U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-17629
ADM TRONICS UNLIMITED, INC.
(Name of Small Business Issuer in its Charter)
Delaware 22-1896032
(State or Other Juris- (I.R.S. Employer Identifi-
diction of Incorpora- cation Number)
tion or Organization)
224-S Pegasus Avenue, Northvale, New Jersey 07647
(Address of Principal Executive Offices) (Zip
Code)
Issuer's Telephone Number (201) 767-6040
Securities Registered under Section 12(b) of the Act:
NONE
Securities Registered under Section 12(g) of the Act:
Common Stock, $.0005 par value
<PAGE>
ADM TRONICS UNLIMITED, INC.
EXHIBIT INDEX
EXHIBIT DESCRIPTION
10.10 Agreement for Sale of Stock
10.11 Employment Agreement
10.12 Asset Purchase Agreement
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.
ADM TRONICS UNLIMITED, INC.
By: \s\ Dr. Alfonso Di Mino
President
By: \s\ Andre' Di Mino
Principal Financial Officer
Dated: Northvale, New Jersey
July 16, 1998
EXHIBIT 10.10
AGREEMENT FOR SALE OF STOCK
BETWEEN
ADM TRONICS UNLIMITED, INC.
AND
JAMES C. WICKSTEAD AND THOMAS R. PETRIE
AGREEMENT (the "Agreement") dated this 26th day of November, 1997,
between ADM TRONICS UNLIMITED, INC., a corporation organized under the
laws of the State of Delaware with offices at 224-S Pegasus Avenue,
Northvale, New Jersey ("ADM"), such corporation sometimes referred to
herein as "ADM", and JAMES C. WICKSTEAD, residing at 5 Cold Hill Road,
Mendham, New Jersey 07945, THOMAS R. PETRIE, residing at 32 Deerhaven
Lane, Newfoundland, New Jersey 07435, the foregoing individuals being
sometimes collectively referred to herein as the "Shareholders".
W I T N E S S E T H:
WHEREAS, ADM desires to purchase 100% of the outstanding corporate
stock of Precision Assembly Corp.; and
WHEREAS, James C. Wickstead and Thomas R. Petrie collectively own
100% of the outstanding stock of Precision Assembly Corp. (hereinafter
referred to as "PAC").
NOW THEREFORE, ADM and Shareholders in consideration of the
premises and of the mutual provisions, agreements and covenants herein
contained in accordance with the applicable statutes hereby agree as
follows:
ARTICLE 1. PURCHASE OF SHARES
1.01 ADM agrees to purchase and Shareholders agree to sell all of the
outstanding stock of Precision Assembly Corp. for the sum of $22,741.00
(Wickstead $20,466.90 and Petrie $2,274.10) and ADM shall pay as
additional consideration a loan in the sum of $30,259.00 which is owed
to James Wickstead Design Associates, Inc. all as set forth herein.
The respective sums of $22,741.00 and $30,259.00 shall be paid at
closing by bank cashier's check or attorney trust account check. In
addition, ADM shall guarantee the obligation to pay James C. Wickstead,
a Shareholder, the sum of $72,500.00 as follows:
$50,000.00 at 8% payable in quarterly installments over two years
payable on the 15th day of each quarter commencing January 1, 1998 and
a balloon payment of $22,500.00 on January 1, 2000, all as set forth in
a note attached hereto as Exhibit "A".
ARTICLE 2. SHAREHOLDER APPROVAL AND CLOSING DATE
2.01 Shareholder Approval. Meetings of the Shareholders of PAC, or
the requisite actions without such meetings, shall be held or taken in
accordance with the Business Corporation Law of the State of New
Jersey, in each case, among other things, to consider and vote upon the
adoption and approval of the Agreement and the transactions
contemplated hereby.
The closing shall take place at 80 Broadway, Elmwood Park, New
Jersey on or about November 26, 1997.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
Representations and Warranties by the Shareholders
3.01. As a material inducement to ADM to execute and perform its
obligations under this Agreement, each Shareholder represents and
warrants to ADM, to the best of his or her information and belief, as
follows:
Organization and Standing of PAC
(a) PAC is a corporation duly organized and validly existing and
in good standing under the laws of the State of New Jersey. It has all
requisite corporate power and authority to carry on its business as now
being conducted, there is no restriction that prevents shareholders
from entering into this Agreement and carry out and perform the terms
and provisions of this Agreement. PAC has no subsidiaries and,
further, has no direct or indirect interest, either by way of share
ownership or otherwise, in any other firm, corporation, association, or
business. PAC is duly qualified, licensed, or domesticated and in good
standing as a foreign corporation authorized to do business in each
jurisdiction where the nature of its activities or the character of its
properties make qualification, licensing, or domestication necessary.
Capitalization and Indebtedness for Borrowed Money
(b)(1) PAC is duly and lawfully authorized by its Certificate of
Incorporation, as amended, to issue 10,000 shares of common stock no
par value per share, of which 100 shares are now validly issued and
outstanding. Further, PAC has no other authorized series or class of
shares. All of PAC's outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable.
(b)(2) Except as noted in Paragraph 1.01, PAC is not currently
liable on account of any indebtedness for borrowed money, except a bank
loan in the sum of $39,798.50 from Chemical Bank (now known as Chase)
which is current and no default has occurred. The loan shall continue
and survive the transfer of shares; however, ADM shall use its best
efforts to have all Shareholders' collateral released from said loan
and Wickstead released from the guarantee, including, if required by
the bank, the substitution of collateral satisfactory to the bank, and
the substitution of ADM as guarantor.
(b)(3) There are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities, or
other agreements or arrangements of any character or nature whatever
under which PAC is or may be obligated to issue or purchase shares.
Ownership of PAC's Shares
(c) Each Shareholder severally for himself or herself is, and at
the time of the transfer will be the lawful owner of the shares of PAC
stock set opposite his or her name below, free and clear of all liens,
claims, encumbrances, and restrictions of every kind. The schedule
below contains a complete and accurate list of all of the Shareholders
of PAC and its shares held by each. Each Shareholder has full legal
right, power, and authority to sell, assign, and transfer his or her
shares of PAC stock. The delivery of the shares to ADM pursuant to the
provisions of this Agreement will transfer valid title to the shares,
free and clear of all liens, encumbrances, claims and restrictions of
any kind.
Name and Address
of Shareholder of Number of
Corporation Shares
James C. Wickstead 90
Thomas R. Petrie 10
Financial Statements
(d) The Shareholders have furnished to ADM an unaudited Balance
Sheet of the Corporation as of June 30, 1997 and the related Statement
of Income and Retained Earnings for the Twelve Months Ended December
31, 1996.
All financial statements mentioned in this subparagraph present
fairly the financial condition of PAC at the date specified, and the
results of PAC's operations for the period specified, and were prepared
in accordance with generally accepted accounting principles applied on
a basis consistent with prior accounting periods. Specifically, but
not by way of limitation, the Balance Sheet disclosed all of the known
debts, liabilities, and obligations of any nature (whether absolute,
accrued, contingent, or otherwise known and whether due or to become
due) of PAC at the date of the Balance Sheet and includes appropriate
reserves for all taxes and other liabilities accrued or due at that
date, but not yet payable. PAC owes no taxes based upon income for the
calendar years up to and including 1996. All required tax returns of
PAC have been accurately prepared and duly and timely filed. Any
deficiencies or assessments resulting from any examinations by the
Internal Revenue Service or other federal, state, or local taxing
authorities have been duly paid or are properly reflected in the
Balance Sheet. Shareholders represent that the corporation has filed
as a subchapter "S" corporation. Shareholders shall timely file an
income tax return and pay all income tax due up until the date of
closing. Shareholders shall, if requested, submit satisfactory
evidence of payment of said taxes. Shareholders represent that all
salaries and payroll taxes through November 30, 1997 shall have been
paid at time of closing.
Present Status
(e) PAC has not except as disclosed:
(1) Incurred any obligations or liabilities, whether absolute,
accrued, contingent, or otherwise, and whether due or to become due,
except current liabilities incurred in the ordinary course of business,
none of which adversely affects the business or prospects of PAC.
(2) Discharged or satisfied any liens or encumbrances, or paid
any obligation or liability, whether absolute, accrued, contingent, or
otherwise, and whether due or to become due, other than current
liabilities shown on the Balance Sheet and current liabilities incurred
since the close of business on the date of the Balance Sheet, in each
case in the ordinary course of business.
(3) Declared or made any payment or distribution to its
Shareholders or purchased or redeemed, or obligated itself to purchase
or redeem, any of its shares or other securities.
(4) Mortgaged, pledged, or subjected to lien or any other
encumbrances or charges, any of its tangible or intangible assets.
(5) Sold or transferred any of its assets except for inventory
sold in the ordinary course of business, or canceled any debt or claim.
(6) Suffered any damage, destruction, or loss (whether or not
covered by insurance) affecting the properties, business, or prospects
of PAC, or waived any rights of substantial value.
(7) Entered into any transaction other than in the ordinary
course of business.
(8) Encountered any labor difficulties or labor union organizing
activity or loss of key personnel that will adversely affect the
business or prospects of the Corporation.
Litigation
(f) There are no legal actions, suits, arbitrations or other
legal or administrative proceedings pending or threatened against PAC
that would affect it or its properties, assets, or business; and
neither PAC nor any of the Shareholders is aware of any facts that to
its or their knowledge might result in any action, suit, arbitration,
or other proceeding that in turn might result in any material adverse
change in the business or condition (financial or otherwise) of PAC or
its properties or assets. PAC is not in default with respect to any
judgment, order, or decree of any court or any government agency or
instrumentality.
Compliance with the Law and Other Instruments
(g) The business operation of PAC has been and is being conducted
in accordance with all applicable laws, rules, and regulations of all
authorities. PAC is not in violation of, or in default under, any term
or provision of its Certificate of Incorporation, as amended, or its
By-laws, as amended, or of any lien, mortgage, lease, agreement,
instrument, order, judgment, or decree, or subject to any restriction
of any kind or character contained in any of the foregoing that
materially and adversely affects in any way the business, properties,
assets, or prospects of PAC, or that would prohibit the Shareholders
from entering into this Agreement or prevent consummation of the
exchange of securities contemplated by this Agreement.
Title to Properties and Assets
(h) PAC has good and marketable title to all properties and
assets, including without limitation those reflected in the Balance
Sheet and those used or located on property controlled by PAC in its
business (except assets sold in the ordinary course of business).
PAC's properties and assets are subject to no mortgage, pledge, lien,
charge, security interest, encumbrance, or restriction except those
that (i) are disclosed on the Balance Sheet as securing specified
liabilities; (ii) are disclosed in the Schedule of Assets referred to
in Subparagraph 3.01(i) of this Agreement; or (iii) do not materially
and adversely affect the use of the assets. The buildings and
equipment of PAC are in good condition and repair, reasonable wear and
tear excepted. PAC has not been, to the knowledge of any officer of
PAC or Shareholder, threatened with any action or proceeding under any
building or zoning ordinance, regulation, or law. PAC is and has been
engaged in the manufacture of electronic equipment products including
but not limited to the Sonotron device. PAC's assets include its
journals, trade secrets and methods of preparation, and manufacture of
the Sonotron device. The manufacturing techniques for said products
are confidential results of clinical research and testing PAC has
caused to be conducted on said products over a period of years. The
assets of PAC include goodwill built up by PAC in the course of testing
and manufacturing with various authorities whose assistance and
endorsement will enhance the marketing and sale of products. PAC
leases a Minolta copier pursuant to an Equipment Lease Agreement dated
July 31, 1996. PAC also leases the premises located at 185 Ridgedale
Avenue, Cedar Knolls, New Jersey.
Schedule of Assets
(i) Upon the signing of this agreement, the Shareholders will
have delivered to ADM a separate Schedule of Assets, specifically
referring to this subparagraph, containing:
(1) A true and complete list of all agreements, drawings,
records, research papers, marketing information, regulatory data,
product research, supplier contacts, customer lists, electronic data
and manufacturing know-how, equipment and machinery and information of
any kind relating to manufacturing.
(2) A true and complete legal description of all real properties
in which PAC has a leasehold interest, together with a description of
each indenture, lease, sublease, or any instrument under which PAC
claims or holds the leasehold interest. PAC has valid leasehold
interests in the listed properties and all listed instruments are in
effect and enforceable according to their respective terms.
(3) A true and complete list of accounts receivable and accounts
payable.
(4) A true and complete list of all capitalized machinery, tools,
equipment, and rolling stock owned by PAC, setting forth all liens,
claims, encumbrances, charges, restrictions, covenants, and conditions.
(5) A true and complete description of all machinery, tools,
equipment, and rolling stock held or used by the Corporation under
lease, license, or similar arrangement, with a description of each
indenture, lease, sublease, license, agreement, or other instrument
pursuant to which those items are held or used by PAC. PAC has valid
leasehold interests in the described properties and the listed
instruments are in effect and are enforceable according to their
respective terms.
(6) A true and complete list of all patents, patent applications,
patent licenses, trademarks, trademark registrations and applications,
trade names, copyrights and copyright registrations and applications
owned by PAC. (Omit) (none owned by PAC).
(7) A complete schedule of all fire and other casualty and
liability policies of PAC in effect at the time of delivery of the
schedule.
(8) A detailed list of inventory with costs and source of supply.
(9) Copies of all license and manufacturing agreements (i.e., The
Knott Hemo Irradiation) on any devices produced or owned by the
company.
(10) Copies of all patents or patent applications owned, assigned
or leased by PAC. (Omit - none owned by PAC).
Patent and Related Rights
(j) To the knowledge of any Shareholder, PAC is not infringing
upon or otherwise acting adversely to any copyrights, trademarks,
trademark rights, patents, patent rights, or licenses owned by any
person or persons, and there is no claim or infringement or any pending
or threatened action with respect to any claim of infringement. Except
with respect to a certain License Agreement between PAC and the
Foundation for Blood Irradiation, Inc. dated September 23, 1996
(respecting the "Knott Blood Irradiation Device"), and a certain
Licensing Agreement between PAC and Mankind Research Foundation, Inc.
dated December 4,1996 (respecting the "Ovulometer Device"), and a
certain Licensing Agreement between PAC and Mankind Research
Foundation, Inc. dated December 4, 1996 (respecting the "Glucose Level
Analyzer Device"), PAC is not obligated or under any liability whatever
to make any payments by way of royalties, fees, or otherwise to any
owner, licensor of, or other claimant to, any patent, trademark, trade
name, copyright, or other intangible assets, with respect to the use of
any of those assets in connection with the conduct of its business or
otherwise.
Creditor's Arrangements
(k) PAC has not made any assignment for the benefit of creditors,
and no involuntary or voluntary petition in bankruptcy has been filed
by or against PAC.
Contracts and Other Obligations
(l) PAC is not a party to, or otherwise bound by any written or
oral:
(1) Contract or agreement not made in the ordinary course of
business.
(2) Employment or consultant contract that is not terminable at
will without cost or other liability to the Corporation or any
successor.
(3) Contract with any labor union.
(4) Bonus, pension, profit-sharing, retirement, share purchase,
stock option, hospitalization, group insurance, or similar plan
providing employee benefits other than group health and group life
insurance.
(5) Lease with respect to any property, real or personal, whether
as lessor or lessee, other than the lease for the premises at 185
Ridgedale Avenue, Cedar Knolls, New Jersey and the lease with respect
to the Minolta copier as stated herein.
(6) Advertising contract or contract for public relations
services.
(7) Purchase, supply, or service contracts.
(8) Deed of trust, mortgage, conditional sales contract, security
agreement, pledge agreement, trust receipt, or any other agreement or
arrangements whereby any of the assets or properties of PAC are
subjected to a lien, encumbrance, charge, or other restriction.
(9) Contract or other commitment continuing for a period of more
than thirty (30) days that is not terminable without cost or other
liability to PAC or its successors other than as referred to herein.
(10) Contract for good or services sold that (i) contains a
redetermination of price or similar type of provision; or (ii) provides
for a fixed price.
PAC has in all respects performed all obligations required to be
performed by it to date and is not in material default under any of the
contracts, agreements, leases, documents or other arrangements to which
it is a party or by which is otherwise bound. All parties with whom
PAC has contractual arrangements are in compliance with their contracts
and are not in default. All accounts receivable and notes receivable
of PAC are due and payable and are free from any defenses, offsets,
claims or counterclaims. ADM acknowledges a First Amendment of Lease
with respect to the Ridgedale premises.
Changes in Compensation
(m) Since the inception of PAC, there has not been any general
pay increase to employees or any change in the rate of compensation,
commission, bonus, or other remuneration payable to any officer,
employee, director, agent, or Shareholder of PAC greater than that
shown on the books and records of PAC.
Inventories
(n) Since July 1, 1997 PAC has continued to replenish its
inventories in a normal and customary manner consistent with prior and
prudent practice prevailing in the business of PAC, and will continue
to do so until the closing.
Records
(o) The books of account, minute books, share certificate books,
and share transfer ledgers of PAC are complete and correct, and there
have been no transactions involving the business of PAC that properly
should have been set forth in those books, other than those set forth
in those books.
Brokers or Finders
(p) All negotiations on the part of the Shareholders relative to
this Agreement and the transaction contemplated in this Agreement have
been carried on by the Shareholders without the intervention of any
person in a manner giving rise to any valid claim against PAC or ADM
for a brokerage commission, finder's fee, or similar payment. Any
claim for a brokerage commission, finder's fee, or similar payment
shall be a liability of the Shareholders and not ADM or PAC.
Absence of Certain Changes or Events
(q) Since its inception, there has not been any material and
adverse change in, or event or condition materially and adversely
affecting, the condition (financial or otherwise), properties, assets,
liabilities, or, to the knowledge of any Shareholder, the business or
prospects of PAC.
Organization and Standing
(r) ADM is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to carry on its business as now
being conducted, to enter into this Agreement and carry out and perform
the terms and provisions of this Agreement.
Authority of ADM
(s) The execution, delivery, and performance of this Agreement
have been duly authorized by all requisite corporate action. This
Agreement constitutes a valid and binding obligation of ADM in
accordance with its terms (except as limited by bankruptcy, insolvency,
or other laws affecting the enforcement of creditors' rights). No
provision of the Certificate of Incorporation (as amended), by-laws (as
amended), minutes, or share certificates of ADM, or of any contract
that binds ADM, prevents it from purchasing the stock in the manner
contemplated in this Agreement.
Brokers
(t) All negotiations on the part of ADM relative to this
Agreement and the transaction contemplated in this Agreement have been
carried on by ADM without the intervention of any person in a manner
giving rise to any valid claim against the Shareholders for a brokerage
commission, finder's fee, or similar payment.
ARTICLE 4. ACTIONS AND OBLIGATIONS OF THE SHAREHOLDERS
BEFORE AND AFTER THE CLOSING.
Actions of the Shareholders Prior to the Closing
4.01. Each of the Shareholders covenants with ADM that from the date
of this Agreement to and including the closing:
Correct as the Effective Date
(a) Each representation and warranty of the Shareholders set
forth in Paragraph 3.01 of this Agreement shall be true and correct as
of the closing, to the best of his or her information and belief.
Operations
(b) Except with the prior written consent of ADM to the contrary,
Shareholders and PAC will:
(1) Conduct its affairs and business only in the ordinary course
of business.
(2) Not create or incur any liabilities other than current
liabilities incurred in the ordinary course of business.
(3) Not create or incur, or allow to exist, any mortgage, lien,
pledge, hypothecation, charge, encumbrance, or restriction of any kind.
(4) Not make or become a party to any contract or commitment, or
renew, extend, amend, or modify any contract or commitment, except in
the ordinary course of business.
(5) Not make any capital expenditures or capital additions or
betterments except as may be involved in ordinary repairs, maintenance
and replacements.
(6) Not enter into any contract or commitment except in the
ordinary course of business, pursuant to which it will be obligated to
expend, or be entitled to receive, any monetary amount.
(7) Maintain its assets and properties in good condition and
repair, and not sell or otherwise dispose of any of its assets or
properties, except sales out of inventory in the ordinary course of
business.
(8) Not declare or pay a dividend on or make any other
distribution upon, or purchase, retire, or redeem, any of its shares,
or set aside any funds for any similar purpose.
(9) Not issue or sell or obligate itself to issue or sell any
additional shares, whether or not the shares have been previously
authorized or issued or issue or sell any warrants, rights, or options
to acquire any of its shares, or acquire any shares of any corporation
or any interest in any business enterprise.
(10) Not amend its Certificate of Incorporation or by- laws.
(11) Not pay or agree to pay, conditionally or otherwise, any
bonus, extra compensation, pension, or severance pay to any director,
Shareholder, officer, consultant, agent, or employee under any pension
plan or otherwise or increase the compensation paid by it to any
officer, director, agent, consultant, or employee.
(12) Not discharge or satisfy any lien charge or encumbrance, or
pay any obligation or liability, absolute or contingent, except current
liabilities shown on the Balance Sheet dated June 30, 1997 or current
liabilities incurred since that date in the ordinary course of
business.
(13) Preserve its business organization intact and use its best
efforts to retain its present officers and employees.
(14) Use its best efforts to preserve the goodwill of its
suppliers, customers, and those having business relations with it.
(15) Keep its insurable properties and assets insured in
accordance with present practice.
(16) Maintain, keep and preserve all of its properties and assets
in a good condition and state of repair.
(17) Not merge or consolidate, or obligate itself to do so, with
or into any other entity.
(18) Not enter into any transactions or take any acts that, if
effected or performed prior to the date of this Agreement, would
constitute a breach of the representations, warranties, and agreements
contained in this Agreement.
(19) Not institute, settle, or agree to settle any action or
proceeding before any court or governmental body.
Access to Records
(c) PAC will afford ADM, its representatives, counsel, agents, and
employees, at all reasonable times and in a manner and under
circumstances that will not cause unreasonable interference with the
operation of PAC's business, access to all of the properties of PAC and
its books, files, records, insurance policies, and other corporate
books and records, for the purpose of audit, inspection, and
examination, and will do, and cause PAC to do, everything reasonable
necessary to enable ADM to make a complete examination of the assets
and properties of PAC. No examination, however, shall constitute a
waiver or relinquishment on the part of ADM of its right to rely upon
the covenants, representations, and warranties made by the Shareholders
in the provisions of this Agreement.
Consultation
(d) Each of the Shareholders will consult with ADM at all times
up to and including the closing with respect to the operation and
conduct of PAC's business, provided that neither PAC shall not incur
any liability to anyone as a result of the advice or suggestions
offered to any of the Shareholders in this connection. James C.
Wickstead and/or Thomas R. Petrie shall, for a period of 90 days after
the closing date, provide such assistance, information, advice and
consultations, in person or by telephone, as shall be reasonably
required by ADM so that ADM can become familiar with the various
documents and operations of PAC.
Shareholders' Shares
(e) No Shareholder will create or incur, or suffer to exist, any
mortgage, lien, pledge, hypothecation, charge, encumbrance, or
restriction of any kind on PAC's shares that will be assigned,
transferred, and delivered to ADM, on the closing.
ARTICLE 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF ADM
5.01. Except as may be waived in writing by the President, all of the
obligations of ADM under this Agreement are subject to fulfillment,
prior to the closing, of each of the following conditions:
No Material Errors
(a) The representations and warranties of the Shareholders in
this Agreement shall be deemed to have been made again on the Closing
Date and shall then be true and correct, subject to any changes
contemplated by this Agreement, and ADM shall not have discovered any
material error, misstatements, or omission in this Agreement.
Compliance With Agreement
(b) Each Shareholder shall have performed and complied with all
agreements or conditions required by this Agreement to be performed and
complied with by him or her prior to or on the Closing Date.
Certificate of Shareholders
(c) Each Shareholder shall have delivered to ADM a certificate,
dated the Closing Date, executed by the Shareholders certifying in such
details as ADM may reasonably request, to the fulfillment of the
conditions specified in Subparagraph (a) and (b) of this Paragraph.
Counsel's Opinion
(d) The Shareholders shall have delivered to ADM an opinion of
counsel for the Shareholders dated t
Nature and Survival of Representations and Warranties
6.01. All statements of fact contained in this Agreement, any
certificate, the Schedule of Assets delivered pursuant to Subparagraph
3.01(i), or any letter, document, or other instrument delivered by or
on behalf of the Shareholders and its respective officers, pursuant to
the terms of this Agreement shall be deemed representations and
warranties made by the Shareholders. For purposes of this Paragraph
6.01, any party or other person seeking to enforce, or claiming the
benefit of, any representation and warranty under this Agreement is
called a Claimant, and any party or other person against whom a right
is claimed is called a Defendant. All representations and warranties
of the parties shall survive the Closing.
Indemnification by Shareholders
6.02. Shareholders, jointly and severally, shall, and hereby agree to,
indemnify and hold ADM and PAC harmless at all times from and after the
date of this Agreement against and with respect to any damages.
Damages, as used in this paragraph, shall include any claim, action,
loss, cost, expense, liability, penalty, or damage, including without
limitation attorneys' fees and other costs and expenses incurred in
investigating or in attempting to avoid damages or oppose the
imposition of damages, resulting to ADM or PAC from (1) any inaccurate
representation made by or on behalf of the Shareholders, or any of
them, in or pursuant to this Agreement; (2) breach of any of the
warranties made by or on behalf of the Share holders, or any of them,
in or pursuant to this Agreement; and (3) breach or default in
performance by the Shareholders, or any of them, of any of the
obligations that are to be performed by the Share holders under this
Agreement, and shall comprise (without, however, limiting the
generality of the foregoing):
Liabilities Not Included in Balance Sheet
(a) The amount of any liability of PAC, including contingent
liabilities, whether or not asserted against it at the Closing Date,
relating to the conduct of business of PAC, that is not included among
or reflected in the liabilities shown on the Balance Sheet, or any
portion of any liability that is not included.
Taxes
(b) The amount by which provision for and reserves with respect
to franchise, income, excess profits, shares, unemployment insurance,
Social Security, and other taxes (federal, state, or local) set forth
in the Balance Sheet, are inadequate.
Undisclosed Liens
(c) The amount of any undisclosed lien or encumbrance existing on
the Effective Date with respect to the property included in the assets
reflected in the Balance Sheet.
Excess of Liability Over Value of Property Received
(d) The amount by which any liability incurred by the Corporation
other than in the ordinary course of business exceeds the fair value of
the property, assets, or rights received by the Corporation in return
for the imposition of the liability.
Litigation Costs
(e) Costs and expenses of all actions, suits, proceedings,
demands, assessments, claims, and judgments arising out of or in any
way related to any of the items listed in Subparagraphs (a) through (c)
of this Paragraph 6.02.
Shareholders shall reimburse ADM (or PAC if ADM requests) on demand for
any payment made by ADM or by PAC at anytime after the Closing Date,
based on the judgment of any court or pursuant to a bona fide
compromise or settlement of legal claims, with respect to any damages
to which the foregoing indemnity relates.
Expenses
6.3. Shareholders will pay all expenses incurred by them in connection
with and arising out of this Agreement and the trans actions
contemplated by this Agreement, including, without limitation, all fees
of their counsel. Whether or not this Agreement is terminated, each
party shall bear its, his or her own expenses incurred in connection
with this Agreement and in the preparation for and the consummation of
the transactions contemplated by this Agreement.
ARTICLE 7. TERMINATION
Circumstances
7.01 This Agreement may be terminated at any time prior to the Closing
Date notwithstanding the approval of the Shareholders or directors of
either of the corporations:
(a) By mutual consent of the Board of Directors of the
corporations.
(b) At
Nature and Survival of Representations and Warranties
6.01. All statements of fact contained in this Agreement, any
certificate, the Schedule of Assets delivered pursuant to Subparagraph
3.01(i), or any letter, document, or other instrument delivered by or
on behalf of the Shareholders and its respective officers, pursuant to
the terms of this Agreement shall be deemed representations and
warranties made by the Shareholders. For purposes of this Paragraph
6.01, any party or other person seeking to enforce, or claiming the
benefit of, any representation and warranty under this Agreement is
called a Claimant, and any party or other person against whom a right
is claimed is called a Defendant. All representations and warranties
of the parties shall survive the Closing.
Indemnification by Shareholders
6.02. Shareholders, jointly and severally, shall, and hereby agree to,
indemnify and hold ADM and PAC harmless at all times from and after the
date of this Agreement against and with respect to any damages.
Damages, as used in this paragraph, shall include any claim, action,
loss, cost, expense, liability, penalty, or damage, including without
limitation attorneys' fees and other costs and expenses incurred in
investigating or in attempting to avoid damages or oppose the
imposition of damages, resulting to ADM or PAC from (1) any inaccurate
representation made by or on behalf of the Shareholders, or any of
them, in or pursuant to this Agreement; (2) breach of any of the
warranties made by or on behalf of the Share holders, or any of them,
in or pursuant to this Agreement; and (3) breach or default in
performance by the Shareholders, or any of them, of any of the
obligations that are to be performed by the Share holders under this
Agreement, and shall comprise (without, however, limiting the
generality of the foregoing):
Liabilities Not Included in Balance Sheet
(a) The amount of any liability of PAC, including contingent
liabilities, whether or not asserted against it at the Closing Date,
relating to the conduct of business of PAC, that is not included among
or reflected in the liabilities shown on the Balance Sheet, or any
portion of any liability that is not included.
Taxes
(b) The amount by which provision for and reserves with respect
to franchise, income, excess profits, shares, unemployment insurance,
Social Security, and other taxes (federal, state, or local) set forth
in the Balance Sheet, are inadequate.
Undisclosed Liens
(c) The amount of any undisclosed lien or encumbrance existing on
the Effective Date with respect to the property included in the assets
reflected in the Balance Sheet.
Excess of Liability Over Value of Property Received
(d) The amount by which any liability incurred by the Corporation
other than in the ordinary course of business exceeds the fair value of
the property, assets, or rights received by the Corporation in return
for the imposition of the liability.
Litigation Costs
(e) Costs and expenses of all actions, suits, proceedings,
demands, assessments, claims, and judgments arising out of or in any
way related to any of the items listed in Subparagraphs (a) through (c)
of this Paragraph 6.02.
Shareholders shall reimburse ADM (or PAC if ADM requests) on demand for
any payment made by ADM or by PAC at anytime after the Closing Date,
based on the judgment of any court or pursuant to a bona fide
compromise or settlement of legal claims, with respect to any damages
to which the foregoing indemnity relates.
Expenses
6.3. Shareholders will pay all expenses incurred by them in connection
with and arising out of this Agreement and the trans actions
contemplated by this Agreement, including, without limitation, all fees
of their counsel. Whether or not this Agreement is terminated, each
party shall bear its, his or her own expenses incurred in connection
with this Agreement and in the preparation for and the consummation of
the transactions contemplated by this Agreement.
ARTICLE 7. TERMINATION
Circumstances
7.01 This Agreement may be terminated at any time prior to the Closing
Date notwithstanding the approval of the Shareholders or directors of
either of the corporations:
(a) By mutual consent of the Board of Directors of the
corporations.
(b) At the election of the Board of Directors of ADM if:
1. Any material litigation or proceeding shall be instituted or
threatened against PAC, or any of its assets, that, in the opinion of
the Board of Directors, render the purchase of shares inadvisable or
undesirable.
2. Any legislation shall be enacted that, in the opinion of the
Board of Directors, render the purchase inadvisable or undesirable.
3. Between the date of this Agreement and the Closing Date, there
shall have been, in the opinion of the Board of Directors, any material
adverse change in the business or condition, financial or otherwise, of
PAC.
(c) At the election of the Board of Directors, if without the
prior consent in writing of ADM, PAC shall have:
1. Declared or paid a cash dividend on its common stock, or
declared or paid any other dividend or made any other distribution on
its shares.
2. Created or issued any indebtedness for borrowed money.
3. Entered into any transaction other than those involved in
carrying on its business in the usual manner.
Notice of and Liability on Termination
7.02 If an election is made to terminate this Agreement and abandon
the purchase:
(a) The President, any Vice-President or any officer appointed
for such purpose of ADM shall give immediate written notice of the
election to PAC.
(b) On the giving of notice as provided in Subparagraph (a), this
Agreement shall terminate and the proposed purchase of PAC shares shall
be abandoned, and except for payment of its own costs and expenses
incident to this Agreement, there shall be no liability on the part of
either ADM or PAC as a result of the termination and abandonment.
ARTICLE 8. INTERPRETATION AND ENFORCEMENT
Further Assurances
8.01 PAC and Shareholders agree to from time to time, as and when
requested by ADM or by its successors or assigns, that they will
execute and deliver or cause to be executed and delivered deeds,
certificates and other instruments. PAC and Shareholders further agree
to take or cause to be taken any further or other actions as ADM may
deem necessary or desirable to vest in, to perfect in, or conform of
record or otherwise to ADM title to and possession of all the property,
rights, privileges, powers, and franchises referred to in this
Agreement, and otherwise to carry out the intent and proposes of this
Agreement.
8.02 Shareholders shall immediately after execution of this agreement:
(a) File all final tax returns (state, federal, local, corporate,
franchise taxes and the like) and annual reports and pay all taxes,
impositions and fees due thereon.
(b) Obtain all necessary tax clearance certificates and consent of
the State Tax Commission and all other documents and clearance
certificates required for this transaction.
(c) In the event that Shareholders do not commence to perform as
noted in Paragraph 6.02 (a) and (b), and do not continue without delay,
then in such event ADM shall serve notice of same and if not reasonably
resolved between ADM and Shareholders, ADM shall have the option of
performing same at the cost and expense of Shareholders.
Entire Agreement; Counterparts
8.03 This Agreement and the exhibits to this Agreement contain the
entire agreement between the parties with respect to the contemplated
transaction. This Agreement may be executed in any number of
counterparts, all of which taken together shall be deemed one original.
Controlling Law
8.04 The validity, interpretation, and performance of this Agreement
shall be governed by, construed, and enforced in accordance with the
laws of the State of New Jersey. Any legal proceedings arising out of
this Agreement shall be venued in the State of New Jersey.
ARTICLE 9.
Amendment and Waiver
9.01. This Agreement may be amended or modified at any time and in all
respects, but only by an instrument in writing executed by the
President of ADM and Shareholders. Either ADM or Shareholders may,
with the written consent of the other, in writing:
Extension of Time
(a) Extend the time for the performance of any of the obligations
of ADM, PAC, or Shareholders.
Waiving Inaccuracies
(b) Waive any inaccuracies and representations by ADM, PAC, or
Shareholders contained in this Agreement or any document delivered
pursuant to this Agreement.
Waiving Compliance With Covenants
(c) Waive compliance by ADM, PAC, or Shareholders with any of the
covenants contained in this Agreement and performance of any
obligations by them.
Waiving Fulfillment of Condition Precedent
(d) Waive the fulfillment of any condition that is precedent to
any performance required of the party making the waiver.
Assignment
9.02. Neither this Agreement nor any right created by this Agreement
shall be assignable by the Shareholders (or their successors in
interest) without the prior written consent of ADM, except by the laws
of succession.
Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties to this Agreement and
their successors, any rights or remedies under or by reason of this
Agreement.
Notices
9.03. Any notice, communication, request, reply, or advice, severally
and collectively called "notice", provided or permitted under this
Agreement to be given, made or accepted by any party to any other party
must be in writing and may be given or be served by depositing it in
the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, or
by delivery it in person to an officer of the party to be notified.
Notice deposited in the mail in the manner described in this paragraph
shall be effective only if and when received by the party to be
notified. For purposes of notice the addresses of the parties shall,
until changed as provided below, be as follows:
(a) If to ADM:
Andre Di Mino, 224 S. Pegasus Avenue, Northvale, N.J. with a copy
to:
S. Robert Princiotto, 80 Broadway, Elmwood Park, N.J. 07407 or at
any other address that the Purchaser may have advised the Shareholders
in writing.
(b) If to PAC or Shareholders to:
Their address as stated in this Agreement with a copy to:
Andrew M. Kimmel, 185 Ridgedale Ave., Cedar Knolls, N.J. 07927, or
at any other address that PAC or the Shareholders may have advised ADM
of in writing.
Paragraph and Other Headings
9.04. Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Severability
9.05. In the event that any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, the invalidity, illegality, or
unenforceability shall not affect any other provisions of this
Agreement, but this Agreement shall be construed as if the invalid,
illegal, or unenforceable provisions had never been contained in it.
Parties In Interest
9.06. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties and
their successors and assigns.
Integrated Agreement
9.07. This Agreement constitutes the entire agreement among the
parties, and there are no agreements, understanding, restrictions,
warranties, or representations among the parties other than those set
forth or provided for in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
November 26, 1997, at Elmwood Park, New Jersey.
ADM TRONICS UNLIMITED, INC.
By: \s\Andre' Di Mino, Exceutive Vice President
SHAREHOLDERS
\s\JAMES C. WICKSTEAD
\s\THOMAS R. PETRIE
EXHIBIT 10.11
EMPLOYMENT CONTRACT
Agreement made November 26, 1997, between PRECISION ASSEMBLY
CORP., hereinafter referred to as "PAC", and THOMAS R. PETRIE,
hereinafter referred to as the employee.
In consideration of the mutual covenants PAC and the employee
agree as follows:
SECTION ONE
DUTIES OF EMPLOYEE
PAC hereby agrees to employ he employee in the position of
President of PAC and as Chief Engineer of PAC and the employee hereby
accepts such employment. Employee shall perform the duties of
President of PAC subject to the general supervision and pursuant to the
orders, advice and direction of PAC. Employee shall perform such other
duties as are customarily performed by one holding such a position in
other, same or similar businesses or enterprises as the engaged in by
the corporation, and shall also additionally render such other related
services and duties as may be assigned to him from time to time by PAC.
SECTION TWO
BEST EFFORTS
Employee agrees that he will at all times faithfully,
industriously and to the best of his ability, experience and talents,
perform all of the duties that may be required of and from him pursuant
to the express and implicit terms hereof, to the reasonable
satisfaction of PAC.
SECTION THREE
TERM OF EMPLOYMENT
The term of this agreement shall be a period of five (5) years
commencing on the closing, and terminating December 31, 2002, subject,
however, to prior termination as hereinafter provided. This agreement
is contingent upon the sale of all of the outstanding stock of PAC to
ADM Tronics Unlimited, Inc.
SECTION FOUR
TERMINATION
In the event of any material violation by the employee of any of
the terms of this contract PAC may terminate employment without notice
and with payment only to the date of such termination. It is further
agreed that any breach or evasion of any of the terms of this contract
by either party hereto will result in immediate and irreparable injury
to the other party and will authorize recourse to injection and/or
specific performance as well as to all other legal or equitable
remedies to which such injured party may be entitled hereunder.
SECTION FIVE
COMPENSATION
PAC shall pay employee, and employee shall accept from PAC in full
payment for the employee's services hereunder, compensation as follows:
1.An annual base compensation of $75,000 (hereinafter referred to
as base compensation), payable in accordance with the method of payment
for other employees as determined by the Board of Directors (currently
two times per month). Employment commences December 1, 1997.
2.Base compensation shall be adjusted annually as necessary or
desirable by the Board of Directors of PAC in their sole and absolute
discretion.
3.Employee shall receive a bonus payable as soon as practical and
if possible within 60 days after the close of the fiscal year or
calendar year as follows.
(a) Three (3%) percent of the first $200,000.00 of net income
(b) Four (4%) percent of net income above $200,000.00 and up to
$400,000.00
(c )Five (5%) percent of net income above $400.000.00 and up to
$1,000,000.00.
4.The Board of Directors of PAC shall review whether or not it can
obtain stock options agreements from any affiliated company for the
benefit of employee, however, nothing in this agreement shall require
PAC to obtain said agreements.
For the purpose of calculating the bonus referred to in this
Section Five, Paragraph 3, net income shall be determined in accordance
with generally accepted accounting principles applied on a basis
consistent with prior accounting periods.
SECTION SIX
TERMINATION BY DEATH
If employee dies before his employment with PAC is otherwise
terminated, the payments to which he would then have been entitled
until the date of his death shall be paid in the same manner as called
for herein.
SECTION SEVEN
NON-TRANSFERABILITY
This is a personal agreement. Employee's rights hereunder may not
be sold, transferred, assigned, pledged or hypothecated.
SECTION EIGHT
SEVERABILITY
All agreements and covenants contained herein are severable,. And
in the event any of them, with the exception of those contained in
SECTIONS ONE and FOUR hereof, shall be held to be invalid by any
competent court, this contract shall be interpreted as if such invalid
agreements or covenants were not contained herein.
SECTION NINE
CHOICE OF LAW
It is the intention of the parties hereto that this agreement and
the performance hereunder and all suits and special proceedings
hereunder to construed in accordance with and under and other
proceeding that may be brought arising out of, in connection with, or
by reason of this agreement, the laws of the State of New Jersey shall
be applicable and shall govern to the exclusion of the law of any other
forum. Without regard to the jurisdiction in which any action or
special proceeding may be instituted.
SECTION TEN
EMPLOYEE'S RESPONSIBILITIES
(a) Employee shall exert his best efforts to manage the business
of PAC and perform such other duties as necessary.
(b) Employee shall furnish, as it develops, if requested by PAC,
the following information to company:
1. Current activities of employee by report.
2. Technical issues and the current developments of any products
of PAC or its subsidiaries.
3. Information on production.
4. Contents of all correspondence concerning sale or processing of
orders.
5. All complaints, comments and critical remarks pertaining to
manufacturing.
6. Any and all other information required by PAC.
(c) Employee shall maintain and will continue to strive to furnish
maximum service for PAC and it subsidiaries.
Service to PAC shall include, but shall mot be limited to the
following:
1. Regular attendance at all meeting , when possible.
2. Communication with customers, other employees, distributors,
and management.
3. Visits to customers and distributors as may be necessary.
4. Maintenance of adequate contact with customers.
5. Cooperation with customers carrier personnel, both in service
and sales.
6. Investigation and handling off warranty claims, service
problems and complaints.
7. Prompt handling of inquiries, correspondence, and orders.
8. Stimulation of customers who are slow in paying.
9. Speedy follow-up of all inquiries received from PAC or
distributors.
10. Following of all rules and regulations established by PAC
employees.
11. Working the number of hours per week necessary to perform the
duties and responsibilities of this contract in a highly professional
manner but not less than 40 hours per week.
12. Marketing of PAC's products and services.
13. New product research.
14. New product development.
15. Exploration of new business opportunities.
SECTION ELEVEN
EXPENSES
Employee shall pay all of his own expenses in connection with the
agreement. The only obligation of PAC is to pay the application
compensation in this agreement, In addition, employee shall receive the
same group medical insurance coverage and retirement benefits offered
to the highest senior level employee of PAC as permitted by law.
SECTION TWELVE
EMPLOYEE'S AUTHORITY
Employee shall have no right or authority, either express or
implied, to assume or create, on behalf of PAC, any obligation or
responsibility of any kind or nature. Employee shall not develop a new
product without PAC's consent can be withheld by PAC in its sole
discretion. Any new products or enhancements to products are the
property of PAC.
SECTION THIRTEEN
INDEMNIFICATION
Employee agrees to indemnify PAC, its agent, and employees,
against all claims, damages, losses, and expenses, including reasonable
attorneys' fees arising out of fraudulent, intentional, malicious,
criminal or dishonest acts caused in whole or in part by employee, of\r
that of anyone employed by employee, to the extend not covered by
insurance.
SECTION FOURTEEN
MODIFICATION
This agreement may be mofidifed by a written amendment executed by
each of the parties to the agreement.
SECTION FIFTEEN
SUB-AGENT
Employee is not permitted to appoint a sub-agent or hire other
employees, agents or independent contracts.
SECTION SIXTEEN
USE OF COMPANY NAME
Employee shall have no right to use the PAC name or that of its
parent company in such a way as to make the company liable for any
expense of any kind. PAC must be consulted and its instructions
followed in each case where the employee desire to use the PAC name for
any reason.
SECTION SEVENTEEN
OFFICE FACILITIES
PAC shall operate and maintain facilities, and shall provide at
its cost equipment, desks and supplies, suitable to employee's position
and adequate for the performance of his duties. Employer shall also
supply and pay for other expenses reasonably needed in connection with
employee's services at PAC's sole discretion.
SECTION EIGHTEEN
RECORDS AND FILES
All file records, charts, drawings, statement, invoices,
prototype, schematics and files of any kind including current and
future shall belong to the and remain the property of PAC. On
termination of employment, employee shall not be entitled to keep or
reproduce PAC's records or information related to any matter.
SECTION NINETEEN
VACATION
Employee shall be entitled to an annual vacation of two weeks.
Without PAC's consent, vacation time may not be accumulated but must be
taken in the year earned. Employee's vacation will be scheduled at
those times most convenient to PAC's business. In addition, employee
shall be allowed time each year to attend professional meetings or
seminars at employee's cost; provided that attendance at such meetings
or seminars shall be planned for minimum interference with the business
of PAC and approved by PAC.
SECTION TWENTY
DEATH BENEFITS
There are not death benefits provided by PAC.
SECTION TWENTY-ONE
TERMINATION
This contract shall be terminated immediately:
1. If employee becomes disqualified to be employed as President;
2. On the death of the employee;
3. If employer and employee shall mutually agree in writing to
termination;
4. If employee is sick or unable to work or fails to come to the
office for normal working hours for 20 business days or more during any
12 month period.
5. If employee fails or refuses to faithfully or diligently
perform the duties of his employment and the provisions of this
agreement.
Upon termination, no payment shall be made by PAC except as
expressly provided herein.
SECTION TWENTY-TWO
DATA SAFEGUARDS
All written information submitted by any customer, all computer
generation information and all files, and other information which is
referred to herein as proprietary information, will; be safeguarded by
employee. It shall not be copied or otherwise reproduced, nor
distributed by employee.
SECTION TWENTY-THREE
PROPRIETARY RIGHTS
All inventions, specifications, applications, habits, customer
lists, computer generated information, customer information,
techniques, prototypes, schematics, drawings and ideas utilized or
developed by employee in connection with this agreement are and shall
remain the sole property of PAC.
SECTION TWENTY-FOUR
ARBITRATION
All claims, demands, disputes, controversies, and differences that
may arise between the parties under his agreement shall be settled by
arbitration except for injunctive relief. The costs and expenses of
the arbitrators shall be borne equally between the employer and the
employee. Any action for injunctive relief shall be venued in the
Superior Court of New Jersey, Bergen County. All arbitration shall be
governed by New Jersey Statues and shall be administered through the
American Arbitration Association. Arbitration shall be decided by a
panel of three arbitrators selected by American Arbitration procedure.
All arbitration proceedings shall take place in Bergen County, New
Jersey.
SECTION TWENTY-FIVE
DISABILITY
There shall be mo payments made in the event of the disability or
failure to work. PAC shall not be obligated to provide disability
coverage, except as may be required by law.
SECTION TWENTY-SIX
RESTRICTIVE COVENANT
For and in consideration of this agreement, employee agrees to
execute a trade secret, non-disclosure and restrictive covenant in the
form attached hereto as EXHIBIT A.
SECTION TWENTY-SEVEN
ENTIRE CONTRACT BINDING EFFECT
This agreement constitutes the entire contract between the
parties.
SECTION TWENTY-EIGHT
BOARD OF DIRECTORS
Employee shall, until termination of this agreement, participate
as a member of the Board of Directors or PAC.
SECTION TWENTY-NINE
AUTOMOBILE EXPENSE
As additional compensation, employee shall receive an automobile
allowance of $375.00 payable monthly commencing January 1998.
This agreement shall be binding on the heirs, executors, trustees
and administrators of employee and shall be binding upon the inure to
the benefit of the heirs, successors and assigns of PAC.
By:\s\THOMAS R. PETRIE, Employee
PRECISION ASSEMBLY CORP.
By: \s\ANDRE' DI MINO, President
EXHIBIT 10.12
ASSET PURCHASE AGREEMENT
among
ELECTROPHARMACOLOGY, INC.,
and
ADM TRONICS UNLIMITED, INC.
and
AA NORTHVALE MEDICAL ASSOCIATES, INC.
dated
May 27, 1998
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into
this 27th day of May 1998, by and among Electropharmacology, Inc., a
Delaware corporation ("Seller"), AA Northvale Medical Associates, Inc.,
a New Jersey corporation ("Purchaser") and ADM Tronics Unlimited, Inc.,
a Delaware corporation ("ADM").
W I T N E S S E T H:
WHEREAS, Seller has been engaged, among other things, in the
business of developing, manufacturing, selling and renting the
SofPulse, as hereinafter defined; and
WHEREAS, Seller desires to transfer to Purchaser, and Purchaser
desires to acquire from Seller certain of the assets associated with
the development, manufacture, sale and rental of the SofPulse as
specified herein, for the consideration and on the terms and conditions
herein set forth.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant
and agree as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 Assets to be Purchased. On the terms and subject to the
conditions set forth herein, effective on the Closing Date (as
defined below) Seller shall sell, assign, convey, transfer and
deliver to Purchaser, its successors and assigns forever, and
Purchaser shall purchase and acquire from Seller, the following
assets, properties and certain rights of Seller used in the
development, manufacture, sale and rental of the SofPulse
(collectively, the "Assets"), free and clear of any and all liens,
claims and encumbrances, other than Permitted Liens (as hereafter
defined). As used herein, SofPulse shall mean the pulsed
electromagnetic stimulation device designed, developed,
manufactured and marketed by Seller under the name MRT-SofPulse or
SofPulse and related models including electrical and mechanical
design modifications that are deemed substantially equivalent for
use in the label indication specified in the Section 510(k)
premarket notification (the "Notification") attached hereto as
Exhibit 1.1, pursuant to which Magnetic Resonance Therapeutics,
Inc. (the predecessor of Seller) received clearance for commercial
marketing of the MRT 100 SofPulse pulsed electromagnetic
stimulation device from the United States Food and Drug
Administration (the "FDA") in January 1991.
The Assets shall consist of:
(a) the trade names, logos and other trade designations,
including, but not limited to, all rights to the names "SofPulse"
and "MRT 100" or variants thereof as a corporate or trade name of
Seller, and all applications therefor and registrations thereof or
rights to apply for the same and all other statutory or common law
rights Seller has or may have therein, all of which are described
on Schedule 1.1(a) hereto;
(b) the customer list and information relating to customers in
Seller's possession pertaining to the SofPulse, including, but not
limited to, names, addresses and ordering, billing, claims and other historical
data relating to such customers;
(c) the rights of Seller, by agreement or contract, with customers
or any other persons pertaining to the SofPulse, all of which contracts
and agreements are listed on Schedule 1.1(c) hereto;
(d) all open orders from customers for the SofPulse and related
work in progress that have not been completed on or before the Closing
Date, as set forth on Schedule 1.1(d) hereto and the right to
complete, bill and collect for the same;
(e) two (2) prototype units of the SofPulse, one of which shall be
the smart card unit and the other of which shall be the portable
battery operated unit, together with drawings and schematics for both units;
(f) all reasonably available financial, marketing and business
data, business and marketing plans, marketing techniques, literature,
materials, development plans, price lists and policies for the
SofPulse, in Seller's possession, whether proprietary or not;
(g)three hundred forty five (345) SofPulse Model 912 units as set
forth on Schedule 1.1(g) hereto (the "Devices"), of which certain
Devices are new and certain Devices are refurbished, as set forth on
Schedule 1.1(g) and of which certain Devices are in the possession of
Seller (the "Seller Devices") and certain Devices are in the possession
of lessees, representatives or study and trial investigators, as set
forth on Schedule 1.1(g), provided, however, that if through the use of
diligent efforts Purchaser is not able to confirm the recoverability
of any of the forty-nine (49) Devices under the control of study and
trial investigators before the Closing Date, Seller shall replace such
Devices with Devices currently in the possession of Seller and Seller
shall retain all right, title and interest in the Devices with
respect to which Purchaser could not confirm recoverability;
(h)all parts and supply inventory owned by Seller relating to the
SofPulse listed on Schedule 1.1(h) hereto (the "Parts");
(i)insurance recoveries or rights of Seller to the same relating
to damage to or loss of the Devices under any insurance policy
effective on the Closing Date;
(j)all permits, approvals, licenses and authorizations held by
Seller relating to the manufacture and marketing of the SofPulse, to
the extent they are transferable or assignable, all as listed and described on
Schedule 1.1(j) hereto;
(k)all reasonably available marketing materials, including but not
limited to, trade show displays, masters, proofs, photos, computer
files and artwork in Seller's possession relating to the SofPulse;
(l)the instruments and equipment used for quality control, quality
assurance and calibration activities of SofPulse owned by Seller
as set forth on Schedule 1.1(l) hereto (the "Equipment");
(m)except for the rights of Seller against the persons or entities
listed on Schedule 1.1(m), all of Seller's rights with respect to
enforcement of any and all noncompetition, nonsolicitation,
confidential and proprietary information obligations between Seller and
the employees or former employees of Seller not employed by Purchaser
after the Closing (as defined below) with respect to the SofPulse to
the extent relating to the label indication set forth in the
Notification and all claims of Seller with respect thereto, to the
extent assignable by Seller; provided, however, that Seller makes no
representation or warranty as to the enforceability of Seller's rights;
and
(n)inventory racks and quality control equipment racks (the
"Racks").
1.2 Purchaser's Freedom to Practice Under Seller's Patents and Seller's
Technology and Know-how.So long as this Agreement is effective and
Purchaser continues to meet its material obligations hereunder, from
and after the Closing Date, Seller hereby grants Purchaser a royalty-free
freedom, under Seller's Patents and Seller's Technology and Know-how, to
exclusively manufacture and market, worldwide, SofPulse for the
label indication specified in the Notification. Notwithstanding
anything herein to the contrary, if Purchaser is not meeting its
material obligations hereunder, Seller shall give Purchaser written
notice of such fact and Purchaser shall have twenty (20) days in which
to remedy such situation.
"Seller's Patents" as used herein shall mean patents and patent
applications listed on Schedule 1.2 attached hereto, continuations,
continuations-in-part, divisions and reissues thereof.
"Seller's Technology and Know-how" as used herein shall mean all
reasonably available data, information, trade secrets, know-how,
drawings, design specifications (electrical and mechanical designs and
redesigns) and operating instructions and procedures owned by Seller
related to SofPulse.
Notwithstanding anything herein to the contrary, Seller expressly
reserves the sole (except as contemplated by the proviso to this
sentence) right to research, have researched, develop, have developed,
manufacture, have manufactured, market and have marketed all products
based on Seller's Patents and Seller's Technology and Know-how for use,
throughout the world, other than for or in connection with the SofPulse
for the label indication specified in the Notification; provided,
however that if Seller pursues a premarket approval from the FDA for
SofPulse using the current setting specifications set forth in the
Notification, then Seller agrees to negotiate in good faith with
Purchaser an agreement on commercially reasonable terms to share the
costs and benefits of the approval and marketing SofPulse based on such
premarket approval. Notwithstanding the foregoing, if Seller's
research program leads to the identification of pulsed electromagnetic
signals based on an understanding of the mechanism of action of such
signals at the tissue, cell or molecular level, then Seller shall have
no such obligation to Purchaser. Nothing contained in this paragraph
shall detract from the rights granted to Purchaser's in the first
paragraph of this Section 1.2, and any new innovations made by
Purchaser independently of the use of Seller's Patents or Seller's
Technology and Know-how shall be the sole property of Purchaser.
If in the opinion of patent counsel acceptable both to Seller and to
Purchaser, any of Seller's Patents as defined in this Agreement is
infringed by a third party who manufactures and markets a product
deemed substantially equivalent to SofPulse for the label indication in
the Notification, then when requested to do so by Purchaser, Seller
shall file an infringement action in a Federal Court against the third
party to enjoin such infringement and to collect damages therefor. All
legal and other expenses incurred in this action shall be borne by
Purchaser and all damages recovered in this action shall be transferred
to Purchaser.
1.3 Purchaser's Rights to Additional Information and Know-how of
Seller. From and after the Closing Date, Seller further agrees to
provide to Purchaser the following for use by Purchaser in the
development, manufacture and marketing of SofPulse, to the extent in
Seller's possession:
(a) copies of all manuals and documents relating to manufacturing and
operating procedures for the SofPulse including but not limited to GMP
records, Schematics and sourced Bill of Materials;
(b) copies of the supplier list for the SofPulse and all information
and records relating to such suppliers, including, but not limited to,
names, addresses and ordering, billing and other historical data
relating to such suppliers;
(c) copies of all FDA related documentation concerning SofPulse,
including DMR, DHR, MDR, customer complaint files, FDA audit results
and closing letters, any FDA communications or follow-up letters, any
unredacted FDA filings and correspondence; and
(d) copies of all accounting and other files and records of Seller
principally relating to the SofPulse including, but not limited to,
transactions consummated by Seller on or prior to the Closing Date.
1.4 Assets Not Purchased: Except for the Assets and the rights
specifically set forth in Sections 1.2 and 1.3 above, Seller
specifically does not agree to sell, assign or otherwise convey to
Purchaser any other assets or properties, all of which other assets and
properties shall remain the sole property of Seller, including without
limitation, the following assets and properties:
(a) furniture, fixtures and other assets used by Seller in the business
of developing, manufacturing or marketing SofPulse;
(b)accounts receivable of Seller accruing prior to the Closing Date,
including open orders for sales of SofPulse (it being understood and
agreed, however, that Purchaser has certain rights to accounts
receivable accruing on and after the Effective Date, including those
relating to sales and leases of SofPulse, as provided in Section 1.14);
and
(c) SofPulse units other than those set forth on Schedule 1.1(g).
Purchaser agrees to promptly endorse and remit to Seller any funds
received by Purchaser from any of Seller's customers with respect to an
invoice for any period ending on or prior to the Closing Date, except
to the extent Purchaser is entitled to retain such funds pursuant to
Section 1.14. Seller agrees to promptly endorse and remit to Purchaser
any funds received by Seller from any of Seller's customers with
respect to an invoice for any period subsequent to the Closing Date
and, to the extent Purchaser is entitled thereto pursuant to Section
1.14, any funds received by Seller from any customer with respect to an
invoice for any period subsequent to the Effective Date. Purchaser
agrees that any such funds received by it from all such customers shall
be recorded against the oldest unpaid invoices for such customer until
all unpaid invoices through the Closing Date are cleared and such funds
are received by Seller (to the extent provided herein), provided,
however, that if a customer specifically denies any such invoice on
documented grounds of denial of reimbursement by Medicare, Purchaser's
obligations with respect to that invoice shall be void to the extent of
such denial.
1.5 Consideration. In full consideration of the sale and transfer of
the Assets as set forth in Section 1.1 and the rights granted pursuant
to Sections 1.2 and 1.3, Purchaser shall:
(a) deliver the following consideration to or at the direction of
Seller (collectively, the "Purchase Price"):
(i) 1,400,000 shares (the "Fixed Shares") of the $.0005 par value
common stock of ADM ("ADM Stock") plus a number of shares of ADM
Stock (together with the Fixed Shares, the "Shares") equal to
$650,000.00 divided by the average of the closing high bid and low
ask price of ADM Stock as reported on the NASDAQ Small Cap Market
for the five trading days immediately preceding the Effective
Date, which Shares shall be registered in the name of Seller or
Jones, Day, Reavis & Pogue ("JDRP"), with the actual number of
Shares to be registered in each name to be designated by Seller to
Purchaser not later than one (1) day prior to the Closing Date;
all of which Shares shall be delivered to Seller and JDRP as
provided in Section 1.10; and
(ii)two cash payments, each in the amount of $75,000, the first
such payment to be made on the Effective Date and the second such
payment to be made thirty (30) days after the Effective Date (each
a "Cash Payment"); and
(iii)a warrant (the "Warrant"), registered in the name of Seller,
in the form attached hereto as Exhibit 1.5(a)(iii), which Warrant
shall be delivered to Seller as provided in Section 1.10; and
(b)as of the Closing Date, assume and perform, satisfy and
discharge all obligations of Seller pursuant to the agreements set
forth on Schedule 1.5(b) and perform and fulfill all regulatory
(including FDA) obligations associated with the development,
manufacture, marketing and use of the SofPulse, in all cases as
and when the same shall be required to be performed, satisfied,
discharged or fulfilled, as the case may be (the "Assumed
Liabilities"), it being understood that between the Effective Date
and the Closing Date, Purchaser shall perform, satisfy, discharge
and fulfill the Assumed Liabilities pursuant to Section 1.14;
provided, however, that Seller shall remain solely responsible to
remedy the matters set forth in the letters from the FDA to Seller
dated January 14, 1998 and May 12, 1998 (the "FDA Letters").
1.6 Registration of Shares, Limitations on Sale of Shares, Repurchase
of Shares and Voting of Shares.
(a) The Shares and the shares of ADM Stock to be issued pursuant to the
Warrant, if any (the "Warrant Shares") shall be registered under the
Securities Act of 1933 as amended (the "Securities Act") and under
applicable state securities laws in accordance with the provisions of
Section 11 of this Agreement.
(b) Seller agrees that it shall not sell any Shares until sixty (60)
days following the Closing Date and JDRP agrees that it shall not sell
or otherwise dispose of any Shares until thirty (30) days following the
Closing Date. Seller and JDRP each further agrees that for the ninety
(90) day period commencing thirty-one (31) days after the Closing Date
and terminating one hundred twenty (120) days after the Closing Date,
in any calendar month, collectively, they will not sell or otherwise
dispose of a number of Shares in excess of five percent (5%) of the
average reported trading volume of ADM Stock during the immediately
preceding calendar month (such limitation not being cumulative) and
during the period commencing on the one hundred twenty first (121st)
day after the Closing Date and terminating on the first anniversary of
the Closing Date, in any calendar month, collectively, they will not
sell or otherwise dispose of a number of Shares in excess of ten
percent (10%) of the average reported trading volume of ADM Stock
during the immediately preceding calendar month (such limitation not
being cumulative). Furthermore, until the first anniversary of the
Closing Date, Seller and JDRP each agrees that prior to making any sale
of any Shares, it shall give verbal notice to ADM and ADM shall have
until 5:00 pm on the business day following receipt of such notice to
give verbal notice to Seller or JDRP, as applicable, that it will
purchase all, but not less than all of the Shares with respect to which
notice was given, at a price equal to the Fair Market Value (as defined
in the Warrant) of ADM Stock, with the determination of Fair Market
Value being made as of the date Seller or JDRP, as the case may be,
gives such notice. If ADM elects to purchase Shares as provided in
clause (ii) of the proviso to the immediately preceding sentence, the
closing of such purchase and sale shall take place within three (3)
business days following the date ADM gives such notice. If ADM fails
to timely give notice that it will purchase the Shares subject to
Seller's or JDRP's notice, as applicable, or if ADM fails to timely
close such purchase and sale, Seller or JDRP, as applicable, shall be
free to sell the Shares subject to its notice without again offering
such Shares to ADM. All notices pursuant to this Section 1.6(b) shall
be irrevocable. Notwithstanding anything in this Section 1.6(b) to the
contrary, the restrictions and limitations set forth in this Section
1.6(b), including the obligation to first offer Shares to ADM, shall
not apply to Shares transferred pursuant to a Change of Control or a
Change of Control Offer, where a Change of Control means any merger,
consolidation, share exchange or other extraordinary business
combination concerning ADM and a Change of Control Offer means any bona
fide offer by any person or group to acquire more than ten percent
(10%) of the outstanding shares of ADM Stock at a price not less than
the price of ADM Stock on the day such Change of Control Offer is made,
determined as set forth in Section 1.6(d).
(c)Seller agrees that for a one (1) year period commencing on the date
the Warrant Shares are issued to Seller, in any calendar month Seller
will not sell or otherwise dispose of a number of Warrant Shares in
excess of ten percent (10%) of the average reported trading volume of
ADM Stock during the immediately preceding calendar month (such
limitation not being cumulative).
(d) If the Shares have not been registered under the Securities Act and
under applicable state securities laws by the sixtieth (60th) day
following the Closing Date, then on such sixtieth (60th) day and on
each thirty (30) day anniversary thereof until the Shares are
registered under the Securities Act and under applicable state
securities laws (each such day being a "Purchase Date", provided that
if any such day is not a business day the next following business day
shall be the Purchase Date), if requested by JDRP by verbal notice to
ADM on the business day immediately preceding such Purchase Date, ADM
will purchase from JDRP for a purchase price of Twenty Thousand Dollars
($20,000) a number of Shares equal to Twenty Thousand (20,000) divided
by (a) if the ADM Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on NASDAQ, the last reported sale price of ADM Stock on such
exchange or system on the business day immediately prior to the
Purchase Date or if no such sale is made on such day, the average of
the closing high bid and low asked prices for such day on such exchange
or system, (b) if the ADM Stock is not so listed or admitted to
unlisted trading privileges but bid and asked prices are reported by
the National Quotation Bureau, Inc. (the "Bureau"), the average of the
last reported high bid and low asked prices reported by the Bureau on
the business day immediately prior to the Purchase Date, or (c) if the
ADM Stock is not so listed or admitted to unlisted trading privileges
and bid and asked prices are not so reported, the book value of a share
of ADM Stock as at the end of the fiscal quarter of ADM ending
immediately prior to the Purchase Date. ADM's obligation pursuant to
this Section 1.6(d) shall be limited to the purchase of an aggregate of
$60,000 worth of Shares if such registration has not occurred due to
circumstances not reasonably within the control of ADM.
(e) Seller and JDRP each agrees to permit the Chief Executive Officer
of ADM to vote the Shares owned by it pursuant to a Voting Trust
Agreement in form and content satisfactory to counsel to Seller, JDRP
and ADM, each acting reasonably.
1.7 Liabilities Not Assumed. Except for the Assumed Liabilities,
Purchaser specifically does not assume or agree to pay or discharge any
debts, liabilities or obligations of Seller, all of which shall be
retained by Seller (the "Retained Liabilities").
1.8 Purchase Price Allocation. The Purchase Price shall be allocated
among the Assets in a manner determined by Purchaser in its reasonable
discretion.
1.9 Effective Date and Closing Date. The Effective Date of this
Agreement shall be the date this Agreement is executed by all parties.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place as of the close of business, Pompano Beach,
Florida time, at the offices of Seller at 2301 NW 33rd Court, Suite
102, Pompano Beach, Florida 33069 not more than ten days after all of
the conditions to Closing set forth in Article 6 are satisfied or
waived (the date on which the Closing takes place being the "Closing
Date") or at such other time and place as the parties hereto shall
agree. If the Closing Date has not occurred on or before September 30,
1998, each party shall have the right to terminate this Agreement as
provided in Article 8.
1.10 Execution and Delivery of Closing Documents. At the Closing, (i)
Seller will deliver to Purchaser such assignments, consents to
assignments and good and sufficient instruments of transfer and
conveyance as shall be necessary to transfer, assign and convey to, and
to vest in, Purchaser good and merchantable title to the Assets, free
and clear of all liens, claims and encumbrances other than Permitted
Liens and such lists and descriptions of the Assets and such other
documents as Purchaser may reasonably request and (ii) Purchaser will
deliver to Seller and/or JDRP, as the case may be, (a) the Shares
registered as provided in Section 1.5(a)(i) and (b) the Warrant
registered in the name of Seller and (c) an Assumption Agreement in the
form of Schedule 1.10(ii)(c). At the Closing, each party also will
execute and deliver such other appropriate and customary documents as
any other party reasonably may request for the purpose of consummating
the transactions contemplated by this Agreement. All actions taken at
the Closing will be deemed to have been taken simultaneously at the
time the last of any such actions is taken or completed.
1.11 Covenant to Defend Title. Effective as of the Closing Date,
Seller hereby binds itself, and its successors and assigns, except with
respect to Permitted Liens, at Seller's sole cost and expense, to
warrant and defend title to the Assets unto Purchaser, and its
successors and assigns against every person whomsoever lawfully
claiming the same or any part thereof.
1.12 Further Assurances. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional
actions as either party may reasonably deem to be practical and
necessary or advisable in order to consummate the transactions
contemplated by this Agreement and to vest more fully in Purchaser the
ownership of and rights to the Assets and the other rights granted
hereunder as they existed immediately prior to the Closing and to vest
more fully in Seller or JDRP, as applicable, the ownership of and
rights to the Shares and the Warrant, and, if and when they are issued,
the Warrant Shares.
1.13 Option for Additional SofPulse Devices. For a period of 18 months
after the Closing Date, if Purchaser elects to manufacture or acquire
additional SofPulse Model 912 units (or variations thereof), then
Purchaser agrees to notify Seller of the number of such units that it
desires to manufacture or acquire and Seller shall have the option, for
a period of thirty (30) days, to sell to Purchaser such units at a
price of $3,400 per unit for refurbished units and $4,500 per unit for
new units; provided that Seller's option hereunder shall be limited to
80 refurbished SofPulse Model 912 units and 45 new SofPulse Model 912
units. If Seller is unable to or elects not to sell such units to
Purchaser, then Purchaser will have no further obligation or option to
purchase such units from Seller. This Section 1.13 shall not prevent
Purchaser from setting up a manufacturing operation provided that it
does not sell or lease any such units manufactured by it until and
unless it has complied with this Section 1.13.
1.14 Interim Operation of Business. During the period between the
Effective Date and the Closing Date, Purchaser shall manage and operate
Seller's business concerning the Assets (the "Business"), including,
without limitation, performing, satisfying and discharging all
obligations of Seller pursuant to the agreements set forth on Schedule
1.5(b) and perform and fulfill all regulatory (including FDA other than
the matters set forth in the FDA Letters) obligations associated with
the development, manufacture, marketing and use of the SofPulse, in all
cases as and when the same shall be required to be performed,
satisfied, discharged or fulfilled, as the case may be. To enable
Purchaser to manage and operate the Business, promptly after the
Effective Date, Seller shall deliver to Purchaser (at the sole cost and
expense of Seller) the Seller Devices, the Parts, the Equipment, the
Racks and such other of the Assets as are necessary to manage and
operate the Business. In consideration of such management and
operation of the Business by Purchaser, Purchaser shall be entitled to
retain all rental and sales revenues generated by the Assets with
respect to the period commencing on the Effective Date and terminating
on the Closing Date or such earlier date as is provided in the
following sentence ("Revenues"). If this Agreement is terminated
pursuant to Article 8, (i) Purchaser's right to manage and operate the
Business shall terminate concurrently with the termination of this
Agreement, (ii) Purchaser shall deliver to Seller any of the Assets
still in its possession or subject to its control that had been
delivered to Purchaser, (iii) Purchaser shall deliver to Seller the
excess of Revenues over Purchaser's out-of-pocket expenses actually
incurred in operating the Business (and shall promptly deliver to
Seller any Revenues subsequently received by Purchaser), and (iv)
Seller shall deliver to Purchaser any Cash Payments paid to Seller by
Purchaser; provided, however, that if such termination is pursuant to
Section 8.2 and is due to the nonsatisfaction of the conditions set
forth in Section 6.2(a), (d) or (e). Purchaser shall be entitled to
retain all Revenues received by Purchaser with respect to its operation
of the Business during the period from the Effective Date through such
termination date. Notwithstanding anything herein to the contrary,
Purchaser shall be entitled to set off against its obligation to
deliver any Assets or monies to Seller any Cash Payment not delivered
to Purchaser as required by the immediately preceding sentence.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.1 Organization and Good Standing of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware.
2.2 Power and Authority. Seller has the corporate power and authority
to own, lease and operate its properties and assets and to carry
on its business relating to the Assets as currently being
conducted.
2.3 Authorization and Validity. Seller has the corporate power and
authority to execute, deliver and perform its obligations under
this Agreement and the other documents executed or required to be
executed by it in connection with this Agreement. This Agreement
and the other documents executed or required to be executed by
Seller in connection with this Agreement have been or will be duly
authorized by all necessary corporate action; provided that Seller
needs to receive shareholder approval to the transactions
contemplated by this Agreement.
2.4 Binding Effect. This Agreement and the other documents executed
or required to be executed by Seller in connection with this
Agreement have been or will have been duly executed and delivered
by Seller and are or will be, when executed and delivered, the
legal, valid and binding obligations of Seller enforceable in
accordance with their terms except to the extent that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability; and
(c) rights to indemnification may be limited by considerations
of public policy.
2.5 No Violation. Neither the execution and performance of this
Agreement or the agreements described herein nor the consummation
of the transactions described herein or therein will:
(a) result in a violation or breach of (i) the certificate of
incorporation or by-laws of Seller; or (ii) subject to
obtaining the consents referred to in Schedule 2.8 hereto,
any material agreement or other material instrument under
which Seller is bound or to which any of the Assets are
subject, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the Assets other than
Permitted Liens, or
(b) violate, in any material respect, any applicable law or
regulation or any judgment or order of any court or
governmental agency.
Seller has complied in all material respects with all applicable
laws, regulations and licensing requirements, and has filed with
the proper authorities all necessary statements, applications,
notices, reports and any other filings with respect to Seller's
business, except where the failure to do so would not reasonably
be expected to have a material adverse effect on the Assets or the
intended use thereof by Purchaser.
2.6 Permits and Licenses; Compliance. Seller possesses all necessary
governmental licenses, franchises, permits, approvals,
authorizations, and rights, whether federal, state, local or
foreign, that are necessary for Seller to engage in the
manufacture and marketing of the SofPulse Model 912 units and
that, if not possessed, could reasonably be expected to have a
material adverse effect on the Assets or the intended use thereof
by Purchaser. Seller is in compliance with all such governmental
licenses, franchises, permits, approvals, authorizations, or
rights, and all federal, state or local laws or regulations
applicable to the Assets except where the failure to be in
compliance would not reasonably be expected to have a material
adverse effect on the Assets or the intended use thereof by
Purchaser.
2.7 Title to Assets. Seller owns the Assets free and clear of all
liens, claims and encumbrances except as contemplated by this
Agreement and except for the following:
(a) liens for non-delinquent ad valorem taxes and non-delinquent
statutory liens arising other than by reason of its default,
provided that the aggregate of such liens shall not exceed
Ten Thousand dollars ($10,000);
(b) such liens and minor imperfections of title as do not in any
material respect detract from the value thereof and do not
interfere with the present use of the properties subject
thereto; and
(c) the liens described on Schedule 2.7 hereto, which liens will
be discharged (or Purchaser will be provided with releases of
such liens) on or before the Closing Date.
Upon consummation of the transactions contemplated hereby,
Purchaser shall receive good and valid title to the Assets, free
and clear of all liens, claims and encumbrances other than those
set forth in Section 2.7(a) and (b) (the "Permitted Liens").
2.8 Consents. Except as set forth on Schedule 2.8 hereto, no
authorization, consent, approval, permit or license of, or filing
with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or
is required in connection with, the execution, delivery and
performance of this Agreement or the agreements or transactions
contemplated hereby on the part of Seller.
2.9 Absence of Certain Changes. Except as set forth on Schedule 2.9,
since April 15, 1998, Seller has not, with respect to the Assets:
(a) suffered any material adverse change in the Assets;
(b) mortgaged, pledged or subjected to any lien, lease, security
interest or other charge or encumbrance the Assets other than
Permitted Liens;
(c) suffered any damage or destruction to or loss of the Assets
(whether or not covered by insurance) that could reasonably
be expected to or does materially and adversely affect the
Assets;
(d) acquired or disposed of the Assets, other than in the
ordinary course of business;
(e) written up or written down the carrying value of the Assets
in any material amounts;
(f) waived any material rights or forgiven any material claims
with respect to the Assets;
(g) lost or terminated any customers (or had any customer fail to
renew its relationship with Seller) that could reasonably be
expected to materially and adversely affect the Assets or the
Business; or
(h) entered into any other commitment or transaction or
experienced any other event that is material to this
Agreement or to any of the other agreements and documents
executed or to be executed pursuant to this Agreement or to
the transactions described herein or therein, or that could
reasonably be expected to have, or has had, a material
adverse effect on the Assets.
2.10 Litigation. Except as set forth on Schedule 2.10 hereto, no legal
or administrative or other adversary proceeding or investigation
is currently pending against Seller and, to the best knowledge of
Seller, none is threatened or contemplated by any governmental
agency or other third party with respect to the Assets. Seller is
not subject to any continuing court or administrative order, writ,
injunction or decree applicable specifically to the Assets or
which would affect the obligations of Seller or the rights of
Purchaser hereunder. Seller has not received any notice from a
customer for any claim that could be made by such customer based
upon inadequate or negligent services, defective products, or
improper performance of or other breach of any contract with such
customer by Seller.
2.11 Condition of Assets. The Devices and Parts are in good working
condition and (except for ordinary wear and tear) repair for their
intended use in the ordinary course of business and conform in all
material respects with all applicable ordinances, regulations and
other laws and there are no known defects therein.
2.12 Contracts. The agreements set forth on Schedule 1.1(c) are a
complete and accurate listings of all agreements of the character
referred to in Section 1.1(c) and include all amendments and
modifications of the agreements so listed. All such agreements
are in full force and effect and are valid, binding, subsisting
and enforceable. No material defaults exist under any of such
agreements, and there is no existing breach, violation, default,
event of default, or event or act by Seller that, with or without
the giving of notice, lapse of time, or the occurrence of any
other event, would constitute a material default by Seller under
any such agreempurchasing the Assets or exercising the rights
granted by Seller to Purchaser hereunder. In addition, Seller
makes no representation or warranty that any design, drawing,
computer software, documentation, materials used, equipment used
or processes used or adapted for the development or manufacture of
the Assets or the use thereof by Purchaser is sufficient or is fit
for a particular purpose and Seller makes no representation or
warranty that Purchaser should rely on such design, drawings,
materials, documentation, equipment or process. Seller makes no
representation or warranty that Purchaser can or should continue
to conduct the business of manufacturing and marketing of SofPulse
in the same manner as it was conducted by Seller. Seller has
advised Purchaser that there are many competing and overlapping
patents, proprietary rights and trade secret claims in this area
of business, and that Purchaser shall rely on its own independent
evaluation of the patents, proprietary rights and trade secrets in
the conduct of its business.
Purchaser acknowledges that in making the decision to enter into
this Agreement and to consummate the transactions contemplated
hereby, Purchaser has relied solely on the basis of its own
independent investigation and due diligence and upon the express
written representations, warranties and covenants in this
Agreement. Without diminishing the foregoing sentence, Purchaser
acknowledges that Purchaser has (a) received and reviewed the
information regarding the Assets and the business of manufacturing
and marketing of SofPulse, (b) reviewed the past adverse events
relating to the business of manufacturing and marketing SofPulse
disclosed on Schedule 2.21, and (c) has had an opportunity to ask
questions regarding SofPulse, Seller's Patents and Seller's
Technology and Know-how. All of the representations and
warranties of Seller under this Agreement are reduced to writing
and contained in this Agreement and in the Schedules attached
hereto. Without diminishing the scope of the express written
representations, warranties and covenants of Seller in this
Agreement (including, without limitation the covenant made by
Seller in Section 4.5) and without affecting or impairing its
right to rely thereon, Purchaser acknowledges that Seller has not
made, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE
ASSETS AND SELLER'S PATENTS AND SELLER'S TECHNOLOGY AND KNOW-HOW
(INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS).
2.22 Access to Information. From the date hereof until the earlier of
the Closing or the termination of this Agreement, upon reasonable
notice, Seller shall and shall cause its officers, directors,
employees, agents, representatives, accountants and counsel to:
(i) afford the officers, employees and authorized agents,
accountants, counsel and representatives of Purchaser reasonable
access to the facilities, books and records of Seller and to those
officers, directors, employees, managers, members, agents,
accountants and counsel of Seller who have any knowledge relating
to, and to the books and records of Seller relating to, the Assets
and (ii) furnish to such representatives of Purchaser such
additional financial and operating data and other information
regarding the assets, properties and good will of the Assets (or
legible copies thereof) as Purchaser or such representatives may
from time to time reasonably request.
2.23 Financial Information. Seller has heretofore delivered to Seller
true and correct copies of all forms, statements and documents
filed by Seller with the Securities and Exchange Commission (the
"SEC") since January 1, 1997 (the "Seller SEC Documents"). As of
their respective dates, the Seller SEC Documents did not contain
any 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, in light of the circumstances under which
they were made, not misleading. The financial statements
contained in the Seller SEpurchasing the Assets or exercising the rights
granted by Seller to Purchaser hereunder. In addition, Seller
makes no representation or warranty that any design, drawing,
computer software, documentation, materials used, equipment used
or processes used or adapted for the development or manufacture of
the Assets or the use thereof by Purchaser is sufficient or is fit
for a particular purpose and Seller makes no representation or
warranty that Purchaser should rely on such design, drawings,
materials, documentation, equipment or process. Seller makes no
representation or warranty that Purchaser can or should continue
to conduct the business of manufacturing and marketing of SofPulse
in the same manner as it was conducted by Seller. Seller has
advised Purchaser that there are many competing and overlapping
patents, proprietary rights and trade secret claims in this area
of business, and that Purchaser shall rely on its own independent
evaluation of the patents, proprietary rights and trade secrets in
the conduct of its business.
Purchaser acknowledges that in making the decision to enter into
this Agreement and to consummate the transactions contemplated
hereby, Purchaser has relied solely on the basis of its own
independent investigation and due diligence and upon the express
written representations, warranties and covenants in this
Agreement. Without diminishing the foregoing sentence, Purchaser
acknowledges that Purchaser has (a) received and reviewed the
information regarding the Assets and the business of manufacturing
and marketing of SofPulse, (b) reviewed the past adverse events
relating to the business of manufacturing and marketing SofPulse
disclosed on Schedule 2.21, and (c) has had an opportunity to ask
questions regarding SofPulse, Seller's Patents and Seller's
Technology and Know-how. All of the representations and
warranties of Seller under this Agreement are reduced to writing
and contained in this Agreement and in the Schedules attached
hereto. Without diminishing the scope of the express written
representations, warranties and covenants of Seller in this
Agreement (including, without limitation the covenant made by
Seller in Section 4.5) and without affecting or impairing its
right to rely thereon, Purchaser acknowledges that Seller has not
made, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE
ASSETS AND SELLER'S PATENTS AND SELLER'S TECHNOLOGY AND KNOW-HOW
(INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS).
2.22 Access to Information. From the date hereof until the earlier of
the Closing or the termination of this Agreement, upon reasonable
notice, Seller shall and shall cause its officers, directors,
employees, agents, representatives, accountants and counsel to:
(i) afford the officers, employees and authorized agents,
accountants, counsel and representatives of Purchaser reasonable
access to the facilities, books and records of Seller and to those
officers, directors, employees, managers, members, agents,
accountants and counsel of Seller who have any knowledge relating
to, and to the books and records of Seller relating to, the Assets
and (ii) furnish to such representatives of Purchaser such
additional financial and operating data and other information
regarding the assets, properties and good will of the Assets (or
legible copies thereof) as Purchaser or such representatives may
from time to time reasonably request.
2.23 Financial Information. Seller has heretofore delivered to Seller
true and correct copies of all forms, statements and documents
filed by Seller with the Securities and Exchange Commission (the
"SEC") since January 1, 1997 (the "Seller SEC Documents"). As of
their respective dates, the Seller SEC Documents did not contain
any 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, in light of the circumstances under which
they were made, not misleading. The financial statements
contained in the Seller SEC Documents are true, complete and
correct in all material respects and were prepared in accordance
with generally accepted accounting principles applied on a
consistent basis, and fairly present the financial position of
Seller as of the dates and for the periods indicated.
2.24 Investment Representations and Warranties.
(a) The Shares being acquired by Seller, the Warrant and the
shares to be issued pursuant to the Warrant, if any (the
"Warrant Shares") are being acquired by Seller for its own
account and not with a view to or for sale or other
disposition in connection with any distribution of all of
such Shares, the Warrant or the Warrant Shares, or any part
thereof, in any transaction that would be in violation of the
Securities Act or the securities laws of any state, without
prejudice, however, to the rights of Seller at all times to
sell or otherwise dispose of all or any part of such Shares,
the Warrant and the Warrant Shares under an effective
registration statement under the Act or under an exemption
from such registration available under the Securities Act.
(b) Seller represents that it is capable of evaluating the merits
and risks of an investment in such Shares, the Warrant and
the Warrant Shares and has such knowledge, experience and
skill in financial and business matters that it is capable of
evaluating the merits and risks of the investment in ADM and
the suitability of such Shares, the Warrant and the Warrant
Shares as an investment and can bear the economic risk of an
investment in such Shares, the Warrant and the Warrant
Shares. No guarantees have been made or can be made with
respect to the future value, if any, of such Shares, the
Warrant, or the Warrant Shares or the profitability or
success of the business of ADM.
(c) Seller understands that such Shares, the Warrant and the
Warrant Shares will not have been registered pursuant to the
Securities Act or any applicable state securities laws, that
such Shares, the Warrant and the Warrant Shares will be
characterized as "restricted securities" under federal
securities laws, and that under such laws and applicable
regulations such Shares, the Warrant and the Warrant Shares
cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom. In this
connection, Seller represents that it is familiar with Rule
144 promulgated under the Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to
the transfer agent for securities of ADM (or a notation may
be made in the appropriate records of ADM) in connection with
such Shares, the Warrant and the Warrant Shares, but only to
the extent customary for securities which are "restricted
securities."
ARTICLE 2A
REPRESENTATIONS AND WARRANTIES OF JDRP
JDRP represents and warrants to ADM as follows:
(a) The Shares being acquired by JDRP are being acquired by JDRP
for its own account and not with a view to or for sale or
other disposition in connection with any distribution of all
of such Shares, or any part thereof, in any transaction that
would be in violation of the Securities Act or the securities
laws of any state, without prejudice, however, to the rights
of JDRP at all times to sell or otherwise dispose of all or
any part of such Shares under an effective registration
statement under the Act or under an exemption from such
registration available under the Securities Act.
(b) JDRP represents that it is capable of evaluating the merits
and risks of an investment in such Shares and has such
knowledge, experience and skill in financial and business
matters that it is capable of evaluating the merits and risks
of the investment in ADM and the suitability of such Shares
as an investment and can bear the economic risk of an
investment in such Shares. No guarantees have been made or
can be made with respect to the future value, if any, of such
Shares or the profitability or success of the business of
ADM.
(c) JDRP understands that such Shares will not have been
registered pursuant to the Securities Act or any applicable
state securities laws, that such Shares will be characterized
as "restricted securities" under federal securities laws, and
that under such laws and applicable regulations such Shares
cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom. In this
connection, JDRP represents that it is familiar with Rule 144
promulgated under the Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to
the transfer agent for securities of ADM (or a notation may
be made in the appropriate records of ADM) in connection with
such Shares, but only to the extent customary for securities
which are "restricted securities."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and ADM, jointly and severally, represent and warrant to
Seller as follows:
3.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
the State of New Jersey. ADM is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
3.2 Power and Authority. Purchaser and ADM each has the corporate
power and authority to own, lease and operate its respective
properties and assets and to carry on its respective business as
currently being conducted and ADM has the corporate power and
authority to issue the Shares, the Warrant and the Warrant Shares
as provided in Section 1.5.
3.3 Authority and Validity. Purchaser and ADM each has the corporate
power and authority to execute, deliver and perform its respective
obligations under this Agreement and the other documents executed
or required to be executed by it in connection with this
Agreement, and this Agreement and the other documents executed or
required to be executed by Purchaser and/or ADM in connection with
this Agreement have been duly authorized by all necessary
corporate action of Purchaser or ADM, as the case may be.
3.4 Binding Effect. This Agreement and the other documents executed
or required to be executed by Purchaser and/or ADM in connection
with this Agreement have been or will have been duly authorized,
executed and delivered by Purchaser or ADM, as the case may be,
and are or will be, when executed and delivered, the legal, valid
and binding obligations of Purchaser or ADM, as the case may be,
enforceable in accordance with their terms except to the extent
that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
3.5 No Violation. Neither the execution and performance of this
Agreement or the agreements described herein nor the consummation
of the transactions described herein or therein will:
(a) result in a violation or breach of (i) the respective
certificate of incorporation or by-laws of Purchaser or ADM
or (ii) subject to obtaining the consents referred to on
Schedule 3.6 hereto, any material agreement or other material
instrument under which Purchaser or ADM is bound or to which
any of the assets of Purchaser or ADM are subject, or result
in the creation or imposition of any lien, charge or
encumbrance upon any of the assets or properties of Purchaser
or ADM; or
(b) violate, in any material respect, any applicable law or
regulation or any judgment or order of any court or
governmental agency.
Purchaser and ADM each has complied in all material respects with
all applicable laws, regulations and licensing requirements, and
has filed with the proper authorities all necessary statements,
applications, notices, reports and any other filings with respect
to Purchaser's and ADM's business, as applicable, except where the
failure to do so would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
assets, properties or prospects of Purchaser or ADM, as the case
may be.
3.6 Consents. Except as set forth on Schedule 3.6 hereto, no
authorization, consent, approval, permit or license of, or filing
with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or
is required in connection with, the execution, delivery and
performance of this Agreement or the agreements or transactions
contemplated hereby on the part of Purchaser or ADM.
3.7 Finder's Fee. Neither Purchaser nor ADM has incurred any
obligation on behalf of itself or Seller for any finder's,
broker's or agent's fee in connection with the transactions
contemplated hereby, except to Robert Rohinsky, which fee
Purchaser and ADM agree they shall pay in accordance with its
terms.
3.8 ADM's Stock and Securities Compliance. Since January 1, 1997, ADM
has timely filed all required forms, statements and documents with
the SEC, all of which have complied in all material respects with
all applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended. ADM has heretofore
delivered to Seller true and correct copies of all such forms,
statements and documents filed by ADM with the SEC since January
1, 1997 (the "ADM SEC Documents"). As of their respective dates,
the ADM SEC Documents did not contain any 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, in
light of the circumstances under which they were made, not
misleading. The financial statements contained in the ADM SEC
Documents are true, complete and correct in all material respects
and were prepared in accordance with generally accepted accounting
principles applied on a consistent basis, and fairly present the
financial position of ADM as of the dates and for the periods
indicated. Since the date that the last ADM SEC Document filed
with the SEC was filed with the SEC, no event or condition has
occurred that (i) may reasonably be expected to result in a
material adverse effect on the condition (financial or otherwise)
of ADM or on its assets, properties or prospects or (ii) requires
the filing by ADM of any form, statement or document with the SEC.
Since the date of the last financial statement included in the ADM
SEC Document, ADM has not incurred any material liabilities other
than liabilities incurred in the ordinary and usual course of
business consistent with past practice. Seller and JDRP each
acknowledge having received copies of correspondence from NASDAQ
regarding the possible delisting of ADM Stock and also acknowledge
being informed that ADM might effect a reverse split, and that
either of such matters could have an adverse effect on ADM Stock.
The capitalization of ADM is as set forth on Schedule 3.8. Except
as described on Schedule 3.8, there is not outstanding any
security, right, subscription, warrant, option, stock appreciation
right or other agreement or other security that is convertible
into, exercisable for, or entitles the holder to purchase or
acquire any capital stock from ADM. The Shares, the Warrant and
the Warrant Shares have been duly and validly authorized. The
Shares and the Warrants when issued as provided herein, will have
been duly and validly issued and registered in the name of Seller
or JDRP, as applicable. The Shares and the Warrant, when issued
as provided herein, shall be fully paid and nonassessable. The
issuance of the Shares and the Warrant shall comply in all
respects with all requirements under the Securities Act (subject
to the accuracy of the representations and warranties made by
Seller and JDRP in Section 2.24 and Article 2A, respectively) and
with all requirements of the NASDAQ. The Warrant Shares have been
duly and validly reserved for issuance and when issued as provided
herein and paid for as provided in the Warrant, shall be duly and
validly issued and registered in the name of Seller, shall be
fully paid and nonassessable, and shall comply in all respects
with all applicable requirements of the Securities Act (subject to
the accuracy of the representations and warranties made by Seller
and JDRP in Section 2.24 and Article 2A, respectively) and with
all applicable requirements of NASDAQ.
3.9 Permits and Licenses; Compliance. Purchaser and ADM each
possesses all necessary governmental licenses, franchises,
permits, approvals, authorizations, and rights, whether federal,
state, local or foreign, that are necessary for Purchaser and ADM,
as applicable, to engage in its respective business and that, if
not possessed, could reasonably be expected to have a material
adverse effect on the condition of Purchaser or ADM (financial or
otherwise) or on its respective assets, properties or prospects.
Purchaser and ADM each is in compliance with all such governmental
licenses, franchises, permits, approvals, authorizations, or
rights, and all federal, state or local laws or regulations
applicable to its respective business except where the failure to
be in compliance could not reasonably be expected to have a
material adverse effect on the condition of Purchaser or ADM
(financial or otherwise) or on its respective assets, properties
or prospects.
3.10 Absence of Certain Changes. Except as set forth on Schedule 3.10,
since December 31, 1997, neither Purchaser not ADM has:
(a) suffered any material adverse change in its business;
(b) suffered any damage or destruction or loss that could
reasonably be expected to or does materially and adversely
affect the condition of Purchaser or ADM (financial or
otherwise) or its respective assets, properties or prospects;
(c) acquired or disposed of any assets or properties other than
in the ordinary course of business; or
(d) entered into any other commitment or transaction or
experienced any other event that is material to this
Agreement or to any of the other agreements and documents
executed or to be executed pursuant to this Agreement or to
the transactions described herein or therein, or that could
reasonably be expected to have, or has had, a material
adverse effect on the condition of Purchaser or ADM
(financial or otherwise) or on its respective assets,
properties or prospects.
3.11 Litigation. Except as set forth on Schedule 3.11, no material
legal or administrative or other adversary proceeding or
investigation is currently pending against Purchaser or ADM and,
to the best knowledge of Purchaser and ADM, none is threatened or
contemplated by any governmental agency or other third party.
Neither Purchaser nor ADM is subject to any continuing court or
administrative order, writ, injunction or decree.
ARTICLE 4
COVENANTS OF SELLER
4.1 Consents. Seller will use its reasonable commercial efforts to
obtain the necessary written consents and approvals of the parties
listed on Schedule 2.8 hereto to the transactions contemplated in
this Agreement. Within ten (10) days after the Effective Date,
Seller shall deliver to Purchaser agreements by the holders of
greater than fifty percent (50%) of Seller's outstanding common
stock approving the transactions contemplated by this Agreement
and agreeing to vote in favor of any shareholder resolution
approving the transactions contemplated by this Agreement.
4.2 Ownership and Operation of the Assets. After the Closing Date
Purchaser will have the sole control of the Assets set forth
herein.
4.3 Exclusive Negotiations. Until the earlier of the Closing Date or
the termination of this Agreement, and subject to the fiduciary
duties of the directors of Seller, Seller agrees that none of
Seller or any of the officers, directors, employees, investment
bankers, attorneys, accountants or other agents of Seller will,
directly or indirectly, solicit or accept from any person or
entity any offer or expression of interest in, or with respect to
an acquisition, combination, merger or similar transaction
involving Seller with respect to the Assets. Upon receipt of any
unsolicited bona fide offer or expression of interest in or with
respect to any such transaction, Seller agrees to promptly inform
Purchaser of the existence and terms of such offer or expression
of interest.
4.4 Non-Compete. For a period of five (5) years from the Closing
Date, (i) Seller, Arup Sen and David Saloff each agrees neither to
manufacture and sell nor to assist a third party (other than
Purchaser, ADM and their affiliates) to manufacture and sell a
medical device that is substantially equivalent to SofPulse for
the label indication in the Notification and (ii) Seller agrees to
grant Purchaser the right of first refusal to manufacture and sell
for the label indication in the Notification, any pulsed
electromagnetic stimulation therapeutic device product developed
by Seller to the extent that it is cleared for commercial
marketing for the label indication in the Notification, provided
that the foregoing shall not diminish any of the rights granted to
Purchaser hereunder. During this five-year period, Seller agrees
to keep Purchaser informed of research and development conducted
by Seller on Seller's Patents and Seller's Technology and Know-how
related to the label indication in the Notification and Purchaser
agrees to keep confidential all such information until such time
as Seller makes public disclosure of such new information. In the
course of Seller's future research and development program during
said five-year period, if Seller receives a premarket approval
(PMA) from the FDA on a variant of SofPulse for a label indication
other than as set forth in the Notification, then Seller agrees to
first offer Purchaser the opportunity to negotiate the right to
manufacture such a device to the extent that Seller, at the time
of such PMA, has the right and desire to offer the manufacturing
right to a third party.
4.5 Warranty Obligation. Between the Effective Date and the Closing
Date, and in accordance with Purchaser's management and operation
of the Business as set forth in Section 1.14, Purchaser shall be
responsible for performing all repair work on the Devices, whether
or not such Devices are within any applicable warranty period;
provided, however, that Seller shall reimburse Purchaser for
Purchaser's (i) out-of-pocket costs for materials in connection
with such repair work to the extent such materials are not
included within the Parts and (ii) Purchaser's actual labor costs
excluding any allocation of overhead. After the Closing Date,
Purchaser shall be responsible for performing all repair work on
the Devices, whether or not such Devices are within any applicable
warranty period; provided, however, that for the period commencing
on the Effective Date and terminating on the earlier of (i) one
year after the last Seller Device is sold or rented by Purchaser
or (ii) eighteen (18) months after the Effective Date, Seller
shall reimburse Purchaser for Purchaser's (i) out-of-pocket costs
for materials in connection with such repair work to the Seller
Devices to the extent such materials are not included within the
Parts and (ii) Purchaser's actual labor costs in connection with
such repair work to the Seller Devices excluding any allocation of
overhead.
4.6 Sales and Use Tax. Seller shall be responsible for any sales or
use tax payable in connection with the sale of the Assets
hereunder; provided that Purchaser will reasonably assist Seller
to minimize any such sales or use tax.
4.7 Insurance. Seller shall obtain and pay for a "tail" insurance
policy insuring Seller and Purchaser against product liability
claims with respect to the use of Devices prior to the Closing
Date, which insurance policy will be substantially in the form of
Exhibit 4.7.
4.8 Assistance. For a period of two (2) months following the
Effective Date, Seller at no charge to Purchaser (other than for
out-of-pocket expenses) shall cause David Saloff and Se Yong Oh
(or such other qualified individual as Seller may designate if
either of such individuals is unable to provide such assistance)
to provide reasonable assistance (not exceeding in the case of
either individual, on average 30 hours per week or 40 hours in any
specific week) to Purchaser in connection with the operation of
the Business.
ARTICLE 5
COVENANTS OF PURCHASER
5.1 Consents. Purchaser and ADM each will use its reasonable
commercial efforts to obtain the necessary written consents and
approvals of the parties listed on Schedule 3.6 hereto to the
transactions contemplated in this Agreement.
5.2 Exclusive Negotiations. Until the earlier of the Closing Date
or the termination of this Agreement, and subject to the
fiduciary duties of the directors of ADM, Purchaser and ADM
each agrees that none of Purchaser or ADM or any of the
officers, directors, employees, investment bankers, attorneys,
accountants or other agents of Purchaser or ADM will, directly
or indirectly, solicit or accept from any person or entity any
offer or expression of interest in, or with respect to a
similar transaction involving, Purchaser or ADM with respect to
a product or a business that competes, directly or indirectly,
with the commercial use of the Assets (limited to the label
indications).
5.3 Operation of Business. Until the earlier of the Closing Date
or the termination of this Agreement, Purchaser agrees to
operate its business under its normal business practice and not
enter into any transaction other than those listed on Schedule
5.3 hereto, that could reasonably be expected to have a
material adverse effect on the condition of Purchaser
(financial or otherwise) or on its assets, properties or
prospects.
5.4 Conduct of Business. Purchaser agrees, for the twelve month
period commencing on the Closing Date, to conduct the business
of manufacturing and marketing of SofPulse in the ordinary
course of business and not alter its reasonable business
practice or take or omit to take any action that in any manner
could reasonably be expected to adversely affect revenues from
the manufacturing and marketing of SofPulse; provided, however,
that this shall not prevent Purchaser from making such changes
in the manner in which it manufactures and markets the SofPulse
as it deems appropriate in the exercise of its reasonable
business judgment, including, without limitation, pricing
changes. ADM agrees that it and its affiliates shall assist
Purchaser with the manufacturing and marketing of SofPulse,
provided that such assistance is on arms' length terms and
conditions. Purchaser acknowledges that Seller is relying on
Purchaser's obligations under this Section 5.4 in setting the
thresholds for exercise of the Warrant pursuant to Section 1.5.
5.5 Audit Rights. Purchaser agrees that Seller shall have the
right to examine Purchaser's books and records for the purpose
of determining whether, and to what extent, the Warrant is
exercisable, and Purchaser agrees to make such books and
records available for inspection and copying by Seller and its
authorized representatives; provided, however, that (i) Seller
and its representatives agree to keep such information
confidential and to use such information solely for the purpose
of determining whether and to what extent the Warrant is
exercisable, (ii) all copying shall be at the sole cost and
expense of Seller, and (iii) such inspection shall occur during
Purchaser's normal business hours.
5.6 Insurance. Purchaser shall obtain and pay for an insurance
policy insuring Seller and Purchaser against products liability
claims with respect to the use of Devices from and after the
Closing Date.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Seller. The obligations of Seller
to consummate the transactions contemplated by this Agreement
(other than the covenants and agreements of Seller that under
the terms hereof are to be fulfilled prior to the Closing Date)
shall be subject to the fulfillment, at or prior to the Closing
of each of the following conditions in all material respects:
(a) Representations, Warranties and Covenants. The representations
and warranties of Purchaser and ADM contained in this Agreement
shall have been true and correct as of the date they were made
or deemed to have been made and shall be true and correct as of
the Closing Date, with the same force and effect as if made as
of the Closing Date, except for such changes as are permitted
or contemplated by this Agreement, and other than such
representations and warranties as are made as of another date.
The covenants and agreements contained in this Agreement to be
complied with by Purchaser and ADM, as the case may be, on or
before the Closing Date shall have been complied with. Seller
shall have received a certificate from Purchaser and from ADM
to such effect, dated as of the Closing Date and signed by the
Chief Executive Officer of Purchaser or ADM, as the case may
be.
(b) No Proceeding or Litigation. No legal or regulatory action
shall have been commenced or threatened by or before any court
or any federal, state or local governmental authority
(collectively, "Governmental Authority") against Seller,
Purchaser or ADM seeking to restrain or adversely alter the
transactions contemplated by this Agreement or which is likely
to render it impossible or unlawful to consummate such
transactions or which could reasonably be expected to have a
material adverse effect on the condition of Purchaser or ADM
(financial or otherwise) or on its respective assets,
properties or prospects.
(c) Consents and Approvals. Seller shall have received, each in
form and content satisfactory to Seller, all authorizations,
consents, orders and approvals listed on Schedule 2.8 which, in
each case, shall not contain any material conditions or
limitations that are reasonably unacceptable to Seller.
(d) Legal Opinion. Seller shall have received the legal opinion of
counsel to Purchaser and ADM in form and content satisfactory
to counsel to Seller, Purchaser and ADM, each acting reasonably
(the "Purchaser Legal Opinion").
(e) Registration of Shares. The Registration Statement (as defined
in Section 11.1) shall have been filed with the SEC pursuant to
the Securities Act.
6.2 Conditions to Obligations of Purchaser and ADM. The
obligations of Purchaser and ADM to consummate the transactions
contemplated by this Agreement (other than the covenants and
agreements of Purchaser and ADM that under the terms hereof are
to be fulfilled prior to the Closing Date) shall be subject to
the fulfillment, at or prior to the Closing, of each of the
following conditions in all material respects:
(a) Representations, Warranties and Covenants. The representations
and warranties of Seller contained in this Agreement shall have
been true and correct as of the date as of which they were made
or deemed to have been made and shall be true and correct as of
the Closing Date, with the same force and effect as if made as
of the Closing Date except for such changes as are permitted or
contemplated by this Agreement, other than such representations
and warranties as are made as of another date. The covenants
and agreements contained in this Agreement to be complied with
by Seller on or before the Closing Date shall have been
complied with. Purchaser shall have received a certificate
from Seller to such effect dated as of the Closing Date and
signed by the Chief Executive Officer of Seller;
(b) No Proceeding or Litigation. No legal or regulatory action
shall have been commenced or threatened by or before any
Governmental Authority against Seller, Purchaser or ADM seeking
to restrain or adversely alter the transactions contemplated
hereby or which is likely to render it impossible or unlawful
to consummate the transactions contemplated by this Agreement
or which could have a material adverse effect on the Assets.
(c) Consents and Approvals. Purchaser and ADM each shall have
received, each in form and substance reasonably satisfactory to
Purchaser or ADM, as the case may be, all authorizations,
consents, orders and approvals listed on Schedule 3.6 which, in
each case, shall not contain any material conditions or
limitations that are reasonably unacceptable to Purchaser or
ADM, as the case may be.
(d) Legal Opinion. Purchaser and ADM shall have received the legal
opinion of counsel to Seller in form and content satisfactory
to counsel to Seller, Purchaser and ADM, each acting reasonably
(the "Seller Legal Opinion").
(e) Seller Shareholder Approval. Seller shall have obtained the
approval of its shareholders to the transactions contemplated
by this Agreement; provided that this shall not be a condition
to Closing if Seller provides Purchaser and ADM with an opinion
of counsel, reasonably acceptable to Purchaser, that such
shareholder approval is not required.
ARTICLE 7
INDEMNIFICATION
7.1 Survival of Representations and Warranties. The
representations and warranties contained in Article 2 and
Article 3 shall expire on June 30, 1999, except that the
provisions of Sections 2.2, 2.3 2.7, 2.19, 2.21 and Sections
3.2, 3.3 and 3.8 shall survive the Closing forever.
7.2 Indemnification of Seller.
(a) Subject to the terms and conditions of this Article 7,
Purchaser hereby agrees to indemnify, defend and hold each of
Seller and its officers, directors, agents, attorneys and
affiliates harmless from and against all losses, obligations,
assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages") asserted
against or incurred by Seller or such identified persons by
reason of or resulting from (i) a representation or warranty
made by Purchaser or ADM in Article 3 being incorrect or untrue
or (ii) a breach by Purchaser of any covenant contained herein
or in any of the agreements executed pursuant hereto or (iii)
any failure by Purchaser to pay, perform or otherwise discharge
any of the Assumed Liabilities.
(b) Subject to the terms and conditions of this Article 7, ADM
hereby agrees to indemnify, defend and hold each of Seller and
its officers, directors, agents, attorneys and affiliates
harmless from and against all Damages asserted against or
incurred by Seller or such identified persons by reason of or
resulting from (i) a representation or warranty made by ADM in
Article 3 being incorrect or untrue or (ii) a breach by ADM of
any covenant made by ADM contained herein or in any of the
agreements executed pursuant hereto.
(c) Seller agrees to cooperate with Purchaser and ADM in the event
of any settlement negotiated by Purchaser or ADM with regard to
the indemnification provided herein. In no event shall the
total amount payable pursuant to this Section 7.2(c) with
respect to the incorrectness of a representation or warranty
exceed the Purchase Price or with respect to a breach of a
covenant or agreement exceed the sum of the Purchase Price plus
the net profit earned by Purchaser with respect to the
operation of the Assets (including all rights granted to
Purchaser hereunder).
7.3 Indemnification of Purchaser and ADM. Subject to the terms and
conditions of this Article 7, Seller hereby agrees to
indemnify, defend and hold Purchaser and ADM and their
officers, directors, agents, attorneys and affiliates harmless
from and against all Damages asserted against or incurred by
Purchaser, ADM or such indemnified persons by reason of or
resulting from:
(a) a representation or warranty contained in Article 2 being
incorrect or untrue or a breach by Seller of any covenant
contained herein or in any agreement executed pursuant hereto
or any failure by Seller to pay, perform or discharge any of
the Retained Liabilities; or
(b) the APS, O'Connell, and 1993 and 1994 Diapulse litigations as
disclosed in Seller's annual report for the fiscal year ended
December 31, 1997 filed with the SEC on Form 10-K; or
(c) the subject matter or content of the FDA Letters.
Purchaser and ADM agree to cooperate with Seller in the event of any
settlement negotiated by Seller with regard to the indemnification
provided herein. In no event shall the total amount payable pursuant
to this Section 7.3 exceed the Purchase Price.
7.4 Assertion and Resolution of Indemnification Claim.
(a) Any permitted indemnitee under Sections 7.2 and 7.3 (an
"Indemnified Party") shall give notice to the person
responsible for indemnification (an "Indemnifying Party") of
any claim as to which indemnification may be sought as soon as
possible after the Indemnified Party has actual knowledge
thereof and the amount thereof, if known; provided, however,
that in the case of a claim based upon a representation or
warranty being incorrect or untrue notice of such claim must be
given to the Indemnifying Party before the expiration of such
representation or warranty pursuant to Section 7.1. The
Indemnified Party shall supply to the Indemnifying Party any
other information in the possession of the Indemnified Party
regarding such claim, and will permit the Indemnifying Party
(at its expense) to assume the defense of any third party claim
and any litigation resulting therefrom, provided that counsel
for the Indemnifying Party who shall conduct the defense of
such claim or litigation shall be reasonably satisfactory to
the Indemnified Party, and provided further that the failure by
the Indemnified Party to give notice as provided herein will
not relieve the Indemnifying Party of its indemnification
obligations hereunder except to the extent that the
Indemnifying Party is damaged as a result of the failure to
give notice and except that any claim not made within the time
period set forth in the proviso to the first sentence of this
Section 7.4(a) shall be forever barred. If the Indemnifying
Party has assumed the defense of a third party claim, the
Indemnifying Party shall not be entitled to settle such third
party claim without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably
withheld, provided that such consent shall not be required if
such settlement involves only the payment of money and the
claimant provides to the Indemnified Party, in form and
substance reasonably satisfactory to such Indemnified Party, a
release from all liability in respect of such third party
claim.
(b) The Indemnified Party shall have the right at all
times to participate in the defense, settlement,
negotiations or litigation relating to any third
party claim or demand at its own expense. If the
Indemnifying Party does not assume the defense of any
matter as above provided, then the Indemnified Party
shall have the right to defend any such third party
claim or demand, and will be entitled to settle any
such claim or demand in its discretion for the
account or benefit of the Indemnified Party. In any
event, the Indemnified Party will cooperate in the
defense of any such action at the expense of the
Indemnifying Party and the records of each party
shall be available to the other with respect to such
defense.
7.5 Indemnification of Negligence of Indemnitee. The
indemnification provided in this Article 7 shall be applicable
whether or not negligence of the indemnified party is alleged
or proven.
ARTICLE 8
TERMINATION
8.1 Termination by Seller. Seller shall have the right to
terminate this Agreement if (i) the conditions in Section 6.1
have not been satisfied or waived by Seller on or before
September 30, 1998 or (ii) the form and content of the Seller
Legal Opinion and the Purchaser Legal Opinion have not been
agreed upon on or before June 5, 1998.
8.2 Termination by Purchaser. Purchaser shall have the right to
terminate this Agreement if (i) the conditions in Section 6.2
have not been satisfied or waived by Purchaser on or before
September 30, 1998 or (ii) the form and content of the Seller
Legal Opinion and the Purchaser Legal Opinion have not been
agreed upon on or before June 5, 1998.
8.3 Termination by Agreement of Seller and Purchaser. Seller and
Purchaser may terminate this Agreement at any time by their
mutual consent.
8.4 Damages. If this Agreement is terminated pursuant to Article
8, the parties shall retain any rights they may have against
each other for any breach of any of the terms and conditions of
this Agreement.
ARTICLE 9
GUARANTEE BY ADM
ADM hereby irrevocably and unconditionally guarantees the timely
performance by Purchaser of all of Purchaser's obligations pursuant to
Section 1.5(a)(ii) and the penultimate sentence of Section 1.14,
subject to the provisions of the last sentence of Section 1.14.
ARTICLE 10
MISCELLANEOUS
10.1 Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement and the transactions
contemplated hereby.
10.2 Entire Agreement. This Agreement and the schedules and
exhibits hereto contain the complete agreement among the
parties with respect to the transactions contemplated hereby
and supersede all prior agreements and understandings among the
parties with respect to such transactions.
10.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together
shall constitute only one original.
10.4 Notices. All notices, demands, requests, or other
communications that may be or are required to be given, served
or sent by any party to any other party pursuant to this
Agreement shall be in writing and shall be mailed by first-class,
registered or certified mail, return receipt requested,
postage prepaid, or transmitted by hand delivery, telegram,
facsimile, or telex, addressed as follows:
(a) If to Seller: (b) If to Purchaser or ADM:
Electropharmacology, Inc. ADM Tronics Unlimited, Inc.
2301 NW 33rd Court, Suite 102 224-S Pegasus Avenue
Pompano Beach, FL 33069 Northvale, NJ 07647
Attn: Arup Sen Attn: Andre DiMino
Facsimile: (954) 975-4021 Facsimile: (201) 784-0620
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request or communication
that is mailed, delivered or transmitted in the manner described
above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee,
with the return receipt, the delivery receipt, the affidavit of
messenger, or (with respect to a telecopy or telex) the answerback
or confirmation of receipt being deemed conclusive evidence of such
delivery, or at such time as delivery is refused by the addressee
upon presentation.
10.5 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws
effective during the term hereof, the provision shall be fully
severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision were never
a part hereof; and the remaining provisions hereof shall remain
in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as
part of this Agreement a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
10.6 Successors and Assigns. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
10.7 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed, construed and enforced
in accordance with the laws of the State of New Jersey and
exclusive venue shall lie in the state and federal courts in
the State of Jersey.
10.8 Amendment, Waiver and Other Action. This Agreement may be
amended, modified or supplemented only by a written instrument
executed by the parties against which enforcement of the
amendment, modification or supplement is sought.
10.9 Legal Representation. All of the parties to this Agreement
acknowledge that they have been advised that they should seek
and have had the opportunity to seek counsel to review this
Agreement and to obtain the advice of such counsel relating
thereto.
10.10 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by either party hereto without the consent
of the other party, which consent shall not be unreasonably
withheld, provided that this shall not prevent Seller or JDRP
from selling any ADM Stock in accordance with the terms and
conditions of this Agreement.
10.11 Confidentiality. Each party shall maintain the confidentiality
of, and not divulge or disclose to any other person, the
existence of or any terms and conditions of this Agreement or
any of the financial or other information provided to it by the
other party to this Agreement.
10.12 Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any
of the terms or provisions hereof.
10.13 Number and Gender. Whenever the context requires, references
in this Agreement to the singular number shall include the
plural; the plural number shall include the singular; and words
denoting gender shall include the masculine, feminine, and
neuter.
10.14 Public Announcements. Except to the extent that Seller or
Purchaser believes on the advice of counsel that public
disclosure is required by law, no party to this Agreement shall
make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news
media without prior notification to the other parties. The
parties shall cooperate as to the time and contents of any such
press release or public announcement, but if they are unable to
reach an agreement as to the time and contents of such press
release or public announcement, each shall be free to make such
press release or public announcement as it deems necessary.
ARTICLE 11
REGISTRATION RIGHTS
11.1 Registration Rights.
(a) As soon as practicable following the Effective Date and as
expeditiously as possible, ADM shall prepare a registration
statement to effect a registration under the Securities Act of
the Shares by means of a "shelf" registration statement
pursuant to Rule 415 under the Securities Act (as well as
necessary amendments or supplements thereto) (a "Registration
Statement"). As soon as possible following the Closing Date,
ADM shall file with the SEC the Registration Statement and use
its best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable
after such filing.
(b) As soon as practicable following the date the condition to the
issuance of the Warrant Shares has been satisfied and as
expeditiously as possible, ADM shall prepare and file a
registration statement to effect a registration under the
Securities Act of the Warrant Shares by means of a "shelf"
registration statement pursuant to Rule 415 under the
Securities Act (as well as necessary amendments or supplements
thereto) (a "Registration Statement"). ADM shall use its best
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such
filing.
11.2 Registration Procedures. In connection with such registration
under either Section 11.1(a) or 11.1(b), ADM shall:
(a) prepare and file with the SEC the Registration Statement, and
use its best efforts to cause such Registration Statement to
become and remain effective until the earlier of (i) the date
on which all Shares or Warrant Shares, as applicable, included
in the Registration Statement have been sold or (ii) two years
after the effective date of such Registration Statement;
(b) prepare and file with the SEC such amendments to such
Registration Statement and supplements to the prospectus
contained therein as may be necessary to keep such Registration
Statement effective and current until the earlier of (i) the
date on which all Shares or Warrant Shares, as applicable, have
been sold or (ii) two years from the effective date of such
Registration Statement;
(c) furnish to Seller and JDRP and to the underwriters, if any, of
the securities being registered such reasonable number of
copies of the Registration Statement, preliminary prospectus,
final prospectus and such other documents as such underwriters
may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under the state
securities or blue sky laws of not more than five jurisdictions
as Seller or JDRP may reasonably request in writing within five
days following the mailing, by first class mail, of a notice of
the original filing of such Registration Statement, such notice
to be mailed within five business days of such filing, except
that ADM shall not for any purpose be required to execute a
general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
(e) notify Seller and JDRP, promptly after it shall receive notice
thereof, of the time when such Registration Statement has
become effective or a supplement to any prospectus forming a
part of such Registration Statement has been filed;
(f) notify Seller and JDRP promptly of any request by the SEC for
the amending or supplementing of such Registration Statement or
prospectus or for additional information and promptly deliver
to Seller and JDRP copies of any comments received from the
SEC;
(g) prepare and file with the SEC, promptly upon the request of
Seller or JDRP, any amendments or supplements to such
Registration Statement or prospectus which, in the opinion of
counsel for Seller or JDRP (and concurred in by counsel for
ADM), is required under the Act or the rules and regulations
thereunder in connection with the distribution of ADM Stock by
Seller or JDRP;
(h) promptly prepare and file with the SEC and promptly notify
Seller and JDRP of the filing of such amendment or supplement
to such Registration Statement or prospectus as may be
necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required
to be delivered under the Act, any event shall have occurred as
the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
in which they were made, not misleading;
(i) advise Seller and JDRP, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order
by the SEC suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; and
(j) upon the effectiveness of such Registration Statement, the
Shares or Warrant Shares, as applicable, included in the
Registration Statement shall be listed on the Nasdaq National
Market or the Nasdaq Small Cap Market if other shares of
outstanding ADM Stock are so listed and on each national
securities exchange on which other shares of outstanding ADM
Stock are then listed.
11.3 Agreements of Seller and JDRP. Seller and JDRP each hereby
agrees to provide ADM, or its agents or designees, with all
information reasonably requested in connection with the
registration under the Act or any applicable state securities
law of the Shares or Warrant Shares, as applicable.
11.4 Expenses.
(a) With respect to the registration pursuant to Section 11.1
hereof, all fees, costs and expenses of and incidental to such
registration and public offering (as specified in paragraph (b)
below) in connection therewith shall be borne by Seller;
provided that the Purchaser shall bear any such fees, costs and
expenses in excess of $15,000 in the case of the registration
of the Shares and $7,500 in the case of the registration of the
Warrant Shares.
(b) The fees, costs and expenses of registration to be borne by
Seller (up to $15,000 or $7,500, as applicable) or ADM (in
excess of $15,000 or $7,500, as applicable) as provided in
paragraph (a) above shall include, without limitation, all
registration, filing, and NASD fees, printing expenses, fees
and disbursements of counsel and accountants of ADM and all
legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdictions in
which the securities to be offered are to be registered and
qualified; provided that if Seller or JDRP want to comply with
the blue sky laws of any jurisdiction other than Texas or New
York, the filing fees with respect to such jurisdictions shall
be paid by Seller or JDRP, as applicable. Fees and
disbursements of counsel and accountants for Seller and any
other expenses incurred by Seller not expressly included above
shall be borne by Seller. Fees and disbursements of counsel
and accountants for JDRP and any other expenses incurred by
JDRP not expressly included above shall be borne by JDRP.
11.5 Indemnification.
(a) ADM will indemnify and hold harmless each of Seller and each of
its directors and officers, and JDRP and each of its partners
and employees and any underwriter (as defined in the Act) for
such holder and each person, if any, who controls such holder
or such underwriter within the meaning of the Act, from and
against, and will reimburse Seller and JDRP and each such
underwriter and controlling person with respect to, any and all
loss, damage, liability, reasonable cost and expense to which
such holder or any such underwriter or controlling person may
become subject under the Act or otherwise, insofar as such
losses, damages, liabilities, reasonable costs or expenses are
caused by any untrue statement or alleged untrue statement of
any material fact contained in such Registration Statement, any
prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading; provided, however, that ADM will not be liable in
any such case to the extent that any such loss, damage,
liability, reasonable cost or expenses arises out of or is
based upon (i) an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with
written information furnished by such holder, such underwriter
or such controlling person in writing specifically for use in
the preparation thereof or (ii) the failure to deliver a
current prospectus.
(b) Each of Seller and JDRP will indemnify and hold harmless ADM,
its directors and officers, any controlling person and any
underwriter from and against, and will reimburse ADM, its
directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage,
liability, cost or expense to which ADM or any controlling
person and/or any underwriter may become subject under the Act
or otherwise, insofar as such losses, damages, liabilities,
reasonable costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in
such Registration Statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so
made in reliance upon and in strict conformity with written
information furnished by or on behalf of Seller or JDRP, as
applicable, specifically for use in the preparation thereof.
Notwithstanding anything herein to the contrary, the
indemnification obligation of JDRP shall be limited to the
assets of JDRP and none of the partners or employees of JDRP
shall have any personal liability in connection therewith.
(c) If the indemnification provided for in subsection (a) and (b)
of this Section 11.5 is unavailable or insufficient to hold
harmless an indemnified party, then each indemnifying party
shall contribute to the amount paid or payable by such
indemnified party referred to in subsections (a) and (b) of
this Section 11.5 in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other hand in connection
with statements or omissions which result in losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statements or
omissions. The parties agree that it would not be just and
equitable if contributions pursuant to this clause were to be
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the first sentence of this
subsection (c). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred
to in the first sentence of this subsection (c) shall be deemed
to include any legal or other expense reasonably incurred by
such indemnified party in connection with investigating or
defending any loss, claim, damage, liability or proceeding
which is the subject of this clause. No person guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything herein
to the contrary, no person who sold ADM Stock shall have to
indemnify or otherwise contribute an amount to any other party
in excess of the total proceeds received by such person from
the sale of Shares or Warrant Shares, as applicable.
(d) Promptly after receipt by an indemnified party pursuant to the
provisions of subsection (a) or (b) of this Section 11.5 of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said
subsection (a) or (b), promptly notify the indemnifying party
of the commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than hereunder
or any liability hereunder except to the extent it is damaged
by such omission to so notify. In case such action is brought
against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party
shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with
counsel satisfactory to such idemnified party, provided,
however, if the defendants in any action include both
the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition
to those available to the indemnifying party, or if there
is a conflict of interest which would prevent counsel
for the idemnifying party from also representing the
idemnifying party, the idemnified party or parties have
the right to select separate counsel to participate in
the defense of such action on behalf of such indemnified
party or parties. After notice from the indemnifying party
to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable
to such indemnified party pursuant to the provisions of
said subssection (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party
shall have employed counsel in accordance with the
provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party
within a reasonable time after the notice of the
commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
ELECTROPHARMACOLOGY, INC. ADM TRONICS UNLIMITED, INC.
By: \s\ Arup Sen By: \s\ Andre' Di Mino
Its: President Its: Executive Vice President
Date: May 27, 1998 Date: May 27, 1998
AA NORTHVALE MEDICAL ASSOCIATES,
INC.
By: \s\ Andre' Di Mino
Its: President
Date: May 27, 1998
INTERVENTION
Each of Arup Sen and David Saloff intervene in this Agreement solely
for the purpose of agreeing to be bound by the terms and conditions
of Section 4.4, to the extent the same is applicable to him.
\s\ Arup Sen \s\ David Saloff
Jones, Day, Reavis & Pogue intervenes in this Agreement solely for the
purposes of making the representations and warranties set forth in
Article 2A amd agreeing to be bound by the terms and conditions of
Section 1.6 and Article 11, in each case, to the extent the same is
applicable to it.
\s\ Jones, Day, Reavis & Pogue
