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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 1, 1998
IDEXX Laboratories, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of organization)
0-19271 01-0393723
(Commission File Number) (I.R.S. Employer Identification No.)
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One IDEXX Drive, Westbrook, Maine 04092
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(Address of principal executive offices) (Zip Code)
(207) 856-0300
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On October 1, 1998, IDEXX Laboratories, Inc. (the "Company")
acquired all of the shares of capital stock (the "Blue Ridge Shares") of Blue
Ridge Pharmaceuticals, Inc. ("Blue Ridge") in consideration for (i) $39,089,486
in cash, (ii) promissory notes in the original principal amount of $7,830,456
(the "Notes"), (iii) 114,894 shares of the Company's Common Stock (the "Company
Shares") and (iv) warrants to purchase an aggregate of 805,519 shares of the
Company's Common Stock, exercisable at a price of $31.59 per share until
December 31, 2003. In addition, the Company agreed to issue up to 1,240,875
shares of its Common Stock based on the achievement by the Company's
pharmaceutical division (which currently consists primarily of Blue Ridge) of
net sales and operating profit targets through 2004.
The Notes, which bear interest at a rate of 5.5% annually and are
payable in two equal installments on October 1, 1999 and October 1, 2000, were
issued to certain key employees (and former shareholders) of Blue Ridge. The
Company's obligations to repay the Notes is contingent, with certain exceptions,
upon such employees continuing to be employed by Blue Ridge or the Company on
the relevant payment date. The Company Shares are issuable by the Company on
October 1, 2001, to a key employee (and former shareholder) of Blue Ridge, and
the Company's obligation to issue the Company Shares is contingent, with certain
exceptions, on such employee continuing to be employed by Blue Ridge or the
Company on that date. The Company acquired the Blue Ridge Shares from Blue
Ridge's 21 shareholders, who included private investors and employees. The
purchase price was based upon the Company's determination of the fair value of
Blue Ridge and negotiation with the Blue Ridge shareholders. The cash portion of
the purchase price for the Shares was funded from the Company's available cash
and short-term investments.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. This
information will be filed by amendment on or prior to
December 14, 1998.
(b) Pro Forma Financial Information. This information will be
filed by amendment on or prior to December 14, 1998.
(c) Exhibits
*2.1 Stock Purchase Agreement dated as of September 23, 1998 by and
among the Company, Blue Ridge and the stockholders of Blue
Ridge. Certain schedules and exhibits to the agreement (each
of which are identified in the agreement) have been omitted in
reliance upon Rule 601 (b)(2) of Regulation S-K. The Company
hereby undertakes to furnish such schedules and exhibits to
the Commission supplementally upon request.
4.1 Form of Warrant dated October 1, 1998 to purchase Common Stock
of the Company issued to shareholders of Blue Ridge other than
employee shareholders.
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4.2 Form of Warrant dated October 1, 1998 to purchase Common Stock
of the Company issued to employee shareholders of Blue Ridge.
10.1 Employment Agreement dated as of September 23, 1998 between the
Company and Roland Johnson.
* Confidential treatment has been requested as to certain portions.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
IDEXX LABORATORIES, INC.
BY:/S/ Ralph K. Carlton
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Ralph K. Carlton
Senior Vice President Finance
and Administration
Date: October 15, 1998
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Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
IDEXX LABORATORIES, INC.,
BLUE RIDGE PHARMACEUTICALS, INC.
AND
THE STOCKHOLDERS OF
BLUE RIDGE PHARMACEUTICALS, INC.
DATED
SEPTEMBER 23, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF THE BLUE RIDGE SHARES 1
1.1 Purchase of the Blue Ridge Shares from the Stockholders 1
1.2 Purchase Price 1
1.3 The Closing 7
1.4 Further Assurances 8
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES REGARDING THE BLUE RIDGE SHARES
9
2A.1 Ownership of Blue Ridge Shares 9
2A.2 Authority 9
2A.3 Noncontravention 9
2A.4 Investment Representations. 10
ARTICLE IIB
REPRESENTATIONS AND WARRANTIES REGARDING BLUE RIDGE 11
2B.1 Organization 11
2B.2 Capitalization 11
2B.3 Noncontravention 12
2B.4 Financial Statements and Information 12
2B.5 Intellectual Property 13
2B.6 Trademarks 15
2B.7 Real Property 15
2B.8 Personal Property 16
2B.9 Contracts 16
2B.10 Books and Records; Bank Accounts 17
2B.11 Tax Matters 17
2B.12 Product and Service Warranties 18
2B.13 Customers and Suppliers 18
2B.14 Insurance 18
2B.15 Legal Compliance; Environmental Matters 19
2B.16 Permits 20
2B.17 Litigation 21
2B.18 Confidential Information 21
2B.19 Employees 21
2B.20 Employee Benefits 21
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2B.21 Business Relationships With Affiliates 23
2B.22 Brokers' Fees 23
2B.23 Disclosure 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER 24
3.1 Organization 24
3.2 Capitalization 24
3.3 Authorization 25
3.4 Noncontravention 25
3.5 Reports and Financial Statements 25
3.6 Absence of Material Adverse Changes 26
3.7 Location of Headquarters 26
3.8 Brokers' Fees 26
ARTICLE IV
COVENANTS 26
4.1 Best Efforts 26
4.2 Required Consents 26
4.3 Operation of Business 26
4.4 Full Access 27
4.5 Exclusivity 27
4.6 Expenses 28
4.7 Director and Officer Indemnification 28
ARTICLE V
CONDITIONS TO CLOSING 28
5.1 Conditions to Obligations of the Buyer 28
5.2 Conditions to Obligations of the Stockholders 29
ARTICLE VI
INDEMNIFICATION 29
6.1 Indemnification by the Stockholders 29
6.2 Indemnification by the Buyer 29
6.3 Claims for Indemnification 30
6.4. Holdback Provisions 31
6.5 Limitations 32
ARTICLE VII
REGISTRATION RIGHTS 34
7.1 Registration of Shares 34
7.2 Limitations on Registration Rights 35
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7.3 Registration Procedures 36
7.4 Requirements of Selling Stockholders 36
7.5 Indemnification 37
7.6 Assignment of Rights 37
ARTICLE VIII
TERMINATION 37
8.1 Termination of Agreement 37
8.2 Effect of Termination 38
ARTICLE IX
DEFINITIONS 38
ARTICLE X
MISCELLANEOUS 40
10.1 Press Releases and Public Disclosure 40
10.2 Prior Agreements 40
10.3 No Third Party Beneficiaries 40
10.4 Entire Agreement 41
10.5 Succession and Assignment 41
10.6 Counterparts 41
10.7 Headings 41
10.8 Notices 41
10.9 Governing Law 43
10.10 Amendments and Waivers 43
10.11 Severability 43
Schedule I - Stockholders
Schedule II - Targets for Pharmaceutical Division
Schedule III - Schedule of Employment Agreements to be signed by Employees
Schedule IV - Agreements to be Terminated
Disclosure Schedule
Exhibits
Exhibit A-1
A-2 Forms of Promissory Notes
Exhibits B-1
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and B-2 - Forms of Warrant
Exhibits C-1,
C-2, C-3 and
C-4 Forms of Employment Agreement (including as
attachments IDEXX standard forms of Non-Compete
Agreement and Invention and Non-Disclosure Agreement)
Exhibit D - Form of Consulting Agreement
Exhibit E - Form of Opinion of Kirkland & Ellis
Exhibit F - Form of Opinion of Howrey & Simon
Exhibit G - Form of Opinion of Hale and Dorr LLP
Exhibit H - Form of Letter Agreement between Bain and Blue Ridge
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STOCK PURCHASE AGREEMENT
This Agreement is entered into as of September 23, 1998 by and among
IDEXX Laboratories, Inc., a Delaware corporation (the "Buyer"), Blue Ridge
Pharmaceuticals, Inc., a Delaware corporation ("Blue Ridge") and the
stockholders of Blue Ridge listed on Schedule I attached hereto (individually, a
"Stockholder" and collectively, the "Stockholders"). The Buyer, Blue Ridge and
the Stockholders are referred to collectively herein as the "Parties."
PRELIMINARY STATEMENT
1. The Stockholders collectively own all of the outstanding shares of
the capital stock (collectively, the "Blue Ridge Shares") of Blue Ridge, as set
forth in more detail on Schedule I attached hereto.
2. The Buyer desires to purchase from the Stockholders, and the
Stockholders desire to sell to the Buyer, the Blue Ridge Shares for the
consideration set forth below, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the Parties agree as follows:
ARTICLE II
PURCHASE AND SALE OF THE BLUE RIDGE SHARES
1.1 Purchase of the Blue Ridge Shares from the Stockholders. Upon and
subject to the terms and conditions of this Agreement, at the closing of the
purchase and sale of the Blue Ridge Shares contemplated by this Agreement (the
"Closing"), each Stockholder shall sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer shall purchase, acquire and accept from each
Stockholder, all of the Blue Ridge Shares owned by such Stockholder.
1.2 Purchase Price. The purchase price to be paid by the Buyer for the
Blue Ridge Shares shall be as follows:
(a) (i) At the Closing, the Buyer shall pay to the
Stockholders the sum of $46,919,942 (the "Cash Purchase Price"), allocated among
the Stockholders as set forth on Schedule I attached hereto, provided that,
one-third of the amount of the Cash Purchase Price payable to each of Doug
Hepler and L. Steven Beck shall be paid to such Stockholders at the Closing and
two-thirds of such amount shall be payable pursuant to the terms of a Promissory
Note substantially in the form attached hereto as Exhibit A-1, it being
acknowledged that Messrs.
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Hepler and Beck shall make an election pursuant to Section 83(b) (an "83(b)
Election") of the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to such Promissory Note; and provided further, that $2,506,978.40 of the
Cash Purchase Price payable to Roland Johnson shall be paid at the Closing and
$3,500,000 of such amount shall be payable pursuant to the terms of a Promissory
Note substantially in the form attached hereto as Exhibit A-2, it being
acknowledged that Mr. Johnson shall make an 83(b) Election with respect to such
Promissory Note;
(ii) On the third anniversary of the Closing Date, the
Buyer shall issue to Roland H. Johnson 114,894 shares (the "Johnson Shares") of
common stock, $0.10 par value per share, of the Buyer (the "Buyer Common
Stock"), pursuant to the terms of a Promissory Note substantially in the form
attached hereto as Exhibit A-2;
(iii) The Buyer, Roland H. Johnson, Doug Hepler and L.
Steven Beck agree to treat the payments under such Promissory Notes in
accordance with the installment method under Section 453 of the Code.
(b) At the Closing, the Buyer shall issue warrants
(collectively, the "Warrants"), to purchase an aggregate of 805,519 shares of
Buyer Common Stock, allocated among the Stockholders as set forth on Schedule I,
which Warrants shall be in the form attached hereto as Exhibit B-1 with respect
to each of the Stockholders designated on Schedule I as an "Institutional
Stockholder" and in the form attached hereto as Exhibit B-2 with respect to each
of the Stockholders designated on Schedule I as an "Employee Stockholder" (an
"Employee Stockholder");
(c) (i) Subject to the terms of this Section 1.2(c), within
five days after the issuance of the Quarterly Results (as defined below)
relating to a financial period in which any of the Net Sales (as defined below)
targets or Operating Profit (as defined below) targets set forth on Schedule II
attached hereto are achieved by the Buyer Pharmaceutical Division (as defined
below) (the final day of any such financial period shall be referred to herein
as a "Contingent Share Date"), the Buyer shall issue to the Stockholders that
portion of an aggregate of 1,240,875 shares (subject to appropriate adjustment
in the event of a stock split, stock dividend or similar recapitalization event
affecting the Buyer Common Stock) of Buyer Common Stock (the "Contingent
Shares") to which the Stockholders are entitled pursuant to the terms set forth
on Schedule II attached hereto. Any Contingent Shares issued pursuant to this
Section 1.2(c) shall be allocated among the Stockholders according to the
percentages set forth on Schedule I attached hereto, provided that, no such
issuance of Contingent Shares shall be made to any Employee Stockholder who is
not employed by (or, in the case of L. Steven Beck (the "Consultant"), engaged
as a consultant to, pursuant to an agreement with) the Buyer or any subsidiary
of the Buyer on the Contingent Share Date, unless such Employee Stockholder dies
or becomes disabled (meaning that the Employee Stockholder is unable to perform
his duties as an employee of (or in the case of the Consultant, as a consultant
to) the Buyer for a period of 90 consecutive days due to illness or injury), or
his employment (or, in the case of the Consultant, consulting relationship) with
the Buyer is terminated by the Buyer or such subsidiary without
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Cause (as defined below) or by the Employee Stockholder for Good Reason (as
defined below) prior to such Contingent Share Date.
(ii) Within five days after the occurrence of a Change in
Control Event (as defined below) of the Buyer, the Buyer (or its successor)
shall issue and distribute to the Stockholders such number of Contingent Shares
as is equal to 20% of that number of Contingent Shares which may be issued in
the future, if any (the "Accelerated Contingent Shares"), allocated among the
Stockholders in accordance with the percentages set forth on Schedule I attached
hereto. If the Buyer shall be obligated to issue any Accelerated Contingent
Shares pursuant to this Section 1.2(c)(ii), then the number of Contingent Shares
to be issued upon the achievement of each Net Sales target and Operating Profit
target that has not yet been achieved shall be reduced by 20%, to reflect the
earlier distribution of the Accelerated Contingent Shares.
(iii) If there shall occur any reorganization,
recapitalization, consolidation, merger or sale involving the Buyer in which the
Buyer Common Stock is converted into or exchanged for securities, cash or other
property, then, following any such reorganization, recapitalization,
consolidation, merger or sale, the Stockholders shall have the right to receive,
in lieu of each Contingent Share issuable under this Section 1.2(c), when and if
such Contingent Share becomes issuable, the kind and amount of securities, cash
or other property which each share of Buyer Common Stock was converted into or
exchanged for in such reorganization, recapitalization, consolidation, merger or
sale. Notwithstanding the foregoing sentence, if (x) there shall occur any
reorganization, recapitalization, consolidation, merger or sale involving the
Buyer in which the Buyer Common Stock is converted into or exchanged for
anything other than solely equity securities, and (y) the common stock of the
acquiring or surviving company is publicly traded, then, following any such
reorganization, capitalization, consolidation, merger or sale, the Stockholders
shall have the right to receive, in lieu of each Contingent Share issuable under
this Section 1.2(c), such number of shares of common stock of the acquiring or
surviving company as is determined by dividing (A) the fair market value per
share of Buyer Common Stock as of the effective date of such transaction, as
determined in good faith by the Board of Directors of the Buyer, by (B) the fair
market value per share of common stock of the acquiring or surviving company as
of the effective date of such transaction, as determined in good faith by the
Board of Directors of the Buyer. If the Buyer shall sell all or substantially
all of the Buyer Pharmaceutical Division (whether by stock sale, asset sale or
otherwise), then the Buyer shall, in its sole discretion, either (1) cause the
acquiring company to agree to assume the obligations of the Buyer under this
Section 1.2(c) and to issue, in lieu of each Contingent Share issuable under
this Section 1.2(c), such number of shares of common stock of the acquiring
company as is determined by dividing (A) the fair market value per share of
Buyer Common Stock as of the effective date of such transaction, as determined
in good faith by the Board of Directors of the Buyer, by (B) the fair market
value per share of common stock of the acquiring company as of the effective
date of such transaction, as determined in good faith by the Board of Directors
of the Buyer, or (2) issue to the Stockholders, upon the consummation of such
sale, all unissued Contingent Shares which the Stockholders still had the
opportunity to earn in the future.
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(iv) Within 10 days after the filing of a Form 10-K or
Form 10-Q, as appropriate, relating to each fiscal year or quarter,
respectively, of the Buyer, until such time as the Buyer has no further
obligations to pay any Contingent Shares, the Buyer shall provide to the
Stockholders' Representative (as defined below), a notice of the Buyer's Net
Sales and Operating Profit results relating to such quarter (or, in the case of
the fiscal year end, relating to the fourth quarter of such fiscal year), along
with financial documentation to support such results (the "Quarterly Results").
If any of the Stockholders dispute the Quarterly Results, the Stockholders'
Representative shall deliver to the Buyer within 30 days after receiving the
Quarterly Results a statement setting forth such objections to the Quarterly
Results and describing the basis for such objections. Each of the Stockholders'
Representative and the Buyer shall use good faith efforts to resolve any
disputes relating to the Quarterly Results. Failure of the Stockholders'
Representative to timely deliver a statement of objection to Quarterly Results
pursuant to this Section 1.2(c)(iv) shall constitute acceptance of such
Quarterly Results. If the Buyer and the Stockholders' Representative do not
negotiate a final resolution to any dispute relating to the interpretation of
and calculations pursuant to Schedule II within 30 days after delivery of the
Stockholders' Representative's objection to the Quarterly Results, the Buyer and
the Stockholders' Representative shall submit such dispute to Ernst & Young LLP
in New York City (the "Independent Auditor"), whose costs shall be shared
equally by the Buyer and the Stockholders. The Buyer and the Stockholders'
Representative shall instruct the Independent Auditor to resolve any such
dispute no later than 30 days after submission of the dispute to the Independent
Auditor, whose determination thereof shall be final, binding upon and
non-appealable by the Parties. The Buyer shall afford, and cause its officers,
employees, agents and representatives (including, without limitation, its
independent accountants) to afford, to the Stockholders' Representative and his
agents and representatives, reasonable access to the personnel (including,
without limitation, independent accountants), and financial, accounting and
other data and information (including, without limitation, workpapers of the
Buyer's independent accountants), to the extent relating to the calculation of
the Quarterly Results as reasonably requested by the Stockholders'
Representative or his representatives or agents for purposes of resolving such
dispute. Any written resolution achieved by the Buyer and the Stockholders'
Representative, or, as the case may be, by the Independent Auditor, of a matter
of (A) calculation, (B) interpretation or application of Schedule II, or (C) the
application of accounting principles or policies shall preclude the parties from
disputing such matter further in the future.
(v) The Stockholders agree that if some or all of the Net
Sales targets or Operating Profit targets set forth on Schedule II are not
achieved, the Buyer shall have no liability to any Stockholder based on the
manner in which the Buyer Pharmaceutical Division was operated unless the Buyer
engaged in bad faith or gross negligence in the operation of such Division.
(vi) For purposes of this Agreement, the following terms
shall have the following definitions:
(A) "Net Sales" and "Operating Profit" shall each have
the respective meaning ascribed to them on Schedule II.
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(B) The "Buyer Pharmaceutical Division" shall mean all of
the Buyer's veterinary pharmaceutical business as of the Closing, the business
conducted by Blue Ridge as of the Closing, and any veterinary pharmaceutical
product lines developed in the ordinary course of business after the Closing by
the Buyer, through Blue Ridge or otherwise, but excluding entities and
businesses acquired by the Buyer after the Closing, unless the Buyer and the
Stockholders' Representative mutually agree by written consent to include such
an entity or business acquired by the Buyer.
(C) "Cause" for termination shall mean (a) the Employee
Stockholder's willful material misconduct, embezzlement, fraud, or other
criminal act involving moral turpitude, or (b) gross negligence in the
performance of the Employee Stockholder's duties to the Buyer, or (c) any breach
by the Employee Stockholder of any employment agreement, invention and
non-disclosure agreement, non-competition agreement or similar agreement with
the Buyer that is not cured within 15 days after receipt of written notice
thereof from the Company.
(D) "Good Reason" for termination shall be deemed to
exist upon the occurrence of any of the following events without the written
consent of the Employee Stockholder: (i) a material reduction or diminution in
the Employee Stockholder's position, authority or responsibilities as in effect
on the Closing Date (as defined below), excluding an action or circumstance
which is remedied by the Buyer within five business days following written
notice from the Employee Stockholder to the Buyer describing such action or
circumstance, provided that the Employee Shareholder must provide such notice
within 30 days after becoming aware of the circumstances which constitute the
alleged reduction or dimunition; (ii) a reduction in the annual base salary of
the Employee Stockholder, unless a proportionate reduction is made to the annual
base salaries of all of the Buyer's employees holding positions at a comparable
level to that of the Employee Stockholder (provided that such reduction will not
in any event exceed 5% of such Employee Stockholder's annual base salary); (iii)
a relocation of the Employee Stockholder's principal place of employment to a
new location that is more than 75 miles from the current location in Greensboro,
North Carolina (unless such new location is closer than the current location to
the Employee Stockholder's residence); or (iv) a breach by Buyer of the
Employment Agreement, dated as of the Closing Date, between the Buyer and such
Employee Stockholder, which breach is not cured within 15 days after receipt of
notice thereof from the Employee Stockholder, except that "Good Reason" with
respect to the Consultant shall be deemed to exist upon the occurrence of a
breach by the Buyer of the terms of the consulting agreement between the
Consultant and the Buyer, which breach is not cured within 15 business days
after receipt of notice thereof from the Consultant.
(E) "Change in Control Event" shall be defined as the
consummation of (i) a merger, consolidation, reorganization, recapitalization,
tender offer, sale or other disposition involving the Buyer, immediately
following which the individuals and entities who were the beneficial owners of
the Buyer Common Stock immediately prior to such transaction beneficially own,
directly or indirectly, less than 50% of the combined voting power
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of the then-outstanding securities entitled to vote generally in the election of
directors, of the resulting or acquiring corporation in such transaction, (ii)
the sale of all or substantially all of the assets of the Buyer or (iii) the
sale of all or substantially all of the Buyer Pharmaceutical Division (whether
by stock sale, asset sale or otherwise).
(F) "Stockholders' Representative" means Dwight Poler
(or, after his resignation, his duly appointed replacement, as determined by
Stockholders who held not less than a majority of Blue Ridge's capital stock
immediately prior to the Closing), who is hereby designated by each of the
Stockholders to serve as the representative of the Stockholders with respect to
the matters expressly set forth in this Agreement to be performed by the
Stockholders' Representative. Each of the Stockholders, by execution of this
Agreement, hereby irrevocably appoints the Stockholders' Representative as the
agent, proxy and attorney-in-fact for such Stockholder for the following
purposes: (a) to consummate the transactions contemplated herein, (b) to pay
such Stockholder's expenses incurred in connection with the negotiation and
performance of this Agreement, (c) to disburse any funds received hereunder to
such Stockholder and each other Stockholder, (d) to execute and deliver any
certificates representing the Company's capital stock and execute such further
instruments as the Buyer may request and (e) to negotiate, settle, compromise
and otherwise handle all disputes regarding Quarterly Results or Contingent
Shares and all claims for indemnification made by the Buyer or the Stockholders.
Each of the Stockholders agrees that such agency and proxy are coupled with an
interest, are therefore irrevocable without the consent of the Stockholders'
Representative and shall survive the death, incapacity or bankruptcy of any
Stockholder. Neither the Stockholders' Representative nor any agent employed by
him shall incur any liability to any Stockholder relating to the performance of
his duties hereunder except for actions or omissions constituting fraud, bad
faith or willful misconduct.
1.3 The Closing
(a) The Closing shall take place at the offices of Hale and
Dorr LLP in Boston, Massachusetts, commencing at 10:00 a.m., local time, on
October 1, 1998, or, if all of the conditions to the obligations of the Parties
to consummate the transactions contemplated hereby have not been satisfied or
waived by such date, on such mutually agreeable later date as soon as
practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date"). The closing of the purchase of all of the Blue Ridge
Shares from each of the Stockholders shall take place simultaneously.
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(b) At the Closing:
(i) Blue Ridge shall deliver to the Buyer the certificate
referred to in Section 5.1(b);
(ii) each Stockholder shall deliver to the Buyer one or
more certificates evidencing all of the Blue Ridge Shares owned by such
Stockholder, duly endorsed in blank or with stock powers duly executed by the
Stockholder;
(iii) the Buyer shall deliver to each Stockholder (A) the
portion of the Cash Purchase Price set forth on Schedule I, subject to Section
1.2(a) hereto, payable by wire transfer of immediately available funds to an
account designated by such Stockholder and (B) the portion of the Warrants set
forth on Schedule I;
(iv) the Buyer shall deliver to each of Roland Johnson,
Douglas Hepler and L. Steven Beck a Promissory Note in the form attached hereto
as Exhibit A-1, A-2 or A-3, as appropriate, and shall provide evidence of the
establishment of irrevocable standby letters of credit securing the payment of
such Promissory Notes;
(v) the Buyer and each of the employees of Blue Ridge
shall execute and deliver:
(A) an Employment Agreement in the form attached
hereto as Exhibits C-1, C-2, C-3 or C-4 (the appropriate form for each employee
being designated on Schedule III);
(B) a Non-Compete Agreement in the form attached as
Schedule A to such Employment Agreement; and
(C) an Invention and Non-Disclosure Agreement in
the form attached as Schedule B to such Employment Agreement;
(vi) Blue Ridge and the Consultant shall execute and
deliver a Consulting Agreement substantially in the form attached hereto as
Exhibit D;
(vii) Kirkland & Ellis shall deliver to the Buyer an
opinion with respect to the matters set forth in Exhibit E attached hereto,
addressed to the Buyer and dated as of the Closing Date;
(viii)Howrey & Simon shall deliver to the Buyer an
opinion with respect to the matters set forth in Exhibit F attached hereto,
addressed to the Buyer and dated as of the Closing Date;
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(ix) Hale and Dorr LLP shall deliver to the Stockholders
an opinion with respect to the matters set forth in Exhibit G attached hereto,
addressed to the Stockholders and dated the Closing Date;
(x) Bain Capital, Inc. ("Bain") and Blue Ridge shall
execute and deliver a Letter Agreement, in the form attached hereto as Exhibit
H, terminating the Advisory Agreement dated December 30, 1996 between Blue Ridge
and Bain; and
(xi) the Buyer and the Stockholders' Representative (on
behalf of the Stockholders) shall execute and deliver a cross-receipt evidencing
the purchase and sale of the Blue Ridge Shares referred to above.
(c) Effective as of the Closing, Blue Ridge and each of the
Stockholders party to the agreements listed on Schedule IV hereto agree that
each such agreement shall be terminated and shall be of no further force and
effect (it being understood and agreed that no termination of any such
employment, consulting, legal services or benefits agreement shall relieve Blue
Ridge of any obligation to pay any accrued but unpaid compensation or benefits
thereunder).
1.4 Further Assurances At any time and from time to time after the
Closing, at the reasonable request of the Buyer and without further
consideration, the Stockholders shall promptly execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and take
all such other action as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Blue Ridge Shares, to put the Buyer through its ownership of the Blue
Ridge Shares in actual possession and operating control of the assets (including
without limitation the original corporate minute books of Blue Ridge and all
corporate seals), properties and business of Blue Ridge, and to carry out the
purpose and intent of this Agreement.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES
REGARDING THE BLUE RIDGE SHARES
Each of the Stockholders severally represents and warrants to the Buyer
as follows:
2A.1 Ownership of Blue Ridge Shares. Except for the Stockholders
Agreement listed on Schedule IV (which agreement shall terminate as of the
Closing), each Stockholder has good and marketable title, free and clear of any
and all Security Interests (as defined below), to all of the Blue Ridge Shares
listed on Schedule I as being owned by him or it. Each Stockholder has the full
right, power and authority to sell, transfer, convey, assign and deliver to the
Buyer at the Closing the Blue Ridge Shares owned by him or it and, upon
consummation of the purchase and sale contemplated hereby, the Buyer will
acquire from him or it good and marketable title to such
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Blue Ridge Shares, free and clear of all Security Interests, other than those
created or arising by reason of any action of the Buyer. For purposes of this
Agreement, "Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, lien, contractual restriction or covenant, option or other
adverse claim (whether arising by contract or by operation of law).
2A.2 Authority Each Stockholder has all requisite power and authority
to execute and deliver this Agreement and to perform his or its obligations
hereunder. This Agreement has been duly and validly executed and delivered by
him or it, and constitutes a valid and binding obligation of him or it,
enforceable against him or it in accordance with its terms.
2A.3 Noncontravention Neither the execution and delivery of this
Agreement by such Stockholder, nor the consummation by him or it of the
transactions contemplated hereby, will (i) conflict with, result in a breach of,
constitute a default under, or require any notice, consent or waiver under, any
agreement or instrument to which such Stockholder is a party or by which such
Stockholder is bound, (ii) result in the imposition of any Security Interest
upon the Blue Ridge Shares owned by him or it, or (iii) violate any law, rule,
regulation, order, writ, injunction or decree applicable to such Stockholder or
to the Blue Ridge Shares owned by such Stockholder.
2A.4 Investment Representations.
(a) Such Stockholder is acquiring the Warrants, the Contingent
Shares and the Buyer Common Stock subject to the Warrants to be issued to such
Stockholder pursuant to this Agreement (collectively, the "Purchase Price
Securities") for his or its own account for investment only, and not with a view
to, or for sale in connection with, any distribution of such shares in violation
of the Securities Act of 1933, as amended (the "Securities Act"), or any rule or
regulation under the Securities Act.
(b) Such Stockholder has had adequate opportunity to obtain
from representatives of the Buyer such information, in addition to the
representations set forth in the Agreement, as is necessary to evaluate the
merits and risks of such Stockholder's acquisition of the Purchase Price
Securities.
(c) Such Stockholder has sufficient experience in business,
financial and investment matters to be able to evaluate the risks involved in
the acquisition of the Purchase Price Securities and to make an informed
investment decision with respect to such acquisition.
(d) Such Stockholder understands that the Purchase Price
Securities have not been registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the Securities Act; and that
until such shares are so registered, the Purchase Price Securities cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available.
(e) Such Stockholder agrees and understands that until the
Purchase Price Securities are sold under an effective registration statement
pursuant to Article VII or sold
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pursuant to Rule 144 under the Securities Act, a legend substantially in the
following form may be placed on the certificate representing the Purchase Price
Securities to be issued to the Stockholder:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
(f) Each of the following Stockholders represents that he or
it is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act: Roland Johnson, P. Scott Moffitt, Bain Capital Fund V, L.P.,
Bain Capital Fund V-B, L.P., BCIP Associates, Randolph Street Partners, Sutter
Hill Ventures, Sutter Hill Associates, L.P., Tench Coxe 401(k), Dennis Sheehan
401(k), Sherryl Hossack 401(k), Stanford University, John Dunning and Richard
Chan.
ARTICLE IIB
REPRESENTATIONS AND WARRANTIES REGARDING BLUE RIDGE
Blue Ridge represents and warrants to the Buyer that the statements
contained in this Article IIB are true and correct as of the date of this
Agreement, except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IIB, and the disclosures in any paragraph of the Disclosure Schedule shall
qualify another paragraph in this Article IIB only to the extent it is
reasonably apparent from a reading of the disclosure that such disclosure is
applicable to such other paragraph.
2B.1 Organization Blue Ridge is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to own its properties and to carry on its
business as now being conducted. Blue Ridge does not have any subsidiaries or
own any equity interest in any other corporation or entity. Blue Ridge is
qualified to transact business as a foreign corporation in the jurisdictions
listed in Section 2B.1 of the Disclosure Schedule.
2B.2 Capitalization The authorized capital stock of Blue Ridge
consists of 4,000 shares of Class L Common Stock, $0.01 par value per share (the
"Class L Common Stock"), of which 1,305 shares are outstanding as of the date of
this Agreement, and 36,000 shares of Class A Common Stock, $0.01 par value per
share (the "Class A Common Stock"), of which 11,745 shares are outstanding as of
the date of this Agreement (all of which outstanding shares of Class L Common
Stock and Class A Common Stock are owned by the Stockholders as set forth on
Schedule I attached hereto), none of which shares of Class L Common Stock or
Class A
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<PAGE> 16
Common Stock are held in the treasury of Blue Ridge. All of the outstanding Blue
Ridge Shares are duly authorized, validly issued, fully paid and nonassessable
and were issued without violation of any preemptive rights. There are no
outstanding or authorized options, warrants, rights, agreements, obligations or
commitments to which Blue Ridge is a party or which are binding upon Blue Ridge
providing for the issuance, disposition or acquisition, contingent or otherwise,
of any of its capital stock, or any other securities exercisable therefore or
convertible thereinto. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to Blue Ridge. There
are no agreements, voting trusts, proxies or understandings with respect to the
voting, or registration under the Securities Act of any capital stock of Blue
Ridge. All of the issued and outstanding Blue Ridge Shares were issued in
compliance with applicable federal and state securities laws.
2B.3 Noncontravention The purchase and sale of the Blue Ridge Shares
contemplated by this Agreement will not, with or without the giving of notice or
the passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to Blue Ridge, except for any violation which could not
reasonably be expected to have a material adverse effect on Blue Ridge or its
business, assets, financial condition or prospects (a "Blue Ridge Material
Adverse Effect"); (b) violate the provisions of the Certificate of Incorporation
or By-laws of Blue Ridge; (c) violate any judgment, decree, order or award of
any court, governmental body or arbitrator applicable to Blue Ridge; or (d)
conflict with, result in the breach or termination of, constitute a default
under, or cause the creation of any Security Interest upon Blue Ridge's assets
pursuant to, any Contract (as defined in Section 2B.9(a)) or Permit (as defined
in Section 2B.16) of Blue Ridge. Section 2B.3 of the Disclosure Schedule sets
forth a list of each notice, consent, waiver or amendment required to be
obtained prior to or as a result of the consummation of the purchase and sale of
Blue Ridge Shares contemplated by this Agreement, under any Contract (the
"Required Consents")
2B.4 Financial Statements and Information
(a) Blue Ridge has previously delivered to the Buyer its
audited financial statements as of and for the year ended December 31, 1997 and
its unaudited financial statements as of and for the eight-month period ended
August 31, 1998. Such financial statements (i) have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods covered thereby (except that such
unaudited financial statements do not include footnotes or normally occurring
adjustments), (ii) fairly present, in all material respects, as of the dates and
for the periods indicated, the financial position and the results of operations
of Blue Ridge and (iii) are consistent, in all material respects, with the books
and records of Blue Ridge.
(b) Blue Ridge has no material liability other than (i) the
liabilities shown on Blue Ridge's balance sheet as of August 31, 1998, (ii)
liabilities, similar in nature to those shown on such balance sheet, which have
arisen after August 31, 1998 in the ordinary course of business consistent with
past practice and (iii) contractual and other liabilities incurred in the
ordinary course of business which are not required by GAAP to be reflected on a
balance sheet.
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<PAGE> 17
* Confidential material has been omitted pursuant to a request for
confidential treatment and filed seperately with the Commission.
(c) Since August 31, 1998, (i) there has been no material
adverse change in Blue Ridge or its business or financial condition, and there
has occurred no event or development which could reasonably be expected to have
a Blue Ridge Material Adverse Effect, and (ii) Blue Ridge has not taken any of
the actions set forth in clauses (a) through (i) of Section 4.3.
2B.5 Intellectual Property.
(a) (i) To the knowledge of Blue Ridge, Blue Ridge owns or has
the right to use all Intellectual Property (as defined below) necessary to make,
use or sell any products currently sold or under development by Blue Ridge, or
otherwise necessary for the operation of its business as presently conducted
(the "Blue Ridge Intellectual Property"). Each item of Blue Ridge Intellectual
Property will be owned or available for use by Blue Ridge on identical terms and
conditions immediately following the Closing. Blue Ridge has taken all
reasonable measures to protect the proprietary nature of each item of Blue Ridge
Intellectual Property, and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the knowledge of Blue Ridge,
no other person or entity has any rights in the worldwide animal health field to
any of the Blue Ridge Intellectual Property (other than off-the-shelf software
programs licensed by Blue Ridge pursuant to "shrink-wrap" licenses and except
pursuant to agreements or licenses specified in Section 2B.5(c) or 2B.5(d) of
the Disclosure Schedule), and, to the knowledge of Blue Ridge, no person or
entity is infringing, violating or misappropriating any Blue Ridge Intellectual
Property to any material extent. Blue Ridge has made available to the Buyer
correct and complete copies of all written documentation evidencing ownership or
licensing of, and any claims or disputes relating to, each item of Blue Ridge
Intellectual Property (other than off-the-shelf software programs licensed by
Blue Ridge pursuant to "shrink-wrap" licenses). For purposes of this Agreement,
"Intellectual Property" means all (A) patents and patent applications, (B)
copyrights and registrations thereof, (C) formulas, processes, techniques,
technical data, research and development information or other confidential
information relating to the development or manufacture of Blue Ridge's products,
(D) computer software, data and documentation, (E) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
and (F) other proprietary rights relating to any of the foregoing.
(ii) Blue Ridge has the exclusive worldwide right and
license to the ***** Technology (as defined in the License Agreement dated as of
***************** between *************** and ************* ) in the animal
health field to make, develop, manufacture, market, sublicense and sell products
utilizing the ***** Technology as a ******************** for ******************
******************************************************************* The *****
Technology is licensed to Blue Ridge by ****************************************
*********************************************** under an assignment and
sublicense agreement dated **************************************************
************************ licenses the ***** Technology under a license agreement
with *********************************** dated ********************************
*********************
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<PAGE> 18
* Confidential material has been omitted pursuant to a request for
confidential treatment and filed seperately with the Commission.
**************** (the ************* Agreement"). ************ licenses the *****
Technology under a license agreement with **************************************
************ dated *****************(the **** Agreement"). ****** has not
breached any term of the ************ Agreement in a manner that would give
************ the right to terminate such agreement, with or without notice.
************ has not breached any term of the *** Agreement in a manner that
would give *** the right to terminate such agreement, with or without notice. No
termination of the *** Agreement has been threatened by *** and no termination
of the ************ Agreement has been threatened by *************and both such
agreements remain in full force in accordance with their terms.
(iii) Blue Ridge has the exclusive worldwide right and
license under the Technology (as defined in the Development, License, and Supply
Agreement effective as of *********** between ******************************
************ and Blue Ridge, as consented to by ********************************
(the ********* Agreement")) in the animal health field to make (subject to the
terms of the ******** Agreement), develop, register and sell products utilizing
the Technology as ********************** for the products set forth on Appendix
A to the ******** Agreement. The Technology is licensed to Blue Ridge by
******** and ***** under the ******** Agreement.
(iv) Blue Ridge has the exclusive right and license in
the United States and Canada under the Patent Rights, Know-How and Improvements
(each as defined in the License Agreement dated as of ***************** between
************************* and Blue Ridge (the ******* Agreement")) to make, use
and sell Products (as defined in the *******Agreement). Patent Rights, as
defined in the *******Agreement include, without limitation, rights under U.S.
Patent Application No. *****************************************************
***********************************************************.
(v) Blue Ridge has the exclusive worldwide right under
the Supply Agreement dated as of ************** between ******************* and
Blue Ridge (the ******** Agreement") to the supply of Product, as defined in the
******* Agreement, for use for all veterinary medicine indications. Blue Ridge's
rights to Products, as defined in the ******* Agreement, are sufficient to
enable Blue Ridge to (A) develop, manufacture, use, register, market and sell
each of the products utilizing ******, as defined in the ******* Agreement, as
an active ingredient which are currently sold or under development by Blue
Ridge, including, without limitation, ****** products intended to **************
********************************************************* and (B) use **********
********************************************************************************
******.
(b) To the knowledge of Blue Ridge, none of the activities or
business presently conducted by Blue Ridge infringes or violates, or constitutes
a misappropriation of, any Intellectual Property rights of any other person or
entity. Blue Ridge has not received any complaint, claim or notice alleging any
such infringement, violation or misappropriation.
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(c) Section 2B.5(c) of the Disclosure Schedule identifies each
license or other agreement pursuant to which Blue Ridge has licensed,
distributed or otherwise granted any rights to any third party with respect to,
any of Blue Ridge Intellectual Property.
(d) Section 2B.5(d) of the Disclosure Schedule identifies each
item of Blue Ridge Intellectual Property that is owned by a party other than
Blue Ridge, and the license or agreement pursuant to which Blue Ridge uses it
(excluding off-the-shelf software programs licensed by Blue Ridge pursuant to
"shrink-wrap" licenses).
(e) To Blue Ridge's knowledge, all internal computer systems
that are material to its business and operations are, or are expected to be by
December 31, 1999, Year 2000 Compliant, except to the extent that a failure to
be Year 2000 Compliant would not reasonably be expected to have a Blue Ridge
Material Adverse Effect. Blue Ridge is not aware, without any obligation to have
made any affirmative inquiries or investigations, of any failure to be Year 2000
Compliant on the part of any third-party system that is material to the business
or operations of Blue Ridge, including without limitation any system belonging
to one of Blue Ridge's suppliers, manufacturers, service providers or customers.
For purposes of this Agreement, "Year 2000 Compliant" means, with respect to
computer and electronic systems, that such system, when used properly in
accordance with its documentation, is capable of correctly receiving, processing
and providing date data within and between the twentieth and twenty-first
centuries; provided that all applications, hardware and other systems used in
conjunction with such system correctly exchange date data with or provide data
to such system.
2B.6 Trademarks Blue Ridge has used the Trademarks (as defined below)
listed in Section 2B.6 of the Disclosure Schedule since the dates set forth in
such Section. Blue Ridge has not licensed or granted any right to use any such
Trademark to any other person or entity. Blue Ridge does not sell products or
operate its business under, and in the past has not sold products or operated
its business under, any Trademarks other than those listed in Section 2B.6 of
the Disclosure Schedule. "Trademarks" means each trademark, tradename or other
designation adopted or used by Blue Ridge and each registered trademark and
application for registration of trademark which is owned by Blue Ridge.
2B.7 Real Property Blue Ridge owns no real property
2B.8 Personal Property
(a) Blue Ridge owns or leases all tangible assets necessary
for the conduct of its business as presently conducted by Blue Ridge. Each such
tangible asset is free from material defects, has been maintained in accordance
with normal industry practice, is in good operating condition and repair
(subject to normal wear and tear) and is suitable for the purposes for which it
presently is used. All such tangible assets are located at Blue Ridge's facility
at 212-B Burgess Road, Greensboro, North Carolina 27409.
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(b) No asset of Blue Ridge (tangible or intangible) is subject
to any Security Interest.
(c) Section 2B.8(c) of the Disclosure Schedule sets forth (i)
a true, correct and complete list as of August 31, 1998 of all items of tangible
personal property (other than inventory), including without limitation purchased
and capitalized software, owned by Blue Ridge as of the date hereof, or not
owned by Blue Ridge but in the possession of or used in the business of Blue
Ridge (the "Personal Property"), other than individual assets with a book value
of less than $10,000; and (ii) a description of the owner of, and any agreement
relating to the use of, each item of Personal Property not owned by Blue Ridge
and the circumstances under which such Property is used. Each item of Personal
Property not owned by Blue Ridge is in such condition that upon the return of
such property to its owner in its present condition at the end of the relevant
lease term or as otherwise contemplated by the applicable agreement between the
respective entity and the owner or lessor thereof, the obligations of the
respective entity to such owner or lessor will be discharged.
2B.9 Contracts
(a) Section 2B.9 of the Disclosure Schedule lists each of the
following contracts, agreements or commitments (written or oral) to which Blue
Ridge is a party (other than those listed in Section 2B.5 of the Disclosure
Schedule): (i) any contract, agreement or commitment providing for the payment
by Blue Ridge of an amount in excess of $25,000 per year which is not terminable
by Blue Ridge without penalty on 60 days or less notice; (ii) any contract,
agreement or commitment concerning ownership of ideas or inventions,
work-for-hire or non-competition; (iii) any contract, agreement or commitment
with any current or former stockholders or employees of or consultants to Blue
Ridge, except employee-at-will arrangements; (iv) any manufacturing or supply
agreement; (v) any lease or sublease of real estate; (vi) any agreement for the
borrowing of money or guarantee of indebtedness; (vii) any agreement with a
customer or distributor under which Blue Ridge has granted exclusive rights or
"most favored nation" pricing terms, and (viii) any agreement relating to the
acquisition or disposition of assets outside the ordinary course of business
having a value of more than $10,000 (collectively, together with the agreements
and licenses listed in Section 2B.5 of the Disclosure Schedule, the
"Contracts").
(b) Blue Ridge has previously delivered to the Buyer a
complete and accurate copy of each Contract. Each Contract is a valid and
binding agreement between Blue Ridge and the other party or parties thereto, and
will continue to be so immediately following the Closing; no defaults or
breaches exist under any of the Contracts on the part of Blue Ridge or, to the
knowledge of Blue Ridge, any other party thereto, and none will arise as a
result of the purchase and sale of Blue Ridge Shares contemplated by this
Agreement, that would give rise to a right to terminate such Contract on the
part of the other party; and Blue Ridge has no reason to believe that any other
party to any Contract will not be able to perform its material obligations
thereunder.
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2B.10 Books and Records; Bank Accounts
(a) The corporate minute books, financial and accounting
records and other business records of Blue Ridge are accurate and complete in
all material respects.
(b) Section 2B.10 of the Disclosure Schedule sets forth a
correct and complete list of all bank accounts and safe deposits of Blue Ridge,
and all authorized signatories with respect thereto.
2B.11 Tax Matters
(a) Blue Ridge has filed on a timely basis all federal, state,
local and foreign Tax (as defined below) returns that were required to be filed,
all of which returns were accurate and complete in all material respects. Blue
Ridge has paid on a timely basis all Taxes which have become due and withheld
and has remitted on a timely basis any Taxes required to be withheld by it. The
unpaid Taxes of Blue Ridge for tax periods through June 30, 1998 do not exceed,
in any material respect, the accruals and reserves for Taxes set forth on the
June 30, 1998 balance sheet of Blue Ridge. No unsatisfied deficiencies have been
asserted or assessed against Blue Ridge as a result of any audit by the Internal
Revenue Service or any state or local taxing authority, and no examination or
audit by any such authority is currently in progress or, to the knowledge of
Blue Ridge, threatened.
(b) Blue Ridge is not and has never been a member of a group
of corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax returns. Blue Ridge has delivered to the Buyer complete
and accurate copies of all federal, state and local income and property Tax
returns, examination reports and statements of deficiencies assessed against or
agreed to by Blue Ridge since its inception. No examination or audit of any Tax
return of Blue Ridge by any governmental entity is currently in progress or, to
the knowledge of Blue Ridge, threatened. Blue Ridge has not waived any statute
of limitations with respect to Taxes or agreed to an extension of time with
respect to a Tax assessment or deficiency. Blue Ridge (i) is not a "consenting
corporation" within the meaning of Section 341(f) of the Code and none of the
assets of Blue Ridge are subject to an election under Section 341(f) of the
Code; (ii) has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(l)(A)(ii) of the Code; (iii) has no actual or
potential liability for any Taxes of any person or entity under Treasury
Regulation Section 1.1502-6 (or any similar provision of federal, state, local
or foreign law), or as a transferee or successor, by contract, or otherwise; and
(iv) is not and has not been required to make a basis reduction pursuant to
Treasury Regulation Section 1.1502-20(b) or Treasury Regulation Section
1.337(d)-2(b).
(c) "Taxes" means all taxes, charges, fees and similar
assessments (including without limitation those relating to income, receipts,
excise, real property, personal property, sales, use, transfer, withholding,
employment, payroll, franchises and value added, and customs and import duties
and fees) imposed by the United States of America or any state, local or foreign
government, or any agency thereof, including any interest, fines or penalties
with respect thereto.
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2B.12 Product and Service Warranties
Standard warranty terms which are set forth in Section 2B.12 of the Disclosure
Statement.
2B.13 Customers and Suppliers No significant customer has indicated to
Blue Ridge that it will stop or decrease, in any material respect, purchasing
products from Blue Ridge in the future or that it wishes to return or receive a
refund for any products previously purchased from Blue Ridge, except for returns
or refunds granted in the ordinary course of business. Section 2B.13 of the
Disclosure Schedule sets forth a list of each supplier that is the sole supplier
of any significant product to Blue Ridge. No such supplier has indicated within
the past year that it will stop, or materially decrease the rate of, supplying
products to Blue Ridge.
2B.14 Insurance
(a) Blue Ridge maintains, has maintained since its inception,
and will maintain until the Closing insurance with respect to its assets and
business, the present scope and coverage amounts of which are described in
Section 2B.14 of the Disclosure Schedule.
(b) No product liability, professional liability or similar
claim has ever been made against Blue Ridge.
2B.15 Legal Compliance; Environmental Matters.
(a) Blue Ridge, and the conduct and operations of Blue Ridge's
business, are in material compliance with each applicable law (including rules,
regulations, ordinances and codes thereunder) of any federal, state, local or
foreign government or governmental authority (including without limitation any
relating to public health and safety, environmental protection, hazardous waste
or applicable building, zoning and other laws), except for any violation or
default which will not result in a Blue Ridge Material Adverse Effect.
(b) Without limiting the generality of Section 2B.15(a):
(i) Blue Ridge has filed with the Food and Drug
Administration (the "FDA") and all applicable state, local or foreign regulatory
bodies for, and received approval of, all registrations, applications or other
regulatory authorizations necessary to conduct Blue Ridge's business as it is
being conducted on the date hereof, except for any failure to file or receive
which will not result in a Blue Ridge Material Adverse Effect, and Blue Ridge
has obtained and is in compliance with such registrations, applications and
other regulatory authorizations, and all applicable FDA, state and local rules,
regulations, guidelines and policies, including those relating to good clinical
practice (GCP), good laboratory practice (GLP) and good manufacturing practice
(GMP), except for any failure to be in compliance which will not result in a
Blue Ridge Material Adverse Effect; and
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(ii) all clinical trials were, and, if still
pending, are, being conducted in a manner that (x) follows, in all material
respects, protocols, procedures and controls generally used by qualified experts
in clinical studies and (y) is consistent in all material respects with all
applicable federal, state and local regulations, including, but not limited to,
20 CFR 200, 21 CFR 511.1 and 21 CFR 512.
(c) Blue Ridge has complied in all material respects with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of Blue Ridge, threatened civil or criminal litigation, written notice
of violation, formal administrative proceeding, or investigation, inquiry or
information request by any governmental entity, relating to any Environmental
Law involving Blue Ridge. For purposes of this Agreement, "Environmental Law"
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including
without limitation any statute, regulation or order pertaining to (i) treatment,
storage, disposal, generation and transportation of industrial, toxic or
hazardous substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
substances, or solid or hazardous waste, including without limitation emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of wild life, marine sanctuaries and wetlands,
including without limitation all endangered and threatened species; (vi) storage
tanks, vessels, containers, abandoned, disposed or discarded barrels, and other
closed receptacles; (vii) health and safety of employees and other persons; and
(viii) manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous materials or substances or oil or petroleum products or solid
or hazardous waste, each as in effect on or prior to the Closing Date. As used
above, the terms "release" and "environment" shall have the meaning set forth in
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA").
(d) There have been no releases of any Materials of
Environmental Concern (as defined below) into the environment at any parcel of
real property or any facility formerly or currently owned, operated or
controlled by Blue Ridge. Blue Ridge is not aware of any releases of Materials
of Environmental Concern at parcels of real property or facilities other than
those owned, operated or controlled by Blue Ridge that could reasonably be
expected to have a material adverse impact on the real property or facilities
owned, operated or controlled by Blue Ridge. For purposes of this Agreement,
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resources Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products.
(e) Section 2.15(e) of the Disclosure Schedule sets forth a
list of all environmental reports, investigations and audits relating to
premises currently or previously owned or operated by Blue Ridge (whether
conducted by or on behalf of Blue Ridge or a third
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<PAGE> 24
party, and whether done at the initiative of Blue Ridge or directed by a
governmental entity or other third party) which Blue Ridge has possession of or
reasonable access to. Complete and accurate copies of each such report, or the
results of each such investigation or audit, have been provided to the Buyer.
2B.16 Permits Blue Ridge possesses all material permits, licenses,
registrations, certificates, orders, approvals, franchises, variances and
similar rights issued by or obtained from any governmental, regulatory or
administrative authority or agency, or any other third party, that are required
to conduct the business of Blue Ridge as currently conducted, each of which is
listed in Section 2B.16 of the Disclosure Schedule (collectively, the
"Permits").
2B.17 Litigation Blue Ridge (a) is not subject to any unsatisfied
judgment, order, decree, stipulation or injunction and (b) is not a party to,
nor to its knowledge threatened with, any litigation, suit, action,
investigation, proceeding or controversy before any court, administrative agency
or other governmental authority.
2B.18 Confidential Information Blue Ridge has not disclosed any
information of a proprietary or confidential nature relating to its business,
products, technology or financial condition to any person or entity, except (i)
in the ordinary course of business pursuant to non-disclosure agreements to
which Blue Ridge is a party, (ii) to the legal and financial advisors of Blue
Ridge and its stockholders, and (iii) to the Buyer and its legal and financial
advisors.
2B.19 Employees All present employees of Blue Ridge are listed in
Section 2B.19 of the Disclosure Schedule, together with their job titles and
salaries. Each present and past employee of Blue Ridge is bound by Blue Ridge's
standard confidentiality agreement, a copy of which is attached as Section 2B.19
of the Disclosure Schedule. No employees of Blue Ridge are represented by any
labor union or subject to any collective bargaining agreement, nor is Blue Ridge
aware of any unionization or organizational effort pending or contemplated.
2B.20 Employee Benefits.
(a) Section 2B.20 of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined below)
maintained, or contributed to, by Blue Ridge or any ERISA Affiliate (as defined
below). For purposes of this Agreement, "Employee Benefit Plan" means any
"employee pension benefit plan" (as defined in Section 2(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), any "employee
welfare benefit plan" (as defined in Section 2(1) of ERISA), and any other
written or oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation. For purposes of this Agreement,
"ERISA Affiliate" means any entity which is or at any applicable time was a
member of (i) a controlled group of corporations (as defined in Section 414(b)
of Code), (ii) a group of trades or
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businesses under common control (as defined in Section 414(c) of the Code), or
(iii) an affiliated service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any of which includes Blue
Ridge. Complete and accurate copies of (i) all Employee Benefit Plans which have
been reduced to writing, (ii) written summaries of all material unwritten
Employee Benefit Plans, (iii) all related trust agreements, insurance contracts
and summary plan descriptions, and (iv) all annual reports filed on IRS Form
5500, 5500C or 5500R for each Employee Benefit Plan since inception of the Plan,
have been delivered to the Buyer. Each Employee Benefit Plan has been
administered in all material respects in accordance with its terms and Blue
Ridge and each ERISA Affiliate have in all material respects met their
obligations with respect to such Employee Benefit Plan and have made all
required contributions thereto. Blue Ridge and all Employee Benefit Plans are in
compliance in all material respects with the currently applicable provisions of
ERISA and the Code and the regulations thereunder.
(b) There are no known investigations by any governmental
entity, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and proceedings
with respect to qualified domestic relations orders), suits or proceedings
against or involving any Employee Benefit Plan or asserting any rights or claims
to benefits under any Employee Benefit Plan that could give rise to any material
liability.
(c) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are qualified and the plans and the trusts related thereto are exempt from
federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any material
respect.
(d) Neither Blue Ridge nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Code or Title
IV of ERISA.
(e) At no time has Blue Ridge or any ERISA Affiliate been
obligated to contribute to any "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination or employment to any employee
of Blue Ridge (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code and insurance conversion privileges under state law.
(g) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by Blue Ridge or any ERISA
Affiliate that would subject Blue Ridge or any ERISA Affiliate to (i) any
material fine, penalty, tax or liability of any kind imposed under ERISA or the
Code or (ii) any contractual indemnification or contribution obligation
protecting any fiduciary, insurer or service provider with respect to any
Employee Benefit Plan.
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(h) No Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
(i) No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits Blue Ridge from amending or terminating any
such Employee Benefit Plan with respect to the accrual of future benefits.
(j) Section 2B.20 of the Disclosure Schedule discloses each:
(i) agreement with any director, executive officer or other key employee of Blue
Ridge (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Blue Ridge of
the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from Blue Ridge that may be subject
to the tax imposed by Section 4999 of the Code or included in the determination
of such person's "parachute payment" under Section 280G of the Code; and (iii)
agreement or plan binding Blue Ridge, including without limitation any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2B.21 Business Relationships With Affiliates. No officer, director or
stockholder of Blue Ridge (a) owns any property or right, tangible or
intangible, which is used in, or was developed for the purpose of use in, the
business of Blue Ridge, (b) has any claim or cause of action against Blue Ridge,
(c) owes any money to or is owed any money by (except for salary and other
compensation accrued in the ordinary course of business) Blue Ridge or (d) has
any other business relationship with Blue Ridge, other than in his capacity as
an officer, director, stockholder or employee.
2B.22 Brokers' Fees No financial advisor, broker, agent or finder was
utilized by Blue Ridge or any Stockholder in connection with the transactions
contemplated by this Agreement and no fees are due or owing by Blue Ridge to any
financial advisor, broker, finder or agent.
2B.23 Disclosure
(a) No representation or warranty by Blue Ridge contained in
this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other
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instrument delivered or to be delivered at the Closing by or on behalf of Blue
Ridge pursuant to this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements herein or therein not misleading.
(b) The financial statements and other information concerning
Blue Ridge that were provided by Blue Ridge to the Stockholders in connection
with their consideration and execution of this Agreement (the "Blue Ridge
Documents") did not contain any untrue statement of a material fact or omit to
state any material fact necessary, in light of the circumstances under which
such statements were made, in order to make the statements therein not
misleading. Any projections contained in the Blue Ridge Documents were made in
good faith and were based upon assumptions believed by Blue Ridge to be
reasonable; however, Blue Ridge makes no guarantee that such projections will be
realized.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Stockholder as follows:
3.1 Organization The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to own its properties and carry on its
business as it is currently being conducted. The Buyer has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
3.2 Capitalization The authorized capital stock of the Buyer consists
of 60,000,000 shares of Buyer Common Stock, of which 38,635,539 shares were
issued as of September 15, 1998. No shares of Buyer Common Stock are held by
subsidiaries of the Buyer and, except as disclosed in the Buyer Reports, no
shares of Buyer Common Stock are reserved for issuance pursuant to employee or
director stock option plans or programs authorized by Buyer's board of directors
and stockholders, or pursuant to warrants, agreements, arrangements or other
commitments. All of the issued and outstanding shares of Buyer Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. All of the Johnson Shares, the Contingent Shares and the
shares of Buyer Common Stock underlying the Warrants (collectively, the
"Purchase Price Shares") will be, when issued in accordance with this Agreement
or the Warrants, duly authorized, validly issued, fully paid, nonassessable,
free of all preemptive rights and listed on the Nasdaq National Market (or such
other securities exchange or trading system on which the Buyer Common Stock is
then listed.)
3.3 Authorization The execution and delivery by the Buyer of this
Agreement, and the consummation by the Buyer of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of the Buyer. This Agreement
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constitutes a valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms.
3.4 Noncontravention The execution and delivery by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated
hereby will not, with or without the giving of notice or the passage of time or
both, (a) violate the provisions of any law, rule or regulation applicable to
the Buyer (b) violate the provisions of the Certificate of Incorporation or
By-laws of the Buyer; (c) violate any judgment, decree, order or award of any
court, governmental body or arbitrator applicable to the Buyer; or (d) conflict
with, result in the breach or termination of, or constitute a default under, or
require any notice, consent or waiver under, any agreement or instrument to
which the Buyer is a party or by which the Buyer or any of its assets is bound.
3.5 Reports and Financial Statements The Buyer has previously furnished
to Blue Ridge complete and accurate copies, as amended or supplemented, of its
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as
filed with the Securities and Exchange Commission (the "SEC") and (b) its
Quarterly Reports on Form 10-Q for the periods ended March 31, 1998 and June 30,
1998 (such reports are collectively referred to herein as the "Buyer Reports").
The Buyer Reports constitute all of the documents required to be filed by the
Buyer under Section 13 of the Exchange Act of 1934, as amended (the "Exchange
Act"), with the SEC since December 31, 1997. As of their respective dates, the
Buyer Reports 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 audited financial statements and unaudited interim financial
statements of the Buyer included in the Buyer Reports (i) comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Buyer as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer.
3.6 Absence of Material Adverse Changes Since June 30, 1998, there has
not been any material adverse change in the Buyer or its business or financial
condition, and there has occurred no event or development which may reasonably
be foreseen to have in the future a material adverse effect on the Buyer or its
business or financial condition.
3.7 Location Headquarters The Buyer currently intends to cause the
headquarters of the Buyer Pharmaceutical Division to be located in the
Greensboro, North Carolina area.
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3.8 Brokers' Fees No financial advisor, broker, agent or finder was
utilized by the Buyer in connection with the transactions contemplated by this
Agreement and no fees are due or owing by the Buyer to any financial advisor,
broker, finder or agent.
ARTICLE IV
COVENANTS
4.1 Best Effort Each of the Parties shall use its reasonable best
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement.
4.2 Required Consents Blue Ridge shall use its reasonable best
efforts to obtain the Required Consents.
4.3 Operation of Business Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing, Blue Ridge
shall not, without the written consent of the Buyer:
(a) issue, grant or sell any shares of capital stock of Blue
Ridge or any rights, warrants or options to acquire any such shares;
(b) pay any dividend or other distribution in cash or property
in respect of capital stock or partnership interests;
(c) create, incur or assume any indebtedness for borrowed
money not currently outstanding (including capital leases obligations); assume,
guarantee or otherwise become liable for the obligations of any other person; or
make any loans or capital contributions to, or investments in, any other person;
(d) enter into, adopt or amend any employee benefit plan in
any material respect or any employment or severance agreement; or increase in
any manner the compensation or fringe benefits of, or materially modify the
employment terms of, or pay any bonuses to, its employees; or hire or terminate
any employee with an annual salary in excess of $40,000;
(e) acquire any assets or make any capital expenditures for an
amount of over $10,000 in any one instance or $50,000 in the aggregate;
(f) pay any material obligation or liability other than in the
ordinary course of business, except as otherwise provided pursuant to Section
4.6 of this Agreement;
(g) sell, lease, encumber, dispose of, assign, transfer or
license any assets or Blue Ridge Intellectual Property, other than in the
ordinary course of business;
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(h) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive any
rights under, any Contract; or
(i) agree to take any of the actions set forth in clauses (a)
through (h) above.
4.4 Full Access Blue Ridge shall permit representatives of the Buyer
to have full access (at all reasonable times, and in a manner so as not to
interfere with the normal business operations of Blue Ridge) to all premises,
properties, technology, financial and accounting books and records, contracts,
other records and documents, officers, personnel, counsel and auditors of or
pertaining to Blue Ridge.
4.5 Exclusivity No Stockholder shall, and the Stockholders shall
cause Blue Ridge and its officers, directors, employees, representatives and
agents not to, directly or indirectly, (i) encourage, solicit, initiate, engage
or participate in discussions or negotiations with, or enter into any agreement
or understanding with, any person or entity (other than the Buyer) concerning
any merger, consolidation, sale of material assets (except with the consent of
the Buyer), tender offer, recapitalization, purchase of shares of common stock
or other equity interest of Blue Ridge, proxy solicitation or other business
combination involving Blue Ridge or (ii) provide any non-public information
concerning, or access to, the business, properties or assets of Blue Ridge to
any person or entity (other than in the ordinary course of business of Blue
Ridge to a party not interested in pursuing a transaction of the nature
described in clause (i) above). The Stockholders shall immediately notify the
Buyer of, and shall disclose to the Buyer the details of, any inquiries or
discussions of the nature described in the preceding sentence.
4.6 Expenses Each Party shall bear its own costs and expenses
(including legal and other professional fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby (it
being agreed that should the Closing occur, except as provided in the last
sentence in this Section 4.6, any such costs and expenses incurred by Blue Ridge
shall be borne by the Stockholders as a reduction of the Cash Purchase Price,
pro rata, allocated among each Stockholder based on his or its percentage
ownership of the capital stock of Blue Ridge immediately prior to the Closing).
Blue Ridge shall provide the Buyer with a calculation of the total costs and
expenses of Blue Ridge no later than two business days prior to the Closing. Of
the $1,287,550 payable by Blue Ridge under the Advisory Agreement dated December
30, 1996 between Blue Ridge and Bain Capital, Inc., $840,000 shall be borne by
the Stockholders pursuant to this Section 4.6, and $447,550 shall be borne by
Blue Ridge.
4.7 Director and Officer Indemnification The Buyer agrees that, to the
maximum extent permitted by the State of Delaware, all rights to indemnification
and exculpation from liability for acts or omissions occurring prior to the
Closing Date now existing in favor of the current or former directors, officers
or employees of Blue Ridge, as provided in the certificate of incorporation or
by-laws of Blue Ridge, shall survive the Closing Date and shall continue in full
force and effect in accordance with their respective terms for a period of not
less than seven years
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after the Closing Date, provided that, no such person shall be indemnified by
Blue Ridge or the Buyer with respect to any matter as to which the Buyer is
entitled to be indemnified under Article VI hereof.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of the Buyer The obligation of the Buyer
to consummate the purchase of the Blue Ridge Shares contemplated hereby is
subject to the satisfaction of the following conditions:
(a) Blue Ridge shall have obtained all Required Consents;
(b) Blue Ridge shall have performed or complied with its
obligations under Section 4.3, and shall have delivered to the Buyer a
certificate to that effect; and
(c) no action, suit or proceeding (other than between the
Buyer and Blue Ridge) shall be pending wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation of the Closing, and no such judgment, order, decree, stipulation or
injunction shall be in effect.
5.2 Conditions to Obligations of the Stockholders The obligation of
each Stockholder to consummate the sale of his or its Blue Ridge Shares
contemplated hereby is subject to the satisfaction of the following conditions:
(a) no action, suit or proceeding (other than between the
Buyer and Blue Ridge) shall be pending wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation of the Closing, and no such judgment, order, decree, stipulation or
injunction shall be in effect.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Stockholders
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(a) Each Stockholder shall, severally and not jointly (to the
extent set forth in Section 6.5(a)), indemnify the Buyer in respect of, and hold
the Buyer harmless against, any and all debts, obligations and other
liabilities, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, costs of investigators, fees and expenses of
attorneys, accountants, financial advisors and other experts, and other expenses
of litigation) ("Damages") incurred or suffered by the Buyer, Blue Ridge, or any
officer or director thereof resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of Blue Ridge contained in this Agreement.
(b) Each Stockholder shall indemnify the Buyer in respect of,
and hold the Buyer harmless against, any and all Damages incurred or suffered by
the Buyer, Blue Ridge, or any officer or director thereof resulting from,
relating to or constituting any misrepresentation, breach of warranty or failure
to perform any covenant or agreement of such Stockholder contained in this
Agreement.
6.2 Indemnification by the Buyer The Buyer shall indemnify each
Stockholder in respect of, and hold it harmless against, any and all Damages
incurred or suffered by such Stockholder resulting from, relating to or
constituting any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of the Buyer contained in this Agreement.
6.3 Claims for Indemnification
(a) A Party entitled to indemnification under this Article VI
(an "Indemnified Party") shall give prompt written notification to the party
from whom indemnification is sought (the "Indemnifying Party") of the
commencement of any action, suit or proceeding relating to a third party claim
for which indemnification pursuant to this Article VI may be sought. Within 15
days after delivery of such notification, the Indemnifying Party may, upon
written notice thereof to the Indemnified Party, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party does not assume control of such
defense, the Indemnified Party shall control such defense. The party or parties
not controlling such defense may participate therein at its or their own
expense; provided that if the Indemnifying Party assumes control of such defense
and the Indemnified Party reasonably concludes that the Indemnifying Party and
the Indemnified Party have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Party shall be considered "Damages" for
purposes of this Agreement. The party or parties controlling such defense shall
keep the other party or parties advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party or parties with respect thereto. The
Indemnified Party shall not agree to any settlement of such action, suit or
proceeding without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld. The Indemnifying Party shall not agree to
any settlement of such action, suit or proceeding without the prior written
consent of the Indemnified Party, which shall not be unreasonably withheld.
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(b) Notwithstanding the provisions of Section 6.3(a), if a
third party asserts (other than by means of a lawsuit) that the Buyer or Blue
Ridge is liable to it for a monetary or other obligation which may constitute or
result in Damages for which the Buyer may be entitled to indemnification
pursuant to this Article VI, and the Buyer reasonably determines that it has a
valid business reason to fulfill such obligation, then (i) the Buyer shall be
entitled to satisfy such obligation, without prior notice to or consent from the
Stockholders, (ii) the Buyer may make a claim for indemnification pursuant to
this Article VI in accordance with the provisions of this Section 6.3, and (iii)
the Buyer shall be reimbursed, in accordance with the provisions of this Section
6.3, for any such Damages for which it is entitled to indemnification pursuant
to this Article VI (subject to the right of the Stockholders to dispute, in the
manner set forth in this Section 6.3, the Buyer's entitlement to indemnification
or the amount for which it is entitled to indemnification).
(c) An Indemnified Party wishing to assert a claim for
indemnification under this Article VI shall deliver to the Indemnifying Party a
written notice (a "Claim Notice") which contains (i) a description and the
amount (the "Claimed Amount") of any Damages incurred by the Indemnified Party,
(ii) a statement that the Indemnified Party is entitled to indemnification under
this Article VI for such Damages and a reasonable explanation of the basis
therefor, and (iii) a demand for payment in the amount of such Damages. Within
20 days after delivery of a Claim Notice, the Indemnifying Party shall deliver
to the Indemnified Party a written response in which the Indemnifying Party
shall either: (i) agree that the Indemnified Party is entitled to receive all of
the Claimed Amount (in which case such response shall be accompanied by a
payment by the Indemnifying Party to the Indemnified Party of the Claimed
Amount, by check or by wire transfer), (ii) agree that the Indemnified Party is
entitled to receive part, but not all, of the Claimed Amount (the "Agreed
Amount") (in which case such response shall be accompanied by a payment by the
Indemnifying Party to the Indemnified Party of the Agreed Amount, by check or by
wire transfer) or (iii) contest that the Indemnified Party is entitled to
receive any of the Claimed Amount. If the Indemnifying Party in such response
contests the payment of all or part of the Claimed Amount, the Indemnifying
Party and the Indemnified Party shall use good faith efforts to resolve such
dispute. If such dispute is not resolved within 60 days following the delivery
by the Indemnifying Party of such response, the Indemnifying Party and the
Indemnified Party shall have the right to submit such dispute to such dispute
resolution service as may be agreed by them or to pursue the matter in a court
of competent jurisdiction.
(d) For purposes of this Section 6.3 and the last two
sentences of Section 6.5(b), any references to the Indemnified Party or the
Indemnifying Party (except provisions relating to an obligation to make or a
right to receive any payments provided for in this Article VI) shall, if the
Stockholders comprise the Indemnified Party or the Indemnifying Party, be deemed
to refer to the Stockholders' Representative. The Stockholders' Representative
shall have full power and authority on behalf of each Stockholder to take any
and all actions on behalf of, execute any and all instruments on behalf of, and
execute or waive any and all rights of, the Stockholders under this Article VI.
The Stockholders' Representative shall have no liability to
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* Confidential material has been omitted pursuant to a request for
confidential treatment and filed seperately with the Commission.
any Stockholder for any action taken or omitted on behalf of the Stockholders
pursuant to this Article VI.
6.4. Holdback Provisions If the Buyer has in good faith delivered a
Claim Notice or an Expected Claim Notice (as defined in Section 6.5(b))pursuant
to this Article VI, and such claim or claims have not been paid by the
Stockholder or Stockholders against which such claim was asserted or otherwise
resolved, then (subject to the limitations set forth in Section 6.5) the Buyer
shall be entitled to hold back such number of Contingent Shares that would
otherwise be issuable to such Stockholder or Stockholders as have a fair market
value as determined by the average of the closing price per share of the Buyer
Common Stock on the Nasdaq National Market over the 15 consecutive trading days
through and including the date two trading days prior to the date such
Contingent Shares would otherwise be issuable, equal to the Claimed Amount (or
any lesser amount then claimed), less any portion thereof as has actually been
paid by such Stockholder or Stockholders pursuant to this Article VI with
respect to such claim, ********************************************************
*******************************************************************************
*********************************************. Upon the resolution of any
indemnity claim that was subject to a hold-back under this Section 6.4, the
Buyer shall (a) be entitled to retain such portion, if any, of the Contingent
Shares that were held back for such claim as the Buyer is entitled to receive
pursuant to the resolution of such indemnity claim (which shall release such
Stockholder or Stockholders of their obligation to pay such amount to the Buyer
under this Article VI and shall release the Buyer of its obligation to issue
such Contingent Shares to such Stockholder or Stockholders), and (b) issue to
such Stockholder or Stockholders the Contingent Shares, if any, that were held
back for such claim which such Stockholder or Stockholders are entitled to
receive pursuant to the resolution of such indemnity claim.
6.5 Limitations
(a) Subject to the limitations set forth in Section 6.5(b),
and notwithstanding anything to the contrary herein, (i) Buyer's exclusive
remedy for Damages under this Article VI shall be limited to******************
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********************************************************************and (ii) the
Stockholders shall be liable under this Article VI for only that portion of the
aggregate Damages which exceeds $625,000 and (iii) each Stockholder shall only
be liable for his or its pro rata share of Damages pursuant to Section 6.1(a)
(based on the percentage ownership of the Blue Ridge Shares by each Stockholder
as a percentage of the aggregate number of Blue Ridge Shares held by all of the
Stockholders immediately prior to the Closing); provided that the limitation set
forth in clause (ii) above shall not apply to a claim relating to a breach of
the representations and warranties set forth in Sections 2A.1, 2A.2, 2B.2 or
2B.23(b) or to a breach of the covenants set
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* Confidential material has been omitted pursuant to a request for
confidential treatment and filed seperately with the Commission.
forth in Section 4.6.*********************************************************
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******************************************************************************
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******************************************************************************
*******************************************************. For purposes solely of
this Article VI, all representations and warranties in Article IIB (other than
Sections 2B.9 and 2B.23) shall be construed as if the terms "material" and "in
all material respects" and references to "Blue Ridge Material Adverse Effect"
(and variations thereof) were omitted from such representations and warranties.
(b) The representations, warranties and covenants of the
Stockholders and the Buyer set forth in this Agreement shall survive the Closing
and the consummation of the transactions contemplated hereby and continue until
one year after the Closing Date; provided that (i) the representations and
warranties contained in Sections 2A.1, 2A.2 and 2B.2 and the covenant contained
in Section 1.4 shall survive the Closing and continue without limitation, (ii)
the representations and warranties contained in Section 3.2 as they relate to
Purchase Price Shares shall survive the Closing and continue without limitation,
(iii) the representations and warranties contained in Section 2B.23(b) shall
survive the Closing and continue until two years after the Closing Date, (iv)
the representations and warranties contained in Section 2B.11 relating to tax
matters shall survive the Closing and continue until the expiration of the
applicable statute of limitations relating to such tax matters; and (v) the
covenants contained in Sections 1.2 and 4.7 and in Article VII shall survive the
Closing for the period covered thereby. If an Indemnified Party delivers in good
faith to an Indemnifying Party, before expiration of a representation or
warranty, either a Claim Notice based upon a breach of such representation or
warranty, or a notice that, as a result a legal proceeding instituted by or
written claim made by a third party, the Indemnified Party reasonably expects to
incur Damages as a result of a breach of such representation or warranty (an
"Expected Claim Notice"), then such representation or warranty shall survive
until, but only for purposes of, the resolution of the matter covered by such
notice. If the legal proceeding or written claim with respect to which an
Expected Claim Notice has been given is withdrawn or resolved in favor of the
Indemnified Party, the Indemnified Party shall promptly so notify the
Indemnifying Party. In addition, the Buyer's exclusive remedy for Damages under
this Article VI shall be limited to the holdback of the Contingent Shares under
Section 6.4, with respect to any Claim Notice or Expected Claim Notice or other
claim for indemnification hereunder that is given more than six months after the
Closing Date.
(c) Except with respect to claims based on fraud, the rights
of the Buyer and the Stockholders under this Article VI shall be the exclusive
remedy of such parties with respect to claims resulting from or relating to any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement contained in this Agreement or any other matter covered by this
Agreement, and no claims or actions shall be brought with respect thereto except
in accordance with this Article VI. Without limiting the generality of the
foregoing, the rights and
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remedies with respect to environmental, health and safety matters (including,
without limitation, arising under Environmental Law) (collectively,
"Environmental Matters") set forth in Article VI hereof shall constitute the
Parties' sole rights and remedies with respect to Environmental Matters and,
except as set forth in Article VI, the Parties hereby waive and release one
another from any and all claims, demands, causes of action, liabilities, costs
or expenses, whether arising under contract, statute (including CERCLA), common
law or otherwise, with respect to Environmental Matters. No Stockholder shall
have any claim or any right of contribution against, or indemnification from,
Blue Ridge with respect to any breach of any of the representations, warranties,
covenants or agreements relating to Blue Ridge under this Agreement (including
without limitation a claim based upon a breach of a representation or warranty
made by Blue Ridge to such Stockholder under any agreement between Blue Ridge
and such Stockholder).
ARTICLE VII
REGISTRATION RIGHTS
7.1 Registration of Shares
(a) At any time after the Closing, the Stockholders'
Representative may request the Buyer, in writing, to effect the registration on
a suitable registration statement under the Securities Act (a "Registration
Statement") of outstanding Purchase Price Shares (the "Registrable Shares")
having an aggregate offering price of at least $2,000,000 (based on the then
current public market price). Upon receipt of any such request, the Buyer shall
promptly give written notice of such proposed registration to all Stockholders.
Such Stockholders shall have the right, by giving written notice to the Buyer
within 30 days after the Buyer provides its notice, to elect to have included in
such registration such of their Registrable Shares as such Stockholders may
request in such notice of election. Thereupon, the Buyer shall, as expeditiously
as possible, use its best efforts to effect the registration of all Registrable
Shares which the Buyer has been requested to so register. The Buyer shall cause
each Registration Statement to remain effective for a period of at least 6
months after the date such Registration Statement first became effective, or
until such earlier time as the Registrable Shares then subject to such
Registration Statement have been sold thereunder.
(b) The Buyer shall permit each Stockholder to include in any
registration statement filed by the Buyer for the registration of Buyer Common
Stock (other than a registration statement on Form S-4 or S-8 or any successor
form) any Registrable Shares (any such registration statement in which
Registrable Shares are included shall also be considered a "Registration
Statement"), subject to the right of the Buyer to limit the number of
Registrable Shares to be included in such Registration Statement relating to an
underwritten offering of securities of the Buyer if the managing underwriter of
such offering determines that the inclusion of such shares in such offering
would adversely affect the marketability of such offering. The Buyer shall
provide written notice to the Stockholders' Representative of its intention to
file such a registration statement, and any holder of Registrable Shares
intending to include such shares in
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<PAGE> 37
such Registration Statement must so notify the Buyer within 15 days of the date
of the Buyer's notice. If such registration relates to an underwritten offering
of securities, any holder of Registrable Shares included therein shall agree to
be bound by the terms and restrictions relating to such offering, as required by
the underwriters.
. 7.2 Limitations on Registration Rights
-----------------------------------
(a) The Buyer shall not be required to effect more than five
registrations pursuant to Section 7.1(a) above. In addition, the Buyer shall not
be required to effect any registration within six months after the effective
date of any other registration statement of the Buyer. The Buyer shall not be
required to register any Registrable Shares which may be sold by the holder
thereof pursuant to Rule 144(k) under the Securities Act.
(b) The Buyer may, by written notice to the Stockholders whose
Registrable Shares are to be included in a Registration Statement pursuant to
Section 7.1(a) (the "Selling Stockholders"), (i) delay the filing or
effectiveness of such Registration Statement or (ii) suspend such Registration
Statement after effectiveness and require that the Selling Stockholders
immediately cease sales of shares pursuant to such Registration Statement, in
the event that (A) the Buyer has filed or is preparing to file a registration
statement (other than a registration statement on Form S-8 or its successor
form) with the SEC for a public offering of its securities, subject to the
rights of the Stockholders to register Registrable Shares pursuant to such
registration statement, as described in Section 7.1(b), or (B) the Buyer is
engaged in any activity or transaction or preparations or negotiations for such
transaction and the Board of Directors of the Buyer determines in good faith
that the filing of such Registration Statement (or the public disclosure
required as a result thereof) would have a material adverse effect on such
activity or transaction, or the preparations or negotiations therefor; provided
that, the Buyer may exercise its right to delay or suspend the Registration
Statement pursuant to item (B) above only once within any 12-month period.
(c) If the Buyer delays or suspends a Registration Statement
or requires the Selling Stockholders to cease sales of shares pursuant to
paragraph (b) above, the Buyer shall, as promptly as practicable following the
termination of the circumstance which entitled the Buyer to do so, take such
actions as may be necessary to file or reinstate the effectiveness of such
Registration Statement and/or give written notice to all Selling Stockholders
authorizing them to resume sales pursuant to such Registration Statement. If as
a result thereof the prospectus included in such Registration Statement has been
amended to comply with the requirements of the Securities Act, the Buyer shall
enclose such revised prospectus with the notice to Selling Stockholders given
pursuant to this paragraph (c), and the Selling Stockholders shall make no
offers or sales of shares pursuant to the Registration Statement other than by
means of such revised prospectus.
7.3 Registration Procedures
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(a) In connection with the filing by the Buyer of a
Registration Statement, the Buyer shall furnish to each Selling Stockholder a
copy of the prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act.
(b) The Buyer shall use its best efforts to register or
qualify the Registrable Shares covered by a Registration Statement under the
securities laws of such states as the Selling Stockholders shall reasonably
request; provided, however, that the Buyer shall not be required in connection
with this paragraph (b) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
(c) If the Buyer has delivered preliminary or final
prospectuses to the Selling Stockholders and after having done so the prospectus
is amended to comply with the requirements of the Securities Act, the Buyer
shall promptly notify the Selling Stockholders and, if requested by the Buyer,
the Selling Stockholders shall immediately cease making offers or sales of
shares under such Registration Statement and return all prospectuses to the
Buyer. The Buyer shall promptly provide the Selling Stockholders with revised
prospectuses and, following receipt of the revised prospectuses, the Selling
Stockholders shall be free to resume making offers and sales under such
Registration Statement.
(d) The Buyer shall pay the expenses incurred by it in
complying with its obligations under this Article VII, including all
registration and filing fees, exchange listing fees, fees and expenses of
counsel for the Buyer, and fees and expenses of accountants for the Buyer and
the reasonable fees and expenses of one counsel retained by Selling
Stockholders, but excluding any selling commissions or underwriting discounts
incurred by the Selling Stockholders in connection with sales under a
Registration Statement.
7.4 Requirements of Selling Stockholders
(a) The Buyer shall not be required to include any Registrable
Shares in a Registration Statement unless the Selling Stockholder owning such
shares furnishes to the Buyer in writing such information regarding such Selling
Stockholder and the proposed sale of Registrable Shares by such Selling
Stockholder as the Buyer may reasonably request in writing in connection with
the Registration Statement or as shall be required in connection therewith by
the SEC or any state securities law authorities.
(b) Each Selling Stockholder agrees:
(1) to indemnify the Buyer and each of its directors
and officers against, and hold the Buyer and each of its directors and officers
harmless from, any losses, claims, damages, expenses or liabilities (including
reasonable attorneys fees) to which the Buyer or such directors and officers may
become subject by reason of any statement or omission in a Registration
Statement made in reliance upon, or in conformity with, a written statement by
such Selling Stockholder furnished pursuant to this Section 7.4; and
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<PAGE> 39
(2) to report to the Buyer sales made pursuant to a
Registration Statement.
7.5 Indemnification The Buyer agrees to indemnify and hold harmless
each Selling Stockholder against any losses, claims, damages, expenses or
liabilities to which such Selling Stockholder may become subject by reason of
any untrue statement of a material fact contained in a Registration Statement or
any omission to state therein a fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such losses,
claims, damages, expenses or liabilities arise out of or are based upon
information furnished to the Buyer by or on behalf of a Selling Stockholder for
use in such Registration Statement. The Buyer shall have the right to assume the
defense and settlement of any claim or suit for which the Buyer may be
responsible for indemnification under this Section 7.5.
7.6 Assignment of Rights A Selling Stockholder may not assign any of
its rights under this Article VII except in connection with the transfer of some
or all of his or her Registrable Shares to a child or spouse, or trust for their
or its benefit or to a general or limited partner or member of any Stockholder
that is a partnership or a limited liability company, provided each such
transferee agrees in a written instrument delivered to the Buyer to be bound by
the provisions of this Article VII.
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement The Parties may terminate this Agreement
prior to the Closing, as provided below:
(a) this Agreement may be terminated by mutual written consent
of the Buyer and Stockholders holding at least 80% of the outstanding Blue Ridge
Shares; or
(b) this Agreement shall automatically terminate if the
Closing shall not have occurred on or before October 31, 1998.
8.2 Effect of Termination If any Party terminates this Agreement
pursuant to Section 8.1, all obligations of the Parties hereunder shall
terminate without any liability of any Party to the other Parties (except for
any liability of a Party for breaches of this Agreement prior to termination).
ARTICLE IX
DEFINITIONS
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For purposes of this Agreement, each of the following defined
terms is defined in the Section of this Agreement indicated below.
Defined Term Section
Accelerated Contingent Shares 1.2(c)(ii)
Agreed Amount 6.3(c)
Bain 1.3(b)(x)
Blue Ridge Introduction
Blue Ridge Documents 2B.23(b)
Blue Ridge Intellectual Property 2B.5(a)(i)
Blue Ridge Material Adverse Effect 2B.3
Blue Ridge Shares
Preliminary Statement
Buyer Introduction
Buyer Common Stock 1.2(a)(ii)
Buyer's Pharmaceutical Division 1.2(c)(vi)(B)
Buyer Reports 3.5
Cash Purchase Price 1.2(a)(i)
Cause 1.2(c)(vi)(C)
CERCLA 2B.15(c)
Change in Control Event 1.2(c)(vi)(E)
Claimed Amount 6.3(c)
Claim Notice 6.3(c)
Class A Common Stock 2B.2
Class L Common Stock 2B.2
Closing 1.1
Closing Date 1.3(a)
Code 1.2(a)(i)
Consultant 1.2(c)(i)
Contingent Share Date 1.2(c)(i)
Contingent Shares 1.2(c)(i)
Contracts 2B.9(a)
Damages 6.1
Disclosure Schedule Aticle IIB
Employee Benefit Plan 2B.20(a)
Employee Stockholder 1.2(b)
Environmental Law 2B.15(c)
Environmental Matters 6.5(c)
ERISA 2B.20(a)
ERISA Affiliate 2B.20(a)
Exchange Act 3.5
Expected Claim Notice 6.5(b)
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FDA 2B.15(b)(i)
GAAP 2B.4(a)
Genzyme Agreement 2B.5(a)(v)
Good Reason 1.2(c)(vi)(D)
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
Independent Auditor 1.2(c)(iv)
Intellectual Property 2B.5(a)(i)
Johnson Shares 1.2(a)(ii)
Larson 2B.5(a)(ii)
Lipoderm 2B.5(a)(iii)
Lipoderm Agreement 2B.5(a)(iii)
Materials of Environmental Concern 2B.15(d)
Mezei 2B.5(a)(iii)
Net Sales Schedule II
Operating Profit Schedule II
Parties Introduction
Permits 2B.16
Personal Property 2B.8(c)
Pharma-Logic 2B.5(a)(ii)
Pharma-Logic Agreement 2B.5(a)(ii)
Purchase Price Securities 2A.4(a)
Purchase Price Shares 3.2
Quarterly Results 1.2(c)(iv)
Registrable Shares 7.1(a)
Required Consents 2B.3
Romark Agreement 2B.5(a)(iv)
RTP 2B.5(a)(ii)
RTP Agreement 2B.5(a)(ii)
Securities Act 2A.4(a)
SEC 3.5
Security Interest 2A.1
Selling Stockholders 7.2(b)
Registration Statement 7.1(a)
Stockholders Introduction
Stockholder Representative 1.2(c)(vi)(F)
Taxes 2B.11(c)
Trademarks 2B.6
Warrants 1.2(b)
Year 2000 Compliant 2B.5(e)
ARTICLE X
MISCELLANEOUS
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<PAGE> 42
10.1 Press Releases and Public Disclosure No Party shall issue any
press release or public announcement relating to the subject matter of this
Agreement (a) prior to the Closing, without the prior written approval of the
Buyer (in the case of a press release or announcement by Blue Ridge or a
Stockholder) or Blue Ridge (in the case of a press release or announcement by
the Buyer), or (b) after the Closing, without the prior written approval of the
Buyer (in the case of a press release or announcement by a Stockholder) or the
Stockholders' Representative (in the case of a press release or announcement by
the Buyer or Blue Ridge), which consent in each case shall not be unreasonably
withheld or delayed; provided, however, that the Buyer may make any public
disclosure it believes in good faith is required by law, regulation or stock
market rules.
10.2 Prior Agreements Each of the Stockholders and Blue Ridge hereby
grants any consents, waivers or approvals with respect to the consummation of
the transactions covered hereby which may be required under any agreement or
instrument to which such Stockholder or Blue Ridge may be a party (including
without limitation waivers of restrictions on transfer of the Blue Ridge Shares
or waivers of purchase rights with respect to the Blue Ridge Shares). Each
Stockholder acknowledges that, effective as of the Closing, it has no right or
claim regarding the receipt of any additional capital stock of Blue Ridge.
10.3 No Third Party Beneficiaries This Agreement (other than Section
4.7 hereof) shall not confer any rights or remedies upon any person other than
the Parties and their respective successors and permitted assigns.
10.4 Entire Aqreement This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations among the
Parties, written or oral, that may have related in any way to the subject matter
hereof, including without limitation the letter agreement dated August 28, 1998
among the Buyer, Blue Ridge, Roland Johnson, Doug Hepler, L. Steven Beck, Bain
Capital Fund V-B., L.P., Bain Capital Fund V, L.P., Sutter Hill Ventures and
Sutter Hill Associates, but excluding the Confidential Disclosure Agreement
between the Buyer and Blue Ridge dated August 12, 1998 (which shall remain in
effect).
10.5 Succession and Assignment This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. Except as set forth in Section 7.6 hereof, no
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Parties.
Notwithstanding the foregoing, the Buyer may assign its rights and obligations
hereunder to a subsidiary of the Buyer, provided that the Buyer also remains
liable for the discharge of such obligations.
10.6 Counterparts This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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10.7 Headings The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.8 Notices All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Stockholders:
Dwight Poler
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
With a copy to:
Jeffrey C. Hammes, Esq.
Gary M. Holihan, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telecopy: (312) 861-2200
and
Roger Klein, Esq.
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2402
and
Roland Johnson
c/o Blue Ridge Pharmaceuticals, Inc.
212 B Burgess Road
Greensboro, NC 27409
If to the Buyer:
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IDEXX Laboratories, Inc.
One IDEXX Drive
Westbrook, Maine 04092
Telecopy: (207) 856-0347
Attn: General Counsel
With a copy to:
Patrick J. Rondeau, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: (617) 526-5000
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
10.9 Governing Law This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Delaware.
10.10 Amendments and Waivers No amendment of any provision of this
Agreement, or waiver or consent given hereunder, shall be valid unless the same
shall be in writing and signed by the Buyer and Stockholders holding at least
80% of the outstanding Blue Ridge Shares immediately prior to the Closing. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.11 Severablility Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
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<PAGE> 45
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
IDEXX LABORATORIES, INC.
By: ____________________________
Title: __________________________
BLUE RIDGE PHARMACEUTICALS, INC.
By: ____________________________
Title: __________________________
STOCKHOLDERS:
_________________________________
Roland Johnson
_________________________________
Douglas Hepler
_________________________________
L. Steven Beck
_________________________________
Stephen A. Capps
_________________________________
P. Scott Moffitt
_________________________________
Karla Joyce Henley
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<PAGE> 47
_________________________________
Randy Lynn
BAIN CAPITAL FUND V, L.P.
By Bain Capital Partners V, L.P.
Its General Partner
By Bain Capital Investors, Inc.
Its General Partner
By: _________________________
A Managing Director
BAIN CAPITAL FUND V-B, L.P.
By Bain Capital Partners V, L.P.
Its General Partner
By Bain Capital Investors, Inc.
Its General Partner
By: _________________________
A Managing Director
BCIP ASSOCIATES
By: _____________________________
A General Partner
SUTTER HILL VENTURES,
a California Limited Partnership
By: ______________________________
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Its: ___________________________
SUTTER HILL ASSOCIATES, L.P.
By: _______________________________
Its: ___________________________
By: ______________________________
A General Partner
SUTTER HILL VENTURES MASTER PURCHASER
TRUST FBO TENCH COXE
By: _______________________________
Its: ___________________________
CARDIOVASCULAR MEDICINE CORONARY INTERVENTION
401(k) FBO DENNIS J. SHEEHAN, M.D.
By: _______________________________
Its: ___________________________
SUTTER HILL VENTURES MASTER PURCHASER
TRUST FBO SHERRYL W. HOSSACK
By: _______________________________
Its: ___________________________
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<PAGE> 49
STANFORD UNIVERSITY
By: _______________________________
Its: ___________________________
___________________________________
Larry Ford
THE LARRY J. FORD CHARITABLE REMAINDER
UNITRUST DATED SEPTEMBER 15, 1998
By: _______________________________
Its: ___________________________
___________________________________
John Dunning
___________________________________
Richard Chan
48
<PAGE> 1
Exhibit 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
Date of Issuance: October 1, 1998 Number of Shares:________
(subject to adjustment)
IDEXX LABORATORIES, INC.
Common Stock Purchase Warrant
(Void after September 30, 2003)
IDEXX Laboratories, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that ______________________ (the "Registered
Holder") is entitled, subject to the terms set forth below, to purchase from the
Company, at any time or from time to time on or after the date of issuance and
on or before September 30, 2003 (the "Expiration Date") at not later than 5:00
p.m. (Portland, Maine time), ________ shares of Common Stock, $.10 par value per
share, of the Company, at a purchase price of $31.59 per share. The shares
purchasable upon exercise of this Warrant, and the purchase price per share,
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the "Warrant Shares" and the "Purchase Price,"
respectively.
1. Vesting Schedule. This Warrant will become exercisable on the date
six months after the date of this Warrant.
2. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in
whole or in part, by surrendering this Warrant, with the purchase form appended
hereto as Exhibit I duly executed by the Registered Holder or by the Registered
Holder's duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
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<PAGE> 2
(b) The Registered Holder may, at its option, elect to pay
some or all of the Purchase Price payable upon an exercise of this Warrant by
cancelling a portion of this Warrant exercisable for such number of Warrant
Shares as is determined by dividing (i) the total Purchase Price payable in
respect of the number of Warrant Shares being purchased upon such exercise by
(ii) the excess of the Fair Market Value per share of Common Stock as of the
effective date of exercise, as determined pursuant to subsection 2(b) below (the
"Exercise Date") over the Purchase Price per share. If the Registered Holder
wishes to exercise this Warrant pursuant to the preceding sentence with respect
to the maximum number of Warrant Shares purchasable pursuant to this method,
then the number of Warrant Shares so purchasable shall be equal to the total
number of Warrant Shares, minus the product obtained by multiplying (x) the
total number of Warrant Shares by (y) a fraction, the numerator of which shall
be the Purchase Price per share and the denominator of which shall be the Fair
Market Value per share of Common Stock as of the Exercise Date. The Fair Market
Value per share of Common Stock shall be determined as follows:
(i) If the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
exchange or trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the last reported sale price per
share of Common Stock thereon on the day immediately preceding the Exercise
Date; or, if no such price is reported on such date, such price on the next
preceding business day (provided that if no such price is reported on the next
preceding business day, the Fair Market Value per share of Common Stock shall be
determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
exchange or trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the amount determined by the Board
of Directors to represent the fair market value per share of the Common Stock;
and, upon request of the Registered Holder, the Board of Directors (or a
representative thereof) shall promptly make such a determination and notify the
Registered Holder of the Fair Market Value per share of Common Stock.
(c) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
2(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in subsection 2(d) below shall be deemed to
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<PAGE> 3
have become the holder or holders of record of the Warrant Shares represented by
such certificates.
(d) As soon as practicable after the exercise of this Warrant
in full or in part, the Company, at its expense, will cause to be issued in the
name of, and delivered to, the Registered Holder, or as such Holder may direct
(it being understood that such issuance shall be made without charge to the
Registered Holder for any issuance tax or other cost incurred by the Company in
connection with such exercise and issuance, excluding any applicable transfer
taxes):
(i) a certificate or certificates for the number of
full Warrant Shares to which the Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which the Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 4
hereof; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the sum of (a) the number of such
shares purchased by the Registered Holder upon such exercise plus (b) the number
of Warrant Shares (if any) covered by the portion of this Warrant cancelled in
payment of the Purchase Price payable upon such exercise pursuant to subsection
2(b) above.
3. Adjustments.
(a) If the outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares or a dividend in Common
Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall be proportionately reduced. If outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall be proportionately increased. When
any adjustment is required to be made in the Purchase Price, the number of
Warrant Shares purchasable upon the exercise of this Warrant shall be changed to
the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect immediately prior to such adjustment,
by (ii) the Purchase Price in effect immediately after such adjustment.
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(b) If there shall occur any reorganization, recapitalization,
consolidation, merger or sale involving the Company in which the Common Stock is
converted into or exchanged for securities, cash or other property, then,
following any such reorganization, recapitalization, consolidation, merger or
sale, the Registered Holder of this Warrant shall have the right to receive upon
the exercise hereof the kind and amount of securities, cash or other property
which the Registered Holder would have been entitled to receive if, immediately
prior to such reorganization, recapitalization, consolidation, merger or sale,
the Registered Holder had held the number of shares of Common Stock subject to
this Warrant. Notwithstanding the foregoing sentence, if (x) there shall occur
any reorganization, recapitalization, consolidation, merger or sale involving
the Company in which the Common Stock is converted into or exchanged for
anything other than solely equity securities, and (y) the common stock of the
acquiring or surviving company is publicly traded, then, as part of any such
reorganization, recapitalization, consolidation, merger or sale, (i) the
Registered Holder of this Warrant shall have the right thereafter to receive
upon the exercise hereof such number of shares of common stock of the acquiring
or surviving company as is determined by multiplying (A) the number of shares of
Common Stock then subject to this Warrant by (B) a fraction, the numerator of
which is the Fair Market Value per share of Common Stock as of the effective
date of such transaction, as determined pursuant to subsection 2(b), and the
denominator of which is the fair market value per share of common stock of the
acquiring or surviving company as of the effective date of such transaction, as
determined in good faith by the Board of Directors of the Company (using the
principles set forth in subsection 2(b) to the extent applicable), and (ii) the
exercise price per share of common stock of the acquiring or surviving company
shall be the Exercise Price divided by the fraction referred to in clause (B)
above. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 3 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any securities, cash or other property
thereafter deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made pursuant to
this Section 3, the Company shall promptly mail to the Registered Holder a
certificate setting forth such adjustment (including the kind and amount of
securities, cash or other property into which this Warrant shall be exercisable
and the Purchase Price) and a brief statement of the facts requiring such
adjustment.
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4. Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Fair Market Value per share of
Common Stock, as determined pursuant to subsection 2(b) above.
5. Transfer Restrictions.
(a) This Warrant may not be sold or transferred without the
prior written consent of the Company, except in compliance with the provisions
of subsections 5(b) and 5(c) below. Any permitted transfer shall be effected by
surrendering this Warrant, along with a properly executed assignment, at the
principal office of the Company.
(b) This Warrant may be sold or transferred (i) in the case of
a Registered Holder which is a corporation, to a wholly owned subsidiary of such
corporation, (ii) in the case of a Registered Holder which is a partnership, to
a partner of such partnership or a retired partner of such partnership or to the
estate of any such partner or retired partner, and (iii) in the case of a
Registered Holder which is a limited liability company, to a member of such
limited liability company or a retired member of such company or to the estate
of any such member or retired member, provided that the transferee in each case
(A) is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act of 1933, as amended (the "Act"), and (B) agrees in writing to be
subject to the terms of this Section 5 to the same extent as if it were the
original Registered Holder hereunder. In addition, the original Registered
Holder may transfer, on one occasion only, this Warrant (or a portion thereof)
to any other person or entity with the prior written consent of the Company,
which consent may not be unreasonably withheld or delayed, provided that the
transferee (A) is an "accredited investor" within the meaning of Rule 501(a)
under the Act and (B) agrees in writing to be subject to the terms of this
Section 5 to the same extent as if it were the original Registered Holder
hereunder. In the event of the death or disability of the Registered Holder
prior to the Expiration Date, this Warrant shall be exercisable in accordance
with its terms by the personal representative or the estate of the Registered
Holder.
(c) The Warrant Shares may not be sold or transferred unless
either (i) they first shall have been registered under the Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act.
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(d) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
offered, sold or otherwise transferred unless and until such securities
are registered under such Act or an opinion of counsel satisfactory to
the Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
6. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
8. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with, in the case of any Restricted Holder other than an
institutional investor, surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, at its expense, in lieu
thereof, a new Warrant of like tenor.
9. Mailing of Notices, etc. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, to the address
furnished to the Company in writing by the last Registered Holder of this
Warrant who shall have furnished an address to the Company in writing. All
notices and other communications from the Registered Holder of this Warrant or
in connection herewith to the Company shall be mailed by first-class certified
or registered mail, postage prepaid, to the Company at its principal office at
One IDEXX Drive, Westbrook, Maine 04092.
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10. No Rights as Stockholder.
(a) Until the exercise of this Warrant, the Registered Holder
of this Warrant shall not have or exercise any rights by virtue hereof as a
stockholder of the Company. Notwithstanding the foregoing, in the event (i) the
Company effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this Warrant are adjusted
as of the date of the distribution of the dividend (rather than as of the record
date for such dividend), and (ii) the Registered Holder exercises this Warrant
between the record date and the distribution date for such stock dividend, the
Registered Holder shall be entitled to receive, on the distribution date, the
stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.
(b) If the Company pays any dividend upon the Common Stock
(whether payable in cash, securities or other property), other than a regular
cash dividend paid out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles) or a stock dividend payable in
shares of Common Stock, then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to the
Warrant Shares purchased upon such exercise, such dividend which would have been
paid to such Registered Holder if he or she had been the owner of record of such
Warrant Shares immediately prior to the record date for such dividend or, if no
record is fixed, the date as of which the record holders of Common Stock
entitled to such dividend are to be determined.
11. Cancellation of Warrant. The Registered Holder acknowledges and
agrees that this Warrant may be cancelled with respect to a portion of the
Warrant Shares in satisfaction of claims for which the Company is entitled to
indemnification in accordance with the terms of Article VI of the Stock Purchase
Agreement, as follows. If the Company has in good faith delivered a Claim Notice
or Expected Claim Notice (each as defined in the Stock Purchase Agreement)
within six months after the date of this Warrant claiming damages from the
Registered Holder, and such claim has not been paid by the Registered Holder or
otherwise resolved, then (subject to the limitations set forth in Article VI of
the Stock Purchase Agreement) the Company shall be entitled to delay the
exercise of such portion of this Warrant as has a value (determined pursuant to
Section 6.5 of the Stock Purchase Agreement) equal to the Claimed Amount (as
defined in the Stock Purchase Agreement) (or any lesser amount then claimed),
less any portion thereof as has actually been paid by the Registered Holder
pursuant to Article VI of the Stock Purchase Agreement with respect to such
claim. Upon the resolution of any indemnity claim that was the subject of an
exercise
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delay under this Section 11, (i) the Company shall be entitled to cancel such
portion of this Warrant (subject to the limitation on the number of Warrant
Shares which may be cancelled set forth in Section 6.5(a) of the Stock Purchase
Agreement) as has a value (determined pursuant to Section 6.5 of the Stock
Purchase Agreement) equal to the amount of Damages (if any) the Company is
entitled to receive pursuant to the resolution of such indemnity claim (which
shall release the Registered Holder of its obligation to pay such amount to the
Company under Article VI of the Stock Purchase Agreement) and (ii) the right to
exercise the balance of such Warrant (to the extent then vested) shall be
immediately reinstated.
12. Change or Waiver. This Warrant is one of a series of Warrants
issued by the Company, all dated the date hereof and substantially similar in
form, except as to the number of shares of Common Stock subject thereto
(collectively, the "Company Warrants"). Any term of this Warrant may be amended
or waived upon the written consent of the Company and the holders of Company
Warrants representing at least 70% of the number of shares of Common Stock then
subject to outstanding Company Warrants; provided that any such amendment or
waiver must apply to all Company Warrants then outstanding; and provided further
that the number of Warrant Shares subject to this Warrant and the Purchase Price
of this Warrant may not be amended, and the right to exercise this Warrant may
not be waived, without the written consent of the holder of this Warrant.
13. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
14. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware.
IDEXX LABORATORIES, INC.
By:________________________________
Title:_____________________________
ATTEST:
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EXHIBIT I
PURCHASE FORM
To: IDEXX LABORATORIES, INC. Dated:______________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check
applicable box or boxes):
_ $_________ in lawful money of the United States,
and/or
_ the cancellation of such portion of the attached
Warrant as is exercisable for a total of ______
Warrant Shares (using a Fair Market Value of $_______
per share for purposes of this calculation).
Signature:__________________________
Address:____________________________
____________________________
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<PAGE> 1
Exhibit 4.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
Date of Issuance: October 1, 1998 Number of Shares:________
(subject to adjustment)
IDEXX LABORATORIES, INC.
Common Stock Purchase Warrant
(Void after September 30, 2003)
IDEXX Laboratories, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that ______________________ (the "Registered
Holder") is entitled, subject to the terms set forth below, to purchase from the
Company, at any time or from time to time on or after the date of issuance and
on or before September 30, 2003 (the "Expiration Date") at not later than 5:00
p.m. (Portland, Maine time), ________ shares of Common Stock, $.10 par value per
share, of the Company, at a purchase price of $31.59 per share. The shares
purchasable upon exercise of this Warrant, and the purchase price per share,
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the "Warrant Shares" and the "Purchase Price,"
respectively.
1. Vesting Schedule.
(a) This Warrant will become exercisable ("vest") as to 33.33%
of the original number of Warrant Shares on each of December 31, 2000, December
31, 2001 and December 31, 2002. The right of exercise shall be cumulative so
that to the extent this Warrant is not exercised in any period to the maximum
extent permissible it shall continue to be exercisable, in whole or in part,
with respect to all Warrant Shares for which it is vested until the earlier of
the Expiration Date or the termination of this Warrant under this Section 1.
(b) Notwithstanding the foregoing vesting schedule:
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(i) this Warrant shall become immediately vested in
full in the event (A) the Registered Holder dies or becomes disabled (meaning
that the Registered Holder is unable to perform his duties as an employee of the
Company for a period of 90 consecutive days due to illness or injury) or the
Registered Holder's employment with the Company is terminated by the Company
without Cause (as defined below) or by the Registered Holder for Good Reason (as
defined below) or (B) a Change in Control Event (as defined below) occurs during
the term of the Registered Holder's employment with the Company; and
(ii) in the event the Registered Holder's employment
with the Company is terminated by the Company for Cause or by the Registered
Holder without Good Reason, this Warrant shall not become exercisable for any
additional Warrant Shares for which it is not exercisable as of the date of such
termination.
(c) For purposes of this Warrant, the following terms shall
have the following meanings:
(i) "Cause" for termination shall mean (a) the
Registered Holder's willful material misconduct, embezzlement, fraud, or other
criminal act involving moral turpitude, or (b) gross negligence in the
performance of the Registered Holder's duties to the Company, or (c) any breach
by the Registered Holder of any employment agreement, invention and
non-disclosure agreement, non-competition agreement or similar agreement with
the Company that is not cured within 15 days after receipt of written notice
thereof from the Company.
(ii) "Good Reason" for termination shall be deemed to
exist upon the occurrence of any of the following events without the Registered
Holder's written consent: (A) a material reduction or diminution in his or her
position, authority or responsibilities as in effect on the date of issuance of
this Warrant, excluding an action or circumstance which is remedied by the
Company within five business days following written notice from the Registered
Holder to the Company describing such action or circumstance, provided that the
Registered Holder must provide such notice within 30 days after becoming aware
of the circumstances which constitute the alleged reduction or diminution; (B) a
reduction in the Registered Holder's annual base salary, unless a proportionate
reduction is made to the annual base salaries of all of the Company's employees
holding positions at a comparable level to that of the Registered Holder
(provided that such reduction will not in any event exceed 5% of annual base
salary); (C) a relocation of the Registered Holder's principal place of
employment to a new location that is more than 75 miles from the current
location in Greensboro, North Carolina (unless such new location is closer than
the current location to his or her
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<PAGE> 3
residence); or (D) a breach by the Company of its employment agreement dated
September 23, 1998 with the Registered Holder that is not cured within 15 days
after receipt of written notice thereof from the Registered Holder.
(iii) "Change in Control Event" shall mean the
consummation of a (A) merger, consolidation, reorganization, recapitalization,
tender offer involving the Company, immediately following which the individuals
and entities who were the beneficial owners of the Common Stock immediately
prior to such transaction beneficially own, directly or indirectly, less than
50% of the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of the resulting or acquiring
corporation in such transaction, (B) a sale of all or substantially all of the
assets of the Company or (C) a sale of all or substantially all of the Buyer
Pharmaceutical Division (as defined in the Stock Purchase Agreement dated
September 23, 1998 among the Company, the Registered Holder and certain other
parties thereto (the "Stock Purchase Agreement")), whether by stock sale, asset
sale or otherwise.
(d) For purposes of this Warrant, the Registered Holder shall
be deemed to be an employee of the Company if he or she is an employee of a
subsidiary of the Company.
2. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in
whole or in part, by surrendering this Warrant, with the purchase form appended
hereto as Exhibit I duly executed by the Registered Holder or by the Registered
Holder's duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
(b) The Registered Holder may, at its option, elect to pay
some or all of the Purchase Price payable upon an exercise of this Warrant by
cancelling a portion of this Warrant exercisable for such number of Warrant
Shares as is determined by dividing (i) the total Purchase Price payable in
respect of the number of Warrant Shares being purchased upon such exercise by
(ii) the excess of the Fair Market Value per share of Common Stock as of the
effective date of exercise, as determined pursuant to subsection 2(b) below (the
"Exercise Date") over the Purchase Price per share. If the Registered Holder
wishes to exercise this Warrant pursuant to the preceding sentence with respect
to the maximum number of Warrant Shares purchasable pursuant to this
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<PAGE> 4
method, then the number of Warrant Shares so purchasable shall be equal to the
total number of Warrant Shares, minus the product obtained by multiplying (x)
the total number of Warrant Shares by (y) a fraction, the numerator of which
shall be the Purchase Price per share and the denominator of which shall be the
Fair Market Value per share of Common Stock as of the Exercise Date. The Fair
Market Value per share of Common Stock shall be determined as follows:
(i) If the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
exchange or trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the last reported sale price per
share of Common Stock thereon on the day immediately preceding the Exercise
Date; or, if no such price is reported on such date, such price on the next
preceding business day (provided that if no such price is reported on the next
preceding business day, the Fair Market Value per share of Common Stock shall be
determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
exchange or trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the amount determined by the Board
of Directors to represent the fair market value per share of the Common Stock;
and, upon request of the Registered Holder, the Board of Directors (or a
representative thereof) shall promptly make such a determination and notify the
Registered Holder of the Fair Market Value per share of Common Stock.
(c) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
2(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in subsection 2(d) below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant
in full or in part, the Company, at its expense, will cause to be issued in the
name of, and delivered to, the Registered Holder, or as such Holder may direct
(it being understood that such issuance shall be made without charge to the
Registered Holder for any issuance tax or other cost incurred by the Company in
connection with such exercise and issuance, excluding any applicable transfer
taxes):
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(i) a certificate or certificates for the number of
full Warrant Shares to which the Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which the Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 4
hereof; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the sum of (a) the number of such
shares purchased by the Registered Holder upon such exercise plus (b) the number
of Warrant Shares (if any) covered by the portion of this Warrant cancelled in
payment of the Purchase Price payable upon such exercise pursuant to subsection
2(b) above.
3. Adjustments.
(a) If the outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares or a dividend in Common
Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall be proportionately reduced. If outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall be proportionately increased. When
any adjustment is required to be made in the Purchase Price, the number of
Warrant Shares purchasable upon the exercise of this Warrant shall be changed to
the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect immediately prior to such adjustment,
by (ii) the Purchase Price in effect immediately after such adjustment.
(b) If there shall occur any reorganization, recapitalization,
consolidation, merger or sale involving the Company in which the Common Stock is
converted into or exchanged for securities, cash or other property, then,
following any such reorganization, recapitalization, consolidation, merger or
sale, the Registered Holder of this Warrant shall have the right to receive upon
the exercise hereof the kind and amount of securities, cash or other property
which the Registered Holder would have been entitled to receive if, immediately
prior to such reorganization, recapitalization, consolidation, merger or sale,
the Registered Holder had held the number of shares of Common Stock subject to
this Warrant. Notwithstanding the foregoing sentence, if (x) there shall occur
any reorganization, recapitalization, consolidation, merger or sale involving
the Company in which the Common Stock is
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<PAGE> 6
converted into or exchanged for anything other than solely equity securities,
and (y) the common stock of the acquiring or surviving company is publicly
traded, then, as part of any such reorganization, recapitalization,
consolidation, merger or sale, (i) the Registered Holder of this Warrant shall
have the right thereafter to receive upon the exercise hereof such number of
shares of common stock of the acquiring or surviving company as is determined by
multiplying (A) the number of shares of Common Stock then subject to this
Warrant by (B) a fraction, the numerator of which is the Fair Market Value per
share of Common Stock as of the effective date of such transaction, as
determined pursuant to subsection 2(b), and the denominator of which is the fair
market value per share of common stock of the acquiring or surviving company as
of the effective date of such transaction, as determined in good faith by the
Board of Directors of the Company (using the principles set forth in subsection
2(b) to the extent applicable), and (ii) the exercise price per share of common
stock of the acquiring or surviving company shall be the Exercise Price divided
by the fraction referred to in clause (B) above. In any such case, appropriate
adjustment (as reasonably determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder of
this Warrant, such that the provisions set forth in this Section 3 (including
provisions with respect to adjustment of the Purchase Price) shall thereafter be
applicable, as nearly as is reasonably practicable, in relation to any
securities, cash or other property thereafter deliverable upon the exercise of
this Warrant.
(c) When any adjustment is required to be made pursuant to
this Section 3, the Company shall promptly mail to the Registered Holder a
certificate setting forth such adjustment (including the kind and amount of
securities, cash or other property into which this Warrant shall be exercisable
and the Purchase Price) and a brief statement of the facts requiring such
adjustment.
4. Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Fair Market Value per share of
Common Stock, as determined pursuant to subsection 2(b) above.
5. Transfer Restrictions.
(a) This Warrant may not be sold or transferred without the
prior written consent of the Company, except in compliance with the provisions
of subsections 5(b) and 5(c) below. Any permitted transfer shall be effected by
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<PAGE> 7
surrendering this Warrant, along with a properly executed assignment, at the
principal office of the Company.
(b) This Warrant may be sold or transferred (i) in the case of
a Registered Holder which is a corporation, to a wholly owned subsidiary of such
corporation, (ii) in the case of a Registered Holder which is a partnership, to
a partner of such partnership or a retired partner of such partnership or to the
estate of any such partner or retired partner, and (iii) in the case of a
Registered Holder which is a limited liability company, to a member of such
limited liability company or a retired member of such company or to the estate
of any such member or retired member, provided that the transferee in each case
(A) is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act of 1933, as amended (the "Act"), and (B) agrees in writing to be
subject to the terms of this Section 5 to the same extent as if it were the
original Registered Holder hereunder. In the event of the death or disability of
the Registered Holder prior to the Expiration Date, this Warrant shall be
exercisable in accordance with its terms by the personal representative or the
estate of the Registered Holder.
(c) The Warrant Shares may not be sold or transferred unless
either (i) they first shall have been registered under the Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act.
(d) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
offered, sold or otherwise transferred unless and until such securities
are registered under such Act or an opinion of counsel satisfactory to
the Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
6. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant.
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7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
8. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with, in the case of any Restricted Holder other than an
institutional investor, surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, at its expense, in lieu
thereof, a new Warrant of like tenor.
9. Mailing of Notices, etc. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, to the address
furnished to the Company in writing by the last Registered Holder of this
Warrant who shall have furnished an address to the Company in writing. All
notices and other communications from the Registered Holder of this Warrant or
in connection herewith to the Company shall be mailed by first-class certified
or registered mail, postage prepaid, to the Company at its principal office at
One IDEXX Drive, Westbrook, Maine 04092.
10. No Rights as Stockholder.
(a) Until the exercise of this Warrant, the Registered Holder
of this Warrant shall not have or exercise any rights by virtue hereof as a
stockholder of the Company. Notwithstanding the foregoing, in the event (i) the
Company effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this Warrant are adjusted
as of the date of the distribution of the dividend (rather than as of the record
date for such dividend), and (ii) the Registered Holder exercises this Warrant
between the record date and the distribution date for such stock dividend, the
Registered Holder shall be entitled to receive, on the distribution date, the
stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.
(b) If the Company pays any dividend upon the Common Stock
(whether payable in cash, securities or other property), other than a regular
cash dividend paid out of earnings or earned surplus (determined in accordance
with
8
<PAGE> 9
generally accepted accounting principles) or a stock dividend payable in shares
of Common Stock, then the Company will pay or distribute to the Registered
Holder of this Warrant, upon the exercise hereof, in addition to the Warrant
Shares purchased upon such exercise, such dividend which would have been paid to
such Registered Holder if he or she had been the owner of record of such Warrant
Shares immediately prior to the record date for such dividend or, if no record
is fixed, the date as of which the record holders of Common Stock entitled to
such dividend are to be determined.
11. Cancellation of Warrant. The Registered Holder acknowledges and
agrees that this Warrant may be cancelled with respect to a portion of the
Warrant Shares in satisfaction of claims for which the Company is entitled to
indemnification in accordance with the terms of Article VI of the Stock Purchase
Agreement, as follows. If the Company has in good faith delivered a Claim Notice
or Expected Claim Notice (each as defined in the Stock Purchase Agreement)
within six months after the date of this Warrant claiming damages from the
Registered Holder, and such claim has not been paid by the Registered Holder or
otherwise resolved, then (subject to the limitations set forth in Article VI of
the Stock Purchase Agreement) the Company shall be entitled to delay the
exercise of such portion of this Warrant as has a value (determined pursuant to
Section 6.5 of the Stock Purchase Agreement) equal to the Claimed Amount (as
defined in the Stock Purchase Agreement) (or any lesser amount then claimed),
less any portion thereof as has actually been paid by the Registered Holder
pursuant to Article VI of the Stock Purchase Agreement with respect to such
claim. Upon the resolution of any indemnity claim that was the subject of an
exercise delay under this Section 11, (i) the Company shall be entitled to
cancel such portion of this Warrant (subject to the limitation on the number of
Warrant Shares which may be cancelled set forth in Section 6.5(a) of the Stock
Purchase Agreement) as has a value (determined pursuant to Section 6.5 of the
Stock Purchase Agreement) equal to the amount of Damages (if any) the Company is
entitled to receive pursuant to the resolution of such indemnity claim (which
shall release the Registered Holder of its obligation to pay such amount to the
Company under Article VI of the Stock Purchase Agreement) and (ii) the right to
exercise the balance of such Warrant (to the extent then vested) shall be
immediately reinstated.
12. Change or Waiver. This Warrant is one of a series of Warrants
issued by the Company, all dated the date hereof and substantially similar in
form, except as to the number of shares of Common Stock subject thereto
(collectively, the "Company Warrants"). Any term of this Warrant may be amended
or waived upon the written consent of the Company and the holders of Company
Warrants representing at least 70% of the number of shares of Common Stock then
subject to outstanding Company Warrants; provided that any such amendment or
waiver must apply to all Company
9
<PAGE> 10
Warrants then outstanding; and provided further that the number of Warrant
Shares subject to this Warrant and the Purchase Price of this Warrant may not be
amended, and the right to exercise this Warrant may not be waived, without the
written consent of the holder of this Warrant.
13. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
14. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware.
IDEXX LABORATORIES, INC.
By:________________________________
Title:_____________________________
ATTEST:
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<PAGE> 11
EXHIBIT I
PURCHASE FORM
To: IDEXX LABORATORIES, INC. Dated:______________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check
applicable box or boxes):
_ $_________ in lawful money of the United States,
and/or
_ the cancellation of such portion of the attached
Warrant as is exercisable for a total of ______
Warrant Shares (using a Fair Market Value of $_______
per share for purposes of this calculation).
Signature:__________________________
Address:____________________________
____________________________
2
<PAGE> 1
Exhibit 10.1
IDEXX LABORATORIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 23d day of
September, 1998, is entered into by IDEXX Laboratories, Inc., a Delaware
corporation with a place of business at One IDEXX Drive, Westbrook, Maine 04092
("IDEXX"), and Roland Johnson, residing at 2433 Tweedmore Ct., High Point, NC
27265 (the "Employee").
IDEXX desires to employ the Employee, and the Employee desires to be
employed by IDEXX. In consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. IDEXX hereby agrees to employ the Employee, and
the Employee hereby accepts employment with IDEXX, upon the terms set forth in
this Agreement, for the period commencing on the date of the closing of the sale
of all of the capital stock of Blue Ridge Pharmaceuticals, Inc. to IDEXX (the
"Commencement Date") and ending on December 31, 2003 (such period, as it may be
extended, the "Employment Period"), unless sooner terminated in accordance with
the provisions of Section 4. For purposes of this Agreement, the employment of
the Employee by a subsidiary of IDEXX shall be deemed to constitute employment
by IDEXX. This Agreement will terminate and be of no further force or effect if
the Commencement Date shall not have occurred on or before October 5, 1998.
2. Title; Capacity. The Employee shall serve as President of Blue Ridge
Pharmaceuticals, Inc. and Vice President of IDEXX. The Employee shall be
assigned to work in IDEXX's Greensboro, North Carolina facility. The Employee
shall be subject to the supervision of, and shall have such authority consistent
with the position held by the Employee as is delegated to him by, the Board of
Directors of IDEXX (the "Board") or such officer of IDEXX as may be designated
by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position. The Employee agrees to
devote his entire business time, attention and energies to the business and
interests of IDEXX during the Employment Period. The Employee agrees to abide by
the rules, regulations, instructions, personnel practices and policies of IDEXX
which are not inconsistent with the terms of this Agreement and which are
generally applicable to all employees or all employees serving in positions
similar to the Employee and any changes therein which may be adopted from time
to time by IDEXX and communicated to the Employee. IDEXX has provided the
Employee with IDEXX's Employee
<PAGE> 2
Handbook and the Employee hereby acknowledges receipt thereof.
3. Compensation and Benefits.
3.1 Base Salary. IDEXX shall pay the Employee, in bi-weekly
installments, an initial annual base salary of $207,000. Such salary shall be
subject to annual review in accordance with IDEXX's customary practices and may
be increased at the discretion of IDEXX. The Employee's salary may not be
decreased unless the same proportionate reduction is made to the annual base
salaries of all IDEXX employees holding positions at a comparable level to that
of the Employee (i.e. corporate officer level), provided that no such decrease
may exceed 5% of the Employee's annual base salary.
3.2 Eligibility for Annual Cash Bonus. The Employee shall
receive an annual bonus for 1998 equal to one times the Employee's base annual
salary immediately prior to the Commencement Date. For years after 1998, the
Employee shall be eligible to receive an annual cash bonus based on achievement
by the Employee of individual goals, the achievement by IDEXX of corporate goals
and the achievement by the IDEXX Pharmaceutical Division of Division goals.
Bonus eligibility will be consistent with bonus eligibility ranges established
annually by IDEXX for employees at the corporate officer level.
3.3 Stock Options. Commencing January 1, 2001, the Employee
shall be eligible to receive stock options to purchase shares of IDEXX's Common
Stock pursuant to IDEXX's employee stock option plan. The grant of any such
stock options to the Employee shall be at the discretion of the Compensation
Committee of IDEXX's Board of Directors. Any options granted shall be on the
customary terms and conditions of IDEXX's employee stock option plan and
standard option agreement.
3.4 Fringe Benefits. The Employee shall be entitled to
participate in all benefit programs that IDEXX establishes and makes available
to employees of IDEXX and its subsidiaries, to the extent that the Employee's
position, tenure, salary, age, health and other qualifications make him eligible
to participate. The Employee shall be entitled to four weeks paid vacation per
year in accordance with IDEXX vacation policy in effect from time to time, to be
taken at such times as may be approved by IDEXX or its designee. The Employee
shall be given credit for his service with Blue Ridge Pharmaceuticals, Inc.
prior to the date hereof for the purposes of earning benefits.
3.5 Reimbursement of Expenses. IDEXX shall reimburse the
Employee for reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, in accordance with
and subject to the terms of the policies of IDEXX.
<PAGE> 3
4. Employment Termination.
4.1 The employment of the Employee by IDEXX pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
(a) expiration of the Employment Period in accordance
with Section 1;
(b) at the election of the Employee, upon 30 days'
prior written notice to IDEXX without Good Reason, provided the Employee shall
not so terminate his employment prior to the third anniversary of the
Commencement Date;
(c) at the election of IDEXX, upon written notice to
the Employee, for Cause (as defined below);
(d) at the election of the Employee for Good Reason
(as defined below);
(e) at the election of IDEXX, upon 30 days' prior
written notice to the Employee, without Cause; or
(f) upon the death of the Employee.
4.2 "Cause" for termination shall mean (a) the Employee's
willful material misconduct, embezzlement, fraud, or other criminal act
involving moral turpitude, or (b) gross negligence in the performance of the
Employee's duties to IDEXX, or (c) any breach by the Employee of this Agreement
or any invention and non-disclosure agreement, non-competition agreement or
similar agreement with IDEXX which is not cured within 15 days after receipt of
written notice thereof from IDEXX.
4.3 "Good Reason" for termination shall be deemed to exist
upon the occurrence of any of the following events without the written consent
of the Employee: (i) a material reduction or diminution in the Employee's
position, authority or responsibilities as in effect on the date of this
Agreement, excluding an action or circumstance which is remedied by IDEXX within
five business days following written notice from the Employee to IDEXX
describing such action or circumstance, provided that the Employee must provide
such notice not more than 30 days after he becomes aware of the circumstances
which constitute the alleged reduction or diminution; (ii) a reduction in the
annual base salary of the Employee unless the same proportionate reduction is
made to the annual base salaries of all IDEXX employees holding positions at a
comparable level to that of the Employee (provided that such reduction
<PAGE> 4
shall not in any event exceed 5% of annual base salary); or (iii) a relocation
of the Employee's principal place of employment to a new location that is more
than 75 miles from the current location in Greensboro, North Carolina (unless
such new location is closer than the current location to the Employee's
residence); or (iv) a breach by IDEXX of this Agreement that is not cured within
15 days after receipt of notice thereof from Employee.
4.4 Effect of termination. In the event of a termination of
the Employee's employment pursuant to Section 4.1(b), 4.1(c) or 4.1(f), IDEXX
shall pay the Employee compensation and benefits through the last day of the
Employee's actual employment by IDEXX. In the event of a termination of the
Employee's employment pursuant to Section 4.1(d) or Section 4.1(e), IDEXX shall
pay the Employee his then current annual base salary for the remainder of the
Employment Period and will pay the cost to the Employee to continue
participation in the Company's health insurance plan pursuant to COBRA
legislation for the full period permitted under COBRA. Except as provided in
this Section 4.4, IDEXX shall have no liability to the Employee under this
Agreement for any termination of the Employee's employment by the Employee for
Good Reason or by IDEXX without Cause.
5. Non-Compete and Proprietary Information and Developments. The
Employee agrees to simultaneously enter into IDEXX's Non-Compete Agreement and
Invention and Non-Disclosure Agreement, the forms of which are attached hereto
as Schedule A and Schedule B, respectively.
6. Miscellaneous.
6.1 Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the other party at the address
shown above, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 6.1.
6.2 Pronouns. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
6.3 Entire Agreement. This Agreement and the Non-Compete
Agreement and Invention and Non-Disclosure Agreement described in Section 5
hereof constitute the entire agreement between the parties and supersede all
prior agreements and understandings, whether written or oral, between the
Employee and Blue Ridge Pharmaceuticals, Inc. relating to the subject matter of
this Agreement or such other agreements.
<PAGE> 5
6.4 Amendment. This Agreement may be amended or modified only
by a written instrument executed by both IDEXX and the Employee.
6.5 Governing Law. This Agreement shall be construed,
interpreted and enforced in accordance with the internal laws (and not the law
of conflicts) of the State of Maine.
6.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns, including any corporation with which or into which IDEXX may be
merged or which may succeed to its assets or business, provided, however, that
the obligations of the Employee are personal and shall not be assigned by him.
IDEXX may assign its rights and obligations under this Agreement to a subsidiary
of IDEXX, provided that IDEXX shall also remain liable for the discharge of such
obligations.
6.7 Waivers. No delay or omission by IDEXX in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by IDEXX on any one occasion shall be effective only
in that instance and shall not be construed as a bar or waiver of any right on
any other occasion.
6.8 Section Headings. The captions of the sections of this
Agreement are for convenience of reference only and in no way define, limit or
affect the scope or substance of any section of this Agreement.
6.9 Severability. In case any provision of this Agreement
shall be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
IDEXX LABORATORIES, INC.
By: /s/ David A. Shaw
Title: Chief Executive Officer
/s/ Roland Johnson
Roland Johnson
