller and
the Corporation and the performance of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Seller and the Board of
Directors of the Corporation and no other corporate proceedings on the part of
either Seller or the Corporation are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and the Corporation and assuming due authorization,
execution and delivery by Buyer, constitutes the valid and binding agreement of
Seller and the Corporation, enforceable in accordance with the terms hereof
except as the same may be limited by bankruptcy, insolvency, reorganization or
other laws affecting the enforceability of creditors' rights
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generally and except that the remedy of specific performance or similar
equitable relief may be subject to equitable defenses.
2.6 Financial Statements and Records.
(a) The Seller has delivered to the Buyer the Financial Statements which
comply with the requirements of the Companies Act, all other relevant statutes
and all Relevant Accounting Standards, and in all other respects have been
prepared in accordance with and on the same basis as the corresponding accounts
for the preceding three financial years, are accurate in all material respects
and give a true, accurate and fair view of the state of affairs generally of the
Corporation as at June 30, 1996, and September 30, 1996, as applicable, and of
the trading record, cash flow and profit or loss of the Corporation in respect
of the financial period for which they were prepared. The Financial Statements
for the financial year ended June 30, 1996 have been audited by the Auditors.
(b) The Corporation has kept proper records of its business and
financial affairs which are now complete, up to date and accurate and give a
true and fair view of its financial and trading position. None of these records
nor any other systems, data, controls or information of the Corporation is
stored, recorded, maintained operated or otherwise wholly or partly dependent
upon or held by any means (including all means of access thereto and therefrom)
which are not under the exclusive ownership and direct control of the
Corporation.
2.7 Title to Personal Properties and Assets. The Corporation has good and
marketable title to, or a valid leasehold interest in, all of the personal
properties and assets reflected in the Financial Statements and all other
personal properties and assets owned or used by the Corporation in the conduct
of its business, free and clear of any Liens, except as otherwise disclosed in
the Financial Statements or Schedule 2.7 and except for (a) those properties and
assets disposed of after June 30, 1996 in the ordinary course of business, (b)
minor imperfections of title and encumbrances that do not detract from the value
or use of the property or asset subject thereto, (c) the lien of current taxes
not yet due and payable and (d) mechanics', carriers', sellers' and other
similar liens arising in the ordinary course of business.
2.8 Properties. Attached hereto as Schedule 2.8 is a complete and correct
list of (i) all real property owned by or leased to the Corporation, together
with a brief description of each such property and the buildings and other major
improvements located thereon, and (ii) a complete and correct list of all
material items of equipment and other tangible personal property owned by, in
the possession of or used by the Corporation, all of which are reflected in the
books and records of the Corporation in accordance with customary practice and
GAAP. All equipment and other tangible personal property of the
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Corporation included in the list on Schedule 2.8 are in good condition, are
operable in the ordinary course of business, and have been regularly maintained,
repaired and replaced in accordance with Corporation's ordinary business
practice.
2.9 Real Property Matters.
(a) The Corporation has good and marketable title to the Properties which
comprise all the estate or interest of the Corporation in any land or premises.
Full and accurate particulars of the titles of the Corporation to the Properties
are set out in Schedule 2.8. The Corporation has in its possession or under its
control all duly stamped deeds and documents which are necessary to prove title
to the Properties.
(b) Except as disclosed in Schedule 2.8, the Corporation has exclusive and
unfettered possession of the Properties.
(c) Except as disclosed in Schedule 2.8, there is no option or agreement
for sale, mortgage (whether specific or floating), charge, lien, lease,
agreement for lease or overriding interest or other such rights in favor of
third parties in respect of the Properties.
(d) The Properties are not subject to the payment of any outgoings (except
those payable pursuant to any leases under which the Properties are held and
general and water rates).
(e) The Corporation has not since 30 June 1992 received any notice of any
breach of any covenants, conditions, agreements or statutory requirements,
planning consents, bye-laws, orders and regulations affecting the Properties.
(f) The current use of each of the Properties is the permitted use for the
purposes of the United Kingdom Town & Country Planning Acts 1971-1990 and the
Planning and Compensation Act 1991.
(g) The Corporation has not since 30 June 1992 received any compulsory
purchase notices, orders or resolutions affecting the Properties.
(h) The Corporation has not since 30 June 1992 owned any interest in any
freehold or leasehold property other than the Properties.
2.10 Accounts Receivable and Trade Discounts. All accounts receivable of
the Corporation shown on the Financial Statements arose from bona fide sales in
the ordinary course of business. The Financial Statements reflect adequate
reserves for bad and doubtful accounts in accordance with GAAP. Adequate accrual
and allowances have been provided for in accordance with GAAP consistently
applied.
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2.11 Patents, Trademarks and Certain Intangibles.
(a) The Corporation owns or possesses, free and clear of all Liens, all
Intellectual Property Rights which are necessary to conduct its business as it
is presently operated, including, without limitation, the Intellectual Property
Rights listed on Schedule 2.11. The Corporation is not infringing upon any
Intellectual Property Rights owned by any other person or persons, and there is
no claim or action by any such person pending, or to the knowledge of the Seller
or the Corporation threatened, with respect thereto. The Seller is not aware of
any infringement by any third party of any of the Intellectual Property Rights
owned by the Corporation. None of the Intellectual Property Rights currently or
previously used by the Corporation give rise or may give rise to any liability
pursuant to Sections 40 and 41 of the United Kingdom Patents Act 1977 (as
amended) and the Corporation has received no notice of any claim by any other
person or under such legislation.
(b) Schedule 2.11 contains a complete and correct list including country,
registration number or application number, explanation of status, and expiration
date (whenever such data or explanation is applicable) of all Intellectual
Property Rights which are owned or acquired by or registered in the name of, or
applied for by, the Corporation or any of its employees for the Corporations's
benefit for the Corporation's business, or have been licensed by or to the
Corporation for the Corporation's business. Each of the Seller and the
Corporation has used its best efforts to keep all of the Intellectual Property
Rights listed on Schedule 2.11 confidential and has not disclosed any of such
Intellectual Property Rights to any other person or entity except under written
valid, binding and enforceable confidentiality agreements which require each
such person or entity to keep the Intellectual Property Rights confidential
subject to only customary exceptions. The Corporation has not taken or omitted
to take any action which would have the effect of waiving any of the rights of
the Corporation to use any of the Intellectual Property Rights listed on
Schedule 2.11. Except as set forth in Schedule 2.11 the Corporation is not a
party to any licenses or other agreements or arrangements regarding the use by
the Corporation of such Intellectual Property Rights and is not under obligation
to pay any license fee or royalty to any other party with respect to the
manufacture, sale or use of any of the Corporation's products. Except as set
forth in Schedule 2.11 the Corporation has not granted to any other person any
license or other right in relation to the Intellectual Property Rights now or
formerly used by the Corporation. Each license, contract and commitment
identified on Schedule 2.11 is a valid, legally binding obligation of the
Corporation and the other parties thereto, without any material default (or any
event which, with notice or lapse of time or both, or the happening or
occurrence of any other event, would constitute a material default) by the
Corporation or, to the Corporation's and the Seller's knowledge,
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of any other parties thereto. Except as disclosed on Schedule 2.11, the Seller
knows of no material facts which would bar or impede the issuance of any patent
related to the Corporation's business.
2.12 Contracts.
(a) Attached hereto as Schedule 2.12 is a complete and correct list of all
contracts (including, without limitation, all employment and collective
bargaining agreements and all pension, bonus, profit-sharing, stock option and
other agreements providing for employee remuneration or benefits), real and
personal property leases, agreements, licenses, instruments and other
commitments to which the Corporation is a party or by which it or any of its
properties is bound that call for a payment by the Corporation in excess of
60,000 pounds or that require performance over a period in excess of one year or
that are otherwise material to the business of the Corporation (collectively,
the "Material Contracts"). Each of the Material Contracts was entered into on an
arm's length basis in the ordinary course of business. Complete and correct
copies of all such contracts have been provided or made available for inspection
to Buyer. Each of the Material Contracts so listed on Schedule 2.12, or required
to be so listed, is a valid and binding obligation of the Corporation in
accordance with its terms, and there have been no uncured or unwaived defaults
by the Corporation or by the other party or parties, or claims of default, and
to the Seller's best knowledge, there are no facts or conditions that have
occurred or that are reasonably anticipated to occur which, through the passage
of time or the giving of notice, or both, would constitute a default by the
Corporation or by the other party or parties, thereunder or would cause the
acceleration of any obligation of any party thereto or the creation of a Lien
upon any asset of the Corporation. Except as set forth in Schedule 2.12, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will require the consent of any party to any of
the Material Contracts and the Corporation has not received any notice or other
communication from any party indicating any intent by such party to terminate or
amend any Material Contracts by reason of the transactions contemplated hereby
or otherwise.
(b) Except for any guarantee or warranty implied by law or contained in
the standard terms of business of the Corporation, the Corporation has given or
made no guarantee, warranty or representation in respect of any goods or
services supplied or contracted to be supplied by it or accepted any liability
or obligation that would apply after the supply of any such goods or services.
There is not now outstanding any other guarantees or agreements for indemnity or
for suretyship either given by the Corporation.
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2.13 Bank Accounts. Attached hereto as Schedule 2.13 is a complete and
correct list of all banks and other financial institutions in which the
Corporation has an account, deposit or safe deposit box, together with a list of
all authorized signatories relating to each account.
2.14 Insurance. Attached hereto as Schedule 2.14 is a complete and correct
list of all insurance policies presently maintained by the Corporation. In
respect of all such insurances (other than insurance maintained through Buyer or
an Affiliated Entity of Buyer):
(a) all premiums have been duly paid to date;
(b) all the policies are in force and are not voidable on account of any
act, omission or nondisclosure on the part of the insured party.
2.15 Taxation.
(a) The Corporation has filed all returns and provided all other
information required by law to be supplied to the Inland Revenue, H. M.
Commissioners of Custom and Excise and/or any other competent fiscal authority,
and such returns are complete and accurate in all material respects and are not
disputed. The Corporation has duly paid all taxation within the time limits set
out by law for which it is liable and with respect to which payment was then
due. The provisions or reserves for taxation appearing in the Financial
Statements are sufficient fully to cover all taxation for which the Corporation
was as of June 30, 1996 accountable with respect to all events occurring on or
before June 30, 1996. The provisions or reserves for taxation appearing in the
Management Accounts are sufficient fully to cover all taxation for which the
Corporation was as of September 30, 1996 accountable with respect to all events
occurring during the period covered thereby.
(b) The Corporation has properly and punctually deducted and accounted for
Taxes which it has been required to deduct or for which it has been required to
account in respect of any payments made or deemed to have been made by it. In
particular, the Corporation has properly operated the United Kingdom "Pay As You
Earn" system and has duly made all deductions and payments required to be made
in respect of United Kingdom National Insurance contributions (including
employer's contributions).
(c) There is no material dispute or disagreement outstanding nor is any
contemplated at the date of this Agreement with any Taxing Authority regarding:
(i) the computation of any gains profits or losses of the
Corporation for the purposes of any Taxes.
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(ii) any liability or potential liability to or for any Taxes
(including penalties or interest) recoverable from the Corporation; or
(iii) the availability to the Corporation of any relief from or to
any Taxes.
(d) The Corporation is not and will not become liable to pay, reimburse or
indemnify any person in respect of any Taxes in consequence of failure by that
or any other person to discharge any such Taxes (whether within any specified
period or otherwise) where such taxation relates to a profit, income, gain,
transaction, event, omission or circumstance arising, occurring or deemed to
arise or occur (whether wholly or partly) on or before the date of this
Agreement.
(e) Schedule 2.15 lists all concessions, agreements and other formal or
informal arrangements with any Tax Authority (other than such as are published
by a Tax Authority in the UK) from which the Corporation has or will benefit, or
by which it is bound, and (in either case) which are extant on the date of this
Agreement.
(f) The Corporation has not since 30 June 1992 been a party to any scheme
or arrangement:
(i) in respect of which the main purpose or one of the main purposes
was or might be held to have been the avoidance, reduction or deferral of
a liability to or for Taxes; or
(ii) in respect of which any tax clearance has been or could have
been obtained; or
(iii) which was or included a reorganization or reduction of the
share capital of the Corporation.
(g) The Corporation has not since 30 June 1996 disposed of any asset
otherwise than in the ordinary course of its trade.
(h) All documents which are in the possession of the Corporation or by
virtue of which the Corporation has any right or interest and which either
attracts stamp duty or stamp duty reserve tax or requires to be stamped with a
particular stamp denoting that no duty is chargeable or that the document has
been produced to the appropriate authority have been properly stamped and there
is no liability to any fine or penalty in respect of such duty or stamp nor are
there any circumstances which may result in the Corporation becoming liable to
any such fine or penalty.
(i) Within the two years ending on the date of this Agreement the
Corporation has not made any claim for exemption
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from stamp duty under Section 42 of the United Kingdom Finance Act 1930.
(j) The Corporation has duly registered for Value Added Tax purposes and
has complied with all relevant provisions of the United Kingdom Value Added Tax
Act 1994 ("VATA") and regulations made or notices issued under any legislation
relating to Value Added Tax.
(k) Schedule 2.15 lists those jurisdictions where the Corporation has
filed or, to the best knowledge of Seller or the Corporation, is required to
file a Tax Return. No claim which remains outstanding has ever been made to the
Seller or the Corporation by a taxing authority in a jurisdiction where the
Corporation does not file a Tax Return that the Corporation is or may be subject
to taxation by that jurisdiction due to its activities or business.
2.16 Litigation; Compliance with Laws. Except as set forth in Schedule
2.16, (a) there is no legal, administrative or regulatory action, suit, claim,
grievance, investigation or proceeding pending or, to the best knowledge of
Seller, threatened, against or affecting the Corporation which if adversely
determined could reasonably be expected to have a Material Adverse Effect on the
Corporation or restrict the ability of the Seller or the Corporation to
consummate the transactions contemplated herein, and (b) there is no outstanding
or unsatisfied judgment, order or decree to which the Corporation is a party or
which is binding on the Corporation or its assets or which could affect the
transactions contemplated hereby. The Corporation is in compliance with all
laws, statutes, orders, rules, ordinances, regulations, charters and by-laws and
regulations (including any applicable building, zoning or environmental
protection law, ordinance or regulation) applicable to it or to the ownership of
its assets or the operation of its business, except to the extent that such
noncompliance would not have a Material Adverse Effect on the Corporation. The
Corporation is not subject to any judicial injunction or mandate or any
quasi-judicial order or quasi-judicial restriction directed to or against it,
nor has any governmental agency at any time challenged the Corporation in
writing or commenced or given notice to the Corporation of intention to commence
any investigation or administrative proceeding, relating to the legal right to
operate its business as presently or heretofore operated, except to the extent
that any of the foregoing would not have a Material Adverse Effect on the
Corporation. To the best knowledge of the Seller, except as otherwise disclosed
pursuant to Schedule 2.16, there are no (a) consumer, customer or distributor
complaints or regulatory complaints or investigations relating to the
Corporation's business, nor is there the basis for any such complaint or (b)
claims which the Corporation has put in the hands of its insurance carriers
seeking damages for personal or other injuries or loss resulting from the
manufacture, sale or use of
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any of the products manufactured or sold by the Corporation. Except as disclosed
in Schedule 2.16, the Seller knows of no strikes, work stoppages undertaken or
threatened or demands for recognition or petitions for representation since June
30, 1996 by any of the employees of the Corporation or grievances or other
claims by any union representing any employees of the Corporation.
2.17 Filings. No notice to or filing with, and no authorization, consent
or approval of, any domestic or foreign court or any public or governmental body
or authority is necessary for the consummation by the Seller or the Corporation
of the transactions contemplated by this Agreement, except for notices or
filings the failure to give or make, and authorizations, consents and approvals
the failure to obtain, would not materially and adversely affect the ability of
the parties hereto to consummate the transactions contemplated hereby or future
conduct of the Corporation's business.
2.18 Agreement Will Not Cause Breach. Neither the execution and delivery
of, nor the consummation of the transactions contemplated by, this Agreement
will result in any of the following:
(a) a default or an event that, with notice or lapse of time, or
both, would constitute a default, breach or violation of (i) the charter,
bylaws or other governing instruments of the Corporation or of the Seller,
(ii) any Material Contract or Material Permit, or (iii) any material
contract, agreement, license or instrument to which the Seller is a party
or by which the Seller, or the property of the Seller is bound which
default, breach or violation could reasonably be expected to have a
Material Adverse Effect on the Corporation or a material adverse effect on
the ability of the parties to consummate the transactions contemplated
hereby;
(b) an event that would permit any person or entity (i) to terminate
any Material Contract or Material Permit or (ii) to accelerate the
maturity of any indebtedness or other obligation of the Corporation, which
acceleration could reasonably be expected to have a Material Adverse
Effect on the Corporation or a material adverse effect on the ability of
the parties to consummate the transactions contemplated hereby;
(c) an event that would permit any person or entity to terminate any
material contract, agreement, license or instrument to which the Seller is
a party or by which the Seller or the property of the Seller is bound, or
to accelerate the maturity of any indebtedness or other obligation of the
Seller which
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termination or acceleration could reasonably be expected to have a
Material Adverse Effect on the Corporation or a material adverse effect on
the ability of the parties to consummate the transactions contemplated
hereby;
(d) the creation or imposition of any Lien upon any asset of the
Corporation or the Seller;
(e) a violation or breach of any statute, ordinance, rule or
regulation applicable to the Corporation or the Seller, or any writ,
injunction or decree of any court or governmental instrumentality to which
the Corporation or the Seller is a party or by which the Corporation, or
the Seller, or the property of the Corporation or the Seller is bound,
which violation or breach could reasonably be expected to have a Material
Adverse Effect on the Corporation or a material adverse effect on the
ability of the parties to consummate the transactions contemplated hereby;
or
(f) a loss or adverse modification under the terms thereof, of any
Material Contract or Material Permit.
2.19 Conduct of Business. Since June 30, 1996, there has occurred no event
which would have a Material Adverse Effect on the Corporation.
2.20 Brokers. Neither the Seller nor the Corporation, nor any shareholder,
officer, director or agent of either of them has incurred on behalf of the
Seller or the Corporation any liability to any broker, finder or agent for any
brokerage fees, finders' fees or commissions with respect to the transactions
contemplated hereby.
2.21 Environmental Laws.
(a) Except as disclosed in Schedule 2.21 hereto, (i) all real property
which is owned or leased by the Corporation complies in all respects with all
applicable Environmental Laws and Environmental Permits; (ii) all Environmental
Permits are valid and subsisting and none has been suspended, revoked or
restricted or is likely to be so or the subject of any notice from any competent
authority nor is any material expenditure required to maintain or renew any
Environmental Permit; (iii) none of the Corporation's operations thereon is
subject to any judicial or administrative proceeding alleging the violation of
any Environmental Law; (iv) none of such real property is the subject of any
regulatory investigation concerning any use or release of any Hazardous
Substance, except for any such investigation conducted entirely without notice
to the Seller or the Corporation without entry to any facility of the Corpora-
tion's and of which the Seller has no knowledge; (v) neither the
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Corporation nor, to the best of the Seller's knowledge, any predecessor-in-title
to such real property has received, nor has the Seller or the Corporation any
reason to expect that the Corporation may receive, any notice under any
Environmental Law or Environmental Permit relating to past or present treatment,
storage or disposal of a hazardous waste or a spill or release of a Hazardous
Substance into the Environment; (vi) the Corporation has no contingent liability
in connection with any release of any Hazardous Substance into the Environment
and no release which could require remediation has occurred; (vii) none of the
Corporation's or any other person's operations on such real property involve the
generation, transportation, treatment, storage or disposal of Hazardous
Substances; (viii) except in accordance with all applicable laws, the
Corporation has not disposed of any Hazardous Substance in, on or about such
real property and neither has any lessee, prior owner or other person.
(b) Except for storage tanks described in Schedule 2.21 hereto, no surface
impoundments or underground storage tanks are located in, on or about any real
property.
2.22 Liabilities. Except as reflected on the Financial Statements, the
Corporation has no liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise, that would be of a type and nature required to
be reported on a financial statement (including the notes thereto) prepared in
accordance with GAAP consistently applied, other than liabilities or obligations
arising in the ordinary course of business since June 30, 1996.
2.23 Employees.
(a) Schedule 2.23 details the names and full particulars of all employees
of the Corporation and their respective ages, length of service with the
Corporation and their terms of employment, including their notice periods and
remuneration (including, without limitation, bonuses, profit sharing
arrangements and benefits in kind and usual dates and terms of review of salary)
and also details any arrangements relating to any redundancy or other payment or
compensation rights or any retirement rights which those employees have or would
have in the event of the termination or cessation of their employment.
(b) Except as set forth in Schedule 2.23, no present employee of the
Corporation has given or received notice terminating his employment or is
entitled (without giving proper notice) to terminate his employment with the
Corporation.
(c) The Corporation is not party to any agreement or arrangement imposing
an obligation on it to increase the rates of remuneration of or to make any
bonus or incentive payments or any benefits in kind or any payments under a
profit sharing scheme to or on behalf of any of its former, present or future
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<PAGE>
employees, whether now or at any future date and nor is it in discussions with
any of the employees of the Corporation or their representatives in relation to
any such agreement or arrangement.
(d) Except as set forth in Schedule 2.23, there is not in existence any
share incentive scheme, share option scheme or profit sharing scheme for all or
any of the Corporation's employees and no proposals for any such scheme or
arrangement are under consideration by the Corporation.
(e) Schedule 2.23 contains details of all consultancy agreements with the
Corporation.
(f) There are no agreements or arrangements (whether or not legally
binding) between the Corporation and any trade union or other body representing
its employees or any of them and the Corporation does not recognize any trade
union or other body representing its employees or any of them for negotiating
purposes.
(g) Except as disclosed in Schedule 2.23 the Corporation has no legal
liability or obligation to pay or provide for the payment of any form of
pension, superannuation or death benefit or allowance or sickness or accident
benefit to or in respect of any person or to contribute to any retirement
benefit accident life assurance medical insurance or salary indemnity scheme in
respect of any person.
(h) There are no disputes with or in relation to or claims by any of the
present or former employees of the Corporation, nor has the Corporation received
notice that any such disputes or claims are pending or threatened.
(i) Except as set forth in Schedule 2.23, since June 30, 1992 the
Corporation has not made or agreed to make any payment or provided or agreed to
provide any benefit to any present or former director or employee or any of
their dependents in connection with the actual or proposed termination or
suspension of their office or employment or variation of any contract of
employment of such present or former director or employee.
2.24 Disclosure.
(a) The Seller and the Corporation have made, and have caused their
officers, directors, employees, agents and other representatives to make
available to Buyer and its representatives and agents all written materials,
documents, agreements files, books and records of the Corporation and financial
statements and other information in their possession that relate to the
Corporation, and the Seller and the Corporation have made available all of their
officers, directors and employees that are responsible or familiar with the
business, financial, legal or other affairs of the Corporation, and have
directed all of
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the officers, directors and employees of the Seller and the Corporation to be
available to Buyer and its representatives and agents to answer all questions
regarding the Corporation.
(b) In connection therewith, neither the Seller nor the Corporation has
withheld from Buyer any information pertaining to the Corporation which in the
good faith judgment of the Corporation or the Seller would be reasonably
necessary for Buyer to properly evaluate, prior to the Closing, the business,
assets, financial condition and prospects of the Corporation.
(c) All such written information delivered or made available to Buyer and
its representatives and agents by the Seller and the Corporation (including
without limitation the information set out in the schedules to this Agreement)
is in all material respects true, accurate and complete.
(d) No representation or warranty by the Seller or the Corporation in this
Agreement or any schedule, exhibit, certificate, or other document furnished or
to be furnished by the Corporation or the Seller to Buyer pursuant to this
Agreement or the Buyer's due diligence review, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(e) It is agreed and acknowledged by the Seller that notwithstanding any
other provisions in this Agreement or the Deed of Tax Covenant no disclosure
shall be made or shall be effective against or in relation to any of the
provisions of the Deed of Tax Covenant.
2.25 Prohibited Payments. Seller has not, with respect to the
Corporation's business and the Corporation has not, (i) entered into any
understanding, agreement or arrangement, written or oral, under or pursuant to
which bribes, kickbacks, illegal rebates, payoffs or other forms of illegal
payments have been or will be made, provided for or suffered, (ii) made any
contributions to any candidate for political office, or failed to disclose fully
any such contribution in violation of law or (iii) made any payment to any
foreign governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments or contributions required or
allowed by applicable law.
2.26 Absence of Certain Changes or Events. Except as set forth in Schedule
2.26, since June 30, 1996, there has not been
(a) any direct or indirect redemption, purchase or other acquisition by
Seller or the Corporation of any shares of the Corporation or any declaration,
setting aside or payment of any dividend with respect to such share capital or
made any payment or disposal which is or is treated as a distribution for the
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purposes of the TA (except as permitted pursuant to Section 4.11 hereof);
(b) any change in the number of issued shares of the Corporation, or any
issuance of options or warrants with respect thereto;
(c) any increase in the compensation payable or to become payable by the
Corporation to any of its officers or employees;
(d) any adoption of, or increases in compensation payable under, or
contributions to, or other amendments to, any of the Corporation's pension,
retirement, profit sharing, bonus or similar benefit plans other than in the
ordinary course of businesses and consistent with past practice;
(e) any new employment or consulting agreements or amendments to any
existing agreements with any of its officers or employees;
(f) any sale or other disposition of any assets of the Corporation other
than sales or dispositions made in the ordinary course of business and
consistent with past practice;
(g) any creation of a material Lien upon any asset of the Corporation,
except in the ordinary course of business and consistent with past practice;
(h) any write-offs or write-downs of inventories or accounts receivable of
the Corporation, other than in the ordinary course of business and consistent
with past practice;
(i) any discharge or payment of any material obligation or liability of
the Corporation, other than in the ordinary course of business and consistent
with past practice;
(j) any borrowings by the Corporation, other than in the ordinary course
of business and consistent with past practice;
(k) any amendment to the Memorandum or Articles of Association or other
governing instruments of the Corporation;
(l) any amendment or termination of any Material Contract or Material
Permit;
(m) any agreement by the Corporation to enter into any commitment,
contractual obligation, capital expenditure or other transactions other than
immaterial commitments in the ordinary course of business; or
(n) any agreement by the Seller or the Corporation, as applicable, to take
any action described in this Section.
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2.27 Business Relations. Neither the Seller nor the Corporation has
received any notice or other communication (written or oral) from any
substantial customer, supplier or any other third party with which the
Corporation has a business relationship involving more than 30,000 pounds in any
of the two most recently ended fiscal years (collectively, the "Customers"),
indicating any intent by such Customer to terminate, reduce or materially change
any business relationship or agreement with the Corporation by reason of the
transactions contemplated herein or otherwise.
2.28 Compliance by Corporation with Other Instruments and Laws. The
Corporation has, and is in compliance with, all necessary consents, permits,
licenses, orders, ratings, authorizations and approvals of, or registration or
declaration with, all governmental authorities, agencies, bureaus, commissions
or regulatory bodies for it to operate the properties and facilities comprising
the business presently being operated, except for those which would not have a
Material Adverse Effect on the Corporation. All labels and packaging materials
and all specifications and procedures used in the manufacture and packaging of
the Corporation's products are in material compliance with all applicable laws
in any jurisdiction in which its products are packaged, shipped or sold by the
Corporation, except where any such noncompliance would not have a Material
Adverse Effect on the Corporation.
2.29 Permits. The Corporation has all permits, licenses, approvals, orders
or authorizations of, or registrations, declarations, qualifications,
designations or filings with, any governmental authority, agency, bureau or
commission, or any third party (including without limitation, Kosher
validation), which are required to be obtained or made by the Corporation in
connection with the operation of its business as presently being conducted,
except for those which would not have a Material Adverse Effect on the
Corporation (collectively, the "Material Permits").
2.30 Covenants Performed. As of the Closing Date, Seller and Corporation
have performed their respective obligations and covenants contained herein which
by their terms are to be performed on or before the Closing Date, except to the
extent any such obligations or covenants are waived in writing by the Buyer.
2.31 Tortious Conduct. Except as otherwise disclosed in the schedules
hereto, covered by insurance or reflected on the June Pro Forma Financial
Statements, on and as of the Closing Date, the Corporation is not liable to any
third party or entity for any damages resulting in whole or in part from the
negligent, reckless or willful acts or omissions of the Corporation, whether
such liability may arise in tort, strict liability or for breach of contract,
nor has the Corporation acted or failed to act so as to result in such
liability, except
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to the extent that any such liability would not have a Material Adverse Effect
on the Corporation.
2.32 Regulatory Matters.
(a) The Corporation has filed or otherwise provided all reports, data,
other information and applications with respect to its business or products
which are required to be filed with or otherwise provided to the U.S. Food and
Drug Administration ("FDA") and any other federal, state, local or foreign
governmental authorities with jurisdiction over the manufacture, use and sale of
such products, and, all regulatory approvals in respect thereof are in full
force and effect on the date hereof, except to the extent that the failure of
any of the foregoing would not have a Material Adverse Effect on the
Corporation. The manufacture, use, sale and distribution by the Corporation of
the products comply in all material respects with all applicable laws and
published governmental rules, regulations and interpretations thereof, as in
effect on the date hereof or on the Closing Date, except to the extent that any
such non-compliance or liability would not have a Material Adverse Effect on the
Corporation and the methods of quality control employed by the Corporation are
reasonably sufficient to ensure such compliance.
(b) No contract, arrangement, agreement or obligation to which the
Corporation is a party contravenes or is registrable under any of the Trade
Descriptions Act, the Fair Trading Act 1973, the Restrictive Trade Practices Act
1976, the Competition Act 1980, the Treaty of Rome or any other applicable
antitrust, antimonopoly, or anticartel legislation or regulations or otherwise
restricts in any way the freedom of the Corporation to carry on any business in
any part of the world.
2.33 Products. All products manufactured, distributed or sold by the
Corporation on or before the Closing Date meet published or quoted
specifications, were not defective, were not contaminated or spoiled, did not
contain any foreign objects and are in compliance with and were manufactured in
accordance with any warranties or representations given or implied in respect
thereof and in compliance with all applicable laws and regulations (including
without limitation the regulations promulgated by the FDA). The products are
packaged in appropriate containers which comply in all material respects with
all FDA regulations, including labeling regulations.
2.34 Inventory. Except as otherwise described herein, the inventories of
the Corporation consist of items of a quality and quantity usable and suitable
in the ordinary course of business, and are in all material respects salable in
the market for which such products were manufactured or produced to be sold and
include no items which require governmental approvals to be sold. To the extent
the values of items were below standard quality or quantity or were obsolete or
otherwise unsalable,
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such items were accounted for in the Financial Statements at the lower of cost
and net realizable value in accordance with GAAP. As of the Closing Date, there
will be a supply of raw materials and goods in process in the inventory at their
customary location (together with supplies) adequate to manufacture, in the
ordinary course of business as generally conducted by the Corporation prior to
the Closing, finished products in amounts which, together with the finished
products in the inventory as of the Closing, will be sufficient to meet the
Corporation's requirements in the ordinary course of business as generally
conducted by the Corporation prior to the Closing, except to the extent of
variations caused by events beyond the Corporation's or Seller's control. Except
for items undergoing routine rework, items not salable in the normal course of
business (including but not limited to discontinued items, damaged goods or
items not meeting quality assurance guidelines), shall be accounted for in the
Closing Date Balance Sheet at the lower of cost or their net realizable value in
accordance with GAAP. Items shall be deemed "Aged" if, as of the end of the
fiscal month immediately preceding the Closing Date (or as of the Closing Date
if the Closing Date coincides with the last day of a fiscal month), they have a
remaining shelf life of less than six (6) months according to Schedule 2.34.
Such items deemed "Aged" shall be accounted for at no value. Items shall be
deemed "Excess" if, as of the end of the fiscal month immediately preceding the
Closing Date (or as of the Closing Date if the Closing Date coincides with the
last day of a fiscal month), there is more than twenty-four (24) months supply
on hand (based on turnover during the last twenty-four (24) month period) in the
Corporation's inventory unless reasonably economical minimum orders are for
greater than twenty-four (24) months supply. The amount deemed "Excess" shall be
accounted for at salvage value. Packaging materials will be valued at cost
except that no value shall be attributable to packaging not usable in the normal
course of business (e.g., damaged, obsolete, discontinued, faded or shaded) or
packaging not meeting applicable legal requirements. All raw materials and
goods-in-process shall be suitable and processable for the production of
products in accordance with the Corporation's standard quality and yield
specifications as now in effect.
2.35 Computer Hardware and Software etc.
(a) The Corporation has not suffered any material failures or breakdowns
of the computer hardware which it used in the year preceding the date of this
Agreement, and has not suffered any material failures or bugs in or breakdowns
of its software (except arising from operator error not based on inadequate
manuals) in the year preceding the date of this Agreement.
(b) The Corporation has operated and used all items of computer hardware
used by it substantially in accordance with the manufacturers' recommendations
including (without limita-
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tion) any recommendations as to environmental conditions and power supply.
(c) Schedule 2.35 contains a list of all computer software (including
programs held on silicon chips, disks and any other media, manuals and operator
guides) used by the Corporation. All such computer software is either owned by
the Corporation or held by it on license as noted in Schedule 2.35.
(d) The Corporation has not altered, adapted or modified any software held
by it on license or used by it whether with or without the consent of the owner
or manufacturers thereof.
2.36 Data Protection Act.
(a) The Corporation has complied in all material respects with all
requirements of the Data Protection Act 1984 and in particular:
(i) has registered as a data user under that Act for all purposes
for which registration is required by the business as carried on by the
Corporation;
(ii) has complied with the data protection principles.
(b) The Corporation has not received any notice letter or complaint
alleging a breach by it of the provisions of the Data Protection Act 1984 and
has no reason to believe that circumstances exist which may give rise to such a
notice letter or complaint.
3. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Seller as of the Effective
Date and as of the Closing Date the following:
3.1 Corporate Status. The Buyer is a company duly incorporated under the
laws of England and Wales.
3.2 Authorization. The Buyer has full power and authority as of the
Effective Date and the Closing Date to enter into this Agreement and to
consummate the transactions contemplated herein. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action. The execution and
delivery of this Agreement by Buyer and the performance of the transactions
contemplated hereby have been duly authorized by the Board of Directors of Buyer
and no other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and, assuming due
authorization, execution and delivery by Seller and the Corporation, constitutes
the valid and binding agreement of
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Buyer, enforceable in accordance with the terms hereof except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforceability of creditors' rights generally and except that the remedy of
specific performance or similar equitable relief may be subject to equitable
defenses.
3.3 Litigation. No legal, administrative or regulatory action, suit or
proceeding is pending or, to the best knowledge of the Buyer, is threatened,
against the Buyer which if adversely determined could reasonably be expected to
restrict the Buyer's ability to consummate the transactions contemplated herein.
3.4 Noncontravention; Consents. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
violate any provisions of the Buyer's Articles of Association; or (b) violate
any agreement to which the Buyer is a party or is bound or result in the
creation of any Lien on any of the Buyer's assets or properties, the effect of
all of which violations, creations and impositions would be to materially
adversely affect the Buyer's ability to consummate the transactions contemplated
herein.
3.5 Brokers. Neither the Buyer nor any stockholder, officer, director or
agent of the Buyer has incurred on behalf of the Buyer any liability to any
broker, finder or agent for any brokerage fees, finders' fees or commissions
with respect to the transactions contemplated hereby.
3.6 Material Misstatements or Omissions. No representation or warranty by
the Buyer in this Agreement or any schedule, exhibit, certificate, or other
document furnished or to be furnished by the Buyer to Seller pursuant to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
3.7 Covenants Performed. As of the Closing Date, Buyer has performed its
obligations and covenants herein which by their terms are to be performed on or
before the Closing Date, except to the extent any such obligations or covenants
are waived in writing by the Seller.
3.8 Title to Purchase Price Shares. Burns Philp Overseas is the beneficial
owner of and has good and marketable title to the Purchase Price Shares, free
and clear of all Liens and the transfer and delivery of the Purchase Price
Shares by Burns Philp Overseas to Seller as contemplated by this Agreement will
transfer good and marketable title to the Purchase Price Shares to Seller free
and clear of all Liens.
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3.9 Filings. No notice to or filing with, and no authorization, consent or
approval of, any domestic or foreign court or any public or governmental body or
authority is necessary for the consummation by the Buyer of the transactions
contemplated by this Agreement, except for notices or filings the failure to
give or make, and authorizations, consents and approvals the failure to obtain,
would not materially and adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby.
4. Covenants of the Buyer and the Seller.
4.1 Access and Confidential Information.
(a) Seller shall make, and shall cause the Corporation and its officers,
directors, employees and agents, including accountants, counsel and other
representatives to make, available to the officers, employees and agents of
Buyer reasonable access during normal business hours throughout the period prior
to the Closing Date all of the Corporation's officers, employees, agents,
properties, books, contracts, commitments and records, and during such period,
shall furnish promptly to Buyer all other reasonably requested information
concerning its business, properties and personnel. Neither the Seller nor the
Corporation shall withhold from Buyer and its representatives and agents for
review or questioning any known or available information pertaining to the
Corporation which in the reasonable judgment of Buyer or the Seller would be
necessary for Buyer to evaluate, prior to the Closing Date, the business,
assets, financial condition and prospects of the Corporation.
(b) No investigation pursuant to this Section shall affect, add to or
subtract from any representations or warranties or the conditions to the
obligations of the parties hereto to consummate the transaction contemplated
hereby.
(c) All information disclosed to Buyer pursuant to this Section 4.1 shall
be subject to the Confidentiality Agreement.
4.2 Interim Operations. After the date hereof and prior to the Closing or
earlier termination of this Agreement, unless Buyer shall otherwise agree in
writing or as otherwise contemplated by this Agreement, each of Seller and the
Corporation shall ensure that:
(a) the business of the Corporation shall be conducted only in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted;
(b) there is no material change (including any change by the incorporation
or acquisition or disposal of a subsidiary of all or part of a business) in the
nature and extent of its business;
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(c) the Corporation shall not create any new subsidiaries;
(d) the Corporation shall not take any of the actions set forth in Section
2.26 hereof or enter into any contract, agreement, commitment or arrangement
with respect to any of such actions;
(e) the Corporation shall not resolve to be or convene any general meeting
as to which a resolution is proposed that the Corporation shall be voluntarily
wound-up;
(f) the Seller shall confer with one or more representatives of Buyer to
report operational matters of a material nature and the general status of
ongoing operations;
(g) neither the Seller nor the Corporation shall:
(i) knowingly cause any of the representations and the warranties by
the Corporation or the Seller contained in this Agreement to be untrue or
incorrect in any material respect as of the Closing Date;
(ii) waive, grant, release or transfer any rights or property of
material value or modify or change in any material respect any Material
Contract or Material Permit other than in the ordinary course of business;
(iii) commit a breach of, or default under, any Material Contract or
Material Permit, or any contract, agreement, license or instrument to
which any of the Corporation's shares may be subject, or violate any
applicable law; regulation, ordinance, order, injunction or decree or any
other requirement of any governmental body or court, relating to the
Corporation's shares or assets or business;
(iv) fail to (A) file all reports and returns required to be filed
with the Registrar of Companies, and local and foreign authorities; (B)
fail to promptly pay all Taxes lawfully levied or assessed upon it or any
of its properties (except for taxes being contested for which adequate
reserves have been created); or (C) withhold or collect and pay to proper
governmental authorities or hold in separate bank accounts for such
payment all Taxes and other assessments that are required by law to be so
withheld or collected; or
(v) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
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(h) The Seller and the Corporation shall use reasonable efforts to
preserve intact the business organization of the Corporation, to keep available
the services of its present officers and key employees, and to preserve the good
will of the Customers;
(i) The Seller and the Corporation shall not, and shall cause their
officers, employees, representatives or agents not to, directly or indirectly:
(i) encourage, solicit, initiate or participate in discussions or
negotiations with, or provide any non-public information to, any person,
other than Buyer or its affiliates concerning any transaction involving
acquisition of all or substantially all of the Shares or the assets of the
Corporation, or
(ii) otherwise solicit, respond, participate in or negotiate with
respect to any proposal contemplating any such transaction.
(j) The Corporation and the Seller shall not take any action or agree, in
writing or otherwise, to take any of the foregoing actions or any action that
could be reasonably foreseen at the time of the taking of such action to cause
any representation or warranty by Seller or the Corporation in this Agreement
untrue or incorrect as of the date hereof or at the Closing Date; and
(k) The Corporation shall not pay, loan or advance any amount to, or sell,
transfer or lease any of its properties or assets to, or enter into any
agreement or arrangement with, any of its officers or directors, except for its
customary directors' fees and compensation to officers.
4.3 Legal Requirements and Filings. Subject to the terms and conditions of
this Agreement, each party will use its reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated under this Agreement.
4.4 Confidentiality Agreements Regarding Intellectual Property Rights.
Seller hereby agrees that the Corporation shall have the right to enforce the
provisions of any confidentiality agreement relating to the Intellectual
Property Rights to which the Seller is a party and that the terms and provisions
of such confidentiality agreements shall inure to the benefit of the
Corporation. Seller agrees, upon request of the Corporation, to promptly execute
any document reasonably requested by the Corporation, including without
limitation any assignment or similar agreement, to enable the Corporation to
enforce the provisions of any such confidentiality agreement.
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4.5 Maintenance of Insurance. From the Effective Date hereof until the
Closing Date, the Corporation shall continue to carry and maintain in full force
and effect the existing property, casualty (including, without limitation, stop
loss coverage for employee medical claims) and liability insurance as set forth
in Schedule 2.14; provided, however, that it shall not be a default hereunder if
the Corporation shall fail to maintain any such insurance which is maintained
through Buyer or an affiliate of Buyer to the extent that such failure is caused
solely by Buyer or such affiliate.
4.6 Additional Transactions. From the Effective Date hereof until the
Closing Date, the Corporation shall not do or agree to do any of the following:
(a) Enter into any lease, contract, agreement, commitment or transaction,
other than in the usual and ordinary course of business.
(b) Sell, lease, assign, hypothecate or otherwise transfer or dispose of
any of its assets, other than in the usual and ordinary course of business;
provided that the foregoing shall not apply to the replacement of existing
assets which are expended, rendered obsolete or retired if replaced with assets
of comparable or better quality.
(c) Modify, amend, cancel, terminate, forfeit, fail to renew, assign or
encumber in any material manner, other than in the ordinary course of business,
any existing governmental license, permit, consent or franchise or any lease,
contract, agreement or commitment of the Corporation or affecting its business
or assets, unless such action would not have a Material Adverse Effect on the
Corporation.
4.7 Adverse Changes. From the Effective Date hereof until the Closing
Date, the Seller and the Corporation shall promptly notify the Buyer in writing
of (a) any adverse developments which became or become known to the Corporation
or the Seller and which could reasonably be expected to have a Material Adverse
Effect on the Corporation; (b) any damage, destruction or loss (whether or not
covered by insurance) affecting any of the assets which could reasonably be
expected to have a Material Adverse Effect on the Corporation; (c) any notice of
material violation, forfeiture or complaint under any permanent license,
consent, authority, operating right, franchise, lease, contract, agreement,
commitment or arrangement; or (d) anything which if not corrected prior to the
Closing Date could reasonably be expected to prevent Seller or the Corporation
from fulfilling any condition precedent to the Closing described in this
Agreement.
4.8 Indebtedness. Seller shall pay or cause the Corporation to pay, on or
prior to the Closing Date, all interest-bearing debt of the Corporation other
than trade
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payables incurred in the ordinary course of business, so that on the Closing
Date, the Corporation has no interest-bearing debt outstanding other than such
trade payables.
4.9 Intercompany Payables.
(a) Seller and Buyer agree that all accounts payable and receivable
outstanding between Seller or the Corporation on the one hand and Buyer or any
of Buyer's affiliates on the other as a result of normal trading transactions
incurred in the ordinary course of business shall be settled in accordance with
their customary terms.
(b) All intercompany payables between the Seller and the Corporation
(other than payables relating to the purchase of goods in the ordinary course of
business and on standard business terms) shall be paid on or prior to the
Closing Date. For purposes of determining the value of the intercompany payables
on the Closing Date, the Rate of Exchange prevailing on the Closing Date shall
be used.
4.10 GECC Lease. On or prior to the Closing Date, Seller shall terminate
the GECC Lease and cause GECC to convey the equipment described on Schedule 4.10
(the "Corporation Equipment") to the Corporation and the remaining equipment
covered by the GECC Lease to the Seller and to obtain from GECC a full release
of the Corporation from any liability under the GECC Lease, and (b) to cause
GECC to unconditionally release Buyer and its affiliates from the guaranty of
the GECC Lease. The Corporation shall pay the portion of the purchase price of
the Corporation Equipment payable to GECC in connection with such termination
that represents repayment of principal and Seller shall pay all other costs
associated with the termination of the GECC Lease, including, without
limitation, any prepayment penalties or premiums included in such purchase
price, all sales tax associated therewith, and the purchase price of and all
costs associated with the equipment covered by the GECC Lease other than the
Corporation Equipment.
4.11 Excluded Assets. Notwithstanding anything else contained herein to
the contrary, Seller and Buyer agree that Seller shall have the right to cause
the Corporation to transfer to Seller as a dividend, prior to the Closing Date,
all cash and Cash Equivalents of the Corporation and the equipment listed on
Schedule 4.11 hereto (collectively, the "Excluded Assets"); provided, however,
that such transfer shall only be permitted to the extent that a dividend of the
Excluded Assets is permissible under applicable law and that it is effected at
the market value of the relevant Excluded Assets as determined by an independent
third party appraiser. Seller shall be responsible for all costs and Taxes
incurred in connection with such transfer.
4.12 Intellectual Property. The parties agree and acknowledge that (i) the
Intellectual Property Rights described
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on Schedule 4.12(a) hereto are owned or possessed by the Corporation and the
Seller does not own or have any right to use any of such Intellectual Property
Rights except to the extent specifically set forth in the License Agreements,
(ii) the Intellectual Property Rights described on Schedule 4.12(b) hereto are
owned or possessed by the Seller and the Corporation does not own or have any
right to use any of such Intellectual Property Rights except to the extent
specifically set forth in the License Agreements, and (iii) none of the
transactions contemplated by this Agreement shall have any effect on the
foregoing. The parties further agree and acknowledge that the value received by
each licensee under the License Agreements is equal to the value received by the
other licensee under the License Agreements.
4.13 Mayacamas Agreement.
(a) With regard to the Letter Agreement dated June 19, 1996 (the
"Mayacamas Agreement"), by and between the Corporation and Mayacamas Fine Foods,
Inc. ("Mayacamas"), the Seller agrees to promptly reimburse the Buyer for profit
reduction incurred by the Corporation as a result of (i) the return of
"returnable Product" (as defined in the Mayacamas Agreement), (ii) the sale of
Product (as defined in the Mayacamas Agreement) for less than $300 per kilogram
by Mayacamas, and (iii) commissions paid to Mayacamas, upon receipt of written
notice thereof from the Buyer setting forth in reasonable detail the calculation
of the profit reduction. Profit reduction means the reduction in Target Net Book
Value as presented on the June 1996 Pro Forma Financial Statements, by reason of
(i) the return of Product, (ii) the sale of Product for less than $300 per
kilogram by Mayacamas, and (iii) commissions paid to Mayacamas, pursuant to the
Mayacamas Agreement. In addition to the cost for shipping returnable Product to
the Corporation, Seller's obligation to reimburse the Buyer hereunder shall not
exceed $400,000 in the aggregate.
(b) Buyer and the Corporation agree (i) to cause the first 2,000 kilograms
of sale of the Product for use in the US on orders placed prior to June 28, 1997
to be made by Mayacamas and (ii) to use commercially reasonable efforts to
mitigate the likelihood of any such return and profit reduction.
4.14 Regulatory Documentation. From time to time after the Closing, the
Corporation shall supply to Seller, as soon as reasonably possible (taking into
consideration Seller's needs for such documentation) after request by Seller, a
complete copy of the quality assurance and quality control regulatory
documentation, analytical records, certification records and other documentation
(e.g., process development records) in the possession of the Corporation
relating to the toxicology, manufacture and supply of nisin for pharmaceutical
purposes and other purposes for which Seller is permitted to use nisin under the
License Agreement ("Seller's Permitted Uses") furnished by
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the Corporation to Seller, including, but not limited to, Nisin GN, to the
extent that any of the foregoing are in Seller's reasonable opinion necessary
for any regulatory uses involving the use of nisin for Seller's Permitted Uses;
provided, however, that all out-of-pocket costs and expenses incurred by the
Corporation in connection with providing copies of any such documentation shall
be for the account of Seller; and provided, further, that Seller shall (a) keep
all such documentation strictly confidential and only disclose such
documentation under standard confidentiality arrangements except to the extent
required to be disclosed by law or other governmental requirement, (b) use
commercially reasonable efforts to cause any governmental entities to which such
documentation must be disclosed to keep such documentation confidential, and (c)
not use any such documentation for any purpose other than regulatory uses. Buyer
shall cause the Corporation to retain records of such documentation as is
reasonably required by Seller.
4.15 Withholding Tax. The Seller shall be responsible for the payment of
any amounts required to be withheld on account of Taxes in connection with the
redemption of the New Preferred Stock and the payment of the redemption value
and accrued dividends thereon pursuant to Section 1.9 hereof, and the transfer
back to Seller of the Purchase Price Shares as part of the Purchase Price
pursuant to Section 1.3 hereof, in each case under any applicable law,
including, without limitation, the Internal Revenue Code of 1986, as amended.
5. Conditions to Obligations of the Buyer.
The obligations of the Buyer under this Agreement are subject to the
satisfaction of all of the following conditions, unless waived by the Buyer in
writing:
5.1 Representations and Warranties. All of the representations and
warranties by the Seller contained in this Agreement shall be true and complete
in all material respects as of the Closing Date, and the Buyer shall have
received a certificate from the Seller dated the Closing Date and signed by the
President or a Vice President, to such effect.
5.2 Complete Performance by the Seller and the Corporation. The Seller and
the Corporation shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by each
of them prior to, on, or as of the Closing Date, and the Buyer shall have
received certificates to such effect from each of the Seller and the
Corporation, each dated the Closing Date and signed by the President or a Vice
President in the case of the Seller, and by a duly authorized Attorney-in-Fact
in the case of the Corporation.
5.3 Corporate Action. The Buyer shall have received certified copies of
the resolutions of the respective boards of
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directors of the Seller and the Corporation which authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
5.4 Related Documents. The Seller and the Corporation, as applicable,
shall have executed and delivered the Related Documents.
5.5 Opinion of Counsel. The Seller shall have delivered to the Buyer an
opinion of counsel to the Seller and the Corporation in the form of Exhibit H.
5.6 Absence of Changes. During the period from the date of this Agreement
to and including the Closing Date, the Corporation shall not have sustained any
loss or damage to its assets or its business, whether or not insured, which
materially and adversely affects the ability of the Corporation to conduct its
business as a whole.
5.7 Litigation. As of the Closing Date, no action or proceeding shall be
completed or pending that has or may result in a judgment, decree or order that
will prevent or make unlawful the consummation of the transactions contemplated
under this Agreement or will have a Material Adverse Effect on the Corporation,
its assets, or its business. As of the Closing Date, there shall be in effect no
order restraining or prohibiting the consummation of the transactions
contemplated by this Agreement or any proceedings pending with respect thereto.
5.8 Delivery of Other Closing Documents. The Seller shall deliver to the
Buyer.
(a) duly executed share transfers in respect of the Shares in favor of the
Buyer, or as it may direct, together with the relative share certificates and
any power of attorney or other authority under which such transfers have been
executed;
(b) the Common Seal, Certificate of Incorporation and all statutory books
of the Corporation properly written up to the day prior to the Closing Date,
namely the Register of Members, Register of Mortgages, Register of Directors and
Secretaries, Register of Directors' Interests, the Books of Account and the
Minute Books of Meetings of the Corporation and of its Board of Directors;
(c) all documents of title to the Properties;
(d) irrevocable powers of attorney (in such form as the Buyer may
reasonably require) executed by the Seller in favor of the Buyer, or its
nominees, enabling the Buyer, or its nominees, pending registration of the
transfers of the Shares, to exercise all voting and other rights attaching to
the Shares and to appoint proxies for such purpose; and
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(e) any other documents required by this Agreement to be supplied by the
Seller to the Buyer at the Closing Date or reasonably requested by Buyer to give
effect to the transactions contemplated hereby.
5.9 Board Meeting of the Corporation. The Seller shall cause to be duly
held a meeting of the Board of the Corporation validly to effect or execute or
validly to resolve to effect or execute:
(a) the approval of the said transfers of the Shares to the Buyer, the
issue to the Buyer of share certificates in respect of those shares and the
registration of Buyer as holder of those shares (subject only to those transfers
being represented duly stamped);
(b) the appointment as Directors and Secretary of the Corporation of such
persons as the Buyers may nominate, subject to such persons consenting to such
appointment and not being disqualified in law or under the Articles of
Association of the Corporation;
(c) the sealing of the Share Certificates in favor of the Buyer and the
execution of the Supply Agreement and the License Agreements;
(d) any other business which may be necessary or desirable to give full
and valid effect to the sale and purchase provided for in this Agreement or as
the Buyer may reasonably require;
and the Seller shall supply a certified copy of the duly signed minutes of such
meeting to the Buyer on the Closing Date.
5.10 Board Approval. The Board of Directors of Burns Philp & Company
Limited shall have approved this Agreement and the transactions contemplated
hereby.
5.11 GECC Lease. GECC shall have (i) unconditionally released Buyer and
its affiliates from the guaranty of the GECC Lease, and (ii) terminated the GECC
Lease and conveyed the Corporation Equipment to the Corporation free and clear
of any claims of GECC or Seller, all under documentation and arrangements
reasonably satisfactory in form and substance to Buyer.
5.12 Gist-Brocades Distribution Agreement. The Corporation shall have
entered into a valid, binding and enforceable written distribution agreement
with Gist-Brocades Australia Pty Limited for distribution of Nisaplin on terms
and conditions satisfactory to the Buyer in its sole discretion.
5.13 Board Approval of Seller. This Agreement, the Related Documents and
the transactions contemplated hereby and thereby shall have been approved by the
disinterested members of the Board of Directors of Seller in accordance with
Seller's
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articles of incorporation and bylaws and applicable law. For the avoidance of
doubt, such disinterested directors shall not include (but without limitation),
any director that is an employee of or otherwise affiliated with Buyer or any of
its affiliates other than Seller, and Fredric Price.
5.14 Management Services Agreement. The Management Services Agreement,
dated September 9 and 11, 1996 (with an effective date of July 1, 1996) by and
between the Seller and the Corporation, shall have been terminated.
5.15 Declaration of Trust. Seller shall have terminated the declaration of
trust established for the benefit of Seller in connection with the one ordinary
share of the Corporation held in the name of Burns Philp International
Investments Limited and shall have delivered to the Buyer the Deed of
Termination duly executed by the Seller.
6. Conditions to Obligations of the Seller.
The obligations of the Seller under this Agreement are subject to the
satisfaction of all of the following conditions, unless waived by the Seller in
writing:
6.1 Representations and Warranties. All representations and warranties by
the Buyer contained in this Agreement shall be true and complete in all material
respects as of the Closing Date, and the Seller shall have received a
certificate from the Buyer, dated the Closing Date and signed by its duly
authorized Attorney-in-Fact, to such effect.
6.2 Complete Performance by the Buyer. The Buyer shall have performed and
complied with all agreements and conditions on its part required by this
Agreement to be performed and complied with prior to, on, or as of the Closing
Date, and the Seller shall have received a certificate from the Buyer, dated the
Closing Date and signed by its duly authorized Attorney-in-Fact, to such
effect.
6.3 Corporate Action. The Seller shall have received a certified copy of
the resolutions of the board of directors of the Buyer which authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
6.4 Opinion of Counsel. The Buyer shall have delivered to the Seller an
opinion of counsel to the Buyer in the form of Exhibit I.
6.5 Litigation. As of the Closing Date, no action or proceeding shall be
completed or pending that has or may result in a judgment, decree or order that
will prevent or make unlawful the consummation of the transactions contemplated
under this Agreement or will have a Material Adverse Effect on the
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Corporation, its assets, or its business. As of the Closing Date, there shall be
in effect no order restraining or prohibiting the consummation of the
transactions contemplated by this Agreement or any proceedings pending with
respect thereto.
6.6 Related Documents. The Buyer or its affiliates, as applicable, shall
have executed and delivered the Related Documents.
6.7 Delivery of Other Closing Documents. The Buyer shall have delivered to
the Seller all other documents required to be delivered hereunder, including,
without limitation, the Termination Acknowledgment.
6.8 Fairness Opinion. The Board of Directors of Seller shall have received
a reasonably satisfactory fairness opinion with respect to the transactions
contemplated by this Agreement, the costs of which shall be borne solely by
Seller.
7. Indemnification.
7.1 Indemnification by the Seller. The Seller shall indemnify, defend and
hold harmless the Buyer and its affiliates, shareholders, officers and employees
from and against any and all claims, demands, actions, losses, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
expenses) which arise out of or in connection with: (i) the inaccuracy of any of
the representations and warranties of Seller contained in this Agreement, or any
certificate or agreement delivered pursuant hereto or (ii) the breach by Seller
of any of the covenants made by it in this Agreement; provided, however, that
the foregoing shall not apply to any such claims, demands, actions, losses,
damages, liabilities, costs and expenses that do not exceed $15,000 for any
individual matter or $75,000 in the aggregate; and provided, further, that the
Seller's liability in the aggregate under this Section 7.1 shall not exceed
twenty-four million six hundred ninety-two thousand five hundred Dollars
($24,692,500) in the aggregate for all such matters. Neither Buyer nor the
Corporation shall be deemed to have sustained a loss to the extent it is
compensated by insurance carried by Buyer or the Corporation. In computing the
amount to be paid by the Seller under this paragraph, there shall be deducted an
amount equal to any Tax benefits realized by the Buyer, or the Corporation (or
their successors, assigns or affiliates), as a result of the event giving rise
to Seller's obligation to make such payment, after taking into account the
income tax treatment of the Buyer's receipt of such payment. The indemnification
contemplated in the Deed of Tax Covenant and any indemnification resulting from
a breach of the representations and warranties contained in Section 2.15 hereof
or the covenants contained in Section 4.15 hereof shall not be subject to the
dollar limitations or minimums set forth above.
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7.2 Indemnification by the Buyer. The Buyer shall indemnify, defend and
hold harmless the Seller and its affiliates, shareholders, officers and
employees from and against any and all claims, demands, actions, losses,
damages, liabilities, costs and expenses (including reasonable attorneys' fees
and expenses) which arise out of or in connection with: (i) the inaccuracy of
any of the representations and warranties of Buyer contained in this Agreement,
or any document, certificate or agreement delivered pursuant hereto; or (ii) the
breach by Buyer of any of the covenants made by it in this Agreement; provided,
however, that the foregoing shall not apply to any such claims, demands,
actions, losses, damages, liabilities, costs and expenses that do not exceed
$15,000 for any individual matter or $75,000 in the aggregate; and provided,
further, that the Buyer's liability in the aggregate under this Section 7.2
shall not exceed twenty-four million six hundred ninety-two thousand five
hundred Dollars ($24,692,500) in the aggregate for all such matters. In
computing the amount to be paid by the Buyer under this paragraph, there shall
be deducted an amount equal to any Tax benefits realized by the Seller (or its
successors, assigns or affiliates) as a result of the event giving rise to
Buyer's obligation to make such payment, after taking into account the income
tax treatment of the Seller's receipt of these payments.
7.3 Notice and Right To Defend Third-Party Claims. Upon receipt of written
notice of any claim, demand or assessment or the commencement of any suit,
action or proceeding in respect of which indemnity may be sought on account of
an indemnity agreement contained in this Section 7.3, the party seeking
indemnification (the "Indemnitee") shall promptly, but in no event later than
twenty (20) days prior to the date a response or answer thereto is due (unless a
response or answer is due within fewer than twenty (20) days from the date of
Indemnitee's receipt of notice thereof), inform the party against whom
indemnification is sought (the "Indemnitor") in writing thereof. The failure,
refusal or neglect of such Indemnitee to notify the Indemnitor within the time
period specified above of any such claim or action shall relieve such Indemnitor
from any liability which it may have to such Indemnitee in connection therewith,
if the effect of such failure, refusal or neglect is to prejudice materially the
rights of the Indemnitor in defending against the claim or action. In case any
claim, demand or assessment shall be asserted or suit, action or proceeding
commenced against an Indemnitee, and such Indemnitee shall have timely and
properly notified the Indemnitor of the commencement thereof, the Indemnitor
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense, conduct or settlement thereof, with counsel selected by the
Indemnitor. After notice from the Indemnitor to the Indemnitee of its election
to assume the defense, conduct or settlement thereof, the Indemnitor will not be
liable to the Indemnitee for expenses incurred in connection with the defense,
conduct or settlement thereof, except for such expenses as may be reasonably
required to enable the Indemnitor to take over such defense, conduct or
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settlement. The Indemnitee will at its own expense cooperate with the Indemnitor
in connection with any such claim, make personnel, witnesses, books and records
relevant to the claim available to the Indemnitor at no cost, and grant such
authorizations or powers of attorney to the agents, representatives and counsel
of the Indemnitor as the Indemnitor may reasonably request in connection with
the defense or settlement of any such claim. In the event that the Indemnitor
does not wish to assume the defense, conduct or settlement of any claim, demand
or assessment, the Indemnitee shall have the exclusive right to prosecute,
defend, compromise, settle or pay the claim in its sole discretion and pursue
its rights under this Agreement; provided that, before settling any claim
hereunder, the Indemnitee shall give ten (10) days' notice to the Indemnitor to
allow the Indemnitor to reject the settlement, in which case Indemnitor shall
defend the claim. Notwithstanding the foregoing, the Indemnitee shall have the
right to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be paid by the Indemnitee unless (a) the Indemnitor has agreed in writing
to pay such fees and expenses, (b) the Indemnitor has failed to assume the
defense of such action, claim or proceeding or (c) the named parties to any such
action, claim or proceeding (including any impleaded parties) include both the
Indemnitor and the Indemnitee and the Indemnitee reasonably determines that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnitor (in which case, if the
Indemnitee informs the Indemnitor in writing that it elects to employ separate
counsel at the expense of the Indemnitor, the Indemnitor shall not have the
right to assume the defense of such action, claim or proceeding on behalf of the
Indemnitee, it being understood, however, that the Indemnitor shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnitee, which firm shall be designated in
writing by the Indemnitee).
7.4 Survival of Indemnification. The right to make a claim for
indemnification pursuant to Sections 7.1 and 7.2 of this Agreement shall survive
the Closing Date for a period with respect to all claims against the Corporation
relating to Taxes, equal to the applicable statutory limitation period for the
applicable claim plus six weeks, and with respect to all other matters, equal to
two years and one month. The last day of each such period shall be, with respect
to the applicable matter, referred to herein as the "Applicable Claim
Termination Date." No claim or action for indemnification under this Agreement
shall be asserted or maintained by any party hereto after the Applicable Claim
Termination Date except that if there shall be pending on the Applicable Claim
Termination Date any claim
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asserted by a party in writing to the party alleged to be responsible for such
claim under this Article 7, on or prior to the Applicable Claim Termination
Date, then the party asserting that claim shall thereafter have the right to
continue to assert that claim and to be indemnified with respect thereto, if due
under this Article 7.
8. Termination.
8.1 Termination. Notwithstanding anything in this Agreement to the
contrary:
(a) Mutual Consent. This Agreement may be terminated by the mutual
consent of the parties hereto.
(b) Default. If, notwithstanding the terms of this Agreement, a
party hereto shall intentionally fail or refuse to consummate the
transactions contemplated herein or otherwise fail to perform its
obligations hereunder, then the nondefaulting party, after affording the
defaulting party a ten (10) day period after notice in which to cure such
breach or default, shall have the right, to terminate this Agreement by
written notice given to the other party hereto.
(c) Upset Date. If the Closing shall not have occurred on or before
December 31, 1996 then, unless otherwise agreed to in writing between the
parties hereto, this Agreement may be terminated by either party at any
time upon notice to the other party; provided, however, that the conduct
or failure to act by the party electing to terminate this Agreement shall
not have prevented the Closing from occurring.
(d) Legal Restraint. Any party may, by written notice to the other
party, terminate this Agreement if at the time the written notice of
termination is given, there is in effect a permanent injunction enjoining
the transaction contemplated hereunder.
8.2 Effect of Termination. In the event of termination of this Agreement
by either Buyer or Seller, as provided above, this Agreement shall forthwith
become void and there shall be no further obligations hereunder on the part of
either Buyer or Seller or their respective officers or directors. However,
nothing contained in this Section shall relieve any party hereto from any
liability to the others for any breach of this Agreement. If this Agreement is
terminated, the Existing Agreement shall remain in effect.
8.3 Remedies for Breach by Seller. Seller and Buyer agree that it may be
impossible to measure in money the damages which will accrue by reason of a
failure by Seller to perform its
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obligations to sell the Shares to Buyer under this Agreement. In the event of
any dispute or controversy concerning any right or obligation under this
Agreement, such right or obligation shall be enforceable in a court of equity or
other competent jurisdiction by a decree of specific performance or other
appropriate equitable relief, including injunctive relief (in any event of which
the Buyer shall also have and receive the costs of such action which shall
include its reasonable attorneys' fees). Seller hereby waives its right to
assert any claim or defense that Buyer has or may have an adequate remedy at
law.
9. Miscellaneous.
9.1 Parties and Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by any party
without the consent of the other parties hereto, except that the Buyer may
designate a wholly owned subsidiary as the purchaser of the Shares, but such
designation shall not relieve the Buyer of any of its obligations hereunder.
Nothing in this Agreement shall confer upon any person or entity not a party to
this Agreement (other than the legal representatives and agents of the parties
to this Agreement) any rights, remedies of any nature or kind whatsoever, and no
such person or entity shall be construed to be a third party beneficiary or
shall be entitled to rely upon any provision of this Agreement or any agreement,
instrument, certificate or document executed pursuant to or in connection with
this Agreement. Notwithstanding the foregoing or any other provision in this
Agreement the benefit of all representations and warranties given under this
Agreement or pursuant to this Agreement by Seller may be assigned, in whole or
in part and without restriction, to any person acquiring any of the Shares from
Buyer and accordingly such person shall be entitled to enforce each of the
representations and warranties against the Seller as if they were named in this
Agreement as the Buyer.
9.2 Confidentiality; Press Releases. Except as otherwise required by law,
from and after the Effective Date and until the Closing Date each of the parties
hereto agrees that all press releases and other announcements, whether written
or oral, to be made by any of them with respect to the transactions contemplated
hereby shall be subject to the agreement and consent of all parties hereto prior
to the dissemination thereof. Until the Closing Date, each of the parties hereto
shall comply with the terms of the Confidentiality Agreement.
9.3 Expenses. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, financial
advisors, accountants, brokers, finders, and investment bankers, and any filing
or
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other fees or charges. Any sales, use or stamp tax or duty assessed or imposed
in connection with the transfer of the Shares hereunder shall be borne by
Seller.
9.4 Notices. Any notices, requests, demands or other communications
hereunder, shall be in writing and shall be deemed to have been duly given when
personally delivered, whether by hand, air courier or by facsimile confirmed by
receiving party to the following addresses:
If to the Seller: Applied Microbiology, Inc.
771 Old Saw Mill River Road
Tarrytown, New York 10591
Attn: Benjamin T. Sporn
Vice President - Legal
Fax: (914) 347-6370
with a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Richard R. Plumridge, Esq.
Fax: (212) 586-7878
If to the Buyer: Burns Philp & Co. Ltd.
7 Bridge Street
Sydney, NSW 2000, Australia
Attn: The Company Secretary
Fax: 61 2 9247 8391
with a copy to: Burns Philp Food, Inc.
222 Sutter Street, 9th Floor
San Francisco, CA 94108
Attn: Lorraine E. Vega, Esq.
Fax: (415) 296-5746
or to such other addresses as either party may specify in writing to the other.
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
9.6 Headings. The headings of the sections and paragraphs hereunder are
for convenience and reference only and shall not be deemed a part of this
Agreement.
9.7 Entire Agreement. This Agreement, which includes the Schedules and
Exhibits hereto, sets forth the parties' final and entire agreement with respect
to its subject matter and supersedes any and all understandings and agreements,
and may not be contradicted, explained or supplemented by evidence of any prior
agreement, any contemporaneous oral agreement or any consistent additional
terms; provided, however, that until the Closing Date the Existing Agreement and
the Confidentiality Agreement shall
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remain in full force and effect in accordance with their respective terms.
9.8 Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement or affecting the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
9.9 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York (without regard to principles of conflicts of
laws) applicable to contracts made and to be performed within such state.
9.10 Consent to Jurisdiction. Subject to Section 9.11 hereof, the parties
to this Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby agree to
submit themselves to the exclusive jurisdiction of the courts of the State of
New York located in New York City, and the United States District Court for the
Southern District of New York, in respect of any matter arising under this
Agreement. The parties hereby waive, to the fullest extent they may effectively
do so under applicable law, any objection which they now or hereafter have to
the laying of the venue of any such matter brought in any such court and any
claim that any such matter brought in any such court has been brought in an
inconvenient forum. Service of process, notices and demands of such courts may
be made upon any party to this Agreement by personal service at any place where
it may be found or by giving notice to such party pursuant to this Agreement.
9.11 Resolution of Disputes.
(a) Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement or any
other Related Document, or the breach, termination or validity hereof or
thereof, by negotiations between executives who have authority to settle the
controversy. Any party may give the other party written notice of any dispute
not resolved in the normal course of business. Within 20 days after delivery of
such notice, executives of both parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the dispute. If the
matter has not been resolved within 60 days of the disputing party's notice, or
if the parties fail to meet
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within 20 days, either party may initiate arbitration of the controversy or
claim as provided hereinafter.
If a negotiator intends to be accompanied at a meeting by an attorney, the
other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
(b) Arbitration. If a dispute arising out of or relating to this Agreement
or any other Related Document, or the breach, termination or validity hereof or
thereof, has not been resolved by negotiation as provided herein, it shall be
settled by arbitration in accordance with the Center for Public Resources
Institute for Dispute Resolution Rules for Non-Administered Arbitration of
Business Disputes. The arbitration shall take place in New York City, New York,
shall be governed by the United States Arbitration Act, 9 U.S.C. ss.ss. 1-16,
and judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction thereof.
9.12 Waivers and Amendments. Each of Seller and Buyer may by written
notice to the other (a) extend the time for the performance of any of the
obligations or other actions of the other; (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement; (c)
waive performance of any of the covenants or obligations of the other created
under this Agreement; or (d) waive fulfillment of any of the conditions to its
own obligations under this Agreement. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach, whether or not similar, and shall not constitute a
waiver by either party of any rights or remedies under this Agreement or
otherwise in law or equity. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties hereto.
9.13 Further Acts. If, at any time after the Closing Date, any further
action by the Seller is necessary or appropriate to more effectively convey,
transfer and assign to Buyer the legal and beneficial title to Shares or for
aiding and assisting and collecting and reducing to possession and exercising
rights with respect thereto or otherwise giving effect to the transactions
contemplated hereby and by the Related Documents, Seller shall promptly upon
request of Buyer and at Seller's own expense cause such action to be taken.
9.14 Disclosure in Schedules. Each schedule attached to this Agreement
shall be deemed to incorporate all information contained in all other schedules
to the extent applicable.
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9.15 Interpretation. In this Agreement any reference to a statute or
statutory provision includes any consolidation or reenactment, modification or
replacement of the same, any statute or statutory provision of which it is a
consolidation, reenactment, modification or replacement and any subordinate
legislation in force under any of the same from time to time.
9.16 Warranties Remain Notwithstanding Completion. The parties acknowledge
that the parties have entered into this Agreement upon the basis of the
representations and warranties set out in this Agreement and accordingly the
said representations and warranties together with any other provisions of this
Agreement, the Deed of Tax Covenant and all other Related Documents which shall
not have been fully performed at Completion shall remain in force, subject to
the provisions of Section 7.4 hereof, notwithstanding that the Closing shall
have taken place.
9.17 Information Supplied by Corporation Not Deemed Warranty. The Seller
agrees with the Buyer and the Corporation and their respective officers and
employees or agents that any information supplied by the Corporation or their
respective officers and employees or agents prior to the Closing Date to the
Seller or its agents, representatives or advisers in connection with the
representations and warranties, or otherwise in relation to the business and
affairs of the Corporation shall not be deemed a representation, warranty or
guarantee of its accuracy by the Corporation to the Seller and shall not
constitute a defense to any claim by the Buyer under this Agreement and the
Seller waives any claim against the Corporation and its officers, employees and
agents in respect of any misrepresentations in or omissions from any such
information so supplied.
9.18 Representations and Warranties to the Seller's Knowledge. With
respect to each representation and warranty made by the Seller herein that is
expressed to be given "so far as the Seller is aware" or "to the best of the
knowledge of the Seller," or words to that effect, the Seller shall be deemed to
have knowledge of all facts, matters and circumstances which are actually known
to each of the officers and directors of Seller after due inquiry or
investigation, including, without limitation, due inquiry of all relevant
officers, directors and employees of the Corporation.
9.19 Restrictive Trade Practices. In the United Kingdom, no provision of
this Agreement or of any agreement or arrangement of which this Agreement forms
part and which is subject to registration under the Restrictive Trade Practices
Act 1976 shall take effect until the day after particulars of this Agreement or
of the agreement or arrangement of which it forms part (as the case may be) have
been furnished to the Director General of Fair Trading pursuant to the
provisions of Section 24 of that Act.
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9.20 Right of Setoff. Notwithstanding anything else contained herein or in
any Related Document to the contrary Buyer shall have the right to set off (a)
any payment of the Earnout Amount or the Final Payment due hereunder against any
amounts due and owing by AMBI under Section 7 of the Deed of Tax Covenant at the
time any such payment is made, and (b) any payment of the Earnout Amount against
any amounts due and owing by AMBI under the Loan Agreement at the time such
payment is made.
9.21 Currency of Payments Due Under Agreement; Currency Exchange.
(a) Payments made under this Agreement shall be made in the currencies
specified herein. All payments made on account of the indemnities set forth in
Section 7 hereof or in the Deed of Tax Covenant or otherwise on account of costs
and expenses to be borne by a party hereunder shall be made in the currency of
the underlying claim, cost or expense that gives rise to a right of indemnity or
reimbursement for costs and expenses.
(b) For purposes of determining the amount of the Purchase Price
Adjustment pursuant to Section 1.6 hereof, the difference between the Closing
Net Book Value and the Target Net Book Value shall be converted to Dollars at
the Rate of Exchange four business days prior to the Final Payment Date.
(c) For purposes of determining whether the Dollar limitations or minimums
set forth in Section 7.1 or 7.2 have been exceeded, amounts payable under such
Sections that are not payable in Dollars shall be converted to Dollars at the
Rate of
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Exchange prevailing on the date on which such amounts were payable thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
APPLIED MICROBIOLOGY, INC.
By______________________________________
Benjamin Sporn
Vice President
EXECUTED AS A DEED BY APLIN &
BARRETT LIMITED BY BENJAMIN SPORN
ITS DULY AUTHORIZED ATTORNEY:
By______________________________________
Benjamin Sporn
Its Lawful Attorney
BURNS PHILP (UK) PLC
By______________________________________
Lorraine E. Vega
Its Lawful Attorney
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LICENSE AGREEMENT
This Agreement is entered into as of December 12, 1996 between Licensee
Applied Microbiology, Inc., a New York corporation ("AMBI"), and Licensor Aplin
& Barrett, Limited, a corporation incorporated under the laws of England and
Wales ("A&B") (collectively "parties").
WHEREAS, AMBI and A&B have entered into a Share Purchase Agreement (the
"Purchase Agreement") dated as of December 12, 1996 by and among AMBI, A&B, and
Burns Philp (UK) plc ("Burns Philp"), pursuant to which Burns Philp has agreed
to purchase all of the issued and outstanding shares of A&B from AMBI; and
WHEREAS, A&B has developed, and maintained as confidential, certain
valuable PROPRIETARY INFORMATION, hereinafter defined, relating to NISIN
PREPARATIONS, hereinafter defined, with respect to the manufacture, use, and
sale of LICENSED PRODUCTS, hereinafter defined; and
WHEREAS, AMBI desires the right to use A&B's PROPRIETARY INFORMATION in
the manufacture, use, and sale of the LICENSED PRODUCTS; and
WHEREAS, A&B has obtained, or may obtain, patents encompassed by the
PATENTED TECHNOLOGY, hereinafter defined, for certain inventions relating to the
manufacture, use, and sale of the LICENSED PRODUCTS; and
WHEREAS, AMBI desires the right to use the inventions claimed in A&B's
PATENTED TECHNOLOGY in the manufacture, use, and sale of the LICENSED PRODUCTS;
and
WHEREAS, the obligations of AMBI and A&B under the Purchase Agreement are
conditioned, among other things, upon the execution and delivery of this
Agreement by the parties hereto
<PAGE>
and the grant of certain licenses by A&B to AMBI as hereafter set forth; and
WHEREAS, the obligations of AMBI and A&B under the Purchase Agreement are
conditioned, among other things, upon the simultaneous execution and delivery of
a counterpart License Agreement by the parties hereto granting certain licenses
by AMBI to A&B (the "AMBI License Agreement"); and
WHEREAS, A&B desires the right to use any inventions, modifications, and
improvements subsequently made or obtained by AMBI that relate to the
manufacture, use, or sale of the EXCLUDED PRODUCTS, and AMBI desires the right
to use any inventions, modifications, and improvements subsequently made or
obtained by A&B that relate to the manufacture, use, or sale of the LICENSED
PRODUCTS; and
WHEREAS, A&B recognizes that additional classes of products may be
developed by AMBI which would be incorporated into the listing of LICENSED
PRODUCTS, and AMBI recognizes that additional classes of products may be
developed by A&B which would be incorporated into the listing of EXCLUDED
PRODUCTS.
NOW THEREFORE, for good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1 CERTAIN DEFINITIONS
1.1 "LICENSED PRODUCTS" shall mean all AMBI products comprising,
incorporating, or relating to NISIN PREPARATIONS, whether existing or
subsequently developed, for the fields of application that are described by the
general classifications listed in Exhibit A-1 attached hereto.
2
<PAGE>
1.2 "EXCLUDED PRODUCTS" shall mean all A&B products comprising,
incorporating, or relating to NISIN PREPARATIONS for the fields of application
that are described by the general classifications listed in Exhibit A-2 attached
hereto.
1.3 "PROPRIETARY INFORMATION" shall mean all secret or confidential
information relating to the LICENSED PRODUCTS including, without limitation,
reagents, computer programs, names and expertise of employees and consultants,
know-how, formulas, processes, procedures, ideas, inventions (whether patentable
or not), schematics and other technical, business, financial, customer and
product development plans, forecasts, strategies, or other confidential
information, including currently pending and unpublished patent applications, or
subsequently filed and unpublished patent applications, including information
obtained from third parties to the extent that A&B is permitted to disclose such
information to AMBI, relating to the general classifications listed in Exhibit
B.
1.4 "PATENTED TECHNOLOGY" shall mean those inventions claimed in any
patents obtained by, assigned to, or licensed to A&B (to the extent that A&B is
permitted to sublicense such patents to AMBI), relating to the LICENSED PRODUCTS
during the term of this Agreement including any such patents listed in Exhibit
B.
1.5 "TECHNICAL INFORMATION" shall mean technical information other than
the PROPRIETARY INFORMATION and the PATENTED TECHNOLOGY within A&B's control,
including information obtained from third parties to the extent that A&B is
permitted to disclose such information to AMBI, relating to the manufacture of
NISIN PREPARATIONS or the LICENSED PRODUCTS.
1.6 "NISIN PREPARATIONS" shall mean all products containing a measurable
concentration of any form, variant, or derivative of nisin.
3
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2 SCOPE OF LICENSE GRANT
2.1 Subject to all the terms and limitations of this Agreement, A&B grants
to AMBI the perpetual, sole and exclusive, non-transferable, and world-wide
rights and licenses, to use A&B's PROPRIETARY INFORMATION, TECHNICAL
INFORMATION, and PATENTED TECHNOLOGY in developing, manufacturing, having
manufactured, using, selling, marketing, or distributing the LICENSED PRODUCTS.
Full consideration for this Agreement is provided by the execution of, and
continued compliance with, the counterpart AMBI License Agreement under which
A&B will receive rights and licenses to AMBI's PROPRIETARY INFORMATION,
TECHNICAL INFORMATION, and PATENTED TECHNOLOGY, the rights and licenses granted
under the AMBI License Agreement having an equivalent annual value to the rights
and licenses granted under this Agreement.
2.2 A&B and AMBI agree that this Agreement includes the right to
sublicense or disclose the PROPRIETARY INFORMATION and TECHNICAL INFORMATION to
a third party provided that any such sublicense or disclosure 1) expressly
obligates any such third party to conform to the obligations imposed on AMBI
under this Agreement regarding the confidentiality of the PROPRIETARY
INFORMATION, 2) is not made to any person or entity involved in the manufacture
of any EXCLUDED PRODUCTS for other than A&B or its affiliates, 3) is not made to
any person or entity manufacturing any NISIN PREPARATIONS for sale or delivery
other than to, or on behalf of, AMBI, A&B, or their affiliates, and 4) is
otherwise consistent with the scope of the license and obligations under this
Agreement, and further provided that AMBI shall provide notice of each such
sublicense or disclosure to A&B within thirty (30) days, and shall, at A&B's
request, provide a copy of any such agreement relating to such sublicense or
disclosure to A&B, AMBI having the right to redact financial information from
such copies.
4
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2.3 A&B and AMBI agree that this Agreement includes the right to
sublicense to any third party any portion or element of the PATENTED TECHNOLOGY
provided that any such sublicense 1) is not made to any person or entity
involved in the manufacture of any EXCLUDED PRODUCTS for other than A&B or its
affiliates, 2) is not made to any person or entity manufacturing any NISIN
PREPARATIONS for sale or delivery other than to, or on behalf of, AMBI, A&B, or
their affiliates, and is 3) otherwise consistent with the scope of the license
and obligations under this Agreement, and further provided that AMBI shall
provide notice of each such sublicense to A&B within thirty (30) days, and
shall, at A&B's request, provide a copy of any such sublicense to A&B, AMBI
having the right to redact financial information from such copies.
2.4 A&B and AMBI agree that this Agreement does not include the right of
AMBI to develop, manufacture, use, sell, or distribute the EXCLUDED PRODUCTS.
2.5 A&B and AMBI agree that this Agreement includes the right of AMBI to
manufacture, or have manufactured, NISIN PREPARATIONS for sale or distribution
by AMBI or third parties for incorporation into the LICENSED PRODUCTS.
2.6 A&B recognizes that new classes of products may be subsequently
developed by AMBI and agrees that such new classes of products shall be
incorporated into the LICENSED PRODUCTS, Exhibit A-1, provided that AMBI gave
written notice to A&B of each such proposed class and that A&B has not, within
thirty (30) days, objected to the proposed new class of products as detrimental
to A&B's ability to manufacture, use, or sell the EXCLUDED PRODUCTS. To the
extent that AMBI disagrees with A&B's objection, AMBI shall seek redress only in
accordance with paragraph 10.5.
5
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2.7 A&B and AMBI further agree that this Agreement does not include the
right of AMBI to use any of A&B's copyrights, trademarks, or trade names, in
connection with the manufacture, use, sale, or distribution of any of the
LICENSED PRODUCTS. However, A&B agrees that AMBI may deplete, in the normal
course of business, its inventory of materials and products bearing the "Aplin &
Barrett" tradename.
3 TRANSFER OF PROPRIETARY INFORMATION
3.1 A&B shall furnish to AMBI, as soon as is reasonably practicable after
the effective date of this Agreement, in the form or forms that are mutually
acceptable to the parties, the PROPRIETARY INFORMATION, PATENTED TECHNOLOGY, and
TECHNICAL INFORMATION necessary to enable AMBI to manufacture, have
manufactured, use, and sell the LICENSED PRODUCTS. When the foregoing
PROPRIETARY INFORMATION, PATENTED TECHNOLOGY, and TECHNICAL INFORMATION is
available in tangible form, it shall be provided in tangible form, and when
available in machine readable form, it shall be provided on mutually acceptable
media.
3.2 To the extent that the PROPRIETARY INFORMATION is provided in
documentary form, including written, graphic, or machine readable form, at least
the first page of any such document, or the label attached to any such machine
readable form, shall be suitably marked by A&B to indicate its confidential
nature.
3.3 AMBI agrees that, to the extent any document provided by A&B and
marked in accordance with paragraph 3.2 is copied or otherwise reproduced, in
whole or in part, each copy or reproduction will be marked by AMBI to indicate
its confidential nature.
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3.4 All PROPRIETARY INFORMATION shall remain at all times the property of
A&B and shall not be used by AMBI beyond the scope of the license granted under
this Agreement.
3.5 Upon termination of this Agreement pursuant to paragraph 7.3 as the
result of a breach by AMBI, AMBI shall, at A&B's option, return to A&B, or
destroy and provide certification of such destruction to A&B, all PROPRIETARY
INFORMATION, including all copies, revisions, and translations thereof, and
shall thereafter make no use of the PROPRIETARY INFORMATION.
4 TECHNICAL ASSISTANCE
4.1 A&B agrees to provide to AMBI reasonable technical support and
assistance in connection with AMBI's manufacturing of the LICENSED PRODUCTS for
a period of two (2) years from the effective date of this Agreement. The term
"sublicensee" as used in this Section includes "assignees and transferees" in
accordance with paragraph 10.3.
4.2 The technical support and assistance provided by A&B may include, as
reasonably required, meetings with A&B technical personnel at A&B's facilities,
visits by A&B technical personnel to AMBI's or its sublicensees' facilities,
observation of A&B's manufacturing operation by technical personnel of AMBI, its
consultants, or its duly sublicensed manufacturers of NISIN PREPARATIONS, and on
site support at AMBI's or its sublicensees' facilities, subject to the following
terms and conditions:
4.2.1 Such technical support and assistance services will only be
provided at the request of AMBI, or its successor in accordance with
paragraph 10.3, requests for the support and assistance to sublicensees
provided at
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A&B's facility being subject to A&B's approval, such approval not to be
unreasonably withheld;
4.2.2 Such services will be provided at times, places, and in a
manner mutually acceptable to the parties;
4.2.3 Such technical support and assistance services provided during
visits by AMBI personnel and approved sublicensees to A&B's facilities
will not exceed a total of forty-five (45) working days in any one year
period;
4.2.4 Such technical support and assistance services provided by A&B
personnel at AMBI's and its sublicensees' facilities will not exceed a
total of sixty (60) person-days in any one year period;
4.2.5 A&B shall not place a surcharge on any such services, but AMBI
shall, subject to paragraph 4.2.6, reimburse A&B for all reasonable
expenses incurred in connection with the provision of such services
including, but not limited to, the salary, travel, meal and living
expenses of the A&B personnel providing the service, excluding expenses
otherwise paid by AMBI, e.g. salaries paid pursuant to the Supply
Agreement between the parties of even date;
4.2.6 AMBI shall not be responsible for any expense over $500
incurred by A&B in conjunction with providing such technical support and
assistance without AMBI's prior written approval;
4.2.7 The expenses related to A&B's technical support and assistance
under paragraph 4.2.4 will be detailed in a statement to AMBI delivered as
soon as reasonably available after the conclusion of any such visit by
A&B's technical personnel.
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5 INVENTIONS AND IMPROVEMENTS
5.1 AMBI shall, in good faith, promptly notify A&B of any inventions,
modifications, or improvements to, or applications of, the PROPRIETARY
INFORMATION or the PATENTED TECHNOLOGY relating to the manufacture,
modification, or use of NISIN PREPARATIONS in any of the LICENSED PRODUCTS where
such inventions, modifications, or improvements are reasonably related to or may
improve A&B's manufacture, use, or sale of the EXCLUDED PRODUCTS. A&B recognizes
and acknowledges that any such inventions, modifications, or improvements are
proprietary to and owned exclusively by AMBI.
5.2 With respect to any notice provided to A&B under paragraph 5.1, AMBI
shall notify A&B within thirty (30) days of filing for patent protection for any
such invention, modification, or improvement, shall specify the countries in
which any such patent applications have been filed, and shall provide A&B with a
copy of the first such application and a copy of any subsequent application that
includes new matter.
5.3 A&B agrees to hold such inventions, modifications, improvements, or
applications as AMBI's PROPRIETARY INFORMATION in accordance with the provisions
of the AMBI License Agreement. After any such patent application is published,
or otherwise made publicly available in a manner consistent with the procedures
of the jurisdiction in which such application is pending, or a patent is
granted, information so published or otherwise made publicly available will no
longer be considered AMBI's PROPRIETARY INFORMATION.
5.4 With respect to all such patent applications, AMBI shall ensure that
none of A&B's PROPRIETARY INFORMATION is disclosed in the specification or in
subsequent communications
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with the relevant patent office without the express written consent of A&B.
5.5 The parties agree that A&B will have the non-exclusive right to use
any such inventions, modifications, or improvements, whether or not patented,
without payment or limitation, in the development, manufacture, use, and sale of
the EXCLUDED PRODUCTS in accordance with the terms and conditions of the AMBI
License Agreement.
5.6 Upon A&B's request, AMBI shall provide a detailed description of any
such invention, modification, or improvement sufficient to enable A&B to use the
same in the development, manufacture, use, and sale of the EXCLUDED PRODUCTS.
5.7 The parties agree that A&B will have the non-exclusive right to use,
without limitation, any inventions, modifications, or improvements to, or new
applications of, the PROPRIETARY INFORMATION, TECHNICAL INFORMATION, or PATENTED
TECHNOLOGY in which AMBI has or obtains rights arising from research contracted,
commissioned, directed, or funded by AMBI ("Contracted Research"), including,
without limitation, Contracted Research to improve yields and to develop nisin
variants, that is reasonably applicable, in AMBI's opinion, to the EXCLUDED
PRODUCTS, to the extent permitted and in accordance with the terms and
conditions of the AMBI License Agreement and the terms and conditions of the
Contracted Research. A&B will have no responsibility for any payments for such
Contracted Research other than those required under the terms and conditions of
the Contracted Research or which have been separately approved by A&B, such
payments not being subject to any surcharge by AMBI. AMBI further agrees that it
will keep A&B informed regarding the scope and objectives of the Contracted
Research, and results from such Contracted Research, that are reasonably
applicable to the EXCLUDED PRODUCTS.
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5.8 With respect to inventions, modifications, or improvements for which
AMBI is obligated to provide notice to A&B under paragraph 5.1, the parties
agree that A&B will have the non-exclusive right to review and use data or other
information developed during any experimental, clinical, qualification,
regulatory, or other testing, relating to any improvements to or new
applications of the PROPRIETARY INFORMATION, TECHNICAL INFORMATION, or PATENTED
TECHNOLOGY including, without limitation, toxicological evaluations, performed
by, or on behalf of, AMBI, without payment or limitation, in the development,
manufacture, use, approval, qualification, or sale of the EXCLUDED PRODUCTS in
accordance with the terms and conditions of the AMBI License Agreement.
5.9 A&B agrees to hold information or data received from AMBI in
accordance with paragraphs 5.7 or 5.8 as AMBI's PROPRIETARY INFORMATION in
accordance with the provisions of the AMBI License Agreement. After any such
information is published, or otherwise becomes publicly available, such
information will no longer be considered AMBI's PROPRIETARY INFORMATION.
6 CONFIDENTIALITY
6.1 AMBI recognizes that A&B's PROPRIETARY INFORMATION is critical to the
business of A&B and that A&B would not enter into this Agreement without
assurance that such PROPRIETARY INFORMATION and the value thereof will be
protected as provided in this Section 6 and elsewhere in this Agreement.
Accordingly, AMBI agrees as follows:
6.2 AMBI shall hold A&B's PROPRIETARY INFORMATION in confidence and to
take all precautions with respect thereto as AMBI employs with respect to its
own confidential materials.
11
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6.3 AMBI shall not divulge, release, disseminate, or otherwise disclose
any PROPRIETARY INFORMATION, or any information derived therefrom, to any third
party, except as permitted under and in accordance with paragraph 2.2.
6.4 Notwithstanding the foregoing, the preceding covenants shall not apply
to any PROPRIETARY INFORMATION which AMBI can establish:
6.4.1 Is in or (through no improper action or inaction by the AMBI,
its agents or employees) enters the public domain;
6.4.2 Was rightfully in AMBI's possession or known by it prior to
receipt from A&B;
6.4.3 Was rightfully disclosed to AMBI by a third party without
restriction, however, A&B considers all previous transfers of PROPRIETARY
INFORMATION from A&B to AMBI to have been confidential; or
6.4.4 Was independently developed by AMBI without access to or use
of any of A&B's PROPRIETARY INFORMATION.
6.5 Immediately upon termination of AMBI's license under paragraph 7.3,
AMBI will turn over to A&B all documents or media containing any PROPRIETARY
INFORMATION and any and all copies or extracts thereof and will make no further
use of any kind of any of A&B's PROPRIETARY INFORMATION.
6.6 AMBI acknowledges and agrees that due to the unique nature of A&B's
PROPRIETARY INFORMATION, there can be no adequate remedy at law for any breach
of its obligations hereunder, that any such breach may result in irreparable
harm to A&B and therefore, that upon any such breach or any threat
12
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thereof, A&B shall be entitled to appropriate equitable relief in addition to
whatever remedies it might have at law.
7 TERM AND TERMINATION
7.1 This Agreement will remain in effect unless terminated pursuant to
paragraph 7.2
7.2 If a party intentionally, willfully, or through its gross negligence,
materially breaches a material provision of this Agreement, the other party may
terminate this Agreement upon 60 days prior written notice unless the breach is
cured within such period or, if the breach cannot reasonably be so cured,
diligent efforts to effect such cure are commenced during that period and are
continued in a diligent manner until the cure is completed, which shall be
within a reasonable time.
7.3 In the event of any termination of this Agreement due to a breach by
AMBI under paragraph 7.2, the rights and licenses granted AMBI under this
Agreement, including all sublicenses, shall terminate but AMBI's obligations
under Section 6, as well as obligations imposed on AMBI's sublicensees under
paragraph 2.2, to maintain the confidentiality of A&B's PROPRIETARY INFORMATION
and TECHNICAL INFORMATION shall survive such termination for a period of five
(5) years thereafter; and further provided that if the termination is on account
of a breach by A&B, the rights and licenses granted AMBI in Section 2, and
disclosures made or sublicenses granted by AMBI in accordance with this
Agreement, will continue for all PROPRIETARY INFORMATION, PATENTED TECHNOLOGY,
and TECHNICAL INFORMATION licensed as of the termination date, provided that any
such disclosure or sublicense, according to its terms, (i) was properly granted,
(ii) A&B will have no further obligation thereunder, (iii) all the restrictions
and limitations of this Agreement shall continue to apply to such disclosure or
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sublicense as though this Agreement continued in effect, and (iv) A&B shall be
entitled to require AMBI to terminate such disclosures or sublicenses on the
same basis as is provided herein for termination of this Agreement.
7.4 Neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other arising from or
incident to any termination of this Agreement (or any part thereof) other than
that provided for in paragraph 6.7.
8 REPRESENTATIONS AND WARRANTIES
8.1 A&B represents and warrants that it has full power, authority and
legal right to enter into and perform this Agreement and to grant to AMBI the
rights and licenses set forth herein; that the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on its part; and that the execution, delivery and performance
of this Agreement do not contravene any law, governmental rule, regulation or
order binding on A&B or contravene its charter or by-laws or any material
indenture, mortgage or contract or other agreement to which it is a party or by
which it is bound and which could reasonably be expected to have a material
adverse effect on the ability of A&B to fulfill its obligations under the
Agreement.
8.2 AMBI represents and warrants that it has full power, authority and
legal right to enter into and perform this Agreement; that the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on its part; and that the execution, delivery and
performance of this Agreement do not contravene any law, governmental rule,
regulation or order binding on AMBI or contravene its charter or by-laws or any
material indenture,
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mortgage or contract or other agreement to which it is a party or by which it is
bound and which could reasonably be expected to have a material adverse effect
on the ability of AMBI to fulfill its obligations under the Agreement.
8.3 A&B represents and warrants that A&B owns all right, title and
interest in and to the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY and that
the possession and use of the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY
does not infringe any existent patent, known trade secret, or other intellectual
property right of any third party. The warranty provided by this Section 8 does
not extend to claims based on modifications to the PROPRIETARY INFORMATION and
PATENTED TECHNOLOGY by any party other than A&B nor to any use by AMBI in a
manner inconsistent with this Agreement.
9 INFRINGEMENT MATTERS
9.1 In the event that any claim of infringement arises from AMBI's use of
the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY in the manufacture of the
LICENSED PRODUCTS and licensed as of the date of this Agreement, A&B will be
solely responsible for expenses incurred in defending or settling any such
action. In the event AMBI is notified of any such claim of infringement, AMBI
must give written notice to A&B within ten (10) days of such notice for this
paragraph to be operative.
9.2 In the event that any claim of infringement arises from AMBI's use of
the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY in the manufacture of the
LICENSED PRODUCTS, AMBI will cooperate in A&B's defense of any such action by
making its records and personnel reasonably available at times, places, and in a
manner mutually acceptable to the parties.
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10 MISCELLANEOUS
10.1 INCIDENTAL AND CONSEQUENTIAL DAMAGES - EXCEPT AS OTHERWISE SET FORTH
IN SECTION 9, NEITHER PARTY WILL BE LIABLE UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT. THIS PARAGRAPH SHALL NOT
BE READ OR INTERPRETED TO EXCLUDE, RESTRICT, OR LIMIT EITHER PARTY'S LIABILITY
FOR DEATH OR PERSONAL INJURY RESULTING FROM ITS NEGLIGENCE.
10.2 Independent Contractors - The parties are independent contractors and
not partners, joint venturers or otherwise affiliated and neither has any right
or authority to bind the other in any way.
10.3 Assignment - The rights and obligations of the parties under this
Agreement, may be assigned or transferred to affiliates or subsidiaries 1) in
which a party maintains a controlling interest, 2) which, with a party, are both
under the common control of a third party (e.g. Burns Philp), or 3) to
successors to the parties' business interests by the sale or merger of
substantially all of AMBI's assets relating to the LICENSED PRODUCTS or by the
sale or merger of substantially all of A&B's assets relating to the EXCLUDED
PRODUCTS.
10.4 Amendment and Waiver - Except as otherwise expressly provided herein,
any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or any particular
instance and either retroactively or prospectively) only with the written
consent of the parties, such amendments and waivers not to be unreasonably
refused.
10.5 Resolution of Disputes.
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10.5.1 Negotiation Between Executives - The parties shall attempt in
good faith to resolve any dispute arising out of or relating to this
Agreement, or the breach, termination or validity thereof, by negotiations
between executives who have authority to settle the controversy. Any party
may give the other party written notice of any dispute not resolved in the
normal course of business. Within 20 days after delivery of such notice,
executives of both parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the dispute. If
the matter has not been resolved within 60 days of the disputing party's
notice, or if the parties fail to meet within 20 days, either party may
initiate arbitration of the controversy or claim as provided hereinafter.
If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given at least three working days'
notice of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and state rules of evidence.
10.5.2 Arbitration - If a dispute arising out of or relating to this
Agreement, or the breach, termination or validity thereof, has not been
resolved by negotiation as provided herein, it shall be settled by
arbitration in accordance with the Center for Public Resources Institute
for Dispute Resolution Rules for Non-Administered Arbitration of Business
Disputes. The arbitration shall take place in New York City, New York,
shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and
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judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction thereof.]
10.6 Governing Law and Legal Actions - This Agreement shall be governed by
and construed under the laws of the State of New York and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods.
10.7 Jurisdiction and Venue - The parties agree not to contest personal
jurisdiction and further agree that any action initiated relating to this
Agreement shall be filed in the United States District Court for the Southern
District of New York.
10.8 Headings - Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
10.9 Notices - Notice under this Agreement shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery courier
service, or mailed by certified or registered mail, return receipt requested to
a party at its addresses set forth in the signature block below or as amended by
notice pursuant to this subsection.
10.10 Entire Agreement - This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among the
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
10.11 WARRANTY DISCLAIMER - EXCEPT AS OTHERWISE SET FORTH HEREIN, A&B
MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
OTHER SUBJECT MATTER OF THIS
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AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
10.12 Force Majeure - Neither party hereto shall be responsible for any
failure to perform its obligations under this Agreement if such failure is
caused by acts of God, war, strikes, revolutions, lack or failure of
transportation facilities, laws or governmental regulations or other causes
which are beyond the reasonable control of such party. Obligations hereunder,
however, shall in no event be excused but shall be suspended only until the
cessation of any cause of such failure. In the event that such force majeure
should obstruct performance of this Agreement for more than six (6) months, the
parties hereto shall consult with each other to determine whether this Agreement
should be modified. The party facing an event of force majeure shall use its
best endeavors in order to remedy that situation as well as to minimize its
effects. A case of force majeure shall be notified to the other party by telex
or telefax within five (5) days after its occurrence and shall be confirmed by a
letter.
10.13 Severability - If any provision of this Agreement is held illegal,
invalid or unenforceable by a court of competent jurisdiction, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.
LICENSEE:
APPLIED MICROBIOLOGY, INC.
By: _____________________________
Benjamin Sporn
Title: Vice President
Address: Applied Microbiology, Inc.
19
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Old Saw Mill River Road
Tarrytown, NY 10591
U.S.A.
Attn: Benjamin Sporn, Esq.
With Copy: Brobeck, Phleger & Harrison
LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Richard R. Plumridge,
Esq.
Fax: (212) 586-7878
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LICENSOR:
APLIN & BARRETT, LIMITED
By: ______________________________
Benjamin Sporn
Title: Lawful Attorney
Address: Aplin & Barrett Limited
15 North Street
Beaminster, Dorset
DT8 3DZ
England
Attn: Dr. Robert Evans
With Copy: Burns Philp & Co. Ltd.
7 Bridge Street
Sydney, NSW 2000, Australia
Attn: The Company Secretary
Fax: 61 2 9247 8391
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EXHIBIT A-1
LICENSED PRODUCTS
Pharmaceutical Products
Animal Healthcare Products
Deodorant Products
Cosmetic Preservatives
Hygiene Products
Environmental Sanitizers
NISIN PREPARATIONS for incorporation in LICENSED PRODUCTS
22
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EXHIBIT A-2
EXCLUDED PRODUCTS
NISIN PREPARATIONS for incorporation into EXCLUDED PRODUCTS
Food Additives for food preservation
Food Preservatives
Food Preservation Methods
23
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LICENSE AGREEMENT
This Agreement is entered into as of December 12, 1996 between Licensee
Aplin & Barrett, Limited, a corporation incorporated under the laws of England
and Wales ("A&B"), and Licensor Applied Microbiology, Inc., a New York
corporation ("AMBI") (collectively "parties").
WHEREAS, A&B and AMBI have entered into a Share Purchase Agreement (the
"Purchase Agreement") dated as of December 12, 1996 by and among A&B, AMBI, and
Burns Philp (UK) plc ("Burns Philp"), pursuant to which Burns Philp has agreed
to purchase all of the issued and outstanding shares of A&B from AMBI; and
WHEREAS, AMBI has developed, and maintained as confidential, certain
valuable PROPRIETARY INFORMATION, hereinafter defined, relating to NISIN
PREPARATIONS, hereinafter defined, with respect to the manufacture, use, and
sale of LICENSED PRODUCTS, hereinafter defined; and
WHEREAS, A&B desires the right to use AMBI's PROPRIETARY INFORMATION in
the manufacture, use, and sale of the LICENSED PRODUCTS; and
WHEREAS, AMBI has obtained, or may obtain, patents encompassed by the
PATENTED TECHNOLOGY, hereinafter defined, for certain inventions relating to the
manufacture, use, and sale of the LICENSED PRODUCTS; and
WHEREAS, A&B desires the right to use the inventions claimed in AMBI's
PATENTED TECHNOLOGY in the manufacture, use, and sale of the LICENSED PRODUCTS;
and
WHEREAS, the obligations of A&B and AMBI under the Purchase Agreement are
conditioned, among other things, upon the
<PAGE>
execution and delivery of this Agreement by the parties hereto and the grant of
certain licenses by AMBI to A&B as hereafter set forth; and
WHEREAS, the obligations of A&B and AMBI under the Purchase Agreement are
conditioned, among other things, upon the simultaneous execution and delivery of
a counterpart License Agreement by the parties hereto granting certain licenses
by A&B to AMBI (the "A&B License Agreement"); and
WHEREAS, AMBI desires the right to use any inventions, modifications, and
improvements subsequently made or obtained by A&B that relate to the
manufacture, use, or sale of the EXCLUDED PRODUCTS, and A&B desires the right to
use any inventions, modifications, and improvements subsequently made or
obtained by AMBI that relate to the manufacture, use, or sale of the LICENSED
PRODUCTS; and
WHEREAS, AMBI recognizes that additional classes of products may be
developed by A&B which would be incorporated into the listing of LICENSED
PRODUCTS, and A&B recognizes that additional classes of products may be
developed by AMBI which would be incorporated into the listing of EXCLUDED
PRODUCTS.
NOW THEREFORE, for good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1 CERTAIN DEFINITIONS
1.1 "LICENSED PRODUCTS" shall mean all A&B products comprising,
incorporating, or relating to NISIN PREPARATIONS, whether existing or
subsequently developed, for the fields of application that are described by the
general classifications listed in Exhibit A-1 attached hereto.
2
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1.2 "EXCLUDED PRODUCTS" shall mean all AMBI products comprising,
incorporating, or relating to NISIN PREPARATIONS for the fields of application
that are described by the general classifications listed in Exhibit A-2 attached
hereto.
1.3 "PROPRIETARY INFORMATION" shall mean all secret or confidential
information relating to the LICENSED PRODUCTS including, without limitation,
reagents, computer programs, names and expertise of employees and consultants,
know-how, formulas, processes, procedures, ideas, inventions (whether patentable
or not), schematics and other technical, business, financial, customer and
product development plans, forecasts, strategies, or other confidential
information, including currently pending and unpublished patent applications, or
subsequently filed and unpublished patent applications, including information
obtained from third parties to the extent that AMBI is permitted to disclose
such information to A&B, relating to the general classifications listed in
Exhibit B.
1.4 "PATENTED TECHNOLOGY" shall mean those inventions claimed in any
patents obtained by, assigned to, or licensed to AMBI (to the extent that AMBI
is permitted to sublicense such patents to A&B), relating to the LICENSED
PRODUCTS during the term of this Agreement including any such patents listed in
Exhibit B.
1.5 "TECHNICAL INFORMATION" shall mean technical information other than
the PROPRIETARY INFORMATION and the PATENTED TECHNOLOGY within AMBI's control,
including information obtained from third parties to the extent that AMBI is
permitted to disclose such information to A&B, relating to the manufacture of
NISIN PREPARATIONS or the LICENSED PRODUCTS.
1.6 "NISIN PREPARATIONS" shall mean all products containing a measurable
concentration of any form, variant, or derivative of nisin.
3
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2 SCOPE OF LICENSE GRANT
2.1 Subject to all the terms and limitations of this Agreement, AMBI
grants to A&B the perpetual, sole and exclusive, non-transferable, and
world-wide rights and licenses, to use AMBI's PROPRIETARY INFORMATION, TECHNICAL
INFORMATION, and PATENTED TECHNOLOGY in developing, manufacturing, having
manufactured, using, selling, marketing, or distributing the LICENSED PRODUCTS.
Full consideration for this Agreement is provided by the execution of, and
continued compliance with, the counterpart A&B License Agreement under which
AMBI will receive rights and licenses to A&B's PROPRIETARY INFORMATION,
TECHNICAL INFORMATION, and PATENTED TECHNOLOGY, the rights and licenses granted
under the A&B License Agreement having an equivalent annual value to the rights
and licenses granted under this Agreement.
2.2 AMBI and A&B agree that this Agreement includes the right to
sublicense or disclose the PROPRIETARY INFORMATION and TECHNICAL INFORMATION to
a third party provided that any such sublicense or disclosure expressly
obligates any such third party to conform to the obligations imposed on A&B
under this Agreement regarding the confidentiality of the PROPRIETARY
INFORMATION, is not made to any person or entity involved in the manufacture of
any EXCLUDED PRODUCTS for other than AMBI or its affiliates, is not made to any
person or entity manufacturing any NISIN PREPARATIONS for sale or delivery other
than to, or on behalf of, A&B, AMBI, or their affiliates, and is otherwise
consistent with the scope of the license and obligations under this Agreement,
and further provided that A&B shall provide notice of each such sublicense or
disclosure to AMBI within thirty (30) days, and shall, at AMBI's request,
provide a copy of any such agreement relating to such sublicense or disclosure
to AMBI, A&B having the right to redact financial information from such copies.
4
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2.3 AMBI and A&B agree that this Agreement includes the right to
sublicense to any third party any portion or element of the PATENTED TECHNOLOGY
provided that any such sublicense is not made to any person or entity involved
in the manufacture of any EXCLUDED PRODUCTS for other than AMBI or its
affiliates, is not made to any person or entity manufacturing any NISIN
PREPARATIONS for sale or delivery other than to, or on behalf of, A&B, AMBI, or
their affiliates, and is otherwise consistent with the scope of the license and
obligations under this Agreement, and further provided that A&B shall provide
notice of each such sublicense to AMBI within thirty (30) days, and shall, at
AMBI's request, provide a copy of any such sublicense to AMBI, A&B having the
right to redact financial information from such copies.
2.4 AMBI and A&B agree that this Agreement does not include the right of
A&B to develop, manufacture, use, sell, or distribute the EXCLUDED PRODUCTS.
2.5 AMBI and A&B agree that this Agreement includes the right of A&B to
manufacture, or have manufactured, NISIN PREPARATIONS for sale or distribution
by A&B or third parties for incorporation into the LICENSED PRODUCTS.
2.6 AMBI recognizes that new classes of products may be subsequently
developed by A&B and agrees that such new classes of products shall be
incorporated into the LICENSED PRODUCTS, Exhibit A-1, provided that A&B gave
written notice to AMBI of each such proposed class and that AMBI has not, within
thirty (30) days, objected to the proposed new class of products as detrimental
to AMBI's ability to manufacture, use, or sell the EXCLUDED PRODUCTS. To the
extent that A&B disagrees with AMBI's objection, A&B shall seek redress only in
accordance with paragraph 10.5.
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2.7 AMBI and A&B further agree that this Agreement does not include the
right of A&B to use any of AMBI's copyrights, trademarks, or trade names, in
connection with the manufacture, use, sale, or distribution of any of the
LICENSED PRODUCTS. However, AMBI agrees that A&B may deplete, in the normal
course of business, its inventory of materials and products bearing the "Applied
Microbiology" tradename.
2.8 The parties further agree that A&B has the right to provide purified
NISIN PREPARATIONS to other commercial entities only under terms and conditions
which limit its use to research of, development of, experimentation for, or
manufacturing of the LICENSED PRODUCTS; and that A&B has the right to provide
purified NISIN PREPARATIONS to academic or non-profit institutions only under
terms and conditions which limit its use to research of, development of, or
other experimentation for the LICENSED PRODUCTS and which further provide that
all right, title, and interest to intellectual property arising from such work
shall be granted to A&B. Any agreement for providing purified NISIN PREPARATIONS
for use in LICENSED PRODUCTS shall provide that no licenses are granted to use
the products supplied for other than their intended purpose. For the purpose of
this paragraph, purified NISIN PREPARATIONS shall mean NISIN PREPARATIONS which,
at any time, had a peptide purity of more than 25%, i.e. at least 25% of the
protein present by weight is or was nisin.
3 TRANSFER OF PROPRIETARY INFORMATION
3.1 AMBI shall furnish to A&B, as soon as is reasonably practicable after
the effective date of this Agreement, in the form or forms that are mutually
acceptable to the parties, the PROPRIETARY INFORMATION, PATENTED TECHNOLOGY, and
TECHNICAL INFORMATION necessary to enable A&B to manufacture, have manufactured,
use, and sell the LICENSED PRODUCTS. When the
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foregoing PROPRIETARY INFORMATION, PATENTED TECHNOLOGY, and TECHNICAL
INFORMATION is available in tangible form, it shall be provided in tangible
form, and when available in machine readable form, it shall be provided on
mutually acceptable media.
3.2 To the extent that the PROPRIETARY INFORMATION is provided in
documentary form, including written, graphic, or machine readable form, at least
the first page of any such document, or the label attached to any such machine
readable form, shall be suitably marked by AMBI to indicate its confidential
nature.
3.3 A&B agrees that, to the extent any document provided by AMBI and
marked in accordance with paragraph 3.2 is copied or otherwise reproduced, in
whole or in part, each copy or reproduction will be marked by A&B to indicate
its confidential nature.
3.4 All PROPRIETARY INFORMATION shall remain at all times the property of
AMBI and shall not be used by A&B beyond the scope of the license granted under
this Agreement.
3.5 Upon termination of this Agreement pursuant to paragraph 7.3 as the
result of a breach by A&B, A&B shall, at AMBI's option, return to AMBI, or
destroy and provide certification of such destruction to AMBI, all PROPRIETARY
INFORMATION, including all copies, revisions, and translations thereof, and
shall thereafter make no use of the PROPRIETARY INFORMATION.
4 TECHNICAL ASSISTANCE
4.1 AMBI agrees to provide to A&B reasonable technical support and
assistance in connection with A&B's manufacturing of
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the LICENSED PRODUCTS for a period of two (2) years from the effective date of
this Agreement. The term "sublicensee" as used in this Section includes
"assignees and transferees" in accordance with paragraph 10.3.
4.2 The technical support and assistance provided by AMBI may include, as
reasonably required, meetings with AMBI technical personnel at AMBI's
facilities, visits by AMBI technical personnel to A&B's or its sublicensees'
facilities, observation of AMBI's manufacturing operation by technical personnel
of A&B, its consultants, or its duly sublicensed manufacturers of NISIN
PREPARATIONS, and on site support at A&B's or its sublicensees' facilities,
subject to the following terms and conditions:
4.2.1 Such technical support and assistance services will only be
provided at the request of A&B, or its successor in accordance with
paragraph 10.3, requests for the support and assistance to sublicensees
provided at AMBI's facility being subject to AMBI's approval, such
approval not to be unreasonably withheld;
4.2.2 Such services will be provided at times, places, and in a
manner mutually acceptable to the parties;
4.2.3 Such technical support and assistance services provided during
visits by A&B personnel and approved sublicensees to AMBI's facilities
will not exceed a total of forty-five (45) working days in any one year
period;
4.2.4 Such technical support and assistance services provided by
AMBI personnel at A&B's and its sublicensees' facilities will not exceed a
total of sixty (60) person-days in any one year period;
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4.2.5 AMBI shall not place a surcharge on any such services, but A&B
shall, subject to paragraph 4.2.6, reimburse AMBI for all reasonable
expenses incurred in connection with the provision of such services
including, but not limited to, the salary, travel, meal and living
expenses of the AMBI personnel providing the service;
4.2.6 A&B shall not be responsible for any expense over $500
incurred by AMBI in conjunction with providing such technical support and
assistance without A&B's prior written approval;
4.2.7 The expenses related to AMBI's technical support and
assistance under paragraph 4.2.4 will be detailed in a statement to A&B
delivered as soon as reasonably available after the conclusion of any such
visit by AMBI's technical personnel.
5 INVENTIONS AND IMPROVEMENTS
5.1 A&B shall, in good faith, promptly notify AMBI of any inventions,
modifications, or improvements to, or applications of, the PROPRIETARY
INFORMATION or the PATENTED TECHNOLOGY relating to the manufacture,
modification, or use of NISIN PREPARATIONS in any of the LICENSED PRODUCTS where
such inventions, modifications, or improvements are reasonably related to or may
improve AMBI's manufacture, use, or sale of the EXCLUDED PRODUCTS. AMBI
recognizes and acknowledges that any such inventions, modifications, or
improvements are proprietary to and owned exclusively by A&B.
5.2 With respect to any notice provided to AMBI under paragraph 5.1, A&B
shall notify AMBI within thirty (30) days of filing for patent protection for
any such invention, modification, or improvement, shall specify the countries in
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which any such patent applications have been filed, and shall provide AMBI with
a copy of the first such application and a copy of any subsequent application
that includes new matter.
5.3 AMBI agrees to hold such inventions, modifications, improvements, or
applications as A&B's PROPRIETARY INFORMATION in accordance with the provisions
of the A&B License Agreement. After any such patent application is published, or
otherwise made publicly available in a manner consistent with the procedures of
the jurisdiction in which such application is pending, or a patent is granted,
information so published or otherwise made publicly available will no longer be
considered A&B's PROPRIETARY INFORMATION.
5.4 With respect to all such patent applications, A&B shall ensure that
none of AMBI's PROPRIETARY INFORMATION is disclosed in the specification or in
subsequent communications with the relevant patent office without the express
written consent of AMBI.
5.5 The parties agree that AMBI will have the non-exclusive right to use
any such inventions, modifications, or improvements, whether or not patented,
without payment or limitation, in the development, manufacture, use, and sale of
the EXCLUDED PRODUCTS in accordance with the terms and conditions of the A&B
License Agreement.
5.6 Upon AMBI's request, A&B shall provide a detailed description of any
such invention, modification, or improvement sufficient to enable AMBI to use
the same in the development, manufacture, use, and sale of the EXCLUDED
PRODUCTS.
5.7 The parties agree that AMBI will have the non-exclusive right to use,
without limitation, any inventions, modifications, or improvements to, or new
applications of, the PROPRIETARY INFORMATION, TECHNICAL INFORMATION, or PATENTED
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TECHNOLOGY in which A&B has or obtains rights arising from research contracted,
commissioned, directed, or funded by A&B ("Contracted Research"), including,
without limitation, Contracted Research to improve yields and to develop nisin
variants, that is reasonably applicable, in A&B's opinion, to the EXCLUDED
PRODUCTS, to the extent permitted and in accordance with the terms and
conditions of the A&B License Agreement and the terms and conditions of the
Contracted Research. AMBI will have no responsibility for any payments for such
Contracted Research other than those required under the terms and conditions of
the Contracted Research or which have been separately approved by AMBI, such
payments not being subject to any surcharge by A&B. A&B further agrees that it
will keep AMBI informed regarding the scope and objectives of the Contracted
Research, and results from such Contracted Research, that are reasonably
applicable to the EXCLUDED PRODUCTS.
5.8 With respect to inventions, modifications, or improvements for which
A&B is obligated to provide notice to AMBI under paragraph 5.1, the parties
agree that AMBI will have the non-exclusive right to review and use data or
other information developed during any experimental, clinical, qualification,
regulatory, or other testing, relating to any improvements to or new
applications of the PROPRIETARY INFORMATION, TECHNICAL INFORMATION, or PATENTED
TECHNOLOGY including, without limitation, toxicological evaluations, performed
by, or on behalf of, A&B, without payment or limitation, in the development,
manufacture, use, approval, qualification, or sale of the EXCLUDED PRODUCTS in
accordance with the terms and conditions of the A&B License Agreement.
5.9 AMBI agrees to hold information or data received from A&B in
accordance with paragraphs 5.7 or 5.8 as A&B's PROPRIETARY INFORMATION in
accordance with the provisions of the A&B License Agreement. After any such
information is published,
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or otherwise becomes publicly available, such information will no longer be
considered A&B's PROPRIETARY INFORMATION.
6 CONFIDENTIALITY
6.1 A&B recognizes that AMBI's PROPRIETARY INFORMATION is critical to the
business of AMBI and that AMBI would not enter into this Agreement without
assurance that such PROPRIETARY INFORMATION and the value thereof will be
protected as provided in this Section 6 and elsewhere in this Agreement.
Accordingly, A&B agrees as follows:
6.2 A&B shall hold AMBI's PROPRIETARY INFORMATION in confidence and to
take all precautions with respect thereto as A&B employs with respect to its own
confidential materials.
6.3 A&B shall not divulge, release, disseminate, or otherwise disclose any
PROPRIETARY INFORMATION, or any information derived therefrom, to any third
party, except as permitted under and in accordance with paragraph 2.2.
6.4 Notwithstanding the foregoing, the preceding covenants shall not apply
to any PROPRIETARY INFORMATION which A&B can establish:
6.4.1 Is in or (through no improper action or inaction by the A&B,
its agents or employees) enters the public domain;
6.4.2 Was rightfully in A&B's possession or known by it prior to
receipt from AMBI;
6.4.3 Was rightfully disclosed to A&B by a third party without
restriction, however, AMBI considers all
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previous transfers of PROPRIETARY INFORMATION from AMBI to A&B to have
been confidential; or
6.4.4 Was independently developed by A&B without access to or use of
any of AMBI's PROPRIETARY INFORMATION.
6.5 Immediately upon termination of A&B's license under paragraph 7.3, A&B
will turn over to AMBI all documents or media containing any PROPRIETARY
INFORMATION and any and all copies or extracts thereof and will make no further
use of any kind of any of AMBI's PROPRIETARY INFORMATION.
6.6 A&B acknowledges and agrees that due to the unique nature of AMBI's
PROPRIETARY INFORMATION, there can be no adequate remedy at law for any breach
of its obligations hereunder, that any such breach may result in irreparable
harm to AMBI and therefore, that upon any such breach or any threat thereof,
AMBI shall be entitled to appropriate equitable relief in addition to whatever
remedies it might have at law.
7 TERM AND TERMINATION
7.1 This Agreement will remain in effect unless terminated pursuant to
paragraph 7.2
7.2 If a party intentionally, willfully, or through its gross negligence,
materially breaches a material provision of this Agreement, the other party may
terminate this Agreement upon 60 days prior written notice unless the breach is
cured within such period or, if the breach cannot reasonably be so cured,
diligent efforts to effect such cure are commenced during that period and are
continued in a diligent manner until the cure is completed, which shall be
within a reasonable time.
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7.3 In the event of any termination of this Agreement due to a breach by
A&B under paragraph 7.2, the rights and licenses granted A&B under this
Agreement, including all sublicenses, shall terminate but A&B's obligations
under Section 6, as well as obligations imposed on A&B's sublicensees under
paragraph 2.2, to maintain the confidentiality of AMBI's PROPRIETARY INFORMATION
and TECHNICAL INFORMATION shall survive such termination for a period of five
(5) years thereafter; and further provided that if the termination is on account
of a breach by AMBI, the rights and licenses granted A&B in Section 2, and
disclosures made or sublicenses granted by A&B in accordance with this
Agreement, will continue for all PROPRIETARY INFORMATION, PATENTED TECHNOLOGY,
and TECHNICAL INFORMATION licensed as of the termination date, provided that any
such disclosure or sublicense, according to its terms, (i) was properly granted,
(ii) AMBI will have no further obligation thereunder, (iii) all the restrictions
and limitations of this Agreement shall continue to apply to such disclosure or
sublicense as though this Agreement continued in effect, and (iv) AMBI shall be
entitled to require A&B to terminate such disclosures or sublicenses on the same
basis as is provided herein for termination of this Agreement.
7.4 Neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other arising from or
incident to any termination of this Agreement (or any part thereof) other than
that provided for in paragraph 6.7.
8 REPRESENTATIONS AND WARRANTIES
8.1 AMBI represents and warrants that it has full power, authority and
legal right to enter into and perform this Agreement and to grant to A&B the
rights and licenses set forth herein; that the execution, delivery and
performance of this
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Agreement have been duly authorized by all necessary corporate action on its
part; and that the execution, delivery and performance of this Agreement do not
contravene any law, governmental rule, regulation or order binding on AMBI or
contravene its charter or by-laws or any material indenture, mortgage or
contract or other agreement to which it is a party or by which it is bound and
which could reasonably be expected to have a material adverse effect on the
ability of AMBI to fulfill its obligations under the Agreement.
8.2 A&B represents and warrants that it has full power, authority and
legal right to enter into and perform this Agreement; that the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on its part; and that the execution, delivery and
performance of this Agreement do not contravene any law, governmental rule,
regulation or order binding on A&B or contravene its charter or by-laws or any
material indenture, mortgage or contract or other agreement to which it is a
party or by which it is bound and which could reasonably be expected to have a
material adverse effect on the ability of A&B to fulfill its obligations under
the Agreement.
8.3 AMBI represents and warrants that AMBI owns all right, title and
interest in and to the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY and that
the possession and use of the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY
does not infringe any existent patent, known trade secret, or other intellectual
property right of any third party. The warranty provided by this Section 8 does
not extend to claims based on modifications to the PROPRIETARY INFORMATION and
PATENTED TECHNOLOGY by any party other than AMBI nor to any use by A&B in a
manner inconsistent with this Agreement.
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9 INFRINGEMENT MATTERS
9.1 In the event that any claim of infringement arises from A&B's use of
the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY in the manufacture of the
LICENSED PRODUCTS and licensed as of the date of this Agreement, AMBI will be
solely responsible for expenses incurred in defending or settling any such
action. In the event A&B is notified of any such claim of infringement, A&B must
give written notice to AMBI within ten (10) days of such notice for this
paragraph to be operative.
9.2 In the event that any claim of infringement arises from A&B's use of
the PROPRIETARY INFORMATION and PATENTED TECHNOLOGY in the manufacture of the
LICENSED PRODUCTS, A&B will cooperate in AMBI's defense of any such action by
making its records and personnel reasonably available at times, places, and in a
manner mutually acceptable to the parties.
10 MISCELLANEOUS
10.1 INCIDENTAL AND CONSEQUENTIAL DAMAGES - EXCEPT AS OTHERWISE SET FORTH
IN SECTION 9, NEITHER PARTY WILL BE LIABLE UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT. THIS PARAGRAPH SHALL NOT
BE READ OR INTERPRETED TO EXCLUDE, RESTRICT, OR LIMIT EITHER PARTY'S LIABILITY
FOR DEATH OR PERSONAL INJURY RESULTING FROM ITS NEGLIGENCE.
10.2 Independent Contractors - The parties are independent contractors and
not partners, joint venturers or otherwise affiliated and neither has any right
or authority to bind the other in any way.
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10.3 Assignment - The rights and obligations of the parties under this
Agreement, may be assigned or transferred to affiliates or subsidiaries in which
a party maintains a controlling interest, which, with a party, are both under
the common control of a third party (e.g. Burns Philp), or to successors to the
parties' business interests by the sale or merger of substantially all of A&B's
assets relating to the LICENSED PRODUCTS or by the sale or merger of
substantially all of AMBI's assets relating to the EXCLUDED PRODUCTS.
10.4 Amendment and Waiver - Except as otherwise expressly provided herein,
any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or any particular
instance and either retroactively or prospectively) only with the written
consent of the parties, such amendments and waivers not to be unreasonably
refused.
10.5 Resolution of Disputes.
10.5.1 Negotiation Between Executives - The parties shall attempt in
good faith to resolve any dispute arising out of or relating to this
Agreement, or the breach, termination or validity thereof, by negotiations
between executives who have authority to settle the controversy. Any party
may give the other party written notice of any dispute not resolved in the
normal course of business. Within 20 days after delivery of such notice,
executives of both parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the dispute. If
the matter has not been resolved within 60 days of the disputing party's
notice, or if the parties fail to meet within 20 days, either party may
initiate arbitration of the controversy or claim as provided hereinafter.
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If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given at least three working days'
notice of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and state rules of evidence.
10.5.2 Arbitration - If a dispute arising out of or relating to this
Agreement, or the breach, termination or validity thereof, has not been
resolved by negotiation as provided herein, it shall be settled by
arbitration in accordance with the Center for Public Resources Institute
for Dispute Resolution Rules for Non-Administered Arbitration of Business
Disputes. The arbitration shall take place in New York City, New York,
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections
1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof.]
10.6 Governing Law and Legal Actions - This Agreement shall be governed by
and construed under the laws of the State of New York and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods.
10.7 Jurisdiction and Venue - The parties agree not to contest personal
jurisdiction and further agree that any action initiated relating to this
Agreement shall be filed in the United States District Court for the Southern
District of New York.
10.8 Headings - Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
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10.9 Notices - Notice under this Agreement shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery courier
service, or mailed by certified or registered mail, return receipt requested to
a party at its addresses set forth in the signature block below or as amended by
notice pursuant to this subsection.
10.10 Entire Agreement - This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among the
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
10.11 WARRANTY DISCLAIMER - EXCEPT AS OTHERWISE SET FORTH HEREIN, AMBI
MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10.12 Force Majeure - Neither party hereto shall be responsible for any
failure to perform its obligations under this Agreement if such failure is
caused by acts of God, war, strikes, revolutions, lack or failure of
transportation facilities, laws or governmental regulations or other causes
which are beyond the reasonable control of such party. Obligations hereunder,
however, shall in no event be excused but shall be suspended only until the
cessation of any cause of such failure. In the event that such force majeure
should obstruct performance of this Agreement for more than six (6) months, the
parties hereto shall consult with each other to determine whether this Agreement
should be modified. The party facing an event of force majeure shall use its
best endeavors in order to remedy that situation as well as to minimize its
effects. A case of force majeure shall be notified to the other party by telex
or telefax within five (5) days after its occurrence and shall be confirmed by a
letter.
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10.13 Severability - If any provision of this Agreement is held illegal,
invalid or unenforceable by a court of competent jurisdiction, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.
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LICENSEE:
APLIN & BARRETT, LIMITED
By: ______________________________
Benjamin Sporn
Title: Lawful Attorney
Address: Aplin & Barrett Limited
15 North Street
Beaminster, Dorset
DT8 3DZ
England
Attn: Dr. Robert Evans
With Copy: Burns Philp & Co. Ltd.
7 Bridge Street
Sydney, NSW 2000, Australia
Attn: The Company Secretary
Fax: 61 2 9247 8391
LICENSOR:
APPLIED MICROBIOLOGY, INC.
By: ______________________________
Benjamin Sporn
Title: Vice President
Address: Applied Microbiology, Inc.
Old Saw Mill River Road
Tarrytown, NY 10591
U.S.A.
Attn: Benjamin Sporn, Esq.
With Copy: Brobeck, Phleger & Harrison
LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Richard R. Plumridge,
Esq.
Fax: (212) 586-7878
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EXHIBIT A-1
LICENSED PRODUCTS
NISIN PREPARATIONS for incorporation into LICENSED PRODUCTS
Food Additives for food preservation
Food Preservatives
Food Preservation Methods
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EXHIBIT A-2
EXCLUDED PRODUCTS
Pharmaceutical Products
Animal Healthcare Products
Deodorant Products
Cosmetic Preservatives
Hygiene Products
Environmental Sanitizers
NISIN PREPARATIONS for incorporation in EXCLUDED PRODUCTS
23
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SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") dated as of December 12, 1996 by
and between APLIN & BARRETT LIMITED, a company incorporated under the laws of
England and Wales ("AB") and APPLIED MICROBIOLOGY, INC., a New York corporation
("AMBI"),
W I T N E S S E T H:
WHEREAS, pursuant to a Share Purchase Agreement dated as of December 12,
1996, among AB, AMBI and Burns Philp UK plc ("Burns Philp"), Burns Philp is
purchasing from AMBI, simultaneously with the execution hereof, all of the
issued ordinary shares of AB; and
WHEREAS, it is a condition precedent to the obligation of Burns Philp to
purchase such shares and the obligation of AMBI to sell such shares that AB and
AMBI enter into a supply agreement for the supply by AB to AMBI of the nisin and
nisin preparations described on Exhibit A (the "Products") for use in accordance
with a License Agreement of even date granting licenses from AB to AMBI (the
"Permitted Uses");
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereby agree
as follows:
1. Sale and Purchase. AB shall sell to AMBI, and AMBI shall purchase from
AB, in accordance with AMBI's orders, AMBI's requirements of Product on the
terms and conditions set forth in this Agreement. AB shall have no liability to
AMBI if AB is unable to supply all of the Products ordered by AMBI hereunder if
AB has used its commercially reasonable efforts to supply such requirements of
Products. AMBI shall provide to AB a rolling six month forecast of AMBI's
requirements for planning purposes. AMBI shall be obligated to purchase all
inventory of Product produced and inventory of Product on hand at the date of
termination of this Agreement.
2. Use of Products by AMBI. AMBI agrees that it shall use the Products
purchased hereunder solely for the Permitted Uses.
3. Prices. The price for Products shall be composed of Monthly
Manufacturing Overhead Fee and price per gram of Product sold, as set forth on
Exhibit B. Such prices shall be effective for the term of this Agreement,
without regard to renewal terms. Upon notice of renewal of this Agreement, the
parties shall mutually agree upon the price.
4. Payment. AB shall send AMBI a monthly invoice as
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of the first day of each calendar month setting forth the Monthly Manufacturing
Overhead Fee for such month. AB shall send AMBI a monthly invoice as of the end
of each calendar month setting forth the quantity of Products delivered during
such month, if any, and the amount due therefor. AMBI shall remit to AB the
entire net balance due within 30 days of the date of each invoice. In the event
that AMBI disputes any such invoice, AMBI shall promptly notify AB in writing of
such dispute. The parties shall resolve the dispute in accordance with Section
26 below. A late charge of one percent (1%) per month, or if lower, the maximum
rate allowed by law, shall be applicable to unpaid invoices from the due dates
thereof. AMBI agrees to pay AB's cost of collection, if any, on overdue
invoices, including reasonable attorneys' fees. If AMBI becomes delinquent in
the payment of any amount due AB, whether due hereunder or otherwise and such
delinquency is not cured within 30 days after receipt of written notice thereof,
AB may at its sole option suspend, defer or decline to make further shipments
hereunder except upon receipt of security satisfactory to AB or cash payment in
advance of delivery. No invoice shall be deemed to be unpaid or delinquent until
final resolution of the dispute pursuant to Section 26, provided however that if
such dispute is resolved in favor of AB, AMBI shall be liable for late charges
on the amount due from the original due date to the date paid.
5. Order and Delivery. AMBI shall submit written purchase orders, either
hard copy or through electronic data input, for the Products to AB from time to
time. All purchase orders for a quantity of Products equal to or less than the
amount forecasted shall be accepted by AB. AB shall use commercially reasonable
efforts to deliver such Products to AMBI within 14 days after receipt of the
applicable purchase order. AB shall deliver Products F.O.B. AMBI's facility in
Tarrytown, New York or any other delivery point requested by AMBI (the "Delivery
Point"), and AMBI shall take delivery and shall be deemed to have taken delivery
of all shipments of Products delivered to the Delivery Point. AMBI shall arrange
for acceptance of all shipments delivered to the Delivery Point at such time and
on such date as AB notifies AMBI that such shipments are scheduled to be
delivered. AMBI will be responsible for all shipping costs for each shipment of
Product to a Delivery Point other than AMBI's facility in Tarrytown, New York to
the extent that such costs exceed the cost that AB would have incurred if such
shipment had been delivered to such facility. AMBI shall be responsible for
payment of all customs duties and other expenses of customs incurred in
connection with shipping the Products from AB's plant in Beaminster, England to
the Delivery Point. AB will be responsible for all transportation arrangements.
AB will package the Products in accordance with the packaging specifications set
forth in Exhibit E and AB shall provide documents in the form specified on
Exhibit E.
6. Title. Title to all Products shipped to the Delivery Point shall pass
to AMBI upon delivery thereof by AB to the Delivery Point.
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7. Warranties. The Products delivered pursuant to this Agreement shall (i)
conform to the specifications set forth in Exhibit C (the "Specifications"),
(ii) be free from defects in material and workmanship, and (iii) not be
adulterated or misbranded with the meaning of applicable U.S. federal or state
laws and regulations, including the Federal Food, Drug and Cosmetic Act. AB
MAKES NO OTHER WARRANTY AND HEREBY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING THAT OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE. AMBI shall notify AB as soon as practicable,
but no later than 30 days after delivery, if any portion of the Products do not
conform to such warranty, shall retain possession of such Products until it
receives instructions from AB and shall minimize losses to AB. No portion of the
Products may be returned by AMBI until after receipt by AMBI of written shipping
instructions from AB. If AB instructs AMBI to dispose of the Products or a
portion thereof, AMBI shall retain evidence of such disposition and shall allow
AB to inspect and copy AMBI's sales records. AMBI's remedy and AB's liability
for failure of any Products to conform to the warranty contained in this Section
7 shall be limited solely to replacement of such Products at the original
Delivery Point (in which case AB shall use commercially reasonable efforts to
provide AMBI with such replacement Products) or refunding the price per gram of
such Products, at AMBI's option.
8. Delays. AB shall not be liable for any failure or delay in delivery due
in whole or in part to fires, floods, accidents, riots, demonstrations, acts of
God, declared or undeclared war, strikes or other labor difficulties, shortage
or unavailability of fuel, power, raw materials or supplies, production
breakdowns, delay or failure of usual sources of transportation, requirements or
requests of any government or subdivision thereof or acts, demands, orders or
interpositions of any government or any subdivision thereof or agent thereof or
any other cause beyond AB's reasonable control which makes performance
commercially impracticable. Under any such circumstances AB shall have such
additional time within which to perform its obligations under this Agreement as
may be reasonably necessary and may, without liability for any failure to
perform this Agreement, allocate its manufacturing capacity among any or all
buyers of Products and other products, including subsidiaries, affiliates and
departments of AB, in proportion to their respective purchases over the
preceding three months.
9. Absolute Obligation. AMBI acknowledges that AB's sole obligations
hereunder are as set forth in this Agreement, and that after delivery to AMBI of
the Products at the applicable Delivery Point, all risk of loss affecting the
Products shall be with AMBI. Such risks include, without limitation, loss or
theft of or damage to the Products and change in law or any form of governmental
regulation which shall limit, diminish or eliminate the use of the Products.
Effective upon delivery to AMBI of the Products, AMBI's obligation to pay the
purchase price attributable to such Products shall be absolute and
unconditional, subject to
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any exceptions set forth in Section 4 or 7, and AMBI waives to the fullest
extent permitted by law any defense, counterclaim or setoff, reduction,
abatement, deferment or recoupment of any kind whatsoever, including, without
limitation, supervening impracticability, illegality and frustration.
10. Order Forms and Invoices. Any purchase order, invoice or other such
document submitted by either party containing statements, clauses or conditions
modifying, adding to, repugnant to or inconsistent with the terms herein set
forth will be accepted by the other party only on the condition and with the
express understanding that the liabilities of such party shall be determined
solely by the terms and conditions of sale set forth in this Agreement.
11. Limitation on Liability.
(a) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREUNDER, WHETHER ARISING IN CONTRACT OR
TORT. AB'S LIABILITY WITH RESPECT TO PRODUCTS SOLD HEREUNDER (INCLUDING
LIABILITY ARISING FROM BREACH OF CONTRACT OR WARRANTY OR FROM TORT) IN NO CASE
SHALL EXCEED THE TOTAL AMOUNT OF THE PRODUCTS PAID FOR HEREUNDER AND INVOLVED IN
THE CLAIM. CLAIMS OR LOSSES IN TORT INCLUDE, WITHOUT LIMITATION, NEGLIGENCE
(ACTIVE AND PASSIVE), STRICT LIABILITY AND MISREPRESENTATION.
(b) Notwithstanding anything contained in Section 11(a) above, nothing in
this Agreement shall exclude, restrict or limit AB's liability for death or
personal injury resulting from its negligence.
12. Indemnity. AMBI shall indemnify and hold harmless AB, its agents and
assignees, from and against any and all claims, actions, suits, proceedings,
costs, expenses (including court costs and reasonable attorney's fees), damages,
obligations, penalties, injuries and liabilities, including strict liability in
tort, arising out of, connected with or resulting from the AMBI's packaging,
shipment, delivery, sale, or ownership of the Products or any portion thereof
(the "AB Damages"), except to the extent that the AB Damages arise out of, are
connected with or result from the breach of AB's warranty set forth in Section 7
above. AB shall indemnify and hold harmless AMBI, its agents and assignees, from
and against any and all claims, actions, suits, proceedings, costs, expenses
(including court costs and reasonable attorney's fees), damages, obligations,
penalties, injuries and liabilities, including strict liability in tort, arising
out of, connected with or resulting from the breach of AB's warranty set forth
in Section 7 above.
13. Term. This Agreement is effective on and as of the date hereof, and
shall, unless earlier terminated pursuant to Section 14 hereof or renewed
pursuant to this Section 13, terminate on the date that is one year from the
date hereof.
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Subject to Section 3, AMBI shall have the right to extend the term of this
Agreement for additional six month terms upon 60 days prior written notice from
the date of termination.
14. Termination. In addition to all other rights and remedies available to
AB at law, in equity or otherwise, AB shall have the right to terminate this
Agreement by written notice to AMBI upon material default by AMBI of any of its
obligations hereunder, provided that AMBI shall not have cured such default
within 30 days after receipt of notice thereof. AMBI shall have the right to
terminate this Agreement at any time, with or without cause, upon 60 days prior
written notice to AB. Upon termination for any reason, including, without
limitation, expiration of the term of this Agreement pursuant to Section 13
hereof, AMBI shall pay all termination costs identified and set forth in Exhibit
D (the "Termination Costs"). The amount of severance costs shall be agreed upon
prior to the date of termination and shall be payable prior to or at the date of
termination. No later than 60 days after the date of termination, AB and AMBI
shall determine and agree upon the amount of the remainder of the termination
costs. The total amount due shall be payable within 30 days of such
determination.
15. Notices, etc. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered or if mailed
by first-class registered or certified mail, return receipt requested, postage
prepaid, five (5) days after deposit in the mail, addressed as follows:
If to AB, to:
Aplin & Barrett Limited
15 North Street
Beaminster, Dorset
DT8 3DZ
England
Attention: Dr. Robert Evans
If to AMBI, to:
Applied Microbiology, Inc.
771 Old Saw Mill River Road
Tarrytown, NY 10591
U.S.A
Attention: Benjamin Sporn, Esq.
or, in each case, at such other address as may be specified in
writing to the other parties.
16. Waiver; Modification. No waiver by AB of any breach of any provisions
hereof shall constitute a waiver of any other breach of such provision. AB's
failure to object to provisions contained in any communication from AMBI shall
not be deemed an acceptance of such provisions or as a waiver of the
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provisions of this Agreement. Any waiver or modification of this Agreement or
any of the provisions hereof to be effective must be in writing and signed by
the party against whom such waiver or modification is to be enforced.
17. Complete Agreement. This Agreement contains the entire agreement
between the parties pertaining to the subject matter hereof, and there are no
other oral, written or implied agreements between the parties pertaining to the
subject matter hereof; neither party has relied upon any representation or
warranty concerning the subject matter hereof not contained in this Agreement.
18. Confidentiality. The parties hereto shall keep confidential the terms
and conditions of, and the transactions contemplated in, this Agreement, and
such parties shall instruct their respective officers, employees and other
representatives having access to such information of such obligation of
confidentiality; provided, however, that any disclosure of such information may
be made after consultation with the other party to the extent required by
applicable law and that such information may be used as evidence in or in
connection with any pending or threatened litigation related to this Agreement
or any transaction contemplated hereby.
19. Assignment. Neither party shall assign this Agreement or any interest
therein without the prior written consent of the other party, except that either
party may assign this Agreement without consent to such party's affiliates under
common control or subsidiaries in which such party maintains a controlling
interest, or to successors to such party's interest by the sale or merger of
substantially all of such party's assets. Any attempt to assign or transfer in
violation of this Agreement shall be invalid. This Agreement shall be binding
upon and inure to the benefit of the parties, their successors and assigns.
20. Time of Essence. Time is of the essence in each and every provision in
this Agreement.
21. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
22. Governing Law. This contract shall be governed by and construed
according to the laws of the State of New York.
23. Headings. Section headings are for convenience of reference only and
shall not be considered in the interpretation of this Agreement.
24. Nature of Relationship. Each party shall act
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solely as an independent contractor, and nothing in this Agreement shall be
construed to give either party the power or authority to act for, bind or commit
the other party.
25. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
26. Resolution of Disputes.
(a) Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement, or
the breach, termination or validity hereof, by negotiations between executives
who have authority to settle the controversy. Any party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within 20 days after delivery of such notice, executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to exchange relevant information and to attempt to
resolve the dispute. If the matter has not been resolved within 60 days of the
disputing party's notice, or if the parties fail to meet within 20 days, either
party may initiate arbitration of the controversy or claim as provided
hereinafter.
If a negotiator intends to be accompanied at a meeting by an attorney, the
other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
(b) Arbitration. If a dispute arising out of or relating to this
Agreement, or the breach, termination or validity hereof, has not been resolved
by negotiation as provided herein, it shall be settled by arbitration in
accordance with the Center for Public Resources Institute for Dispute Resolution
Rules for Non-Administered Arbitration of Business Disputes. The arbitration
shall take place in New York City, New York, shall be governed by the United
States Arbitration Act, 9 U.S.C. ss.ss. 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
27. Additional Products. The parties acknowledge that
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this Agreement may be amended in the future to add additional Products as agreed
by the parties at such prices as may agreed by the parties.
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
APPLIED MICROBIOLOGY, INC.
By______________________________________
Benjamin Sporn
Its Vice President
APLIN & BARRETT LIMITED
By______________________________________
Benjamin Sporn
Its Lawful Attorney
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INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of the 12th day of December, 1996, by and among APPLIED MICROBIOLOGY,
INC., a New York corporation ("AMBI"), and BURNS PHILP MICROBIOLOGY PTY LIMITED,
an Australian corporation ("BP").
WHEREAS, AMBI owns 2,128,514 of the issued and outstanding ordinary shares
of (pound)1.00 each of Aplin & Barrett Limited, a company incorporated under the
laws of England and Wales ("A&B"), which together with one ordinary share of
(pound)1.00 held in the name of Burns Philp International Investments Limited
constitute all of A&B's issued and outstanding share capital (the "A&B Shares");
WHEREAS, as of the date of this Agreement AMBI and an affiliate of BP will
enter into that certain Share Purchase Agreement by and among AMBI, A&B, and
Burns Philp (UK) plc, a company incorporated under the laws of England and Wales
("BP-UK") (the "Share Purchase Agreement"), pursuant to which BP-UK will
purchase all of the A&B Shares owned by AMBI; and
WHEREAS, as an inducement to and in consideration of AMBI's and BP-UK's
entering into the Share Purchase Agreement AMBI and BP have agreed to enter into
this Agreement:
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained in this Agreement and in the
Share Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1
Restrictions on Transferability of Securities;
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "AMBI Common Stock" shall mean all of the issued and outstanding
shares of common stock, par value $.005 per share, of AMBI.
(b) "Commission" shall mean the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
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(c) "Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(d) "Other Shareholders" shall mean persons other than BP who, by virtue
of agreements with AMBI, are entitled to include their securities in certain
registrations described hereunder.
(e) "person" or "persons" shall mean both natural persons and entities of
any type.
(f) "Private Placement Securities" shall mean the aggregate of one-half of
(i) the shares of AMBI Common Stock held by BP as of the date of this Agreement
that do not constitute Registrable Securities and (ii) any shares of AMBI Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of the shares referenced in (i) above, provided that the
parties hereto may, by mutual written consent, agree to change the number of
shares of AMBI Common Stock held by BP that are considered "Private Placement
Securities."
(g) "Registrable Securities" shall mean the aggregate of one-half of (i)
the shares of AMBI Common Stock held by BP as of the date of this Agreement and
(ii) any shares of AMBI Common Stock issued as a dividend or other distribution
with respect to or in exchange for or in replacement of the shares referenced in
(i) above, provided, however, that Registrable Securities shall not include any
shares of AMBI Common Stock which have previously been registered or which have
been sold to the public and, provided further, that the parties hereto may, by
mutual written consent, agree to change the number of shares of AMBI Common
Stock held by BP that are considered "Registrable Securities."
(h) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
(i) "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for AMBI, blue sky fees and expenses, and
expenses of any regular or special audits incident to or required by any such
registration, but shall not include Selling Expenses and fees and disbursements
of counsel for BP (but excluding the compensation of regular employees of AMBI,
which shall be paid in any event by AMBI).
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(j) "Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(k) "Securities Act" shall mean the United States Securities Act of 1933,
as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(l) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of AMBI Common Stock.
(m) "Underwriter" shall mean one or more nationally reputable investment
banking firms reasonably satisfactory to AMBI and BP acting in the capacity of
an underwriter or a financial advisor.
1.2 Requested Registration.
(a) Request for Registration. If AMBI shall receive from BP at any time or
times within two years (subject to extension pursuant to Section 1.15) after the
date of this Agreement, a written request that AMBI effect any registration with
respect to Registrable Securities, or any portion thereof, in a public offering
and prior to such registration AMBI receives a written opinion of the
Underwriter stating that the registration and sale of such Registrable
Securities will not materially adversely affect the liquidity, trading patterns
or market price of AMBI Common Stock, AMBI will, as soon as practicable, use its
best efforts to effect such registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws, and appropriate compliance with the Securities
Act) as would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such request.
AMBI shall not be obligated to effect, or to take any action to effect,
any such registration pursuant to this Section 1.2:
(A) During the period starting with the date thirty (30) days prior
to AMBI's good faith estimate of the date of filing of, and ending on a
date ninety (90) days after the effective date of, an AMBI-initiated
registration; provided that AMBI is actively employing in good faith all
reasonable efforts to cause such registration statement to become
effective;
(B) During any period in which AMBI does not have available the
financial statements which are required by applicable law or regulation to
be
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included in the registration statement, provided that AMBI shall be
obligated to effect such registration as soon as practicable after such
financial statements become available;
(C) [Intentionally Omitted]
(D) If BP does not request that such offering be firmly underwritten
by Underwriters;
(E) If AMBI and BP using their best efforts are unable to obtain the
commitment of the Underwriters to firmly underwrite the offer; or
(F) If AMBI shall have effected two registrations of the Registrable
Securities, or any portion thereof, pursuant to this Section 1.2.
(b) Subject to the foregoing clauses (A) through (F), AMBI shall file a
registration statement covering the Registrable Securities, or any portion
thereof, so requested to be registered as soon as practicable after receipt of
the request or requests of BP; provided, however, that AMBI shall have the right
to defer such filing for up to 90 days if (i) in the good faith judgment of the
Board of Directors of AMBI (the "Board"), it is determined that such delay is in
the best interest of AMBI, and (ii) AMBI provides to BP a certificate signed by
the President of AMBI stating that in the good faith judgment of the Board, a
delay of the registration would be in the best interests of AMBI, provided that
(except as provided in clause (B) above) (i) AMBI may not defer the filing for a
period of more than ninety (90) days after receipt of the request of BP, (ii)
AMBI shall not defer its obligation in this manner more than once in any
twelve-month period, and (iii) the two-year period set forth in Sections 1.2(a)
and 1.3(a) shall be extended by the number of days that the registration is
deferred.
The registration statement filed pursuant to the request of BP may,
subject to the provisions of Sections 1.2(b) and 1.12 hereof, include (i) other
securities of AMBI, with respect to which registration rights have been granted
and (ii) securities of AMBI being sold for the account of AMBI.
(c) Underwriting. The right of BP to registration pursuant to Section 1.2
shall be conditioned upon BP's participation in such underwriting and the
inclusion of BP's Registrable Securities in the underwriting to the extent
provided herein.
(d) Procedures. If AMBI shall request inclusion in any registration
pursuant to Section 1.2 of securities being sold for its own account, or if
other persons shall request inclusion in any registration pursuant to Section
1.2, BP shall offer to include such securities in the underwriting and may
condition
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such offer on their acceptance of the further applicable provisions of this
Section 1 (including Section 1.11). AMBI shall (together with BP and any other
persons proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the Underwriter. Notwithstanding any other provision of this Section 1.2, if
the representative of the Underwriters advises AMBI and BP in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 1.12 hereof. If a person
who has requested inclusion in such registration as provided above does not
agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from AMBI, the Underwriter or BP. The securities so
excluded shall also be withdrawn from registration. If shares are so withdrawn
from the registration and if the number of shares to be included in such
registration was previously reduced as a result of marketing factors pursuant to
this Section 1.2(d), then AMBI may offer other shareholders who have retained
rights to include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among such other
shareholders requesting additional inclusion pro rata.
1.3 AMBI Registration.
(a) If at any time within two years (subject to extension pursuant to
Section 1.15) after the date of this Agreement, AMBI shall determine to register
any AMBI Common Stock for its own account in an underwritten public offering
(other than pursuant to Section 1.2 hereof, and other than a registration on
Form S-4 or S-8), AMBI will:
(i) promptly give BP written notice thereof; and
(ii) use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as
set forth in Section 1.3(b) below, and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by BP and received by AMBI within twenty (20) days after
the written notice from AMBI described in clause (i) above is mailed or
delivered by AMBI.
(b) Underwriting. If the registration of which AMBI gives notice is for a
registered public offering involving an underwriting, AMBI shall so advise BP as
a part of the written notice given pursuant to Section 1.3(a)(i). In such event,
the right of BP to registration pursuant to this Section 1.3 shall be
conditioned upon BP's desire to participate in such underwriting and the
inclusion of BP's Registrable Securities in the
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underwriting to the extent provided herein. BP shall (together with AMBI and the
other holders of securities of AMBI with registration rights to participate
therein distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
Underwriter.
Notwithstanding any other provision of this Section 1.3, if the
representative of the Underwriters advises AMBI and BP in writing that the
inclusion of such Registrable Securities will materially adversely affect the
offering or the liquidity, trading patterns or market price of AMBI Common
Stock, then the representative may (subject to the limitations set forth below)
advise AMBI to limit the amount of securities to be included in the registration
by BP; provided, however that the aggregate value of Registerable Securities to
be included in such registration by BP may not be so reduced to less than
twenty-five percent (25%) of the total value of all securities included in such
registration. AMBI shall so advise all holders of securities requesting
registration of the number of shares of securities that are entitled to be
included in the registration and underwriting. Such shares shall be allocated as
set forth in Section 1.12. If any person does not agree to the terms of any such
underwriting, provided such terms are reasonable and customary, he shall be
excluded therefrom by written notice from AMBI or the Underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration and if the number of
shares of Registrable Securities to be included in such registration was
previously reduced as set forth above, AMBI shall then offer to all persons who
have retained the right to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated among the
persons requesting additional inclusion in accordance with Section 1.12 hereof.
1.4 Expenses of Registration. The Registration Expenses and Selling
Expenses attributable to BP's shares incurred in connection with any
registration, qualification or compliance pursuant to Sections 1.2 and 1.3
hereof shall be borne by BP; provided, however, that AMBI will bear the
Registration Expenses for any registration proceeding begun pursuant to Section
1.2 or 1.3 and subsequently (i) terminated by AMBI, or (ii) withdrawn by BP if
such withdrawal is based upon material adverse information relating to AMBI that
is different from the information known or available (upon request from AMBI or
otherwise) to BP at the time of its request for registration. All Selling
Expenses relating to securities so registered shall be borne by the holders of
such securities pro rata on the basis of the number of shares of securities so
registered on their behalf.
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All fees and expenses of any separate counsel for BP shall be borne by BP.
1.5 [Intentionally Omitted]
1.6 Registration Procedures. In the case of each registration effected by
AMBI pursuant to this Section 1, AMBI will keep BP advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, AMBI will use its best efforts to:
(a) Keep such registration effective for a period of one hundred twenty
(120) days or until BP has completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
however, that (i) such 120-day period shall be extended for a period of time
equal to the period BP refrains from selling any securities included in such
registration at the request of an Underwriter of AMBI Common Stock (or other
securities) of AMBI; and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Securities Act, permits
an offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (I) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(b) Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as BP from
time to time may reasonably request;
(d) Notify BP at any time when a prospectus relating to a registration
statement of Registerable Securities is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
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statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing, and at BP's request,
prepare and furnish to BP a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange on which similar securities
issued by AMBI are then listed;
(f) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to such registration statement and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration; and
(g) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Sections 1.2 and 1.3 hereof, AMBI will
enter into an underwriting agreement reasonably necessary to effect the offer
and sale of AMBI Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the Underwriter
so requests the underwriting agreement will contain customary contribution
provisions.
1.7 Indemnification.
(a) AMBI will indemnify BP, each of its officers, directors and partners,
legal counsel, and accountants and each person controlling BP within the meaning
of Section 15 of the Securities Act, with respect to which registration,
qualification, or compliance has been effected pursuant to this Section 1, and
each Underwriter, if any, and each person who controls (within the meaning of
Section 15 of the Securities Act) any Underwriter, against all expenses, claims,
losses, damages, and liabilities (or actions, proceedings, or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular, or other document (including any related registration statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by AMBI of the Securities Act or any
rule or regulation thereunder applicable to AMBI and relating to action or
inaction required
-8-
<PAGE>
of AMBI in connection with any such registration, qualification, or compliance,
and will reimburse BP, each of its officers, directors, partners, legal counsel,
and accountants and each person controlling BP, each such Underwriter, and each
person who controls any such Underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending or settling
any such claim, loss, damage, liability, or action, provided that AMBI will not
be liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to AMBI by BP and stated to be
specifically for use therein. It is agreed that the indemnity agreement
contained in this Section 1.7(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of AMBI (which consent has not been unreasonably
withheld).
(b) For each registration statement covering Registerable Securities, BP
will indemnify AMBI, each of its directors, officers, partners, legal counsel,
and accountants and each Underwriter, if any, of AMBI's securities covered by
such a registration statement, each person who controls AMBI or such Underwriter
(within the meaning of Section 15 of the Securities Act), against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular, or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse AMBI and such directors,
officers, partners, legal counsel, and accountants, persons, Underwriters, or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular,
or other document in reliance upon and in conformity with written information
furnished to AMBI by BP and stated to be specifically for use therein; provided,
however, that the obligations of BP hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of BP (which
consent shall not be unreasonably withheld).
(c) Each party entitled to indemnification under this Section 1.7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of
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<PAGE>
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
1, to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
1.8 Information and Personnel by BP. BP shall furnish to AMBI such
information regarding BP and the distribution proposed by BP as AMBI may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification, or compliance referred to in this Section
l and shall make available to AMBI such officers and employees as may be
reasonably necessary to effect the foregoing at its sole cost and expense.
1.9 [Intentionally Omitted]
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1.10 Transfer or Assignment of Registration Rights. The rights to cause
AMBI to register securities granted to BP by AMBI under Sections 1.3 may be
transferred or assigned by BP only to a transferee or assignee of not less than
25% of BP's Registrable Securities (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock splits,
and the like), provided that AMBI is given written notice at the time of or
within a reasonable time after such transfer or assignment, stating the name and
address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned,
and, provided further, that the transferee or assignee of such rights assumes
the obligations of BP under this Section 1 with respect to such shares
transferred or assigned. Except for the rights granted to BP by AMBI under
Sections 1.3, no other rights granted to BP hereunder may be transferred or
assigned without AMBI's prior written consent.
1.11 "Market Stand-Off" Agreement. So long as AMBI has complied with each
of the terms and provisions of this Agreement and the Share Purchase Agreement,
BP shall not, without AMBI's prior written approval, solicit purchasers for BP's
shares of AMBI Common Stock, sell or otherwise transfer or dispose of any AMBI
Common Stock (or other securities of AMBI) held by BP (except, in each case, to
the extent permitted pursuant to Sections 1.2 or 1.3 above or in a "private
placement" as contemplated by Section 2.1 below) during the Stand-Off Period (as
hereinafter defined). The Stand-Off Period means the period ending on the later
of (i) two years after the date of this Agreement or (ii) six months after the
last date of sale of AMBI Common Stock pursuant to Sections 1.2, 1.3 or 2.1,
provided however, that clause (ii) shall apply only if BP has sold at least 2
million shares of AMBI Common Stock through transactions described in Sections
1.2, 1.3 or 2.1, prior to the expiration of the Stand-Off Period.
1.12 Allocation of Registration Opportunities. In any circumstance in
which all of the Registrable Securities and other shares of AMBI Common
Stock(including shares of Common Stock issued or issuable upon conversion of
shares of any currently unissued series of Preferred Stock of AMBI) with
registration rights (the "Other Shares") requested to be included in a
registration on behalf of BP or other selling shareholders cannot be so included
as a result of limitations of the aggregate number of shares of Registrable
Securities and Other Shares that may be so included, the number of shares of
Registrable Securities and Other Shares that may be so included shall be
allocated as follows:
(a) If the registration was requested by BP pursuant to Section 1.2 hereof
then all Registerable Securities shall be included in the registration prior to
the inclusion of any Other Shares or shares to be sold for the account of AMBI.
Thereafter, Other Shares and shares to be sold for the account
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of AMBI may be included pro rata on the basis of the number of Other Shares and
shares to be sold for the account of AMBI originally requested to be included in
such registration to the extent that inclusion of such shares will not have a
material adverse effect on the offering or the liquidity, the trading patterns
or the market price of AMBI Common Stock.
(b) If BP requested to be included in the registration pursuant to Section
1.3 hereof then, after including the number of Registerable Securities necessary
to reach the twenty-five percent (25%) minimum BP participation set forth in
Section 1.3, all additional Registerable Securities and all Other Shares shall
be included in the registration pro rata on the basis of the number of
additional Registerable Securities and Other Shares requested to be included in
such registration.
(c) The number of Registrable Securities to be included in a registration
pursuant to this Agreement shall not be limited in order to include shares held
by shareholders with no registration rights or to include founder's stock or any
other shares of stock issued to employees, officers, directors, or consultants
of AMBI.
1.13 No Other Sales. Unless otherwise permitted by the provisions of this
Agreement, for a period of two years after the date of this Agreement BP will
not enter into an "option" or "put" arrangement with any third party to sell
shares of AMBI Common Stock (or other securities convertible into or exercisable
into AMBI Common Stock).
1.14 Standstill. Without the prior written consent of the Board, for a
period of two years after the date of this Agreement, BP will not (i) acquire,
offer to acquire or agree to acquire, directly or indirectly, by purchase or
otherwise, any voting securities or direct or indirect rights or options to
acquire any AMBI Common Stock (or other securities convertible into or
exercisable into AMBI Common Stock), (ii) make, or in any way participate,
directly or indirectly, in any "solicitation" of "proxies" to vote any
securities of AMBI (as such terms are used in the proxy rules of the
Commission), provided that, for so long as BP shall have the right to nominate
one person for election to the Board pursuant to Section 3.2(b) hereof, BP may
solicit proxies or seek to advise or influence any person with respect to the
voting of any securities of AMBI for any such one BP nominee to the Board, or
(iii) conduct alone or in concert with others a hostile takeover of AMBI.
Notwithstanding anything to the contrary set forth in this Section 1.14, BP may
conduct a tender offer (as such term is used in the rules of the Commission) for
the voting securities of AMBI, provided that such tender offer is for all, but
not less than all, of the issued and outstanding securities of AMBI and that
such tender offer is expressly conditioned upon the tender of at least 90% of
the issued and outstanding securities of AMBI.
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1.15 Extension of Term. In the event that BP requests any registration
pursuant to Section 1.2 and such registration is delayed due to the provisions
of Section 1.2(a)(B) or 1.2(b), the two year period set forth in Sections 1.2
and 1.3 shall be extended by the number of days of such delay. In the event
that, pursuant to any underwriting commitment or other arrangement, (i) BP's
right to request or be included in any registration pursuant to Sections 1.2 or
1.3 is suspended for any period, or (ii) BP is required to enter into a "market
stand-off" agreement which would prevent BP from selling or otherwise
transferring or disposing of any AMBI Common Stock for a period that is longer
than the shortest period for which such restrictions would apply pursuant to
Section 1.11 of this Agreement, then the two year period set forth in Sections
1.2 and 1.3 shall be extended by the number of days for which BP's registration
rights are suspended or by which such "market stand-off" exceeds the shortest
period provided for in Section 1.11. In the event that AMBI breaches any of the
covenants set forth in Sections 2.1 or 2.4 below, the two year period set forth
in Sections 1.2 and 1.3 shall be extended by the number of days that such breach
continues.
SECTION 2
Covenants of AMBI
AMBI hereby covenants and agrees as follows:
2.1 Private Placements. For a period of two years after the Completion
Date, AMBI will use commercially reasonable efforts to arrange for, on an
exclusive basis, the sale of the Private Placement Securities in one or more
transactions exempt from the registration requirements of the Securities Act,
upon notification by BP of its desire to sell the Private Placement Securities
and the receipt of a written opinion of an Underwriter stating that the sale of
such Private Placement Securities will not have a material adverse effect on the
liquidity, trading patterns or market price of AMBI Common Stock, it being
understood that BP is under no obligation to sell the Private Placement
Securities. Notwithstanding the foregoing, if BP is contacted by any person who
is interested in obtaining any portion of the Private Placement Securities from
BP, or if BP is interested in offering any portion of the Private Placement
Securities to any person, then AMBI and BP shall agree upon an approach or
strategy for such sale, and provided that such agreement is reached, BP may
arrange for such sale. At the request of any person who has purchased not less
than 25% of the Private Placement Securities (as presently constituted and
subject to any subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like), AMBI shall, as soon as reasonably practicable, file
a registration statement on Form S-3 with the Commission covering the Private
Placement Securities held by such person. If
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necessary, BP will make appropriate BP corporate officers or other key personnel
available to assist in a transaction. The reasonable expenses associated with
such a transaction incurred with BP's prior written consent will be the
responsibility of BP.
2.2 Basic Financial Information. So long as BP owns any Registrable
Securities, AMBI will furnish to BP, as soon as reasonably practicable, copies
of its annual reports on Form 10-K and its quarterly reports on Form 10-Q,
respectively.
2.3 Additional Information and Rights.
(a) AMBI will permit BP, so long as BP owns at least 5% of the issued and
outstanding shares of AMBI Common Stock (as presently constituted and subject to
subsequent adjustment for stock splits, stock dividends, reverse stock splits,
recapitalizations and the like) to discuss AMBI's affairs, finances and
accounts with AMBI's President and Chief Executive Officer, and with his/her
prior written consent, with other officers of AMBI, all at such reasonable times
and as often as any such person may reasonably request. AMBI shall cause such
officers to participate in such discussions in good faith and to promptly
respond to any reasonable inquiry made by BP.
(b) The provisions of Section 2.2 and this Section 2.3 shall not be in
limitation of any rights which BP may have with respect to the books and records
of AMBI and its subsidiaries, or to inspect their properties or discuss their
affairs, finances and accounts, under the laws of the jurisdictions in which
they are incorporated.
(c) Notwithstanding anything to the contrary in this Section 2, AMBI shall
not be obligated to provide, nor shall BP have access to, any information which
AMBI reasonably considers to be a trade secret or classified information. BP
hereby agrees, with respect to any confidential information received pursuant to
this Agreement and information derived therefrom, to hold such information in
strict confidence, to take all reasonable precautions to protect such
information and not to disclose any such information to any third party;
provided that the foregoing obligations shall not apply to such information as:
(i) is required to be disclosed by applicable law or regulation;
(ii) was publicly known prior to disclosure by AMBI of such
information to BP;
(iii) becomes publicly known, without fault on the part of BP,
subsequent to disclosure by AMBI of such information to BP;
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<PAGE>
(iv) is received by BP at any time from a source, other than AMBI,
lawfully having possession of and the right to disclose such information;
(v) was otherwise known by BP prior to disclosure by AMBI to BP of
such information; or
(vi) is independently developed by BP without use of such
information.
2.4 No Additional Registration Rights. During the period ending two years
(subject to extension pursuant to Section 1.15) after the date of this
Agreement, AMBI will not grant to any person the right to request that their
shares of AMBI Common Stock (or securities convertible into AMBI Common Stock)
be included in any underwritten public offering being conducted as a result of a
request by BP pursuant to Section 1.2 of this Agreement without the prior
written consent of BP.
SECTION 3
Covenants of BP
3.1 BP Insurance and Benefit Plans. So long as a person nominated by BP
has a seat on the Board and so long as BP owns 20% or more of the AMBI Common
Stock, BP will cause its affiliate Burns Philp Inc. ("BPI"), to the extent
permitted by BPI's insurers, to include AMBI and its subsidiaries in BPI's
employee health insurance and other benefit plan coverages at a charge to AMBI
equal to the incremental cost to BPI for such inclusion. BP will cause BPI to
use commercially reasonable efforts to obtain for AMBI on competitive terms from
BPI's insurers, other insurance coverages as AMBI may request, e.g. D & O
Insurance and product liability insurance. Nothing in this Section 3.1 shall
obligate BP or any of its affiliates to take any action that would have an
adverse effect on any such insurance or benefit plans.
3.2 Voting of Shares.
(a) So long as BP owns 10% or more of the AMBI Common Stock, BP will at
each annual and special meeting of AMBI shareholders which occurs during the
two-year period after the Completion Date vote its shares in favor of Fredric D.
Price and one nominee of Fredric D. Price to the Board.
(b) So long as BP owns at least 20% of the issued and outstanding shares
of AMBI Common Stock, BP shall have the right to nominate one (1) person for
election to the Board.
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SECTION 4
Miscellaneous
4.1 Governing law. This Agreement shall be governed in all respects by the
laws of the State of New York, as if entered into by and between New York
residents exclusively for performance entirely within New York.
4.2 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3 Entire Agreement; Amendment; Waiver. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof. Neither this Agreement nor any term hereof may
be amended, waived, discharged or terminated, except by a written instrument
signed by AMBI and BP, and any such amendment, waiver, discharge or termination
shall be binding on BP, but in no event shall the obligations of BP hereunder be
materially increased, except upon the written consent of BP.
4.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally by hand or nationally
recognized courier addressed as follows:
If to AMBI: Applied Microbiology, Inc.
771 Old Saw Mill River Road
Tarrytown, New York 10591
Attn: Benjamin T. Sporn
Vice President - Legal
with a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Richard R. Plumridge, Esq.
If to BP: Burns Philp & Co. Ltd.
7 Bridge Street
Sydney, NSW 2000, Australia
Attn: The Company Secretary
Fax: 61 2 9247 8391
with a copy to: Burns Philp Food, Inc.
222 Sutter Street, 9th Floor
San Francisco, CA 94108
Attn: Lorraine E. Vega, Esq.
Fax: (415) 296-5746
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<PAGE>
or at such other address as AMBI or BP shall have furnished to each other in
writing. All such notices and other written communications shall be effective
(i) if mailed, five (5) days after mailing and (ii) if delivered, upon delivery.
4.5 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to BP, upon any breach or default of AMBI under this
Agreement shall impair any such right, power or remedy of BP nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default therefore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of BP of any breach or default
under this Agreement or any waiver on the part of BP of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to BP, shall be cumulative and
not alternative.
4.6 Separability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
4.7 Information Confidential. BP acknowledges that the information
received by it pursuant hereto may be confidential and for its use only, and it
will not use such confidential information in violation of the Exchange Act or
reproduce, disclose or disseminate such information to any other person (other
than its employees or agents having a need to know the contents of such
information, and its attorneys), except in connection with the exercise of
rights under this Agreement or the Share Purchase Agreement or related documents
or in exercising any remedies or enforcing any rights thereunder, unless AMBI
has made such information available to the public generally or BP is required to
disclose such information by a governmental body.
4.8 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
4.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
4.10 Resolution of Disputes.
(a) Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement, or
the breach, termination or
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validity thereof, by negotiations between executives who have authority to
settle the controversy. Any party may give the other party written notice of any
dispute not resolved in the normal course of business. Within 20 days after
delivery of such notice, executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within 60 days of the disputing
party's notice, or if the parties fail to meet within 20 days, either party may
initiate arbitration of the controversy or claim as provided hereinafter.
If a negotiator intends to be accompanied at a meeting by an attorney, the
other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
(b) Arbitration. If a dispute arising out of or relating to this
Agreement, or the breach, termination or validity thereof, has not been resolved
by negotiation as provided herein, it shall be settled by arbitration in
accordance with the Center for Public Resources Institute for Dispute Resolution
Rules for Non-Administered Arbitration of Business Disputes. The arbitration
shall take place in New York City, New York, shall be governed by the United
States Arbitration Act, 9 U.S.C.
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Sections 1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Investors Rights
Agreement effective as of the day and year first above written.
APPLIED MICROBIOLOGY, INC.
By:____________________________
Name: Benjamin Sporn
Title: Vice President
BURNS PHILP MICROBIOLOGY PTY
LIMITED
By:____________________________
Name: Lorraine E. Vega
Title: Attorney-in-Fact
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REVOLVING LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
BURNS PHILP INC., as Lender
AND
APPLIED MICROBIOLOGY, INC., as Borrower
DATED AS OF DECEMBER 12, 1996
$2,500,000
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions................................................... 1
ARTICLE 2 Revolving Loan................................................ 4
2.1 Revolving Loan................................................ 4
2.2 Procedure for Loans........................................... 5
2.3 Interest...................................................... 5
(a) Interest............................................. 5
(b) Accrual and Computation of Interest.................. 5
(c) Interest Payment..................................... 5
2.4 Maximum Interest Rate......................................... 5
2.5 Repayment..................................................... 6
2.6 Default Interest Rate......................................... 6
ARTICLE 3 Grant of Security Interest.................................... 6
3.1 Grant of Security Interest.................................... 6
3.2 Lender's Appointment as Attorney-in-Fact...................... 7
(a) Appointment.......................................... 7
(b) Limitation on Exercise; Appointment Irrevocable...... 8
(c) Accountability of Lender............................. 9
(d) Performance by Lender of Borrower's
Obligations.......................................... 9
ARTICLE 4 Conditions Precedent.......................................... 9
4.1 Initial Loan.................................................. 9
(a) Authority and Good Standing.......................... 9
(b) Security Interest.................................... 9
(c) Other Documents...................................... 9
4.2 All Loans..................................................... 10
(a) No Existing Default.................................. 10
(b) Representations and Warranties Correct............... 10
(c) Notice of Borrowing.................................. 10
ARTICLE 5 Representations and Warranties................................ 10
5.1 Representations and Warranties of Borrower.................... 10
(a) Due Organization..................................... 10
(b) Chief Executive Office; Name......................... 10
(c) Requisite Power...................................... 10
(d) Corporate Action..................................... 11
(e) Authorization........................................ 11
(f) Binding Nature....................................... 11
(g) No Conflict.......................................... 11
(h) Litigation and Contingent Liabilities................ 11
(i) No Event of Default.................................. 11
(j) Compliance With Laws................................. 11
(k) Title................................................ 11
(l) No Other Security Interests.......................... 12
(m) First Priority Perfected Security Interest........... 12
(n) Taxes................................................ 12
(o) Financial Condition.................................. 12
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(p) Insurance............................................ 13
(q) Full Disclosure...................................... 13
(r) Condition of Patents................................. 13
5.2 Representations and Warranties of Lender...................... 13
(a) Due Organization and Requisite Power................. 13
(b) Corporate Action and Execution....................... 13
(c) No Conflict.......................................... 14
ARTICLE 6 Covenants..................................................... 14
6.1 Further Assurances; Pledge of Instruments..................... 14
6.2 Financial Information......................................... 14
6.3 Maintenance of Records........................................ 14
6.4 Maintenance of Existence...................................... 14
6.5 Compliance With Laws.......................................... 15
6.6 Taxes......................................................... 15
6.7 Authorizations................................................ 15
6.8 Notices....................................................... 15
6.9 Insurance..................................................... 15
6.10 Limitation on Liens on Collateral............................. 16
6.11 Further Identification of Collateral.......................... 16
6.12 Continuous Perfection......................................... 16
6.13 Limitation on Certain Actions................................. 16
6.14 Restrictions on Future Agreements............................. 16
6.15 New Patents................................................... 17
6.16 Lender's Right to Update List of Patents...................... 17
6.17 Covenants Relating to Patents................................. 17
ARTICLE 7 Events of Default............................................. 18
7.1 Events of Default............................................. 18
(a) Payments............................................. 18
(b) Other Covenants and Agreements....................... 18
(c) Warranties........................................... 18
(d) Bankruptcy........................................... 18
7.2 Termination of Commitment and Acceleration.................... 19
7.3 Other Remedies................................................ 19
7.4 Expenses of Lender............................................ 20
7.5 Waiver........................................................ 20
7.6 Distribution of Proceeds of Sale.............................. 21
7.7 Remedies Cumulative........................................... 21
ARTICLE 8 Miscellaneous................................................. 21
8.1 Successors and Assigns and Sale of Interests.................. 21
8.2 No Implied Waiver............................................. 22
8.3 Amendments; Waivers........................................... 22
8.4 Severability.................................................. 22
8.5 Notices....................................................... 22
8.6 Interpretation................................................ 23
8.7 Governing Law................................................. 23
8.8 Consent to Jurisdiction....................................... 23
8.9 Counterparts.................................................. 24
8.10 Headings...................................................... 24
8.11 Release....................................................... 24
8.12 Confidentiality............................................... 24
8.13 Resolution of Disputes........................................ 24
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<PAGE>
(a) Negotiation Between Executives............................... 24
(b) Arbitration.................................................. 25
Exhibit A - Notice of Borrowing
Exhibit B - Collateral Assignment
Schedule 1 - Collateral
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REVOLVING LOAN AND SECURITY AGREEMENT
THIS REVOLVING LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of
the 12th day of December, 1996, by and between BURNS PHILP INC., a Delaware
corporation (together with its permitted assignees, "Lender"), and APPLIED
MICROBIOLOGY, INC., a New York corporation ("Borrower"),
W I T N E S S E T H:
WHEREAS, Borrower, Lender's affiliate Burns Philp (UK) plc, and Aplin &
Barrett Limited are parties to that certain Share Purchase Agreement dated
December 12, 1996 (the "Share Purchase Agreement"); and
WHEREAS, in connection with the Share Purchase Agreement, Lender has
agreed to lend on a revolving basis to Borrower, subject to the terms and
conditions hereof, and Borrower desires to obtain from Lender, loans not to
exceed in the aggregate at any time two million five hundred thousand dollars
($2,500,000):
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
In addition to any terms defined elsewhere in this Agreement, the
following terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Acceleration" means that the Loans shall have become due and payable
prior to their stated maturity pursuant to Section 7.2 hereof.
"Agreement" means this Revolving Loan and Security Agreement, as from time
to time amended.
"Borrower" shall have the meaning set forth in the heading to this
Agreement.
"Borrowing Date" shall have the meaning assigned to such term in Section
2.2(a) hereof.
"Business Day" means a day when Lender and banks are customarily open for
business in New York City, New York.
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"Citibank Prime Rate" means the rate of interest publicly announced from
time to time by Citibank, N.A. in New York City, New York, as its "prime rate."
Any change in the prime rate announced by Citibank N.A. shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Closing Date" means the date on which each of the conditions precedent
set forth in Article 4 hereof have been fulfilled to Lender's satisfaction and
the initial Loan is made; provided, however, that in no event shall the Closing
Date occur prior to the Final Payment Date.
"Collateral" shall have the meaning assigned to such term in Section 3.1
of this Agreement.
"Event of Default" shall have the meaning assigned to such term in Section
7.1 of this Agreement.
"Final Payment Date" shall have the meaning assigned to such term in the
Share Purchase Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Governmental Requirements" means all legal requirements in effect from
time to time including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, approvals, notices, demand
letters, directions and requirements of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers, and
all instruments of record, foreseen or unforeseen, ordinary or extraordinary,
including but not limited to any change in any law, regulation or the
interpretation thereof by any foreign or domestic governmental or other
authority (whether or not having the force of law), relating now or at any time
heretofore or hereafter to the business or operations of Borrower or to any of
the property owned, leased or used by Borrower, including, without limitation,
the development, design, construction, acquisition, start-up, ownership and
operation and maintenance of property.
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"Incipient Default" shall have the meaning set forth in Section 4.2(a)
hereof.
"Interest Payment Date" means the first day of each calendar month, the
first of which shall be the first such day after the Closing Date, provided
that, if any such date is not a Business Day, the relevant Interest Payment Date
shall be the next succeeding Business Day.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof or any agreement to give any security
interest.)
"Loans" shall have the meaning set forth in Section 2.1 hereof.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial condition of Borrower or any of its
Subsidiaries taken as a whole, (ii) the ability of Borrower to pay the
Obligations in accordance with their terms, or (iii) the value of the Collateral
or the perfection and priority of Lender's security interest therein.
"Maturity" means any date on which the Loans or any portion thereof become
due and payable, whether as stated or by Acceleration or otherwise.
"Maturity Date" means June 30, 1999.
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties owing to Lender by Borrower, of any kind or nature, present
or future, arising under this Agreement and whether or not evidenced by any
note, guaranty or other instrument.
"Patent Rights" means letters patent issued by the United States or any
other country, and applications for letters patent of the United States or any
other country, including, without limitation, applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country.
"Patents" means all of the following: (i) all Patent Rights in which the
Borrower has title (ownership) as of the date of this Agreement, (ii) all Patent
Rights in which the Borrower hereafter acquires title (ownership) to the extent
that such Patent Rights relate to or represent improvements in or further
developments of the nisin technology covered by the Patent Rights described in
clause (i), and (iii) all reissues, continuations, continuations-in-part or
extensions of any of the foregoing.
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"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including without limitation, any
instrumentality, division, agency, body or department thereof).
"Proceeds" means "proceeds," as such term is defined in section 9-306(1)
of the UCC. In addition, the term "Proceeds" shall include, without limitation,
all accounts, chattel paper, deposit accounts, instruments, equipment,
inventory, consumer goods, farm products, documents, general intangibles and
other Proceeds which arise from the sale, lease, transfer or other use or
disposition of any kind of Collateral or Proceeds and all Proceeds of any type
described above acquired with cash Proceeds.
"Share Purchase Agreement" shall have the meaning given it in the first
recital to this Agreement.
"Subsidiary" of Borrower means any corporation, association, partnership,
joint venture or other business entity of which more than fifty percent (50%) of
the voting stock or other equity interests is owned or controlled directly or
indirectly by Borrower, or one or more of the Subsidiaries of Borrower, or a
combination thereof.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
Each accounting term not defined herein and each accounting term partly defined
herein to the extent not defined shall have the meaning given to it under GAAP.
Each term used herein and not otherwise defined shall have the meaning given
such term in the UCC if any.
ARTICLE 2
Revolving Loan
2.1 Revolving Loan. Subject to the terms and conditions of this Agreement,
Lender agrees to make loans to the Borrower (the "Loans") from time to time on
and after the Final Payment Date and before the Maturity Date in an aggregate
principal
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amount at any one time outstanding not to exceed two million five hundred
thousand dollars ($2,500,000). During such period the Borrower may borrow, repay
the Loans (in whole or in part) and reborrow any part of the Loans repaid;
provided that borrowings and prepayments shall be in a minimum principal amount
of two hundred fifty thousand dollars ($250,000) and not more than one borrowing
shall be permitted in any consecutive ninety-day period.
2.2 Procedure for Loans.
(a) Borrower may borrow pursuant to this Article 2 by and through
Borrower's giving Lender not less than five (5) Business Day's written notice of
its request for a Loan, such notice to be substantially in the form of Exhibit A
attached hereto. Such notice shall specify the date of the proposed borrowing
(the "Borrowing Date"). Upon satisfaction of the conditions set forth in Article
4 hereof, Lender shall disburse the Loan requested in such notice in immediately
available funds to Borrower an account designated by Borrower by written notice
to Lender.
(b) In lieu of delivering the written notice described above, Borrower may
give Lender telephonic notice of any request for borrowing by the time required
under this Section 2.2; provided, that such telephonic notice shall be confirmed
in writing by delivery (which may include telecopy transmission) of a written
notice to Lender by the close of business on the date of such telephonic notice.
2.3 Interest.
(a) Interest. The Loans shall bear interest from the date of disbursement
on the outstanding principal amount thereof until the earlier of an Event of
Default or the date upon which such amount shall become due and payable (whether
upon Maturity, by Acceleration or otherwise) at a rate per annum equal to the
Citibank Prime Rate.
(b) Accrual and Computation of Interest. Interest shall accrue daily and
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days.
(c) Interest Payment. Interest on the Loans shall be payable monthly in
arrears on each Interest Payment Date. Interest on the Loans shall also be
payable on the date of any prepayment as to the principal amount so repaid and
on Maturity.
2.4 Maximum Interest Rate. Nothing in this Agreement shall require
Borrower to pay interest at a rate exceeding the maximum amount permitted by
applicable law to be charged by Lender. If the amount of interest that accrues
hereunder during any calendar month would exceed such maximum rate, the amount
of interest that accrues hereunder and is added to the principal
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amount of the Loans with respect to such calendar month or is paid by Borrower
with respect to such calendar month, as the case may be, shall be automatically
reduced to the maximum permissible amount. If the amount of interest that
accrues hereunder during any calendar month is reduced pursuant to the previous
sentence and the amount of interest that accrues hereunder during any subsequent
calendar month would be less than the maximum rate permitted by applicable law,
then the amount of interest that accrues hereunder and is added to the principal
amount of the Loans with respect to such calendar month or is paid by Borrower
with respect to such calendar month, as the case may be, shall be automatically
increased to the maximum permissible amount; provided that at no time shall the
aggregate amount by which accrued interest has been increased pursuant to this
sentence exceed the aggregate amount by which accrued interest has been reduced
pursuant to the preceding sentence.
2.5 Repayment. The Loans shall be repaid in full on the Maturity Date. All
payments of principal and interest shall be in dollars and in immediately
available funds to Lender at the following account - Citibank - N.Y., 399 Park
Avenue, ABA #021000089, Account # 3846-6244, Favour: Burns Philp Inc.or such
other account as Lender shall designate by written notice to Borrower and shall
be made prior to 4:00 P.M. New York City time. All payments received after 4:00
P.M. New York City time shall be considered to have been received the next
Business Day.
2.6 Default Interest Rate. After the earlier of an Event of Default or
Maturity (whether by Acceleration or otherwise) of the Loans, the Loans shall
bear interest, payable on demand, at a rate per annum (on the basis of a 360-day
year for the actual number of days involved) equal to the rate of interest
specified in Section 2.3(a) plus three percent (3%) (the "Default Rate"),
subject to Section 2.4. Any other amounts due and owing hereunder which are not
paid when due shall bear interest at the Default Rate from the date due until
paid.
ARTICLE 3
Grant of Security Interest
3.1 Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at stated maturity, by
Acceleration or otherwise) of all the Obligations, Borrower hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers to Lender, and hereby
grants to Lender a security interest in, all of Borrower's right, title and
interest in, to and under any Patents, including, without limitation, the
Patents listed on Schedule 1 attached hereto and made a part hereof, and all
Proceeds thereof (all of which being hereinafter collectively called the
"Collateral").
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3.2 Lender's Appointment as Attorney-in-Fact.
(a) Appointment. Borrower hereby irrevocably constitutes and appoints
Lender, and any officer or agent thereof, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of Borrower and in the name of Borrower or in its own name, from
time to time in Lender's discretion, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
advisable in Lender's reasonable opinion to perfect, protect or enforce the
security interest granted hereunder and, without limiting the generality of the
foregoing, hereby gives Lender the power and right, on behalf of Borrower,
without notice to or assent by Borrower, to do the following:
(i) To ask, demand, collect, receive and give acquittances and
receipts for any and all monies due or to become due under any Collateral
and, in the name of Borrower, in its own name or otherwise to take
possession of, endorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of monies due under any Collateral
and to file any claim or to take or commence any other action or
proceeding in any court of law or equity or otherwise deemed appropriate
by Lender for the purpose of collecting any and all such monies due under
any Collateral whenever payable;
(ii) To pay or discharge taxes, Liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums therefor and the
costs thereof;
(iii) To (1) direct any person liable for any payment under or in
respect of any of the Collateral to make payment of any and all monies due
or to become due thereunder directly to Lender or as Lender shall direct,
(2) receive payment of any and all monies, claims and other amounts due or
to become due at any time arising out of or in respect of any Collateral;
(3) commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral, (4) defend any suit, action or proceeding brought against
Borrower with respect to any Collateral, (5) settle, compromise or adjust
any suit, action or proceeding described in clause (4) above and, in
connection therewith, give such
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discharges or releases as Lender may deem appropriate, (6) license or, to
the extent permitted by an applicable license, sublicense, whether
general, special or otherwise, and whether on an exclusive or nonexclusive
basis, any Patent throughout the world for such term or terms, on such
conditions and in such manner as Lender shall in its discretion determine,
(7) sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, (8)
execute on behalf of Borrower all applications, documents and instruments
necessary for Lender to assign, convey or otherwise transfer title in or
dispose of the Patents to any third person, and (9) execute on behalf of
Borrower and file any financing statement or amendment necessary to
preserve or perfect Lender's security interests and to do, at Lender's
option and Borrower's expense, at any time, or from time to time, all acts
and things which Lender reasonably deems necessary to protect, preserve or
realize upon the Collateral and Lender's Lien therein in order to effect
the intent of this Agreement, all as fully and effectively as Borrower
might do; and
(iv) To prosecute patent applications for patents in the U.S. Patent
and Trademark Office, and any other Patent Office, and to execute and file
documents regarding any such prosecution, and to maintain and enforce any
patents, and to transact any business before the U.S. Patent and Trademark
Office and any other Patent Office that Lender may find necessary or
advisable for the protection and maintenance of the Collateral, and to act
in the name of the Borrower in any lawsuit, re-examination, reissue, or
opposition, or other legal proceeding regarding the Patent or to maintain
the Collateral, and to license and assign or otherwise commercialize the
Patents.
(b) Limitation on Exercise; Appointment Irrevocable. Lender agrees that,
except upon the occurrence and during the continuation of an Event of Default,
it will forebear from exercising the power of attorney or any rights granted to
Lender pursuant to this Section 3.2 hereof. Borrower hereby ratifies, to the
extent permitted by law, all that said attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted pursuant to this Section
3.2 hereof is a power coupled with an interest and shall be irrevocable until
the Obligations are paid or otherwise satisfied in full.
(c) Accountability of Lender. The powers conferred on Lender hereunder are
solely to protect Lender's interests in the Collateral and shall not impose any
duty upon it to exercise any
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such powers. Lender shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees, agents or representatives shall be
responsible to Borrower for any act or failure to act, except for its own gross
negligence or willful misconduct.
(d) Performance by Lender of Borrower's Obligations. If Borrower fails to
perform or comply with any of its agreements contained herein necessary or
advisable in the reasonable opinion of Lender for perfecting or protecting the
Collateral or the security interest granted to Lender therein and Lender, as
provided for by the terms of this Agreement, shall perform or comply, or
otherwise cause performance or compliance, with such agreement, and provided
that Lender shall first have requested that Borrower take such necessary
actions, the reasonable expenses, including attorneys' fees, of Lender incurred
in connection with such performance or compliance, together with interest
thereon at a rate per annum equal to the Citibank Prime Rate, as the case may
be, shall be payable by Borrower to Lender on demand and shall constitute
Obligations secured hereby.
ARTICLE 4
Conditions Precedent
4.1 Initial Loan. The obligation of Lender to make its initial Loan is, in
addition to the conditions precedent specified in Section 4.2 hereof, subject to
condition that the Lender shall have received the following, in form and
substance satisfactory to Lender:
(a) Authority and Good Standing. Such instruments or documents as Lender
may reasonably request relating to the existence and good standing of Borrower
or the authority for execution, delivery and performance of this Agreement,
dated and in full force and effect on the Closing Date;
(b) Security Interest. Evidence that all actions necessary or, in the
reasonable opinion of Lender, desirable to perfect and protect the first
priority security interest granted hereunder have been taken, including, without
limitation, the recording of an agreement with the U.S. Patent and Trademark
Office substantially in the form of Exhibit B attached hereto; and
(c) Other Documents. Such other approvals, opinions or documents as Lender
may reasonably request in connection with the execution of this Agreement by the
Borrower or the perfection of the security interest created hereby.
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4.2 All Loans. The obligation of Lender to make its initial Loan and each
subsequent Loan is subject to the following further conditions precedent:
(a) No Existing Default. No Event of Default or event which, upon the
lapse of time or the giving of notice or both, would constitute an Event of
Default (an "Incipient Default") shall exist on the Borrowing Date;
(b) Representations and Warranties Correct. The representations and
warranties set forth in Section 5.1 shall be true and correct on the Borrowing
Date; and
(c) Notice of Borrowing. Lender shall have received a notice of borrowing
in substantially the form of Exhibit A and the statements certified in such
notice shall be true and correct.
ARTICLE 5
Representations and Warranties
5.1 Representations and Warranties of Borrower. In order to induce Lender
to enter into or become a party to this Agreement and to make the Loans,
Borrower makes the following representations and warranties to Lender as of the
date hereof, the Closing Date and each Borrowing Date:
(a) Due Organization. Borrower and each of its Subsidiaries is (i) a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and (ii) duly qualified as a foreign
corporation, licensed and in good standing under the laws of each jurisdiction
in which the nature of its business requires it to be so qualified, or in which
failure to be so qualified and in good standing would have a Material Adverse
Effect.
(b) Chief Executive Office; Name. Borrower's chief executive office (as
that term is used in Article 9 of the UCC) and the place where Borrower
maintains its records concerning the Collateral is 771 Old Saw Mill River Road,
Tarrytown, New York 10591. Except for changes made in accordance with the
provisions of Section 6.12 hereof, Borrower's legal name is, and has at all
times during the five-year period preceding the date of this Agreement has been,
Applied Microbiology, Inc.
(c) Requisite Power. Borrower has all requisite power and all material
governmental licenses, permits, authorizations, consents and approvals necessary
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted. Borrower has all requisite corporate power to
borrow the sums provided for in this Agreement, and
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Borrower has all requisite corporate power to execute, deliver and issue this
Agreement.
(d) Corporate Action. All corporate actions on the part of Borrower
necessary for the authorization, execution and delivery and performance of this
Agreement, have been duly taken and are in full force and effect.
(e) Authorization. Each Person executing this Agreement on behalf of
Borrower is fully authorized to execute and deliver the same.
(f) Binding Nature. This Agreement is a legal, valid and binding
obligation of Borrower, in full force and effect and enforceable in accordance
with its respective terms, except for the effect of applicable laws regarding
bankruptcy or insolvency.
(g) No Conflict. Neither the execution nor delivery of this Agreement, nor
fulfillment of nor compliance with the terms and provisions hereof or thereof
will (a) conflict with or result in a breach of any Governmental Requirement, or
of any agreement or instrument binding upon Borrower, or conflict with or result
in a breach of any provision of the articles of incorporation or bylaws of
Borrower, except to the extent that any such conflicts or breaches could not in
the aggregate reasonably be expected to have a Material Adverse Effect, or (b)
result in the creation or imposition of any Lien upon any of the Collateral
pursuant to any such agreement or instrument. No authorization, consent or
approval or other action by, and no notice to or filing with, any Governmental
Authority is required to be obtained or made by Borrower other than those which
will be obtained or made prior to the Closing Date, for the due execution,
delivery and performance by Borrower of this Agreement or for the validity or
enforceability thereof.
(h) Litigation and Contingent Liabilities. There is no action, suit,
investigation, tax claim or proceeding pending or, to the knowledge of Borrower,
threatened in writing against or affecting the Patents, before any court,
arbitrator or administrative or governmental body. To the knowledge of Borrower,
no third party is infringing on any of the Patents.
(i) No Event of Default. No Event of Default has occurred and is
continuing or would result from the execution of this Agreement.
(j) Compliance With Laws. Borrower and its Subsidiaries are in compliance
with all Governmental Requirements applicable to the Collateral with only such
exceptions as in the aggregate have no Material Adverse Effect.
(k) Title. Except Liens granted to Lender, Borrower is the sole legal and
equitable owner of each item of the
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Collateral, having good, marketable and insurable title thereto free and clear
of any and all Liens. Schedule 1 hereto contains a complete and correct list of
all Patents in which Borrower has any rights.
(l) No Other Security Interests. No effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is on file or of record in
any public office, except any such statement or instrument filed with respect to
the security interests granted pursuant to this Agreement.
(m) First Priority Perfected Security Interest. As of the Closing Date and
each Borrowing Date thereafter, this Agreement creates a valid security interest
in all of the Collateral in which Borrower now or at any time hereafter has
rights, and all filings and other action necessary or desirable to perfect and
protect such security interest as a first priority security interest have been
duly taken.
(n) Taxes. Borrower and its Subsidiaries have filed all federal and other
material tax returns and reports required to be filed and have paid all federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon the Collateral except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no notice of Lien has been filed or
recorded.
(o) Financial Condition.
(i) The audited consolidated financial statements of financial condition
of Borrower and its Subsidiaries dated June 30, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the fiscal year ended on that date:
(1) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(2) are complete, accurate and fairly present the financial
condition of Borrower and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(3) show all material indebtedness and other liabilities, direct or
contingent of Borrower and its consolidated Subsidiaries as of the date
thereof (including liabilities for taxes and material commitments).
(ii) Since June 30, 1996, there has been no Material Adverse Effect.
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(p) Insurance. The properties of Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as is customarily carried on by
companies engaged in similar businesses and owning similar properties in
localities where Borrower or such Subsidiary operates.
(q) Full Disclosure. None of the representations or warranties made by
Borrower under this Agreement as of the date of such representations and
warranties, and none of the statements contained in each exhibit, report,
statement or certificate furnished by or on behalf of Borrower or any of its
Subsidiaries pursuant to this Agreement, contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading.
(r) Condition of Patents. All the Patents are valid and enforceable, and
are not unenforceable due to inequitable conduct or otherwise. To the knowledge
of Borrower, there is no material prior art, disclosure, public use, or on sale
activity, that was not properly disclosed to the U.S. Patent and Trademark
Office during prosecution of the Patents. To the knowledge of Borrower, there is
no public use, public disclosure, or on sale activity that could invalidate any
Patent or make any Patent unenforceable. The best mode for practicing the
invention covered by each Patent is taught in the specification of each Patent.
All actual inventors of each Patent are duly listed on each Patent. None of the
Patents are subject to any license or other agreement except agreements that are
permitted under Section 6.14 hereof or, with respect to agreements entered into
prior to the date hereof, would have been permitted under Section 6.14 had they
been entered into after the date hereof.
5.2 Representations and Warranties of Lender. In order to induce the
Borrower to enter into and become a party to this Agreement, the Lender makes
the following representations and warranties to the Borrower as of the date of
this Agreement, the Closing Date and each Borrowing Date:
(a) Due Organization and Requisite Power. Lender is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Lender has all requisite corporate power
and authority necessary to lend to the Borrower the sums provided for in this
Agreement.
(b) Corporate Action and Execution. Lender has taken all corporate action
necessary for the authorization, execution, delivery and performance of this
Agreement. This Agreement is a legal, valid and binding obligation of the Lender
enforceable in accordance with its terms.
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(c) No Conflict. Neither the execution nor the delivery nor the
performance of this Agreement by the Lender will violate or otherwise contravene
the Lender's certificate of incorporation or bylaws or the terms of any
agreement or any approvals or licenses (including governmental approvals) the
breach of which would invalidate or prevent the Lender from making any Loans
made or to be made pursuant to this Agreement.
ARTICLE 6
Covenants
Unless Lender shall agree in writing otherwise, Borrower shall comply with
the following provisions so long as any Obligation is outstanding or Lender has
any commitment to lend hereunder:
6.1 Further Assurances; Pledge of Instruments. At any time and from time
to time, upon the written request of Lender, and at the sole expense of
Borrower, Borrower shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem necessary or advisable to perfect and protect the security
interest granted hereby or for the purpose of enforcing such security interest,
including, without limitation, filing any financing or continuation statements
under the UCC or recording any appropriate documentation with the United States
Patent and Trademark Office to perfect and protect the Liens and security
interests granted hereby. Borrower hereby irrevocably constitutes and appoints
Lender and any officer or agent thereof, as its true and lawful
attorney-in-fact, with full irrevocable power and authority to execute and file
any such financing or continuation statement or other documentation on behalf of
Borrower.
6.2 Financial Information. As soon as reasonably practicable, Borrower
shall furnish to Lender copies of its annual reports on Form 10-K and its
quarterly reports on Form 10-Q, respectively, and any other documents filed by
Lender with the Securities and Exchange Commission.
6.3 Maintenance of Records. Borrower shall keep and maintain at its own
cost and expense complete and accurate records of the Collateral.
6.4 Maintenance of Existence. Borrower shall, and shall cause each of its
Subsidiaries to, preserve and maintain (a) its corporate existence and, (b) all
of its licenses, privileges and franchises, qualifications to do business and
other rights necessary or advisable in the normal course of its businesses,
except to the extent that the failure to preserve and maintain such rights could
not reasonably be expected to have a Material Adverse Effect.
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6.5 Compliance With Laws. Borrower shall, and shall cause each of its
Subsidiaries to, comply with all Governmental Requirements, except where the
failure to do so would not have a Material Adverse Effect.
6.6 Taxes. Borrower shall, and shall cause each of its Subsidiaries to,
pay and discharge when due any and all assessments and real and personal
property taxes, including, but not limited to, federal and state taxes imposed
on the Collateral, except as may be contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves in accordance
with GAAP.
6.7 Authorizations. Borrower shall obtain, make and keep in full force and
effect all authorizations from and registrations with Governmental Authorities
that may be required for the validity and enforceability of this Agreement
against Borrower.
6.8 Notices. Borrower shall advise Lender promptly upon becoming aware of
the same, in reasonable detail, of:
(a) the occurrence of any Incipient Default or Event of Default
hereunder;
(b) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements of Lender or any of its Subsidiaries
delivered to Lender pursuant to Section 6.2;
(c) any Lien, other than the Liens granted pursuant to this
Agreement, attaching to or asserted against any of the Collateral;
(d) any material change in the composition of the Collateral;
(e) the occurrence of any other event which would have a material
adverse effect on the aggregate value of the Collateral or on the Liens
created hereunder; and
(f) the commencement of, or any material development in, any
litigation or proceeding affecting Lender or any of its Subsidiaries in
which injunctive or similar relief is sought and which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect, or in which the relief sought is an injunction or other stay of
the performance of this Agreement or the operations of Borrower or any of
its Subsidiaries.
6.9 Insurance. Borrower shall maintain, and shall cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its properties and business against loss or damage of the kinds customarily
insured
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against by Persons engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar circumstances by such
other Persons, including workers' compensation insurance, public liability and
property and casualty insurance.
6.10 Limitation on Liens on Collateral. Borrower shall not create, permit
or suffer to exist, and shall defend the Collateral against and take such other
action as is necessary to remove, any Lien on the Collateral except the Liens
granted pursuant to this Agreement.
6.11 Further Identification of Collateral. Borrower shall, if so requested
by Lender, furnish to Lender, as often as Lender shall reasonably request,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in reasonable detail.
6.12 Continuous Perfection. Borrower shall not change its name, identity
or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of section 9-402(7) of the UCC (or any other then applicable
provision of the UCC) unless Borrower shall have given Lender at least thirty
(30) days' prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by Lender to amend such financing statement or continuation statement
so that it is not seriously misleading. Borrower shall not change its chief
executive office or remove or cause to be removed the records concerning the
Collateral from 771 Old Saw Mill River Road, Tarrytown, New York 10591, unless
it shall have given Lender at least thirty (30) days' prior written notice
thereof.
6.13 Limitation on Certain Actions. Subject to Section 6.14, without the
prior written consent of Lender, Borrower will not sell, assign, lease,
transfer, exchange or otherwise dispose of, or grant any option with respect to,
the Collateral or any interest therein, or attempt or contract to do so.
6.14 Restrictions on Future Agreements. Borrower agrees that, until all of
the Obligations shall have been satisfied in full, it will not enter into any
agreement (such as, by way of example, a license agreement) that is inconsistent
with Borrower's obligations under this Agreement, without Lender's prior written
consent; provided, however, that Borrower may enter into license agreements with
respect to the Patents without the prior written consent of Lender as long as
such agreements are on standard, commercially reasonable, arm's length terms.
Borrower shall notify Lender promptly after entering into any such license
agreement and shall provide
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copies of any such license agreements to Lender upon request (subject to
redaction of financial terms). In the event of an exercise of remedies by the
Lender under this Agreement and any resultant extinguishment of the Borrower's
rights in the Patents and Applications, any such licenses shall continue in full
force and effect and Lender or any transferees through Lender as a result of
such exercise of remedies shall succeed to Borrower's interest in such licenses.
6.15 New Patents. If, before the Obligations shall have been satisfied in
full, Borrower shall obtain rights to any new Patents, the provisions of Section
3.1 of this Agreement shall automatically apply thereto and Borrower shall give
to Lender prompt written notice thereof.
6.16 Lender's Right to Update List of Patents. Borrower hereby authorizes
Lender to modify this Agreement by amending Schedule 1 hereto to include any
future Patents acquired by Borrower.
6.17 Covenants Relating to Patents. Borrower covenants and agrees as
follows:
(a) Borrower shall notify Lender no later than forty-five (45) days
after the issuance of, or filing of any application for, any Patent not
included in Schedule 1. If Lender so requests, Borrower will deliver to
Lender an amendment to Schedule 1 describing such Patent. If such Patent
is issued by or the subject of an application filed with the United States
Patent and Trademark Office or with any similar office or agency of the
United States, any state or territory thereof, or any foreign country or
political subdivision thereof, and if Lender so requests, Borrower will
file a new Collateral Assignment in the form of Exhibit B hereto covering
all such Patents, with any and all such offices.
(b) Borrower shall take all necessary actions as shall be reasonable
and appropriate in accordance with prudent business practice to diligently
prosecute each Patent application to issuance or final rejection after
exhaustion of all available appeals.
(c) Borrower shall promptly notify Lender, in writing, of any suit,
action or proceeding brought against it relating to, concerned with or
affecting the Collateral, and shall, upon request by Lender, deliver to
Lender a copy of all pleadings, papers, orders, or decrees theretofore or
thereafter filed in any such suit, action or proceeding, and shall keep
Lender fully advised and informed, in writing, of the progress of any such
suit, action or proceeding.
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(d) In the event that any of the Collateral is infringed upon by a
third party, Borrower shall promptly notify Lender in writing of such
infringement after Borrower learns thereof, and the full nature, extent,
evidence and facts of such infringement known to Borrower, and shall, if
such infringement could reasonably be expected to have a Material Adverse
Effect, promptly sue for infringement and to recover any and all damages
for such infringement, and shall take such other actions as Borrower shall
reasonably deem appropriate under the circumstances to protect such
Collateral.
(e) Borrower shall take all actions necessary as shall be reasonable
and appropriate in accordance with prudent business practice to preserve
and maintain all rights in the Patents, including, without limitation, the
timely payment of all maintenance fees. Borrower shall mark all goods and
services covered by the Patents as "patented" or "patent pending," as
appropriate.
ARTICLE 7
Events of Default
7.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Payments. Borrower shall fail to pay when due any installment of
principal, interest or any other sum payable hereunder and such failure
shall continue unremedied for five (5) Business Days;
(b) Other Covenants and Agreements. Borrower shall default in the
performance of any of its material agreements set forth in any other
provision herein which default has or could reasonably be expected to have
a Material Adverse Effect and continuance of such default for thirty (30)
days after notice thereof to Borrower from Lender;
(c) Warranties. Any warranty or certification made by Borrower shall
fail to be true, in any case on any date as of which the facts set forth
are stated or certified and such failure has or could reasonably be
expected to have a Material Adverse Effect; or
(d) Bankruptcy. Borrower or any of its Subsidiaries (i) shall
institute a voluntary case seeking liquidation or reorganization under
Chapter 7 or Chapter 11, respectively, of the United States Bankruptcy
Code, or shall consent to the institution
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of an involuntary case thereunder against it; (ii) shall file a petition
initiating or shall otherwise institute any similar proceeding under any
other applicable federal or state law, or shall consent thereto; (iii)
shall apply for, or by consent or acquiescence there shall be an
appointment of, a receiver, liquidator, sequestrator, trustee or other
officer with similar powers, or Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors; or (iv) shall admit in
writing its inability to pay its debts generally as they become due; or,
if an involuntary case shall be commenced seeking the liquidation or
reorganization of Borrower or any of its Subsidiaries under Chapter 7 or
Chapter 11, respectively, of the United States Bankruptcy Code, or any
similar proceeding shall be commenced against Borrower under any other
applicable federal or state law, and (A) the petition commencing the
involuntary case is not timely controverted; or (B) the petition
commencing the involuntary case is not dismissed within sixty (60) days of
its filing; (C) an interim trustee is appointed to take possession of all
or a portion of the property, to operate all or any part of the business
of Borrower or any of its Subsidiaries; or (D) an order for relief shall
have been issued or entered therein; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee or other officer.
7.2 Termination of Commitment and Acceleration. If any Event of Default
described in Section 7.1(d) shall occur, all Obligations shall become
immediately due and payable, all without notice of any kind, and Lender shall
have no obligation to make further Loans hereunder. If any other Event of
Default shall be continuing, Lender shall have no obligation to make further
Loans hereunder and may declare all Obligations to be due and payable, whereupon
all Obligations shall immediately become due and payable, as so declared by
Lender and without presentment, demand, protest or other notice of any kind;
provided, however, that Lender's right to declare the obligations due and
payable hereunder based on the occurrence of an Event of Default under Section
7.1(a) shall not arise until after the failure to pay the amount due hereunder
that gave rise to such Event of Default shall have continued unremedied for
fifteen (15) Business Days after the date such payment was due. Any such
declaration made pursuant to this Section 7.2 may be rescinded by Lender. Lender
shall use commercially reasonable efforts to give Borrower notice of any Event
of Default under Section 7.1(a); provided, however, that the failure to give
such notice shall not affect Lender's rights hereunder.
7.3 Other Remedies. If any Event of Default shall occur and be continuing,
Lender may exercise in addition to all other
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rights and remedies granted to it under this Agreement and all other rights
provided at law or in equity, all rights and remedies of a secured party under
the UCC. Without limiting the generality of the foregoing, Borrower expressly
agrees that in any such event Lender, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon Borrower or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's board or
at any of Lender's offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption Borrower hereby releases. Borrower
further agrees, at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at
Borrower's premises or elsewhere. Lender shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, as
provided in Section 7.6 hereof, Borrower remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by Lender of any other amount required by any
provision of law, including section 9-504(1)(c) of the UCC, need Lender account
for the surplus, if any, to the person entitled by law to receive such surplus
or Borrower. To the maximum extent permitted by applicable law, Borrower waives
all claims, damages, and demands against Lender arising out of the repossession,
retention or sale of the Collateral except such as arise out of the gross
negligence or willful misconduct of Lender. Borrower agrees that Lender need not
give more than ten (10) days' notice (which notification shall be deemed given
when mailed or delivered on an overnight basis, postage prepaid, addressed to
Borrower at its address referred to in Section 8.5 hereof) of the time and place
of any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. Borrower shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all amounts to which Lender is entitled,
Borrower also being liable for the reasonable fees of any attorneys employed by
Lender to collect such deficiency.
7.4 Expenses of Lender. Borrower also agrees to pay all costs of Lender,
including, without limitation, reasonable
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attorneys' fees, incurred in connection with the enforcement of any of its
rights and remedies hereunder.
7.5 Waiver. Borrower hereby waives presentment, demand, protest or any
notice not specifically required herein (to the maximum extent permitted by
applicable law) of any kind in connection with this Agreement or any Collateral.
7.6 Distribution of Proceeds of Sale. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be
distributed by Lender in the following order of priority:
First, to Lender in an amount sufficient to pay in full the
reasonable costs of Lender in connection with such sale, disposition or
other realization, including all expenses, liabilities and advances
incurred or made by Lender in connection therewith, including, without
limitation, reasonable attorneys' fees;
Second, to Lender in an amount equal to the aggregate amount of
Obligations which are then unpaid;
Finally, upon payment in full of all of the Obligations, to Borrower
or its representatives or as a court of competent jurisdiction may direct.
7.7 Remedies Cumulative. The rights and remedies provided under this
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any other rights and remedies provided by law or equity.
ARTICLE 8
Miscellaneous
8.1 Successors and Assigns and Sale of Interests. The terms of this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their successors and assigns; provided, however, that Borrower shall not
assign its rights in whole or in part without the prior written consent of
Lender, which consent may be withheld for any reason whatsoever, and any such
assignment without such consent shall be void. Nothing in this Agreement,
whether express or implied, shall be construed to give any person (other than
the parties hereto and their respective successors and assigns) any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. Lender may sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, its rights and obligations under this Agreement to any person to
which any rights of Burns Philp (UK) plc are assigned pursuant to the
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Share Purchase Agreement without the consent of Borrower. Any other assignment
by Lender of its rights and obligations under this Agreement shall require the
prior written consent of Borrower.
8.2 No Implied Waiver. No delay or omission to exercise any right, power
or remedy accruing to Lender upon any breach or default of Borrower under this
Agreement shall impair any such right, power or remedy of Lender, nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default occurring thereafter, nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring theretofore or thereafter.
8.3 Amendments; Waivers. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement shall be effective
unless the same shall be in writing and signed and delivered by Borrower and
signed and delivered by Lender. Any amendment, modification, waiver or consent
hereunder shall be effective only in the specific instance and for the specific
purpose for which given.
8.4 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall be, only as to such jurisdiction,
ineffective to the extent of such prohibition or unenforceability, but all the
remaining provisions of this Agreement shall remain valid.
8.5 Notices. Any notices, requests, demands or other communications
hereunder, shall be in writing and shall be deemed to have been duly given when
personally delivered, whether by hand, air courier or by facsimile confirmed by
receiving party to the following addresses:
To Borrower:
Applied Microbiology, Inc.
771 Old Saw Mill River Road
Tarrytown, NY 10591
Attn: Benjamin T. Sporn
Vice President - Legal
Fax: 914-347-6370
With a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attn: Richard R. Plumridge, Esq.
Fax: 212-586-7878
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To Lender:
Burns Philp Inc.
222 Sutter Street, 9th Floor
San Francisco, CA 94108
Attn: Vice President Finance
Fax: 415-296-5746
With a copy to:
Burns Philp & Co. Ltd.
7 Bridge Street
Sydney, NWS 2000, Australia
Attn: The Company Secretary
Fax: 61 2 9247 8391
With a copy to:
Burns Philp Food, Inc.
222 Sutter Street, 9th Floor
San Francisco, CA 94108
Attn: Lorraine E. Vega, Esq.
Fax: 415-296-5746
or to such other addresses as either party may specify in writing to the other.
8.6 Interpretation. This Agreement, together with the exhibits to this
Agreement, is intended by Lender and Borrower as a final expression of their
agreement and is intended as a complete statement of the terms and conditions of
their agreement.
8.7 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York (without regard to principles of conflicts of
laws) applicable to contracts made and to be performed within such state.
8.8 Consent to Jurisdiction. Subject to Section 8.13 hereof, the parties
to this Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby agree to
submit themselves to the exclusive jurisdiction of the courts of the State of
New York located in New York City, and the United States District Court for the
Southern District of New York, in respect of any matter arising under this
Agreement. The parties hereby waive, to the fullest extent they may effectively
do so under applicable law, any objection which they now or hereafter have to
the laying of the venue of any such matter brought in any such court and any
claim that any such matter brought in any such court has been brought in an
inconvenient forum. Service of process, notices and demands of such courts may
be made upon any party to this Agreement by personal service at any place
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where it may be found or by giving notice to such party pursuant to this
Agreement.
8.9 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8.10 Headings. Captions, headings and the table of contents in this
Agreement are for convenience only, and are not to be deemed part of this
Agreement.
8.11 Release. Upon the repayment of the Obligations in full, the Lender
shall forthwith release all of the security interests in the Collateral granted
pursuant to this Agreement and shall reassign or reconvey all rights and
interests in the Collateral to which it has become entitled and shall return to
the Borrower any Collateral in its possession.
8.12 Confidentiality. Lender hereby agrees, with respect to any
information received from Borrower pursuant to this Agreement which Borrower
reasonably considers to be a trade secret or classified information and which
Borrower notifies Lender of such belief in writing at the time of delivery (save
that information as to any intellectual property of the Borrower shall be deemed
confidential without notice thereof), and information derived therefrom, to hold
such information in strict confidence, to take all reasonable precautions to
protect such information and not to disclose any such information to any third
party; provided that the foregoing obligations shall not apply to such
information as:
(i) is required to be disclosed by applicable law or regulation;
(ii) was publicly known prior to disclosure by Borrower of such
information to Lender;
(iii) becomes publicly known, without fault on the part of Lender,
subsequent to disclosure by Borrower of such information to Lender; or
(iv) is received by Lender at any time from a source, other than
Borrower, lawfully having possession of and the right to disclose such
information.
8.13 Resolution of Disputes.
(a) Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement, or
the breach, termination or validity hereof, by negotiations between executives
who have authority to settle the controversy. Any party may give the other party
written notice of any dispute not resolved in the
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normal course of business. Within 20 days after delivery of such notice,
executives of both parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the dispute. If the matter has not been
resolved within 60 days of the disputing party's notice, or if the parties fail
to meet within 20 days, either party may initiate arbitration of the controversy
or claim as provided hereinafter.
If a negotiator intends to be accompanied at a meeting by an attorney, the
other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
(b) Arbitration. If a dispute arising out of or relating to this
Agreement, or the breach, termination or validity hereof, has not been resolved
by negotiation as provided herein, it shall be settled by arbitration in
accordance with the Center for Public Resources Institute for Dispute Resolution
Rules for Non-Administered Arbitration of Business Disputes. The arbitration
shall take place in New York City, New York, shall be governed by the United
States Arbitration Act, 9 U.S.C. ss.ss. 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
BURNS PHILP INC.
By___________________________________
Lorraine E. Vega, Esq.
Title Its Lawful Attorney
APPLIED MICROBIOLOGY, INC.,
a New York Corporation
By___________________________________
Benjamin T. Sporn
Title Vice President
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CHARTERED CAPITAL ADVISERS, INC.
145 FOURTH AVENUE
NEW YORK, NEW YORK 10003
(212) 505-9743 O (212) 533-9680 FAX
December 10, 1996
Board of Directors
Applied Microbiology, Inc.
771 Old Saw Mill River Road
Tarrytown, NY 10591
Dear Members of the Board of Directors:
We understand that Applied Microbiology, Inc. ("AMBI") has signed a
nonbinding letter of intent to sell (the "Sale") Aplin & Barrett, Ltd. ("A&B")
to Burns Philp & Company Ltd. ("BP"). BP currently owns about 49% of the
outstanding common stock of AMBI. The Sale will be structured as a sale of
common stock; AMBI owns 100% of the issued and outstanding common stock of A&B.
The consideration to be received by AMBI from BP (the "Consideration") will
include: (1) a cash payment of $13,500,000; (2) a return to AMBI of 2,420,000
shares of AMBI common stock owned by BP; and (3) an earnout of up to $2.5
million, based on future Nisaplin sales in the United States, due on June 30,
1999. Prior to closing the Sale, AMBI will be repaid intercompany balances that
it is owed by A&B, and AMBI will also be able to retain the cash balances of A&B
on the date that the Sale closes (the "Closing Date"). The cash portion of the
Consideration will be adjusted (the "Adjustments") based on certain defined
changes in the net book value of A&B. The cash payments will be made in two
installments--$8,000,000 on the Closing Date; and $5,500,000, plus interest,
less the Adjustments, due approximately six months after the Closing Date.
You have requested our opinion of the Sale with respect to fairness, from
a financial point of view, to AMBI and its stockholders. Chartered Capital
Advisers, Inc. is customarily engaged in the valuation of businesses and their
securities in connection with mergers & acquisitions, private placements,
shareholder transactions, estate and gift taxes, litigation, and for other
purposes.
In connection with rendering our opinion we have, among other things:
(1) Reviewed the Letter of Intent signed by AMBI and BP that was dated
September 23, 1996;
(2) Reviewed drafts of the Share Purchase Agreement and the Supply
Agreement between AMBI and BP;
(3) Analyzed financial information with respect to A&B, including but
not limited to unaudited financial statements as of and for the
three months ended
<PAGE>
CHARTERED CAPITAL ADVISERS, INC.
Board of Directors
December 10, 1996
Page 2
September 30, 1996, as of and for the year ended June 30, 1996, for
the five years ended June 30, 1996, and audited financial statements
as of and for the three years ended June 30, 1992;
(4) Analyzed pro forma financial information with respect to A&B as of
and for the year ended June 30, 1996;
(5) Analyzed audited financial statements of AMBI as of and for the five
years ended June 30, 1996, audited financial statements as of and
for the three years ended December 31, 1991, and unaudited financial
statements as of and for the three months ended September 30, 1996;
(6) Reviewed various documents filed by AMBI with the Securities and
Exchange Commission, including the Form 10Q for the quarter ended
September 30, 1996, and the Form 10K for the year ended June 30,
1996;
(7) Visited the offices and manufacturing facilities of A&B and held
discussions with certain members of the senior management of A&B and
AMBI concerning the past, current, and planned operations, financial
condition, and business prospects of A&B and AMBI;
(8) Reviewed independent appraisals of the real property owned by A&B;
(9) Reviewed schedules detailing the machinery and equipment owned or
leased by A&B, including lists of the net book values of machinery
and equipment to be returned to AMBI prior to the Sale;
(10) Analyzed various financial and operational information regarding
A&B, AMBI, and BP;
(11) Analyzed historical stock prices of AMBI;
(12) Discussed with the legal advisors of AMBI the results of their due
diligence;
(13) Reviewed the Agreement for the Purchase and Sale of Stock dated as
of June 30, 1992 by and among AMBI and BP;
(14) Reviewed the financial terms of the Sale;
(15) Considered financial data of A&B, and have compared that data with
similar data for publicly held companies with investment
characteristics similar to A&B;
<PAGE>
CHARTERED CAPITAL ADVISERS, INC.
Board of Directors
December 10, 1996
Page 3
(16) Considered financial data of A&B, and have compared that data with
similar data for certain business combinations and other
transactions that have recently been effectuated; and
(17) Considered such other information, financial studies, and analyses
as we deemed relevant, and performed such analyses, studies, and
investigations as we deemed appropriate.
Chartered Capital Advisers, Inc. has assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by us. We have not performed an appraisal of the assets, liabilities,
or intellectual property of A&B or AMBI. We have assumed that the
representations of management have been made in good faith, and that they
reflect the best currently available management judgments as to the matters
covered. Our opinion is necessarily based upon economic, market, and other
conditions as in effect on, and the information made available to us as of, the
date of this letter. Our opinion is limited to the fairness of the Sale as of
the date hereof, from a financial point of view. We make no representations with
respect to the business decision to make the Sale, or any other terms of the
Sale. This opinion does not represent our opinion as to the value of A&B as of
the date of this letter.
We understand that in considering the Sale, the Board of Directors of AMBI
may have considered a wide range of financial and nonfinancial factors, many of
which may be beyond the scope of this letter. This letter is not intended to
substitute for the Board's exercise of its own business judgment in reviewing
the Sale.
Based upon and subject to the foregoing considerations, it is our opinion
as financial advisors that the consideration to be received by AMBI from BP in
the Sale is fair from a financial point of view to AMBI and its stockholders.
The foregoing opinion is to be used solely for the information and
assistance of AMBI. Accordingly, it is understood and agreed that no person
other than AMBI and its officers and directors shall be allowed to use or rely
upon this opinion.
Very truly yours,
CHARTERED CAPITAL ADVISERS, INC.
Ronald G. Quintero, CPA, CFA
Managing Director
