<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934, FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996.
Commission File Number
0-19659
DNX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2877973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
575 Route 28, Raritan, New Jersey 08869
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 722-7900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Common Stock $0.01 par value 8,720,858
Outstanding at November 11, 1996
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DNX CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Income -
for the three and nine months ended
September 30, 1996 and 1995 4
Consolidated Statement of Stockholders' Equity -
for the nine months ended September 30, 1996 5
Consolidated Statements of Cash Flows -
for the nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 15
PART II. OTHER INFORMATION 16
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DNX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
Assets September 30, 1996 December 31, 1995
------ ------------------ -----------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 15,456 20,042
Short-term investments 5,233 1,001
Trade accounts receivable, net 7,167 7,662
Prepaid expenses and other current assets 983 1,351
-------- -------
Total current assets 28,839 30,056
Property, plant and equipment, net 15,190 16,935
Intangible assets, net 964 1,035
Other assets 797 44
Restricted cash 460 777
-------- -------
$ 46,250 48,847
======== =======
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings -- 1,399
Current portion of long-term debt 246 744
Accounts payable 2,455 2,100
Accrued expenses 3,533 2,992
Deferred revenue 2,598 3,456
-------- -------
Total current liabilities 8,832 10,691
Long-term debt, excluding current portion 7,431 7,830
Deferred income taxes 1,779 2,045
Other liabilities 876 948
-------- -------
Total liabilities 18,918 21,514
-------- -------
Stockholders' equity
Serial preferred stock, $.01 par value, 5,000,000
shares authorized; no shares issued and outstanding -- --
Common stock, $.01 par value, 20,000,000 shares
authorized; issued and outstanding 8,713,353 in 1996
and 8,606,194 in 1995 87 86
Additional paid-in capital 57,157 57,000
Translation adjustment 640 1,095
Accumulated deficit (30,552) (30,848)
-------- -------
Total stockholders' equity 27,332 27,333
-------- -------
Commitments and contingencies
$ 46,250 48,847
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
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DNX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
Three and nine months ended September 30, 1996 and 1995
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Commercial services $ 7,286 5,267 21,606 18,317
License fees and other contracts 105 248 351 784
------- ------- ------- -------
7,391 5,515 21,957 19,101
------- ------- ------- -------
Operating expenses:
Cost of commercial services 5,691 4,791 16,966 15,529
Research and development 93 252 329 773
General, administrative and marketing 1,504 1,806 4,530 4,600
------- ------- ------- -------
7,288 6,849 21,825 20,902
------- ------- ------- -------
Income (loss) from operations 103 (1,334) 132 (1,801)
------- ------- ------- -------
Other income (expense):
Interest income 271 85 852 246
Interest expense (154) (202) (488) (613)
Other 82 122 254 474
------- ------- ------- -------
199 5 618 107
------- ------- ------- -------
Income (loss) before equity in net loss of
Nextran and income taxes 302 (1,329) 750 (1,694)
Equity in net loss of Nextran -- 519 -- 2,700
Gain on sale of Nextran, net of income taxes of $200 -- 17,266 -- 17,266
Provision (benefit) for income taxes 246 (49) 454 (45)
------- ------- ------- -------
Net income $ 56 15,467 296 12,917
======= ======= ======= =======
Earnings per common and common
equivalent share:
Primary $ 0.01 1.70 0.03 1.43
======= ======= ======= =======
Fully Diluted $ 0.01 1.70 0.03 1.43
======= ======= ======= =======
Shares used in computing per share amounts
Primary 9,381 9,072 9,287 9,018
------- ------- ------- -------
Fully Diluted 9,381 9,096 9,343 9,056
------- ------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
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DNX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Nine months ended September 30, 1996
(in thousands except shares)
(unaudited)
<TABLE>
<CAPTION>
Additional Total
Common paid-in Translation Accumulated stockholders'
stock capital adjustment deficit equity
------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $86 57,000 1,095 (30,848) 27,333
Issuance of 95,024 shares
of common stock upon
exercise of stock options
and warrants 1 90 -- -- 91
Issuance of 12,135 shares
of common stock pursuant
to 401(k) plan -- 67 -- -- 67
Translation adjustment -- -- (455) -- (455)
Net income -- -- -- 296 296
--- ------ ------ ------- -------
Balance, September 30, 1996 $87 57,157 640 (30,552) 27,332
=== ====== ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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DNX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 296 12,917
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Non-cash items:
Depreciation and amortization 1,881 2,076
Equity in net loss of Nextran -- 2,700
Gain on sale of partnership interest in Nextran -- (17,266)
Deferred income tax expense (benefit) 13 (98)
(Gain) loss on disposal of property, plant and equipment (3) 43
Amortization of premium on short-term investments 177 44
Noncash charges 67 55
Change in operating assets and liabilities:
Decrease in accounts receivable 227 983
Decrease in prepaid expenses and other current assets 93 74
(Increase) decrease in other assets (752) 54
Increase (decrease)in accounts payable 463 (144)
Increase (decrease) in accrued expenses 669 (1,265)
Decrease in deferred revenue (746) (1,447)
Increase (decrease) in other liabilities (35) 64
-------- -------
Net cash provided by (used in) operating activities 2,350 (1,210)
-------- -------
Cash flows from investing activities:
Decrease in restricted cash 317 950
Increase in cash in escrow -- (18,000)
Purchase of property, plant and equipment (706) (623)
Proceeds from disposal of property, plant and equipment 36 6
Purchases of intangibles assets (21) (19)
Purchases of short-term investments (5,409) (2,055)
Proceeds from maturities of short-term investments 1,000 --
Proceeds from sale of partnership interest in Nextran -- 18,000
-------- -------
Net cash used in investing activities (4,783) (1,741)
-------- -------
Cash flows from financing activities:
Proceeds (payments) on short-term borrowings (1,361) 623
Proceeds from borrowings of long-term debt -- 61
Principal payments on long-term debt (893) (582)
Proceeds from stock options exercised 91 36
-------- -------
Net cash provided by (used in) financing activities (2,163) 138
-------- -------
Effect of exchange rate changes on cash 10 (38)
-------- -------
Decrease in cash and cash equivalents (4,586) (2,851)
Cash and cash equivalents, beginning of period 20,042 4,404
-------- -------
Cash and cash equivalents, end of period $ 15,456 1,553
======== =======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 495 637
Income taxes 7 825
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
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DNX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1996
(unaudited)
Note 1. Statement of Accounting Presentation
In the opinion of DNX Corporation and Subsidiaries (as defined below) (the
"Company"), the accompanying unaudited consolidated financial statements include
all significant adjustments (consisting only of normal recurring accruals)
necessary to fairly state the Company's consolidated financial position as of
September 30, 1996, the consolidated results of operations for the three and
nine month periods ended September 30, 1996 and 1995 and the consolidated cash
flows for nine month periods ended September 30, 1996 and 1995. The consolidated
financial statements have been prepared in accordance with the requirements for
Form 10-Q and, therefore, do not include all disclosures of financial
information required by generally accepted accounting principles. The
accompanying consolidated financial statements should be read in conjunction
with the financial statements included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995. The information set forth in the
accompanying consolidated balance sheet as of December 31, 1995 has been derived
from the audited consolidated balance sheet included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
Interim results are not necessarily indicative of the results for the full
year.
Note 2. Earnings Per Share
Earnings per common and common equivalent share is computed based upon the
weighted average number of common shares outstanding during the periods, plus
when their effect is dilutive, common stock equivalents consisting of certain
shares subject to stock options and warrants, and gives effect to certain
adjustments as prescribed by Securities and Exchange Commission Staff Accounting
Bulletin 83.
Note 3. Proposed Transaction
On August 19, 1996, the Company entered into certain agreements (the
"Transaction Agreements") providing for the acquisition by the Company of all
outstanding capital stock of, or equity interests in, BioClin, Inc., BioClin
Europe AG, BioClin GmbH, Kilmer N.V. and BioClin Institute of Clinical
Pharmacology GmbH, (collectively, the "BioClin Group") in consideration and
exchange for 2,632,600 shares of Common Stock (the "Proposed Transaction"). The
BioClin Group is an international contract research organization engaged in
clinical drug development services in the United States, all major European
countries, Israel, Turkey and Australia. The Proposed Transaction has been
structured, and the legal agreements have been drafted, in a manner intended to
qualify the Proposed Transaction for "pooling-of-interests" accounting
treatment. Pursuant to the Transaction Agreements, the closing of the Proposed
Transaction is subject to a number of conditions including DNX stockholder
approval and regulatory approvals. The Proposed Transaction is expected to close
during the late fourth quarter of fiscal 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL SUMMARY
The Company is a contract research organization ("CRO") whose principal
activities consist of preclinical drug development services conducted through
its two wholly-owned subsidiaries, Pharmakon Research International, Inc.
("Pharmakon") and DNX Biotherapeutics, Inc. ("DNX Biotherapeutics"), currently
doing business as DNX Transgenics ("DNX Transgenics," together with Pharmakon,
the "Subsidiaries"). Pharmakon provides preclinical drug development and safety
assessment services, including in vitro and in vivo toxicological,
pharmacological and pharmacokinetics testing services, to the pharmaceutical,
biotechnology, chemical and other industries through its United States
operations and its European subsidiary, Pharmakon Europe. A primary component of
Pharmakon's preclinical drug development services consists of specialty services
such as general and safety pharmacology, continuous infusion techniques,
immunology and immunotoxicology. DNX Transgenics uses its proprietary transgenic
animal technology to provide drug development services to the pharmaceutical,
biotechnology and medical communities via the development of laboratory animal
models that more closely mimic human biological processes than conventional
laboratory animal models for use in in vivo testing for drug discovery and
development and in biomedical research.
The Company also grants sublicenses of its proprietary Pronuclear DNA
Microinjection technology, the process widely used in the pharmaceutical and
biotechnology industries to develop transgenic animals. These sublicenses
entitle the Company to receive revenues consisting of fees and, in certain
cases, royalties. Additionally, although the Company has sold its partnership
interest in Nextran, in the event that Nextran develops and commercializes
hemoglobin blood substitutes using technologies licensed to Nextran by the
Company, the Company will receive royalty income.
Pharmakon accounted for more than 95% of the Company's revenues for the
years ended December 31, 1995 and 1994 and the nine months ended September 30,
1996. Since the majority of Pharmakon Europe's revenues, which accounted for
approximately 69% of the Company's revenues for the year ended December 31, 1995
and 68% of the Company's revenues for the nine months ended September 30, 1996,
are denominated in French Francs, fluctuations in the exchange rate between the
French Franc and the U.S. dollar have an effect on the Company's operating
results (see "Liquidity and Capital Requirements - Exchange Rate Fluctuations").
FORMATION AND SALE OF NEXTRAN
On August 29, 1994, DNX Biotherapeutics entered into a Joint Venture
Agreement (the "Joint Venture Agreement") with Baxter Transplant Holdings
("Holdings"), a wholly-owned subsidiary of Baxter Healthcare Corporation
("Baxter"), which is a subsidiary of Baxter International, Inc., to form
Nextran, a Delaware general partnership, in which DNX Biotherapeutics had a 30%
partnership interest and Holdings
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has a 70% partnership interest. Pursuant to the terms of the Purchase Agreement,
dated September 22, 1995, as amended, DNX Biotherapeutics consummated the sale
of its 30% partnership interest in Nextran to Transplant Acquisition Inc.
("Acquisition"), a wholly-owned subsidiary of Baxter, for a cash purchase price
of $18 million. See Note 6 of the Notes to Consolidated Financial Statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
PROPOSED ACQUISITION OF THE BIOCLIN GROUP
On August 19, 1996, the Company entered into certain agreements (the
"Transaction Agreements") providing for the acquisition by the Company of all
outstanding capital stock of, or equity interests in, BioClin, Inc., BioClin
Europe AG, BioClin GmbH, Kilmer N.V. and BioClin Institute of Clinical
Pharmacology GmbH, (collectively, the "BioClin Group") in consideration and
exchange for 2,632,600 shares of Common Stock (the "Proposed Transaction"). The
BioClin Group is an international contract research organization engaged in
clinical drug development services in the United States, all major European
countries, Israel, Turkey and Australia. The Proposed Transaction has been
structured, and the legal agreements have been drafted, in a manner intended to
qualify the Proposed Transaction for "pooling-of-interests" accounting
treatment. Pursuant to the Transaction Agreements, the closing of the Proposed
Transaction is subject to a number of conditions including DNX stockholder
approval and regulatory approvals. The Proposed Transaction is expected to close
during the late fourth quarter of fiscal 1996.
RESULTS OF OPERATIONS
REVENUES
Revenues were $7,391,000 for the three months ended September 30, 1996
versus $5,515,000 for the same period in 1995, an increase of 34%. Revenues were
$21,957,000 for the nine months ended September 30, 1996 versus $19,101,000 for
the same period in 1995, an increase of 15%. The increase in revenues for the
three and nine month periods ended September 30, 1996 as compared to the same
periods in 1995 was primarily due to an increase in business activity in
preclinical drug development services in both the European and U.S.
marketplaces. The Company believes the increase in business activity is a result
of the improvement in the pharmaceutical industry outsourcing trends and
expanded cash reserves within the biotechnology sector. Additionally, revenue
for the nine months ended September 30, 1995 included approximately $420,000 of
revenue, classified as license fees and other contracts, primarily from a
government contract that was terminated in 1995.
OPERATING EXPENSES
Cost of commercial services was $5,691,000 or 78% of commercial service
revenues for the three months ended September 30, 1996 and $4,791,000 or 91% of
commercial service revenues for the same period in 1995. For the nine months
ended September 30, 1996, cost of commercial services was $16,966,000 or 79% of
commercial service revenues and $15,529,000 or 85% of commercial services
revenue for the same
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period in 1995. The increase in these costs for the three and nine month periods
ended September 30, 1996 versus the same periods in 1995 was primarily due to
(i) increased business activity, which resulted in an increase in variable costs
such as materials and supplies, and (ii) an increase in commercial service
activity associated with DNX Transgenics. The decrease in these costs as a
percent of revenues is due to the leveraging of a base cost structure of
management and scientific personnel, equipment and facilities which supported a
higher level of business in the first nine months of 1996 than experienced
during the same period in 1995.
Research and development expenses decreased 63% to $93,000 for the three
month period ended September 30, 1996 from $252,000 for the same period in 1995.
For the nine month periods ended September 30, 1996 and 1995, research and
development expense decreased 57% to $329,000 from $773,000, respectively. The
decrease in expenses was primarily the result of the shift in the strategic
focus of DNX Transgenics from the internal development of transgenic animal
models to providing commercial specialty drug development services.
General, administrative and marketing expenses were $1,504,000 for the
three months ended September 30, 1996 versus $1,806,000 for the same period in
1995. For the nine month periods ended September 30, 1996 and 1995, these
expenses were $4,530,000 and $4,600,000, respectively. Included in the general,
administrative and marketing expenses for three months ended September 30, 1995
was a charge of $498,000 of expenses associated with cost reduction programs in
Europe. The remainder of the increase in expenses was primarily the result of
increased marketing and business development expenses.
OTHER INCOME (EXPENSE)
Other income (expense) amounted to $199,000 for the three months ended
September 30, 1996 versus $5,000 for the same period last year. For the nine
months ended September 30, 1996 and 1995, other income (expense) was $618,000
and $107,000, respectively. The increase in other income for 1996 as compared to
1995 is primarily the result of (i) the increase in cash available for
investment, (ii) the reduction of debt, primarily Pharmakon Europe's short-term
borrowings under its credit lines (see "Liquidity and Capital Requirements
Debt") and (iii) the decrease in interest expense as a result of the decrease in
interest rates applicable to the Company's debt instruments. Additionally, in
the first quarter of 1995, the Company transferred its lease obligation on the
former Plainsboro pilot plant facility to a third party and sold certain
equipment associated with this facility to the same party for a total of
$600,000 to be paid in monthly installments through September 1996. Other income
for the nine months ended September 30, 1996 and 1995 includes income of
$225,000 and $401,000, respectively, associated with the transactions for this
facility.
EQUITY IN NET LOSS OF NEXTRAN
As a result of the sale of its partnership interest in Nextran in September
1995, the Company no longer records a share of Nextran's financial results of
operations in its consolidated financial statements. Prior to September 30,
1995, as a result of its minority
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equity ownership in Nextran, the Company recorded its share of Nextran's
financial results in its consolidated financial statements based on the equity
method of accounting. For the three and nine month periods ended September 30,
1995, the Company's share of Nextran's loss amounted to $519,000 and $2,700,000,
respectively.
GAIN ON SALE OF NEXTRAN
As a result of the sale of its partnership interest in Nextran in the
third quarter of 1995, the Company eliminated the remaining balance of its
Investment in Nextran from the balance sheet and recorded an estimated
non-recurring gain, net of expenses, income taxes and related accruals, of
$17,266,000.
TAXES
The Company's Pharmakon Europe subsidiary is subject to foreign income
taxes under French tax laws on the profits generated in France. The 1996 French
corporate income tax rate is approximately 37%. For the three and nine months
ended September 30, 1996, the Company recorded income tax expense of $246,000
and $454,000, respectively, as compared to income tax benefit of $49,000 and
$45,000 for the three and nine months ended September 30, 1995, respectively,
due to operating results generated by Pharmakon Europe.
The impact from United States federal and state income taxes is currently
not significant due to the Company's available net operating loss carryforwards.
At December 31, 1995, the Company had available net operating loss carryforwards
of approximately $20,318,000 for United States federal and state income tax
purposes. Such loss carry forwards expire through 2009 and 2001, respectively.
The Company also has research and development tax credit carryforwards of
approximately $2,982,000 for federal income tax reporting purposes which are
available to reduce federal income taxes, if any, through 2010. The Company has
alternative minimum tax credit carryforwards of approximately $200,000 for
federal income tax purposes which are available to reduce federal income taxes,
if any. These tax credits have an unlimited carryforward period. The Company
believes that the Proposed Transaction will have no effect on the Company's
ability to utilize the foregoing carryforwards. The Proposed Transaction,
however, will result in an ownership change under the Code. Accordingly, the
Company's ability to utilize its net operating loss carryforwards may be subject
to certain limitations in the future under the Code.
LIQUIDITY AND CAPITAL REQUIREMENTS
CASH RESERVES
The Company finances its operations and activities by relying on (i) its
operating activities for its working capital requirements, (ii) its cash
reserves and (iii) its available lines of credit. As of September 30, 1996, the
Company had cash reserves (consisting of cash and cash equivalents, short-term
investments and restricted cash) of $21,149,000. The Company invests its cash in
a diversified portfolio of high-grade money market funds,
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United States Government-backed securities and commercial paper and corporate
obligations. During the first nine months of 1996, while the Company generated
$2,350,000 from operating activities, the Company's cash reserves decreased by
$671,000 primarily due to reductions in the outstanding principal amounts of
short-term borrowings and long-term debt totaling $2,254,000 and capital
expenditures as described immediately below.
CAPITAL EXPENDITURES
During the first nine months of 1996, the Company invested a total of
approximately $706,000 in property, plant and equipment, primarily to provide
specialty services at Pharmakon Europe and to enhance information systems
capabilities for the Company's operations.
DEBT
In December 1992, Pharmakon acquired Pharmakon Europe through a stock
purchase. Included in the purchase price were promissory notes having an
aggregate principal amount of $7.0 million (the "Pharmakon Notes"). The
remaining unpaid principal balance as of September 30, 1996 of $5,000,000 will
be paid in December 1997. The payment of the Pharmakon Notes is secured by a
pledge of the capital stock of Pharmakon Europe, a pledge of certain assets of
Pharmakon, a guarantee by the Company and a security interest in fees and
royalties payable to the Company under sublicenses of its proprietary DNA
Microinjection Technology. The Pharmakon Notes require prepayments in specified
amounts upon the Company selling any of its shares of common stock of Pharmakon.
The promissory notes contain various covenants, the most restrictive of which
prohibit the payment of dividends by Pharmakon to the Company and the sale of
any Pharmakon Europe assets that are not made in the ordinary course of
business.
In connection with its new U.S. facility, in 1994 Pharmakon secured (i) a
$1.5 million 15-year mortgage with a bank and (ii) a $1.2 million 15-year
mortgage from a Pennsylvania agency, which required cash collateral of $450,000.
These two loans are also secured by mortgages on the property acquired. The cash
collateral on the mortgage loan with the Pennsylvania agency is classified as
restricted cash as of September 30, 1996. If the Company achieves certain
financial covenants, this $450,000 of cash collateral will be released.
Additionally, the favorable interest rate on the mortgage with the Pennsylvania
agency is subject to change upon review by the agency of certain future
conditions.
Pharmakon Europe has lines of credit and overdraft privileges with French
banks in the aggregate amount of 10.5 million French Francs ($2.0 million at the
exchange rates in effect on September 30, 1996). At December 31, 1995, there
were short-term borrowings outstanding under these facilities in the amount of
6.9 million French Francs ($1,399,000 at December 31, 1995). As of September 30,
1996, there were no outstanding borrowings under these credit facilities.
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In March 1993, DNX Biotherapeutics obtained a $3.0 million debt financing
facility from a bank in the form of an equipment line of credit which is
guaranteed by the Company. In connection with the curtailment of the blood
substitute program in 1993, DNX Biotherapeutics discontinued borrowings under
this line of credit and is paying the principal balance of $90,000 outstanding
on September 30, 1996 in monthly installments through January 1997. The loan is
secured by a security interest in the equipment acquired and the payments due to
the Company under the installment sale of certain equipment associated with the
transfer of the lease obligation on the former Plainsboro pilot plant facility.
In connection with the formation of Nextran, the Company entered into a
services/lease agreement whereby Nextran leases 49% of the equipment subject to
this loan and makes monthly payments to the Company equal to Nextran's
proportionate share of the monthly payment due under this loan based on the
equipment.
In May 1994, Pharmakon obtained a $500,000 equipment loan from a
Pennsylvania agency secured by certain of the equipment required in connection
with the expansion of Pharmakon's United States operations. The loan is payable
in equal monthly installments through June 2001. The funding period for this
loan ended on December 31, 1995. In April 1996, $288,000, representing the
unused proceeds from this equipment loan, was returned to the Pennsylvania
agency.
BIOCLIN TRANSACTION
Based upon unaudited financial information provided to the Company, at
September 30, 1996, the BioClin Group had cash and marketable debt securities
totaling approximately $1,873,000 and outstanding debt, consisting primarily of
short-term lines of credit, totaling approximately $9,983,000. In the event the
Proposed Transaction is consummated, a portion of the cash resources of the
combined entity may be used to reduce the indebtedness of the BioClin Group
acquired in the Proposed Transaction as well as to pay the expenses of the
Proposed Transaction.
CAPITAL REQUIREMENTS
The Company believes that with its current financial resources it has the
ability to meet its working capital requirements on an ongoing basis for the
foreseeable future. The Company anticipates that its future capital requirements
may include investment for expansion of its operating infrastructure to meet
anticipated increased demand for preclinical drug development services from the
pharmaceutical and biotechnology industries. In addition, a $5,000,000 payment
on the principal balance of the Pharmakon Notes will be due in December 1997.
Additionally, the Company from time to time is engaged in discussions regarding
strategic acquisitions, other than the Proposed Transaction, of organizations
providing various drug development services and may finance such acquisition
with its existing cash resources or by additional public or private debt or
equity financings or through the issuance of stock. In the event any such
acquisition requires financing, there can be no assurance that such financing
will be available to the Company or if available, that it will be available on
acceptable terms. Also, there can be no assurance that the Company will
consummate such an acquisition or obtain any such financing, or if consummated,
that such financing arrangements will satisfy a material portion of the
Company's capital needs. Although the Company continually
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considers and evaluates potential acquisitions and related opportunities for
growth, it has not entered into any agreements with respect to such
acquisitions, other than the Proposed Transaction. Consummation of the Proposed
Transaction is subject to a number of conditions including DNX stockholder
approval and regulatory approvals.
As a former general partner of Nextran, the Company remains obligated with
respect to certain environmental representations and warranties which expire on
August 29, 1997. Such representations and warranties are also limited by certain
financial indemnification provisions.
The Company's working capital and other capital requirements will depend
on numerous factors, including among others: success in increasing the Company's
revenues and managing its operating subsidiaries, Pharmakon and DNX Transgenics;
success in licensing the Company's DNA Microinjection technology; the exchange
rate between the United States dollar and the French Franc in the event funds
from the Company's Pharmakon Europe operation are needed to meet capital
requirements of the Company's U.S. operations; the level of Company resources
devoted to marketing and administration; technological advances; the status of
competitors; and consummation of the Proposed Transaction and payment of
expenses of the Proposed Transaction and possible reduction of the indebtedness
of the BioClin Group.
EXCHANGE RATE FLUCTUATIONS
The Company's consolidated financial statements are denominated in U.S.
dollars and, accordingly, changes in the exchange rate between the French Franc
and the U.S. dollar will affect the translation of Pharmakon Europe's revenues
and operating results into U.S. dollars for purposes of reporting the Company's
consolidated financial results, and also affect the U.S. dollar amounts actually
received by the Company from such subsidiary. Based on the assumption that
Pharmakon Europe continues to represent a significant portion of the business of
the Company, the depreciation of the U.S. dollar against the French Franc would
have a favorable impact on the Company's revenues and an unfavorable impact on
the Company's operating expenses due to the effect of such currency translation
on Pharmakon Europe's operating results; however, the appreciation of the U.S.
dollar against the French Franc would have an unfavorable impact on the
Company's revenues and a favorable impact on the Company's operating expenses.
The Company does not currently hedge its currency translation exposure.
Contracts between Pharmakon Europe and its clients are generally
denominated in French Francs. Because substantially all of Pharmakon Europe's
expenses, such as salaries, services, materials and supplies, are paid in French
Francs, its expenses are not materially affected by fluctuations in exchange
rates. However, given that the majority of Pharmakon Europe's clients and
competitors are located outside of France, exchange rate fluctuations may
materially impact contract prices and therefore may materially impact the
results of operations of Pharmakon Europe and the Company.
14
<PAGE> 15
The results of operations of Pharmakon Europe denominated in French Francs
have been translated from French Francs into U.S. dollars using the following
exchange rates:
<TABLE>
<CAPTION>
French Franc U.S. dollar per
Period per U.S. dollar French Franc
------ --------------- ---------------
<S> <C> <C>
1st quarter 1995 5.1602 .1938
2nd quarter 1995 4.9161 .2034
3rd quarter 1995 4.9393 .2025
1st quarter 1996 5.0384 .1985
2nd quarter 1996 5.1578 .1939
3rd quarter 1996 5.0965 .1962
</TABLE>
The rates in the above table represent an average exchange rate calculated using
rates quoted in The Wall Street Journal.
ACCUMULATED DEFICIT
Since its inception in 1988 until the formation and subsequent sale of its
partnership interest in Nextran in 1995, the Company has expended substantial
funds for research and development and capital expenditures. A significant
portion of such expenditures were made to support DNX Biotherapeutics' organ
transplantation and blood substitute research and development programs, which
programs were transferred to the Nextran partnership. Historically, these
programs have accounted for a substantial portion of the Company's accumulated
deficit.
NEW ACCOUNTING PRONOUNCEMENT
In October 1995, the FASB issued Statement 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). SFAS 123 presents companies with the
alternative of retaining the current accounting for stock-based compensation or
adopting a new accounting method based on the estimated fair value of equity
instruments granted during the year. Companies that do not adopt the fair value
based method of accounting will be required to adopt the disclosure provisions
of SFAS 123 for the year ending December 31, 1996. The Company expects to
continue applying its current accounting principles and upon adoption in 1996
will present the required footnote disclosures.
INFLATION
The Company believes that inflation has not had a material impact on its
results of operations.
15
<PAGE> 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
11.1 Statement Re: Computation of earnings per share.
27 Financial Data Schedule
b. Reports on Form 8-K
On August 19, 1996, the Company filed a Current Report on Form 8-K
to report that the Company entered into the Proposed Transaction.
16
<PAGE> 17
DNX CORPORATION
SIGNATURES
The financial information furnished herein has not been audited. However,
in the opinion of management, all significant adjustments necessary for a fair
presentation for the three and nine month periods ended September 30, 1996 and
1995, have been included.
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.
Date: November 12, 1996 DNX CORPORATION
/s/ John G. Cooper
-----------------------------------------
John G. Cooper
Senior Vice President, Chief Financial
Officer and Treasurer
(Duly Authorized Officer and Chief
Accounting Officer)
17
<PAGE> 1
Exhibit 11.1
DNX CORPORATION AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Three and nine months ended September 30, 1996 and 1995 (in
thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------ ------ ----- ------
<S> <C> <C> <C> <C>
Net income $ 56 15,467 296 12,917
------ ------ ----- ------
Weighted average shares - Primary
Common stock 8,708 8,523 8,659 8,470
Warrants and options 178 327 180 329
Common stock equivalents 495 222 448 219
------ ------ ----- ------
Total weighted average shares - Primary 9,381 9,072 9,287 9,018
------ ------ ----- ------
Weighted average shares - Fully Diluted
Common stock 8,708 8,523 8,659 8,470
Warrants and options 178 327 180 329
Common stock equivalents 495 246 504 257
------ ------ ----- ------
Total weighted average shares - Fully Diluted 9,381 9,096 9,343 9,056
------ ------ ----- ------
Earnings per common and common equivalent share:
Primary $ 0.01 1.70 0.03 1.43
====== ====== ===== ======
Fully Diluted $ 0.01 1.70 0.03 1.43
====== ====== ===== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,546
<SECURITIES> 5,233
<RECEIVABLES> 7,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,839
<PP&E> 15,190
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,250
<CURRENT-LIABILITIES> 8,832
<BONDS> 0
0
0
<COMMON> 87
<OTHER-SE> 27,245
<TOTAL-LIABILITY-AND-EQUITY> 46,250
<SALES> 0
<TOTAL-REVENUES> 21,957
<CGS> 0
<TOTAL-COSTS> 16,966
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 488
<INCOME-PRETAX> 750
<INCOME-TAX> 454
<INCOME-CONTINUING> 296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 296
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 19, 1996
DNX Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-19659 22-28779373
- ------------------- ------------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
575 Route 28, Raritan, New Jersey 08869
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 722-7900
--------------
Exhibit Index at Page 5
PAGE 1 OF 289 PAGES
<PAGE> 2
Item 5. Other Events.
-------------
On August 19, 1996, DNX Corporation ("DNX") entered into three
definitive agreements (collectively, the "Share Exchange Agreements") providing
for the acquisition (the "Transaction") by DNX of all outstanding capital stock
of, or equity interests in, BioClin, Inc., a Delaware corporation
("BioClin/U.S."), BioClin Europe AG, a Swiss corporation ("BioClin Europe"),
BioClin GmbH, a German corporation ("BioClin Germany"), Kilmer N.V., a
Netherlands Antilles corporation ("Kilmer"), and BioClin Institute of Clinical
Pharmacology GmbH, a German corporation ("BioClin Institute" and, together
with BioClin/U.S., BioClin Europe, BioClin Germany and Kilmer, collectively,
the "BioClin Group") in exchange for 2,632,600 shares of Common Stock,
par value $0.01 per share, of DNX ("DNX Common Stock"). The BioClin Group,
which is an international contract research organization engaged in clinical
drug development services in the United States, Europe and Israel, is
controlled by a stockholder group consisting of Dr. Jack Barbut ("Barbut"),
Dr. J. Chris Jensen ("Jensen") and Mr. Alec Hackel ("Hackel" and, together with
Barbut and Jensen, collectively, the "Interest Holders"). The Transaction has
been structured, and the definitive legal agreements summarized herein and
attached hereto as exhibits have been drafted, in a manner intended to qualify
the Transaction for pooling-of-interests accounting treatment.
Pursuant to a Stockholders' Agreement among DNX, the Interest Holders
and certain other parties that will be entered into concurrently with the
closing of the Transaction, DNX will grant (a) the Interest Holders a right to
nominate up to two persons for election as members of the Board of Directors of
DNX and (b) the Interest Holders and certain other parties that will receive
DNX Common Stock in the Transaction certain registration rights with respect to
the shares of DNX Common Stock issued in the Transaction.
Pursuant to the Share Exchange Agreements, the closing of the
Transaction is subject to a number of conditions including DNX stockholder
approval and regulatory approvals.
Copies of each of the Share Exchange Agreements, the Stockholders'
Agreement and various other documents relating to the Transaction and certain
unaudited financial information
PAGE 2 OF 289 PAGES
<PAGE> 3
relating to the BioClin Group are attached as Exhibits to this Report and are
incorporated herein by reference and the description herein is qualified in its
entirety by reference thereto.
On August 19, 1996, DNX issued a press release concerning the
Transaction, which press release is attached as an Exhibit to this Report and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
----------------------------------
(a) Financial statements: None.
(b) Pro Forma financial information: None.
(c) Exhibits: See Exhibit Index.
PAGE 3 OF 289 PAGES
<PAGE> 4
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DNX Corporation
By: /s/ John G. Cooper
---------------------------------
Name: John G. Cooper
Title: Senior Vice President and
Chief Financial Officer
Date: August 19, 1996
PAGE 4 OF 289 PAGES
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits Page
----------- ----------------------- ----
<S> <C> <C>
2.1 Merger Agreement, dated as of August 19, 6
1996, among DNX Corporation, DNX
Acquisition Corporation, Dr. Jack Barbut,
Alec Hackel, Dr. John Christian Jensen,
Sherby N.V. and BioClin, Inc.
2.2 Share Exchange Agreement, dated as of 89
August 19, 1996, among DNX Corporation,
Mr. Manfred Wissmann, as Trustee, Dr.
Gerald Rittershaus, as Employee Trustee,
Dr. Jack Barbut, Alec Hackel, Dr. John
Christian Jensen, Bettina Donhardt,
Christine Dune-Kraatz, BioClin GmbH,
Kilmer N.V. and BioClin Europe AG.
2.3 Share Acquisition Agreement, dated as of 176
August 19, 1996, among DNX Corporation, Dr.
Gerald Rittershaus, as Trustee, Dr. Jack
Barbut, Alec Hackel, Dr. John Christian
Jensen, and BioClin Institute of Clinical
Pharmacology GmbH.
99.1 Form of Stockholders' Agreement, dated as 255
of ________, 1996, among DNX Corporation,
Dr. Gerald Rittershaus, as Trustee and
Employee Trustee, Manfred Wissmann, as Trustee,
Dr. Jack Barbut, Alec Hackel, Dr. John Christian
Jensen, Sherby N.V., Martha Lee Reynolds, Barry
Dvorchik, Bettina Donhardt and Christine
Dune-Kraatz.
99.2 Press Release dated August 19, 1996. 285
99.3 Unaudited financial statements of the 288
BioClin Group for fiscal years 1993, 1994
and 1995.
</TABLE>
PAGE 5 OF 289 PAGES
<PAGE> 6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 2.1
MERGER AGREEMENT
among
DNX CORPORATION
(a Delaware corporation),
DNX ACQUISITION CORPORATION
(a Delaware corporation),
DR. JACK BARBUT,
ALEC HACKEL,
DR. JOHN CHRISTIAN JENSEN,
SHERBY N.V.
(a Netherlands Antilles corporation)
and
BIOCLIN, INC.
(a Delaware corporation)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 7
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Recitals......................................................................................................... 1
ARTICLE I DEFINITIONS............................................................................................ 3
ARTICLE II THE MERGER............................................................................................ 13
2.1. The Merger................................................................................... 13
2.2. The Closing.................................................................................. 13
2.3. Effective Time............................................................................... 14
2.4. Certificate of Incorporation and By-Laws of
Surviving Corporation........................................................................ 14
2.5. Directors and Officers of Surviving Corporation.............................................. 14
2.6. Conversion of Securities..................................................................... 14
2.7. Dissenting Company Shares.................................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR........................................................... 16
3.1. Authorization, Validity and Effect........................................................... 16
3.2. Acquiror Shares.............................................................................. 17
3.3. Conflicts; Defaults.......................................................................... 17
3.4. Exchange Act Filings......................................................................... 18
3.5. Absence of Material Adverse Changes.......................................................... 18
3.6. Taxes........................................................................................ 18
3.7. Legal Proceedings; Orders.................................................................... 19
3.8. Absence Of Certain Changes and Events........................................................ 19
3.9. Contracts; No Defaults....................................................................... 21
3.10. Insurance.................................................................................... 21
3.11. Environmental Matters.........................................................................22
3.12. Labor Relations; Compliance.................................................................. 22
3.13. Intellectual Property........................................................................ 23
3.14. Disclosure................................................................................... 23
3.15. Brokers and Finders.......................................................................... 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
REGARDING PARENT AND THE PARENT SHARES....................................................... 24
</TABLE>
i
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
4.1. Authorization, Validity and Effect........................................................... 24
4.2. Consents and Approvals; No Violation......................................................... 25
4.3. Title and Power.............................................................................. 25
4.4. Litigation................................................................................... 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE INTEREST HOLDERS WITH RESPECT TO THE COMPANY............................................. 26
5.1. Organization, Authority and Authorization.................................................... 26
5.2. Consents and Approvals; No Violation......................................................... 27
5.3. Title and Power.............................................................................. 27
5.4. Capitalization of the Company; Subsidiaries.................................................. 27
5.5. Company Financial Statements................................................................. 28
5.6. Books and Records............................................................................ 28
5.7. Reports...................................................................................... 29
5.8. Absence of Material Adverse Changes.......................................................... 29
5.9. Title to Properties; Encumbrances............................................................ 29
5.10. Condition and Sufficiency of Assets.......................................................... 30
5.11. Accounts Receivable.......................................................................... 30
5.12. No Undisclosed Liabilities................................................................... 31
5.13. Taxes........................................................................................ 31
5.14. Compliance with Legal Requirements; Governmental
Authorizations............................................................................... 32
5.15. Legal Proceedings; Orders.................................................................... 33
5.16. Absence Of Certain Changes and Events........................................................ 35
5.17. Contracts; No Defaults....................................................................... 36
5.18. Insurance.................................................................................... 40
5.19. Environmental Matters........................................................................ 41
5.20. Employees.................................................................................... 44
5.21. Labor Relations; Compliance.................................................................. 44
5.22. Intellectual Property........................................................................ 45
5.23. Certain Payments............................................................................. 50
5.24. Disclosure................................................................................... 50
5.25. Relationships with Related Persons........................................................... 51
5.26. Brokers and Finders.......................................................................... 51
5.27. Employee Benefit Plans....................................................................... 51
5.28. Investment Intent; Accredited Investor....................................................... 52
ARTICLE VI CONDUCT OF BUSINESS PRIOR TO THE CLOSING.............................................................. 53
6.1. Conduct Prior to Closing..................................................................... 53
6.2. Consents and Approvals....................................................................... 56
6.3. Bookkeeping, Accounting and Financial Reporting
Capabilities................................................................................. 56
ARTICLE VII ADDITIONAL AGREEMENTS................................................................................ 57
</TABLE>
ii
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
7.1. Current Information.......................................................................... 57
7.2. Access and Investigation..................................................................... 58
7.3. Effect of Investigations..................................................................... 58
7.4. Press Releases, Etc.......................................................................... 58
7.5. Acquisition Proposals........................................................................ 59
7.6. Notification of Certain Matters.............................................................. 59
7.7. Customers.................................................................................... 62
7.8. Preservation of Relationships................................................................ 62
7.9. Resale; Legends.............................................................................. 62
7.10. Pooling Treatment............................................................................ 63
7.11. Shareholder Approval; Proxy Statement........................................................ 63
ARTICLE VIII CONDITIONS.......................................................................................... 64
8.1. Conditions to Each Party's Obligation to Consummate
the Closing.................................................................................. 64
8.2. Conditions to Obligation of Acquiror and Sub to
Consummate the Closing....................................................................... 65
8.3. Conditions to Obligation of Parent, the Company
and the Interest Holders to Consummate
the Closing.................................................................................. 67
ARTICLE IX TERMINATION........................................................................................... 68
9.1. Termination.................................................................................. 68
9.2. Effect of Termination........................................................................ 69
ARTICLE X GENERAL PROVISIONS..................................................................................... 70
10.1. Survival of Representations, Warranties and
Agreements................................................................................... 70
10.2. Expenses..................................................................................... 70
10.3. Confidentiality.............................................................................. 70
10.4. Notices...................................................................................... 71
10.5. Jurisdiction; Service of Process............................................................. 73
10.6. Further Assurances........................................................................... 74
10.7. Waiver....................................................................................... 74
10.8. Entire Agreement and Modification............................................................ 74
10.9. Assignments, Successors, and No Third-Party Rights........................................... 74
10.10. Severability................................................................................. 75
10.11. Section Headings, Construction............................................................... 75
10.12. Governing Law................................................................................ 75
10.13. Specific Performance......................................................................... 75
10.14. Counterparts................................................................................. 76
</TABLE>
iii
<PAGE> 10
<TABLE>
EXHIBITS
<S> <C> <C>
A-1 Employment Agreements between Acquiror and
Dr. Jack Barbut
A-2 Employment Agreement between Acquiror and
Dr. J. Chris Jensen
B Stockholders' Agreement
</TABLE>
iv
<PAGE> 11
MERGER AGREEMENT
----------------
This Merger Agreement (this "Agreement") made as of the
19th day of August, 1996 by and among DNX Corporation, a Delaware corporation
("Acquiror"), with its principal offices at 575 Route 28, Raritan, New Jersey,
DNX Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of Acquiror ("Sub"), Dr. Jack Barbut whose address is c/o Piper &
Marbury, L.L.P., 1251 Avenue of the Americas, New York, New York 10020-1104
("Barbut"), Alec Hackel whose address is Flueliweg 3, 6045 Meggen, Switzerland
("Hackel"), Dr. John Christian Jensen whose address is Bohlstrasse 9a, 6300
Zug, Switzerland ("Jensen," collectively with Barbut and Hackel, the "Interest
Holders"), as the holders of all of the equity interests of Sherby N.V., a
Netherlands Antilles corporation ("Parent"), as controlling stockholder of the
Company, Parent and BioClin, Inc., a Delaware corporation (the "Company").
RECITALS
A. Hackel, Barbut and Jensen hold equity interests in Parent (the
"Parent Shares"), which constitute all of the equity interests in Parent.
B. Parent holds 6 shares of the Common Stock, par value $0.01 per
share, of the Company (the "Company Common") and 91 shares of Series I Preferred
Stock, par value $0.01 per share, of the Company (the "Company Preferred" and,
together with the Company Common, collectively, the "Company Shares"),
representing 97% of the outstanding capital stock and voting power of the
Company.
C. Dr. William H. Barr ("Barr") owns 3 shares of Company Common,
representing the remaining 3% of the outstanding capital stock and voting power
of the Company and each of Ms. Martha Lee Reynolds and Mr. Barry Dvorchik
(collectively, the "Employee
<PAGE> 12
Rightholders") possess a contractual right to purchase 1% of the outstanding
capital stock of the Company (each a "Right," and collectively, the "Rights"):
D. Acquiror, Sub and the Company desire to effect a merger of Sub with
and into the Company pursuant to the terms and provisions of this Agreement and
the General Corporation Law of the State of Delaware (the "DGCL").
E. The respective Boards of Directors of the Company, Parent, Sub and
Acquiror have determined that it is advisable and in the best interests of each
corporation that Sub merge with and into the Company upon the terms and subject
to the conditions provided herein.
F. The Board of Directors of Acquiror has, by resolution duly adopted,
approved this Agreement and directed that it be executed by the undersigned
officer and that it be submitted to a vote of Acquiror's stockholders.
G. The Board of Directors of Sub has, by resolution duly adopted,
approved this Agreement and directed that it be executed by the undersigned
officer.
H. The Board of Directors of Parent has, by resolution duly adopted,
approved this Agreement and directed that it be executed by the undersigned
officer.
I. The Board of Directors of the Company has, by resolution duly
adopted, approved this Agreement and directed that it be executed by the
undersigned officer and that it be submitted to a vote of the Company's
stockholders by means of a written consent in lieu of a meeting.
J. As a condition hereto and simultaneously herewith, Acquiror shall
purchase and acquire all of the issued and outstanding capital stock or equity
interests of BioClin Europe AG, a Swiss corporation, BioClin GmbH, a German
corporation, and Kilmer N.V., a Netherlands Antilles corporation (collectively,
"BioClin/Europe"), and BioClin Institute of Clinical Pharmacology GmbH, a German
corporation ("BioClin Institute" and collectively with BioClin/Europe, the
"BioClin Affiliates").
2
<PAGE> 13
K. Acquiror, Sub, the Interest Holders, Parent and the Company wish
to enter into this Agreement for the purpose of making certain representations
and warranties to each other and entering into certain other obligations in
favor of each other.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree that Sub shall be
merged with and into the Company and that the terms and conditions of the
Merger, the mode of carrying the Merger into effect, the manner of converting
securities in connection with the Merger and certain other provisions relating
thereto shall be as hereinafter set forth.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
"Acquiror" has the meaning given in the first paragraph of this
Agreement.
"Accounts Receivable" has the meaning given in Section 5.11.
"Acquiror's Advisors" has the meaning given in Section 7.2.
"Acquiror Common Stock" has the meaning given in
Section 2.6(a).
"Acquiror Letter" means the disclosure letter delivered by Acquiror to
the Interest Holders concurrently with the execution and delivery of this
Agreement.
"Acquiror Shares" has the meaning given in Section 2.6(a).
"Affiliate" of a specified Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified.
"Agreement" has the meaning given in the first paragraph of
this Agreement.
3
<PAGE> 14
"Applicable Contract" means any Contract (a) under which the Company
has or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any of
the assets owned or used by it is or may become bound.
"Balance Sheet" has the meaning given in Section 5.5.
"Barbut" has the meaning given in the first paragraph of this
Agreement.
"Barr" has the meaning given in the Recitals of this
Agreement.
"BioClin Affiliates" has the meaning given in the Recitals of
this Agreement.
"BioClin/Europe" has the meaning given in the Recitals of
this Agreement.
"BioClin Institute" has the meaning given in the Recitals of
this Agreement.
"Business Day" means any day on which banks are generally open to
conduct business in New York, New York.
"CERCLA" has the meaning given in the definition of Environmental,
Health, and Safety Liabilities in this Agreement.
"Closing" has the meaning given in Section 2.2.
"Closing Date" has the meaning given in Section 2.2.
"Common Acquiror Shares" has the meaning given in Section
2.6(a).
"Company" has the meaning given in the first paragraph of
this Agreement.
"Company Common" has the meaning given in the Recitals of
this Agreement.
4
<PAGE> 15
"Company Preferred" has the meaning given in the Recitals of this
Agreement.
"Company Reports" has the meaning given in Section 5.7.
"Company Shares" has the meaning given in the Recitals of this
Agreement.
"Competing Business" has the meaning given in Section 5.25.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Consideration" has the meaning given in Section 2.6(b).
"Contract" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights" has the meaning given in Section 5.22(a).
"CRAs" has the meaning given in Section 5.17(a)(ix).
"DGCL" has the meaning given in the Recitals of this Agreement.
"Disclosure Letter" means the disclosure letter delivered by the
Interest Holders to Acquiror concurrently with the execution and delivery of
this Agreement.
"Dissenting Shares" has the meaning given in Section 2.7.
"Effective Time" has the meaning given in Section 2.3.
"Employee Acquiror Shares" has the meaning given in Section 2.6(e).
"Employee Rightholders" has the meaning given in the Recitals of this
Agreement.
"Employment Agreements" means collectively the Employment Agreements to
be entered at the Closing by and between Acquiror and each of Barbut and Jensen,
in substantially the form attached hereto as Exhibits A-1 and A-2.
5
<PAGE> 16
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to: (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law. The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Sec. 9601 et seq., as
amended ("CERCLA").
"Environmental Law" means any Legal Requirement that requires or
relates to: (a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such
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as resource extraction or construction, that could have significant impact on
the Environment; (b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment; (c)
reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated; (d) assuring that products are
designed, formulated, packaged, and used so that they do not present
unreasonable risks to human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities; (f) reducing to
acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful substances; (g)
cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or (h) making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment, or permitting self-appointed representatives of
the public interest to recover for injuries done to public assets.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Exchange Act" has the meaning given in Section 3.4.
"Facilities" means any real property, leaseholds or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment currently or formerly owned or operated by the
Company.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
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"Hackel" has the meaning given in the first paragraph of this
Agreement.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" has the meaning given in Section
5.22(a).
"Interest Holders" has the meaning given in the first paragraph of this
Agreement.
"IRC" has the meaning given in the definition of "Tax Laws"
in Article I.
"IRS" has the meaning given in the definition of "Tax Laws"
in Article I.
"Jensen" has the meaning given in the first paragraph of this
Agreement.
"knowledge" has the meaning given in Section 7.6(e).
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"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Marks" has the meaning given in Section 5.22(a).
"Merger" has the meaning given in Section 2.1(a)
"Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Parent" has the meaning given in the first paragraph of the
Agreement.
"Patents" has the meaning given in Section 5.22(a).
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Preferred Acquiror Shares" has the meaning given in Section
2.6(a).
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement" has the meaning given in
Section 5.20(b).
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"Proxy Statement" has the meaning given in Section 7.11(a).
"Related Person" means (i) with respect to a particular individual: (a)
each other member of such individual's Family; (b) any Person that is directly
or indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity); and (ii) with respect to a specified Person
other than an individual: (a) any Person that directly or indirectly controls,
is directly or indirectly controlled by, or is directly or indirectly under
common control with such specified Person; (b) any Person that holds a Material
Interest in such specified Person; (c) each Person that serves as a director,
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity); (d) any Person in which such specified Person holds a Material
Interest; (e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and (f) any Related
Person of any individual described in clause (b) or (c). For purposes
of this definition, (a) the "Family" of an individual includes (i) the
individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"Report Date" has the meaning given in the Stockholders'
Agreement.
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MERGER AGREEMENT
"Representative" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"Right" has the meaning given in the Recitals of this Agreement.
"SEC" has the meaning given in Section 3.4.
"SEC Documents" has the meaning given in Section 3.4.
"Securities Act" means the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Stockholders' Agreement" means the Stockholders' Agreement to be
entered into at the Closing by, among others, Acquiror, the Interest Holders,
Sherby N.V., Martha Lee Reynolds, Barry Dvorchik, Christine Dune-Kraatz, Dr.
Gerald Rittershaus, acting solely in his capacity as trustee (the "Employee
Trustee") pursuant to a Trust Agreement between the Employee Trustee and
Christine Dune-Kraatz, and Bettina Donhardt, in substantially the form attached
hereto as Exhibit B.
"Stockholders Meeting" has the meaning given in
Section 7.11(b).
"Sub" has the meaning given in the first paragraph of this
Agreement.
"Sub Shares" has the meaning given in Section 2.6(c).
"Subsidiary" means, with respect to any Person, any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
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"Surviving Corporation" has the meaning given in Section
2.1(a).
"Surviving Shares" has the meaning given in Section 2.6(c).
"Taxes" means, to the extent applicable to any party hereto, all U.S.
or foreign and all state, municipal and local taxes, charges, fees, levies or
other assessments of whatever kind or nature, including without limitation, all
net income, gross income, gross receipts, sales, value added, use, services, ad
valorem, occupation, transfer, franchise, capital stock, profits, license,
withholding, payroll, employment, unemployment, excise, estimated, severance,
stamp, occupancy or property taxes, custom duties, assessments or governmental
fiscal charges of any kind whatever (together with any interest, penalty, or
addition to tax).
"Taxing Authority" means, to the extent applicable to any party hereto,
the United States Internal Revenue Service (the "IRS") or any successor agency,
and, to the extent applicable to any party hereto, any similar foreign, state,
municipal or local Governmental Body.
"Tax Laws" means, to the extent applicable to any party hereto, the
Internal Revenue Code of 1986, as amended (the "IRC"), and regulations issued by
the IRS thereunder, or any successor law or regulations, and, to the extent
applicable to any party hereto, any similar foreign, state, municipal or local
laws and regulations.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Trade Secrets" has the meaning given in Section 5.22(a).
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"U.S. GAAP" has the meaning given in Section 3.4.
ARTICLE II
THE MERGER
2.1. THE MERGER. (a) On the terms and subject to the
conditions of this Agreement, at the Effective Time, Sub will be merged with and
into the Company in accordance with this Agreement and the applicable provisions
of the DGCL, and the separate corporate existence of Sub will thereupon cease
(the "Merger"). The Company will be the surviving corporation in the Merger (as
such, the "Surviving Corporation").
(b) At the Effective Time, the corporate existence of the
Company with all its rights, privileges, powers and franchises will continue
unaffected and unimpaired by the Merger. The Merger will have the effects
specified in this Agreement and the DGCL.
2.2. THE CLOSING. The closing (the "Closing") of the
transactions contemplated by this Agreement will take place at the New York
offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
10022, at 10:00 a.m., local time, on such date within five Business Days
following the date on which the last of the conditions (excluding conditions
that by their terms cannot be satisfied until the Closing Date) set forth in
Article VIII is satisfied or waived in accordance herewith or at such other
place, time or date as the parties may agree upon in writing. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
2.3. EFFECTIVE TIME. On the Closing Date, Sub and
the Company will cause a certificate of merger to be filed with the Secretary of
State of the State of Delaware as provided in Section 251 of the DGCL. Upon
completion of such filing, the Merger will become effective in accordance with
the DGCL.
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The time and date on which the Merger becomes effective is herein
referred to as the "Effective Time."
2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS OF
SURVIVING CORPORATION. (a) The certificate of incorporation of the Surviving
Corporation to be in effect from and after the Effective Time until amended in
accordance with its terms and the DGCL will be the certificate of incorporation
of Sub immediately prior to the Effective Time, as amended and restated.
(b) The by-laws of the Surviving Corporation to be in effect
from and after the Effective Time until amended in accordance with their terms
and the DGCL will be the by-laws of Sub immediately prior to the Effective Time,
as amended and restated.
2.5. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. (a) The
members of the initial Board of Directors of the Surviving Corporation will be
the members of the Board of Directors of Sub immediately prior to the Effective
Time. All of the members of the Board of Directors of the Surviving Corporation
will serve until their successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
certificate of incorporation and the by-laws of the Surviving Corporation.
(b) The officers of the Surviving Corporation will consist of
the officers of Sub immediately prior to the Effective Time. Such persons will
continue as officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the by-laws of the Surviving Corporation.
2.6. CONVERSION OF SECURITIES. (a) At the Effective Time, (i)
each share of Company Common issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into 6,450 shares (the "Common Acquiror
Shares") of Common Stock, par value $0.01 per share, of Acquiror (the "Acquiror
Common Stock") and (ii) each share of Company Preferred issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action the part of the holder thereof, be converted into 6,450
shares of Acquiror
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Common Stock (the "Preferred Acquiror Shares," and together
with the Common Acquiror Shares and the Employee Acquiror Shares, collectively,
the "Acquiror Shares").
(b) All Company Shares to be converted into Acquiror Shares
pursuant to Section (a) will, by virtue of the Merger and without any action on
the part of the holders thereof, cease to be outstanding, be cancelled and
retired and cease to exist, and each holder of a certificate previously
representing any such Company Shares will thereafter cease to have any rights
with respect to such Company Shares, except the right to receive for each of the
Company Shares, upon the surrender of such certificate, the number of Acquiror
Shares specified above (together with the number of Employee Acquiror Shares
specified in 2.6(e), collectively, the "Consideration").
(c) At the Effective Time, each share of common stock, par
value $0.01 per share, of Sub (the "Sub Shares") issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
share of common stock, par value $0.01 per share, of the Surviving Corporation
(the "Surviving Shares"), with the result that the Surviving Corporation will be
a wholly-owned subsidiary of Acquiror.
(d) All Sub Shares to be converted into Surviving Shares
pursuant to Section 2.6(c) will, by virtue of the Merger and without any
action on the part of the holders thereof, cease to be outstanding, be
cancelled and retired and cease to exist, and each holder of a certificate
previously representing any such Sub Shares will thereafter cease to have any
rights with respect to such Sub Shares, except the right to receive for each of
the Sub Shares, upon the surrender of such certificate, the number of Surviving
Shares specified above.
(e) At the Effective Time, each of the Employee Rightholders
shall, by virtue of the Merger and without any action on their part, and in
consideration for his or her Right, receive 6,575 shares (the "Employee Acquiror
Shares") of Acquiror Common Stock, and, upon such conversion, each such Right,
shall, by virtue of the Merger and without any action on their part, be
extinguished.
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(f) At the Closing, Acquiror shall deliver to each holder of
the Company Shares and to each Employee Rightholder certificates evidencing the
respective number of Acquiror Shares specified in this Section 2.6, subject to
the provisions of Section 4.7 of the Stockholders' Agreement and the
restrictions on transfer contemplated by Section 7.9 of this Agreement.
2.7. DISSENTING COMPANY SHARES. Notwithstanding the provisions
of Section 2.6 or any other provision of this Agreement to the contrary, the
Company Shares that are issued and outstanding immediately prior to the
Effective Time and are held by stockholders of the Company who have not voted
such Company Shares in favor of the adoption of this Agreement and who properly
demand appraisal of such Company Shares in accordance with Section 262 of the
DGCL (the "Dissenting Shares") will not be converted as provided in Section 2.6
at or after the Effective Time unless and until the holder of such Dissenting
Shares fails to perfect or effectively withdraws or loses such right to
appraisal and payment under the DGCL. If a holder of Dissenting Shares so fails
to perfect or effectively withdraws or loses such right to appraisal and
payment, then, as of the Effective Time or the occurrence of such event,
whichever last occurs, such holder's Dissenting Shares will be converted into
and represent solely the rights provided in Section 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
Acquiror and Sub represent and warrant to the Company, Parent
and the Interest Holders as follows:
3.1. AUTHORIZATION, VALIDITY AND EFFECT. (a) Acquiror is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquiror has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements and documents
contemplated hereby to be executed and delivered by it, and subject to receipt
of necessary shareholder approval with respect to this Agreement and the other
agreements with the BioClin Affiliates with respect to the acquisition of all of
the equity interests of the BioClin Affiliates, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and such other
agreements and documents, and the consummation of the transactions
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contemplated herein and therein, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Acquiror, subject,
with respect to this Agreement, to the approval of the stockholders of
Acquiror. This Agreement has been duly and validly executed and delivered by
Acquiror and, once approved by the stockholders of Acquiror, represents the
legal, valid and binding obligation of Acquiror, enforceable against Acquiror
in accordance with its terms.
(b) Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Sub has the requisite
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby to be executed and delivered by it
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and such other agreements and documents, and the
consummation of the transactions contemplated herein and therein, have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of Sub. This Agreement has been duly and validly executed and delivered
by Sub and represents the legal, valid and binding obligation of Sub,
enforceable against Sub in accordance with its terms.
3.2. ACQUIROR SHARES. Assuming that all required stockholder
action has been taken and all conditions set forth in Article VIII have been
satisfied or waived, the Acquiror Shares to be issued to holders of Company
Shares and the Employee Rightholders hereunder have been duly authorized and,
when issued in accordance with this Agreement, will be validly issued, fully
paid and nonassessable.
3.3. CONFLICTS; DEFAULTS. (a) Neither the execution and
delivery of this Agreement by Acquiror, nor the performance of its obligations
hereunder, will conflict with or constitute a default under any of the terms or
provisions of Acquiror's Second Restated Certificate of Incorporation or Second
Amended and Restated By-Laws or any material agreement or other material
instrument to which Acquiror is a party or by which it or its properties are
bound or subject.
(b) Neither the execution and delivery of this Agreement by
Sub, nor the performance of its obligations hereunder, will conflict with or
constitute a default under any
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of the terms or provisions of Sub's Certificate of Incorporation or By-Laws or
any material agreement or other material instrument to which Sub is a party or
by which it or its properties are bound or subject.
3.4. EXCHANGE ACT FILINGS. Since December 10, 1991, Acquiror
has filed all documents (the "SEC Documents") required to be filed by it with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). As of their respective filing dates
(and as amended through the date hereof), the SEC Documents complied in all
material respects with the requirements of the Exchange Act and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances in which they were
made, not misleading except to the extent corrected by a subsequently filed SEC
Document. The financial statements of Acquiror included in the SEC Documents
complied as to form in all material respects with then applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto, or
in the case of unaudited statements, as permitted by Form 10-Q and Regulation
S-X of the SEC) and fairly present the consolidated financial position of
Acquiror and its consolidated subsidiaries as at the dates thereof and the
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments).
3.5. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 3.5 of the Acquiror Letter or in any SEC Document, since March 31, 1996,
there has not been any material adverse change in the business, operations,
properties, prospects, assets or condition of Acquiror that would be required to
be disclosed by Acquiror in a report required to be filed with the SEC pursuant
to the Exchange Act, and no event has occurred or circumstance exists that may
result in such a material adverse change that would be required to be disclosed
by Acquiror in any such report.
3.6. TAXES. (a) Except as set forth in Part 3.6 of the
Acquiror Letter, (i) all Tax Returns with respect to Taxes that
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were required to be filed by or on behalf of Acquiror at and prior to the date
of this Agreement have been duly filed on a timely basis (giving effect to any
extensions granted to Acquiror) and are true, correct and complete in all
material respects, (ii) all Taxes due with respect to periods covered by the Tax
Returns referred to in clause (i) have been paid in full or Acquiror has
adequately reserved or made adequate accruals (in accordance with U.S. GAAP)
with respect to any such Taxes which are due and payable by Acquiror and
Acquiror has not had and will not have any liability for Taxes materially in
excess of the amounts so paid or so reserved or accrued, and (iii) Acquiror is
not a party to or the subject of any action, investigation or proceeding,
exclusive of normal recurring audits, nor, to the knowledge of Acquiror, is any
such action, investigation or proceeding threatened, by any Governmental
Authority for the assessment or collection of any Taxes and no deficiency
notices or reports have been received by Acquiror with respect to any deficiency
of Acquiror for any Taxes.
(b) The statute of limitations for the assessment of U.S.
federal income taxes and all state income taxes of Acquiror has expired for each
period through December 31, 1990.
3.7. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 3.7 of the Acquiror Letter or in any SEC Document, since March 31, 1996, no
Proceeding has been instituted or threatened by or against Acquiror or that
otherwise relates to or may materially affect the business of, or any of the
assets owned or used by, Acquiror that would be required to be disclosed by
Acquiror in a report required to be filed with the SEC pursuant to the Exchange
Act.
(b) Except as set forth in Part 3.7 of the Acquiror Letter or
in any SEC Document, since March 31, 1996, no Order has arisen or been
threatened to which Acquiror or any of the assets owned or used by Acquiror is
subject that would be required to be disclosed by Acquiror in a report required
to be filed with the SEC pursuant to the Exchange Act.
3.8. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Part 3.8 of the Acquiror Letter or in any SEC Document, since March 31,
1996, Acquiror has conducted its business only in the ordinary course of
business and there has not occurred any:
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(a) change in Acquiror's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock
of Acquiror (other than as contemplated by this Agreement); issuance of
any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by Acquiror of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment
in respect of shares of capital stock;
(b) amendment to the Second Restated Certificate of
Incorporation of Acquiror;
(c) payment or increase by Acquiror of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except
in the ordinary course of business consistent with past practice)
employee or entry into any employment, severance, or similar Contract
with any director, officer, or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of Acquiror;
(e) damage to or destruction or loss of any asset or property
of Acquiror, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of Acquiror, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any material Contract or any material license,
distributorship, dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) transaction involving a total remaining
commitment by or to Acquiror of at least U.S. $500,000;
(g) sale (other than sales of inventory in the ordinary
course of business), lease, or other disposition of any material
asset or property of Acquiror;
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(h) cancellation or waiver of any claims or rights with a
value to Acquiror in excess of U.S. $500,000;
(i) material change in the accounting methods used by
Acquiror, except for any change required as a result of a
change in U.S. GAAP;
(j) incurrence or payment of any indebtedness for borrowed
money other than pursuant to Acquiror's financing arrangements in
existence on March 31, 1996;
(k) acquisition of any assets or properties or any
commitment to do so other than in the ordinary course of
business; or
(l) agreement, whether oral or written, by Acquiror to do any
of the foregoing.
3.9. CONTRACTS; NO DEFAULTS. (a) Except as set forth in Part
3.9(a) of the Acquiror Letter, the SEC Documents contain as exhibits all of the
material Contracts, other than those entered into by Acquiror subsequent to
March 31, 1996, to which Acquiror is a party or by which it or its properties or
assets are bound or subject.
(b) Part 3.9(b) of the Acquiror Letter sets forth a summary
schedule of certain of such Contracts produced by Acquiror in the ordinary
course of its business which sets forth, among other things, the parties to such
Contracts and the amount of the remaining commitment of Acquiror under such
Contracts.
3.10. INSURANCE. Except as set forth in Part 3.10 of
the Acquiror Letter:
(i) All insurance policies to which Acquiror is a party or
that provide coverage to any of Acquiror or any director or officer of
Acquiror: (A) to Acquiror's knowledge, are valid, outstanding, and
enforceable; (B) are issued by an insurer that is financially sound and
reputable; (C) taken together, provide adequate insurance coverage for
the assets and the operations of Acquiror for all risks to which
Acquiror is normally exposed; (D) are sufficient for compliance in all
material respects with all Legal Requirements that are or were
applicable to Acquiror or to
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the conduct or operation of its business or the ownership or use of any
of its properties or assets and all Contracts to which Acquiror is a
party or by which it is bound; (E) will continue in full force and
effect following the consummation of the transactions contemplated
hereby; and (F) do not provide for any retrospective premium adjustment
or other experienced-based liability on the part of Acquiror.
(ii) Acquiror has not received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights,
or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any insurance policy is not willing or
able to perform its obligations thereunder.
(iii) Acquiror has paid all premiums due, and has otherwise
performed in all material respects all of its obligations, under each
insurance policy to which Acquiror is a party or that provides coverage
to Acquiror or any director or officer thereof.
(iv) Acquiror has given notice to the insurer of all
claims that may be insured thereby.
3.11. ENVIRONMENTAL MATTERS. Except as set forth in Part 3.11
of the Acquiror Letter or in any SEC Document, since March 31, 1996, Acquiror
has not been in material violation of or liable under, any Environmental Law to
an extent that would be required to be disclosed by Acquiror in a report
required to be filed with the SEC pursuant to the Exchange Act.
3.12. LABOR RELATIONS; COMPLIANCE. Part 3.12 of the Acquiror
Letter sets forth each collective bargaining or other labor contract to which
Acquiror is a party or otherwise subject. Since December 10, 1991, there has not
been, there is not presently pending or existing, and there is not threatened,
(a) any strike, slowdown, picketing, work stoppage, or employee grievance
process, (b) any Proceeding against or affecting Acquiror relating to the
alleged material violation of any Legal Requirement applicable to Acquiror
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with any Governmental Body,
organizational activity, or other labor or employment dispute against or
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affecting Acquiror or its premises, or (c) any application for certification of
a collective bargaining agent. No event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by Acquiror, and no such action is contemplated by
Acquiror. Acquiror has complied in all material respects with all Legal
Requirements applicable to Acquiror relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Acquiror is not liable for the payment of
any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to materially comply with any of the foregoing Legal
Requirements.
3.13. INTELLECTUAL PROPERTY. Except as set forth in Part 3.13
of the Acquiror Letter, all intellectual property necessary for the conduct of
Acquiror's business as currently conducted has been disclosed in the SEC
Documents.
3.14. DISCLOSURE. No notice given by Acquiror pursuant to
Section 7.6 will contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
3.15. BROKERS AND FINDERS. Except with respect to arrangements
with Vector Securities International, Inc., neither Acquiror nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Acquiror in connection with this Agreement or the transactions contemplated
hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
REGARDING PARENT AND THE PARENT SHARES
Parent represents and warrants to Acquiror as follows:
4.1. AUTHORIZATION, VALIDITY AND EFFECT. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the Netherland Antilles. Parent has all requisite power and authority to
carry out its obligations arising in connection with the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
such other agreements and documents, and the consummation of the transactions
contemplated herein and therein, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Parent. This
Agreement and all other agreements and documents to be executed and delivered by
Parent in connection with this Agreement constitute in all respects the legal,
valid and binding obligation of Parent, enforceable against Parent in accordance
with their respective terms.
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4.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by Parent and the consummation of the
transactions contemplated hereby do not and will not (i) require the advance
consent or approval of, or filing with, any person or public authority or (ii)
constitute or result in the breach of any provision of, or constitute a default
under, the organizational and organic documents of Parent or any material
agreement or other material instrument to which Parent is a party or by which it
(or the Company Shares) is bound or subject.
4.3. TITLE AND POWER. Parent is the legal owner of 97% of the
Company Shares, which, together with the Company Shares owned by Barr,
constitute all of the outstanding equity interests of the Company. Good, valid
and marketable title to such Company Shares is held by Parent free and clear of
any claims, liens, restrictions on transfer or voting or encumbrances. The
Company Shares owned by Parent are validly issued, fully paid and
non-assessable. Parent has full power and authority to vote the Company Shares
owned by it in favor of the adoption of this Agreement and the Merger and to
cause the Company to consummate the transactions contemplated by this Agreement.
Except as set forth in Part 4.3 of the Disclosure Letter, there are no voting
trusts or other agreements or understandings to which Parent is a
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party with respect to the voting of the equity interests of the Company.
4.4. LITIGATION. As of the date of this Agreement, there is no
action, suit or proceeding pending against, or to the knowledge of Parent,
threatened against or affecting, Parent or any of its Affiliates or any of its
properties (including, without limitation, the Company Shares owned by it before
any court or arbitrator or any Governmental Body or official which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay any of
the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE INTEREST HOLDERS WITH RESPECT TO THE COMPANY
Each of the Company and the Interest Holders hereby jointly
and severally represent and warrant to Acquiror that:
5.1. ORGANIZATION, AUTHORITY AND AUTHORIZATION. (a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and all agreements and
documents contemplated hereby to be executed and delivered by it, and subject to
receipt of necessary shareholder approval, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and such other
agreements and documents, and the consummation of the transactions contemplated
herein and therein, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of the Company, subject, with
respect to this Agreement, to the approval of the stockholders of the Company.
This Agreement has been duly and validly executed and delivered by the Company
and, once approved by the stockholders of the Company, represents the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(b) The Company has the full corporate power and authority to
own its properties and assets, to carry on the Company's business as it is now
being conducted and to perform all its obligations under Applicable Contracts
and this Agreement. The Company is not required to qualify to do business in any
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jurisdiction where not already so qualified except where a failure to so qualify
would not, individually or in the aggregate, have a material adverse effect on
the financial condition, business or results of operations of the Company. The
Company has all Governmental Authorizations required in order to own or lease
its properties and assets and to carry on its business as now being conducted in
all respects material to the financial condition, business or results of
operations of the Company. The Interest Holders have delivered to Acquiror
copies of the Certificate of Incorporation of the Company, as currently in
effect.
5.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by the Company and each of the
Interest Holders and the consummation of the transactions contemplated hereby do
not and will not (i) require the advance consent or approval of, or filing with,
any person or public authority (other than the stockholders of the Company) or
(ii) constitute or result in the breach of any provision of, or constitute a
default under, the Certificate of Incorporation of the Company or any material
agreement or other material instrument to which the Company or any Interest
Holder is a party or by which such Person (or the Company Shares or Parent
Shares) is bound or subject.
5.3. TITLE AND POWER. Hackel, Barbut and Jensen are the legal
owners of the Parent Shares, which constitute all of the equity interests of
Parent. Good, valid and marketable title to such equity interests in Parent is
held by the Interest Holders free and clear of any claims, liens, restrictions
on transfer or voting or encumbrances. Each of the Parent Shares and the
Company Shares are validly issued, fully paid and non-assessable. Hackel,
Barbut and Jensen have full power and authority to cause Parent to vote the
Company Shares owned by it in favor of the adoption of this Agreement and the
Merger and to cause the Company to consummate the transactions contemplated
hereby.
5.4. CAPITALIZATION OF THE COMPANY; SUBSIDIARIES. (a) The
Company has outstanding 9 shares of Common Stock, par value $0.01 per share, and
91 shares of Series I Preferred Stock, par value $0.01 per share. Parent owns 6
shares of Common Stock and all 91 shares of Series I Preferred Stock. Barr owns
3 shares of Common Stock. Other than the Rights, there are no other equity
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interests in the Company and no outstanding options, warrants, scrip, rights to
subscribe to, calls, commitments or agreements of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
equity interests of the Company. The Company does not hold any treasury shares.
Except as set forth in Part 5.4 of the Disclosure Letter, there are no voting
trusts or other agreements or understandings to which the Company or the
Interest Holders are a party with respect to the voting of the equity interests
of the Company.
(b) The Company does not hold, directly or indirectly, nor is
it a member nor does it have any Contract to acquire, any share, equity or other
interest in any corporation or limited liability company, partnership, or other
entity including silent partnerships, cooperatives and joint ventures.
5.5. COMPANY FINANCIAL STATEMENTS. The Company and the
Interest Holders have delivered to Acquiror as Part 5.5 of the Disclosure
Letter: (i) an unaudited combined consolidated balance sheet of the Company and
the BioClin Affiliates as at December 31, 1994, and the related unaudited
combined consolidated statement of income for the fiscal year then ended as well
as the fiscal year ended December 31, 1993, and (ii) an unaudited combined
consolidated balance sheet of the Company and the BioClin Affiliates as at
December 31, 1995 (the "Balance Sheet") and the related unaudited combined
consolidated statement of income for the fiscal year then ended. Such financial
statements have been prepared in accordance with U.S. GAAP (which except where
noted therein, have been consistently applied), and fairly present the financial
condition and results of operations, changes in stockholders' equity and cash
flow of the Company as at the respective dates and for the periods referred to
in such financial statements.
5.6. BOOKS AND RECORDS. Except as set forth in Part 5.6 of the
Disclosure Letter, the books of account and other records of the Company,
including records of all meetings held by, and the corporate action taken by,
the shareholders of the Company and the board of directors of the Company, all
of which have been made available to Acquiror, are complete and correct and have
been maintained in accordance with sound business practices and in compliance in
all material respects with all applicable Legal Requirements and accounting
requirements. At the Closing, all of
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the foregoing books and records will be in the possession of the Company.
5.7. REPORTS. Except as set forth in Part 5.7 of the
Disclosure Letter, since December 16, 1988, the Company has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with respect to the Company
with any Governmental Body with jurisdiction over the Company or its employees,
assets or properties (all such reports and statements are collectively referred
to herein as the "Company Reports"). As of their respective dates, the Company
Reports complied in all material respects with the statutes, rules, regulations
and orders enforced or promulgated by the regulatory authority with which they
were filed.
5.8. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 5.8 of the Disclosure Letter, since December 31, 1995, there has not
been any material adverse change in the business, operations, properties,
prospects, assets or condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
5.9. TITLE TO PROPERTIES; ENCUMBRANCES. The Company does not
own any real property. Part 5.9 of the Disclosure Letter contains a complete and
accurate list of all leaseholds or other interests in real property held or
possessed by the Company and a summary of the material provisions of any lease
or other Applicable Contract relating to such leasehold or other interest,
including the identity of the other party thereto, a description of the interest
held, the location of the real property, the duration thereof, payment terms and
any rights of termination. The Company and the Interest Holders have made
available to Acquiror copies of all leases and other instruments (as recorded)
by which the Company acquired such real property interests, and copies of any
title insurance policies, opinions, abstracts and surveys in the possession of
the Interest Holders or the Company and relating to such interests. The Company
owns all of the properties and assets (whether real, personal or mixed and
whether tangible or intangible) that it purports to own, including all of the
properties and assets reflected in the Balance Sheet (except for assets held
under capitalized leases disclosed or not required to be disclosed on Part 5.9
of the Disclosure Letter, licenses for intangible personal property (including
software licenses) and
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personal property sold since the date of the Balance Sheet, in the ordinary
course of business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Balance Sheet. Except as set forth
in Part 5.9 of the Disclosure Letter, all material properties and assets
reflected in the Balance Sheet are free and clear of all Encumbrances and are
not, in the case of real property interests, subject to any rights of way,
building use restrictions, exceptions, variances, reservations or limitations of
any nature except, with respect to all such properties and assets (i) security
interests shown on the Balance Sheet, as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (ii) security
interests incurred in connection with the purchase of property or assets after
the date of the Balance Sheet (such security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
and (iii) liens for current taxes not yet due. To the Company's knowledge, all
buildings and structures occupied by the Company lie wholly within the
boundaries of the real property leased by the Company and do not encroach upon
the property of, or otherwise conflict with the property rights of, any other
Person.
5.10. CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth
in Part 5.10 of the Disclosure Letter, the buildings and structures conform to
applicable code requirements and commercial standards for the localities where
the premises are located, and the equipment and other tangible personal property
of the Company are in good operating condition and repair, and are adequate for
the uses to which they are being put, and none of such equipment and other
tangible personal property is in need of maintenance or repair, except ordinary,
routine maintenance and repairs that are not material in nature or cost. The
buildings, structures, equipment and other tangible personal property of the
Company are sufficient for the continued conduct of the Company's business after
the Closing in substantially the same manner as conducted prior to the Closing.
5.11. ACCOUNTS RECEIVABLE. All accounts receivable of the
Company that are reflected on the Balance Sheet (collectively, the "Accounts
Receivable") represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. Except as set
forth in Part 5.11 of
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the Disclosure Letter, unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the reserves, if any, shown on the Balance Sheet or on the accounting records of
the Company on the Closing Date (which, in the case of the reserve as of the
Closing Date, is adequate and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging since the date of
the Balance Sheet). To the knowledge of the Company and the Interest Holders, no
event has occurred nor circumstances exist which make it improbable that the
Company will be able collect the Accounts Receivable outstanding as of the date
of this Agreement or as of the Closing Date consistent with its prior collection
experience.
5.12. NO UNDISCLOSED LIABILITIES. Except as set forth in Part
5.12 of the Disclosure Letter, the Company has no material liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for liabilities or obligations
reflected or reserved against in the Balance Sheet and current liabilities
incurred in the ordinary course of business since the date thereof.
5.13. TAXES. (a) Except as set forth in Part 5.13 of the
Disclosure Letter, (i) all Tax Returns with respect to Taxes that were required
to be filed by or on behalf of the Company at or prior to the date of this
Agreement have been duly filed on a timely basis (giving effect to any
extensions granted to the Company) and are true, correct and complete in all
material respects, (ii) all Taxes due with respect to periods covered by the Tax
Returns referred to in clause (i) have been paid in full or the Company has
adequately reserved or made adequate accruals in accordance with U.S. GAAP
(which are reflected on the Balance Sheet) with respect to any such Taxes which
are due and payable by the Company and the Company has not had and will not have
any liability for Taxes materially in excess of the amounts so paid, reserved or
accrued, and (iii) the Company is not a party to or the subject of any action,
investigation or proceeding, exclusive of normal recurring audits, nor to the
knowledge of the Company and the Interest Holders, is any such action,
investigation or proceeding threatened, by any Governmental Authority for the
assessment or collection of any Taxes and no deficiency notices or reports have
been received by either the Company or any of the Interest Holders with respect
to any deficiency of the Company for any Taxes.
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(b) The statute of limitations for the assessment of U.S.
federal income Taxes and all other Taxes of the Company has expired for each
period through December 31, 1990.
(c) No Tax is required to be withheld pursuant to the IRC,
including, without limitation, section 1445 thereof, as a result of the
transactions contemplated by this Agreement.
(d) As a result of compliance with this Agreement and the
matters referred to herein, neither the Company nor the Interest Holders will be
obligated to make any payment to any individual that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the IRC without regard to whether such payment is to be made in the
future.
5.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (a) Except as set forth in Part 5.14(a) of the Disclosure
Letter: (i) the Company is, and has been, in compliance in all material respects
with each Legal Requirement that is or was applicable to the Company or to the
conduct or operation of its business or the ownership or use of any of its
properties or assets; (ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result in a
material violation by the Company of, or a failure on the part of the Company to
comply in all material respects with, any Legal Requirement that is or was
applicable to the Company or to the conduct or operation of its business or the
ownership or use of any of its properties or assets, or (B) may give rise to any
material obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature; and (iii) the
Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement that is or was applicable to the Company or to the conduct
or operation of its business or the ownership or use of any of its properties or
assets, or (B) any actual, alleged, possible, or potential obligation on the
part of the Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
(b) Except as set forth in Part 5.14 (b) of the Disclosure
Letter: (i) the Company is, and has been, in full
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compliance with all of the terms and requirements of each Governmental
Authorization owned, possessed or otherwise applicable to the Company, the
conduct of its business or any assets owned or used by the Company; (ii) no
event has occurred or circumstance exists that may (with or without notice or
lapse of time) (A) constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any Governmental
Authorization owned, possessed or otherwise applicable to the Company, the
conduct of its business or any assets owned or used by the Company, or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any such Governmental
Authorization; (iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental Authorization
owned, possessed or otherwise applicable to the Company, the conduct of its
business or any assets owned or used by the Company, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any such Governmental
Authorization; and (iv) all applications required to have been filed for the
renewal of the Governmental Authorizations owned, possessed or otherwise
applicable to the Company, the conduct of its business or any assets owned or
used by the Company have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
(c) Except as set forth in Part 5.14(c) of the Disclosure
Letter, the Governmental Authorizations owned, possessed or otherwise applicable
to the Company, the conduct of its business or any assets owned or used by the
Company collectively constitute all of the Governmental Authorizations required
in order to permit the Company to lawfully conduct and operate its business in
the manner it currently conducts and operates such business and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets.
5.15. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 5.15(a) of the Disclosure Letter, there is no pending
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Proceeding: (i) that has been commenced by or against the Company or any of the
Interest Holders or that otherwise relates to or may materially affect the
business of, or any of the assets owned or used by, the Company; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
(b) Except as set forth in Part 5.15(b) of the Disclosure
Letter, to the knowledge of the Company and the Interest Holders, (i) no such
Proceeding has been threatened, and (ii) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. The Company and the Interest Holders have delivered to Acquiror
copies of all pleadings, correspondence with third parties, and other
non-privileged documents relating to each Proceeding listed in Part 5.15 of the
Disclosure Letter. The Proceedings listed in Part 5.15 of the Disclosure Letter
will not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
(c) Except as set forth in Part 5.15(c) of the Disclosure
Letter: (i) there is no Order to which the Company, or any of the assets owned
or used by the Company, is subject; (ii) none of the Interest Holders is subject
to any Order that relates to the business of, or any of the assets owned or used
by, the Company; and (iii) no officer, director, agent or employee of the
Company is subject to any Order that prohibits such officer, director, agent or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of the Company.
(d) Except as set forth in Part 5.15(d) of the Disclosure
Letter: (i) the Company is, and at all times has been, in compliance in all
material respects with all of the terms and requirements of each Order to which
it, or any of the assets owned or used by it, is or has been subject; (ii) no
event has occurred or circumstance exists that may constitute or result in (with
or without notice or lapse of time) a material violation of or failure to comply
in all material respects with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject; and
(iii) the Company has not received any notice or other communication (whether
oral or written) from any Governmental Body or any other
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Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is or has been
subject.
5.16. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in Part 5.16 of the Disclosure Letter, since the date of
the Balance Sheet, the Company has conducted its business only in
the ordinary course of business and there has not been any:
(a) change in the Company's stated capital or equity
interests; grant of any option or right to purchase shares of the
Company; issuance of any security convertible into such shares; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any such shares; or declaration or
payment of any shares in the Company's profits;
(b) amendment to the Certificate of Incorporation of the
Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any shareholder, director, officer,
or (except in the ordinary course of business consistent with past
practice) employee or entry into any employment, severance, or similar
Contract with any director, officer, or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Company;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any Contract, any license, distributorship, dealer,
sales representative, joint venture,
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credit, or similar agreement, or (ii) any transaction involving a total
remaining commitment by or to the Company of at least U.S. $50,000;
(g) sale (other than sales of inventory in the ordinary course
of business), lease, or other disposition of any asset or property of
the Company or mortgage, pledge, or imposition of any Encumbrance on
any material asset or property of the Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of U.S. $50,000;
(i) material change in the accounting methods used by the
Company;
(j) incurrence or payment (other than regularly scheduled
payments under debt obligations existing as of the date of this
Agreement) of any indebtedness for borrowed money or any incurrence of
or commitment to incur any material capital expenditures, in each case
in excess of U.S. $30,000;
(k) acquisition of any assets or properties or any commitment
to do so other than in the ordinary course of business; or
(l) agreement, whether oral or written, by the Company to do
any of the foregoing.
5.17. CONTRACTS; NO DEFAULTS. (a) Part 5.17(a) of the
Disclosure Letter contains a complete and accurate list, and the Company and the
Interest Holders have delivered to Acquiror true and complete copies, of:
(i) each Applicable Contract that involves performance of
services by the Company of an amount or value in excess of U.S.
$100,000, except any such Applicable Contract that can be terminated
without cause by either party thereto without penalty on 30 days or
less notice;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company
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of an amount or value in excess of U.S. $100,000, except any
such Applicable Contract that can be terminated without cause
by either party thereto without penalty on 30 days or less
notice;
(iii) each Applicable Contract that was not entered into in
the ordinary course of business and that involves expenditures or
receipts by Company in excess of U.S. $100,000, except any such
Applicable Contract that can be terminated without cause by either
party thereto without penalty on 30 days or less notice;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
U.S. $20,000);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of
a group of employees or with a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Affiliate of the Company or limit the freedom of the Company or any
Affiliate of the Company to engage in any line of business or to
compete with any Person;
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(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods, except that, with respect to all Applicable
Contracts relating to the retaining of Clinical Research Assistants
("CRAs") by the Company, Part 5.17(a) of the Disclosure Letter need
only set forth the aggregate payments made by the Company to such CRAs
during fiscal 1995;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
ordinary course of business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures
in excess U.S. $50,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company other than in the ordinary course of business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 5.17(b) of the Disclosure
Letter: (i) none of the Interest Holders (and no Related Person of any Interest
Holder) has or may acquire any material rights under, and none of the Interest
Holders have or may become subject to any material obligation or liability
under, any Contract that relates to the business of, or any of the assets owned
or used by, the Company; and (ii) no officer, director, agent, employee,
consultant, or contractor of the Company is bound by any Contract that purports
to limit the ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Company, or (B) assign to the Company or to any
other Person any rights to any invention, improvement, or discovery.
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(c) Except as set forth in Part 5.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 5.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 5.17(d) of the
Disclosure Letter:
(i) the Company is, and at all times has been, in full
compliance with all material terms and requirements of each Contract
under which it has or had any obligation or liability or by which it or
any of its assets is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which the Company has or had any
rights is, and at all times has been, in full compliance with all
material terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene in any material
respect, conflict in any material respect with, or result in a material
violation or breach of, or give the Company or other Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Applicable Contract; and
(iv) the Company has not given to or received from any other
Person, at any time any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential material
violation or breach of, or default under, any Contract.
(e) Except as set forth in Part 5.17(e) of the Disclosure
Letter, there are no renegotiations of, attempts to renegotiate, written demands
to renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to or by the Company under current or completed Contracts with any
Person, other than any reduction of less than 10% of the aggregate amount due to
the Company under any Applicable Contract with a sponsor
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which is proportional to a corresponding reduction of services to be performed
by the Company under such Contract.
(f) Except as set forth in Part 5.23 of the Disclosure Letter,
the Contracts relating to the sale, design, manufacture, or provision of
products or services by the Company have been entered into in the ordinary
course of business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in material violation of any Legal Requirement
that is or was applicable to the Company or to the conduct or operation of its
business or the ownership or use of any of its properties or assets.
5.18. INSURANCE. (a) The Company and the Interest Holders have
delivered to Acquiror: (i) true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or any director of
the Company, is or has been covered at any time within the two years preceding
the date of this Agreement; (ii) true and complete copies of all pending
applications for policies of insurance; and (iii) any statement by the auditor
of the Company's financial statements with regard to the adequacy of such
entity's coverage or of the reserves for claims.
(b) Except as set forth on Part 5.18(b) of the Disclosure
Letter:
(i) All insurance policies to which the Company is a party or
that provide coverage to any of the Interest Holders, the Company or
any director, or officer of the Company: (A) to the Company's
knowledge, are valid, outstanding, and enforceable; (B) are issued by
an insurer that is financially sound and reputable; (C) taken together,
provide adequate insurance coverage for the assets and the operations
of the Company for all risks to which the Company is normally exposed;
(D) are sufficient for compliance in all material respects with all
Legal Requirements that are or were applicable to the Company or to the
conduct or operation of its business or the ownership or use of any of
its properties or assets and all Contracts to which the Company is a
party or by which it is bound; (E) will continue in full force and
effect following the consummation of the transactions contemplated
hereby; and (F) do not provide
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for any retrospective premium adjustment or other experienced-based
liability on the part of the Company.
(ii) None of the Interest Holders or the Company has received
(A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of cancellation
or any other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
insurance policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and have
otherwise performed in all material respects all of their respective
obligations, under each insurance policy to which the Company is a
party or that provides coverage to the Company or an officer or
director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
5.19. ENVIRONMENTAL MATTERS. Except as set forth in
Part 5.19 of the Disclosure Letter:
(a) The Company is, and at all times has been, in compliance
in all material respects with, and has not been and is not in material violation
of or liable under, any Environmental Law that is or was applicable to the
Company or to the conduct or operation of its business or the ownership or use
of any of its properties or assets. None of the Interest Holders or the Company
has any basis to expect, nor has any of them or any other Person for whose
conduct they are or may be held to be responsible received, any actual or
threatened order, notice, or other communication from (i) any Governmental Body
or private citizen acting or purporting to act in the public interest, or (ii)
the current or prior owner or operator of any Facilities, of any actual or
potential material violation or failure to comply in all material respects with
any Environmental Law that is or was applicable to the Company or to the conduct
or operation of its business or the ownership or use of any of its properties or
assets, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any of the Interest Holders or the Company has or
had an interest, or with
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respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Interest Holders, the Company, or any other Person for whose conduct they are or
may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the knowledge of the Company
or the Interest Holders, threatened claims, Encumbrances, or other restrictions
of a material nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law that is or was
applicable to the Company or to the conduct or operation of its business or the
ownership or use of any of its properties or assets, with respect to or
affecting any of the Facilities or any other properties and assets (whether
real, personal, or mixed) in which any of the Interest Holders or the Company
has or had an interest.
(c) None of the Company or the Interest Holders has any basis
to expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential material
violation or failure to comply in all material respects with any Environmental
Law that is or was applicable to the Company or to the conduct or operation of
its business or the ownership or use of any of its properties or assets, or of
any alleged, actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any of the Interest Holders or the Company has or had an interest, or
with respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by the Interest
Holders, the Company, or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) None of the Company or the Interest Holders, or any other
Person for whose conduct they are or may be held responsible, has any material
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to
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any other properties and assets (whether real, personal, or
mixed) in which any of the Interest Holders or the Company (or any predecessor),
has or had an interest, or at any property geologically or hydrologically
adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. None
of the Interest Holders, the Company, any other Person for whose conduct they
are or may be held responsible, or any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to the Facilities
or any other properties or assets (whether real, personal, or mixed) in which
any of the Interest Holders or the Company has or had an interest except in
compliance in all material respects with all Environmental Laws that are or were
applicable to the Company or to the conduct or operation of its business or the
ownership or use of any of its properties or assets.
(f) There has been no Release or, to the knowledge of Interest
Holders, Threat of Release, of any Hazardous Materials at or from the Facilities
or at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which any of the Interest Holders or the Company
has or had an interest, or any geologically or hydrologically adjoining
property, whether by the Interest Holders, the Company, or any other Person.
(g) the Interest Holders have delivered to Acquiror true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Interest Holders or the Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by the Interest Holders, the Company, or
any other Person for whose conduct they are or may be held
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responsible, with Environmental Laws that are or were applicable to the Company
or to the conduct or operation of its business or the ownership or use of any of
its properties or assets.
5.20. EMPLOYEES. (a) Part 5.20 of the Disclosure Letter
contains a complete and accurate summary of the following information for each
employee, officer or director of the Company, including each employee on leave
of absence or layoff status: name; job title; current compensation paid or
payable and any change in compensation since December 31, 1995; vacation
accrued; and service credited for purposes of vesting and eligibility to
participate under the Company's pension, retirement, profit-sharing,
thrift-savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), other equity participation arrangement, severance pay, insurance,
medical, welfare, or vacation plan or any other employee benefit plan.
(b) Except as set forth in Part 5.20 of the Disclosure Letter,
no employee, officer or director of the Company is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee, officer
or director and any other Person ("Proprietary Rights Agreement") that in any
way adversely affects or will affect the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with the Interest Holders
or the Company by any such employee, officer or director. Except as set forth in
Part 5.20 of the Disclosure Letter, to the knowledge of the Company and the
Interest Holders, no director, officer, or other key employee of the Company
intends to terminate his employment with the Company.
(c) Part 5.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee, officer or director of the Company, or their dependents, receiving
benefits or scheduled to receive benefits in the future: name, pension benefit,
pension option election, retiree medical insurance coverage, retiree life
insurance coverage, and other benefits.
5.21. LABOR RELATIONS; COMPLIANCE. Except as set forth in Part
5.21 of the Disclosure Letter, since December 16, 1988, the Company has not been
nor is it currently a party to any collective bargaining or other labor
Contract. Since December 16,
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1988, there has not been, there is not presently pending or existing, and, to
the Company's knowledge, there is not threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting the Company relating to the alleged material violation of
any Legal Requirement applicable to the Company pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with any Governmental Body, organizational activity, or other labor or
employment dispute against or affecting the Company or its premises, or (c) any
application for certification of a collective bargaining agent. Except as set
forth in Part 5.21 of the Disclosure Letter, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Company, and no such
action is contemplated by the Company. Except as set forth in Part 5.21 of the
Disclosure Letter, the Company has complied in all material respects with all
Legal Requirements applicable to the Company relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. Except as set forth in Part
5.21 of the Disclosure Letter, the Company is not liable for the payment of any
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply in all material respects with any of the
foregoing Legal Requirements.
5.22. INTELLECTUAL PROPERTY. (a) The term "Intellectual
Property Assets" includes: (i) the name "BioClin, Inc.", all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks"); (ii) all patents, patent applications, and
inventions and discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights"); and (iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade Secrets");
owned, used, or licensed by the Company as licensee or licensor.
(b) Part 5.22(b) of the Disclosure Letter contains a complete
and accurate list and summary description, including any royalties paid or
received by the Company, of all Contracts
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relating to the Intellectual Property Assets to which the Company is a party or
by which the Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
with a value of less than U.S. $30,000 under which the Company is the licensee.
There are no outstanding and, to the knowledge of the Interest Holders, no
threatened disputes or disagreements with respect to any such agreement.
(c) (i) The Intellectual Property Assets are all those
necessary for the operation of the Company's business as it is currently
conducted. The Company is the owner or licensee of all right, title, and
interest in and to each of the Intellectual Property Assets (other than to the
extent that the Company is obligated to assign any application, invention,
development, etc. relating to such Intellectual Property Assets to another
Person under an Applicable Contract with a sponsor), free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims, and, except as set forth in Part 5.17(c) of the Disclosure Letter, has
the right to use without payment to a third party all of the Intellectual
Property Assets.
(ii) Except as set forth in Part 5.22(c) of the Disclosure
Letter, all former and current employees of the Company have executed written
Contracts with the Company that assign to it all rights to any inventions,
improvements, discoveries, or information relating to the business of the
Company. Except as set forth in Part 5.22(c) of the Disclosure Letter, no
employee of the Company has entered into any Contract that restricts or limits
in any way the scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information concerning
his work to anyone other than the Company.
(d) (i) Part 5.22(d) of the Disclosure Letter contains a
complete and accurate list and summary description of all Patents owned by or
licensed to the Company. Except as set forth in Part 5.22(d) of the Disclosure
Letter, the Company is the owner or licensee of all right, title, and interest
in and to each of such Patents, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all of the issued Patents owned by the Company are currently in
compliance in all material respects with
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applicable Legal Requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable, and
are not subject to any maintenance fees or Taxes or actions falling due within
ninety days after the Closing Date.
(iii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent owned by the Company has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding, nor to the
knowledge of the Interest Holders, is there any potentially interfering patent
or patent application of any third party.
(iv) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent owned by the Company is infringed or, to the knowledge of the
Company and the Interest Holders, has been challenged or threatened in any way.
Except as set forth in Part 5.22(d) of the Disclosure Letter, none of the
products manufactured and sold, nor any process or know-how used, by the Company
infringes or is alleged to infringe any patent or other proprietary right of any
other Person.
(v) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all products made, used, or sold under the Patents owned by the Company
have been marked with the proper patent notice.
(e) (i) Part 5.22(e) of Disclosure Letter contains a complete
and accurate list and summary description of all Marks owned by or licensed to
the Company. Except as set forth in Part 5.22(e) of the Disclosure Letter, the
Company is the owner or licensee of all right, title, and interest in and to
each of such Marks, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all Marks owned by the Company that have been registered with the U.S.
Patent and Trademark Office or similar foreign Governmental Body are currently
in compliance in all material respects with applicable Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or Taxes or actions falling due within
ninety days after the Closing Date.
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(iii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Company has been or is now involved in any
opposition, invalidation, or cancellation and, to the knowledge of the Company
and the Interest Holders, no such action is threatened with the respect to any
of such Marks.
(iv) Except as set forth in Part 5.22(e) of the Disclosure
Letter, to the knowledge of the Company and the Interest Holders, there is no
potentially interfering trademark or trademark application of any third party.
(v) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Company is infringed or, to the knowledge of the
Company and the Interest Holders, has been challenged or threatened in any way.
Except as set forth in Part 5.22(e) of the Disclosure Letter, none of the Marks
used by the Company infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.
(vi) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all products and materials containing a Mark owned by the Company bear
the proper federal registration notice where permitted by law.
(f) (i) Part 5.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all Copyrights owned by or
licensed to the Company. Except as set forth in Part 5.22(f) of the Disclosure
Letter, the Company is the owner or licensee of all right, title, and interest
in and to each of such Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all the Copyrights owned by the Company have been registered (to the
extent required to protect such Copyrights) and are currently in compliance in
all material respects with applicable Legal Requirements, are valid and
enforceable, and are not subject to any maintenance fees or Taxes or actions
falling due within ninety days after the date of Closing.
(iii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, no Copyright owned by the Company is infringed
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or, to the knowledge of the Company and the Interest Holders, has been
challenged or threatened in any way. Except as set forth in Part 5.22(f) of the
Disclosure Letter, none of the subject matter of any of such Copyrights
infringes or is alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
(iv) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all works encompassed by the Copyrights have been marked with the proper
copyright notice (to the extent required to protect such Copyrights).
(g) (i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) The Interest Holders and the Company have taken all
reasonable precautions to protect the secrecy, confidentiality, and value of the
Trade Secrets owned by the Company.
(iii) Except as set forth in Part 5.22(g) of the Disclosure
Letter, the Company has good title and an absolute (but not necessarily
exclusive) right to use the Trade Secrets owned by the Company. Except as set
forth in Part 5.22(g) of the Disclosure Letter, the Trade Secrets owned by the
Company are not part of the public knowledge or literature, and, to the
knowledge of the Company and the Interest Holders, have not been used, divulged,
or appropriated either for the benefit of any Person (other than the Company) or
to the detriment of the Company. Except as set forth in Part 5.22(g) of the
Disclosure Letter, no Trade Secret owned by the Company is subject to any
adverse claim or has been challenged or threatened in any way.
(h) Except as set forth in Part 5.22(h) of the Disclosure
Letter, no Contract (whether or not related to the Intellectual Property Assets)
obligates the Company or any director, officer or employee of the Company to
disclose and/or assign to another Person, any Intellectual Property Asset or any
developments, inventions, etc. relating to the Intellectual Property Assets.
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5.23. CERTAIN PAYMENTS. Except as set forth in Part 5.23 of
the Disclosure Letter, neither the Company nor any director, officer, agent, or
employee of the Company, or any other Person associated with or acting for or on
behalf of the Company, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any Affiliate of the Company, or (iv) in violation of any Legal
Requirement that is or was applicable to the Company or to the conduct or
operation of its business or the ownership or use of any of its properties or
assets; (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Company.
5.24. DISCLOSURE. (a) No representation or warranty of the
Company or the Interest Holders in this Agreement and no statement in the
Disclosure Letter omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading. None of the information to be supplied by the Company or
the Interest Holders for inclusion in, or to be incorporated by reference in,
the Proxy Statement will, at the time of the mailing of the Proxy Statement and
the time of the Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) No notice given by the Company or any of the Interest
Holders pursuant to Section 7.6 will contain any untrue statement or omit to
state a material fact necessary to make the statements therein or in this
Agreement, in light of the circumstances in which they were made, not
misleading.
(c) There is no fact known to any of the Interest Holders that
has specific application to the Interest Holders or the Company (other than
general economic or industry conditions) and that materially adversely affects
the assets, business, prospects, financial condition, or results of operations
of the Company (on a consolidated basis) that has not been set forth in this
Agreement or the Disclosure Letter.
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5.25. RELATIONSHIPS WITH RELATED PERSONS. Except as set forth
in Part 5.25 of the Disclosure Letter, none of the Interest Holders or any
Related Person of such Interest Holders or of the Company has, or since the
first day of the next to last completed fiscal year of the Company has had, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Company's business. Except as set
forth in Part 5.25 of the Disclosure Letter, none of the Interest Holders or any
Related Person of such Interest Holders or of the Company owns, or since the
first day of the next to last completed fiscal year of the Company owned (of
record or as a beneficial owner), an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with the Company, or (ii) engaged in
competition with the Company with respect to any line of the products or
services of the Company (a "Competing Business") in any market presently served
by the Company, except for less than one percent of the outstanding capital
stock or stated capital of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth in
Part 5.25 of the Disclosure Letter, none of the Interest Holders or any Related
Person of such Interest Holders or of the Company is a party to any Contract
with, or has any claim or right against, the Company, other than Contracts
related to their employment with the Company and claims for ordinary
compensation as provided by any such Contract.
5.26. BROKERS AND FINDERS. Neither the Interest Holders nor
the Company nor any of its officers, directors, or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted,
directly or indirectly, for any of the Interest Holders or the Company, in
connection with this Agreement or the transactions contemplated hereby or
thereby.
5.27. EMPLOYEE BENEFIT PLANS. (a) Part 5.27 of the Disclosure
Letter sets forth a complete and accurate list and summary description of each
employee benefit plan or arrangement, including, without limitation, bonus,
savings or profit sharing plan, deferred compensation plan, pension or
retirement plan, stock option plan, stock appreciation right plan, executive
compensation practice and other executive perquisite, each plan or arrangement
providing for insurance (including, without
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limitation, health and life insurance) coverage, severance, termination or
similar coverage and each written compensation policy and practice, which in
each case, covers any current or former employee, officer, director, or agent of
the Company, and which is or was maintained or contributed to by the Company,
other than those benefit plans or arrangements mandated by applicable Legal
Requirements.
(b) Except as set forth in Part 5.27 of the Disclosure Letter,
(i) all employee benefit plans or programs maintained for the benefit of the
current or former employees or directors of the Company or any of its Affiliates
that are sponsored, maintained or contributed to by the Company or any of its
Affiliates, or with respect to which the Company or any of its Affiliates has
any liability, including without limitation any such plan that is an "employee
benefit plan" as defined in Section 3(3) of ERISA, are in compliance with all
applicable requirements of law, including ERISA and the IRC, and (ii) neither
the Company nor any of its Affiliates has any liabilities or obligations with
respect to any such employee benefit plans or programs, whether accrued,
contingent or otherwise, nor to the knowledge of the Company are any such
liabilities or obligations expected to be incurred. The execution of, and
performance of the transactions contemplated by, this Agreement will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, program, policy, arrangement or agreement or
any trust, loan or funding arrangement that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee.
5.28. INVESTMENT INTENT; ACCREDITED INVESTOR. Parent and the
Interest Holders are acquiring the Acquiror Shares pursuant to Article II of
this Agreement for their own accounts and not with the view to, or for resale in
connection with, any distribution or public offering thereof with the meaning of
the Securities Act, except as contemplated by the Stockholders' Agreement. Each
of Parent and each Interest Holder is either (i) an "accredited investor" as
such term is defined in Section 501(a) of Regulation D promulgated under the
Securities Act or (ii) otherwise has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and the risks
of the Acquiror Shares being delivered
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pursuant to Section 2.6 of this Agreement so that such delivery of Acquiror
Shares is eligible for exemption from the registration and prospectus delivery
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act or Regulation S thereunder. Each of Parent and each Interest Holder has had
an opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Acquiror Shares, has had full access to such
information concerning Acquiror as such Person has requested and possesses
substantial information about, and familiarity with, Acquiror as a result of the
information provided to such Person. Parent and the Interest Holders understand
that the Acquiror Shares have not been registered under the Securities Act by
reason of their contemplated issuance by Acquiror in a transaction exempt from
the registration and prospectus delivery requirements of the Securities Act
pursuant to Section 4(2) thereof, and that the reliance of Acquiror upon this
exemption is predicated in part upon this representation and warranty by the
Interest Holders.
ARTICLE VI
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
6.1. CONDUCT PRIOR TO CLOSING. (a) Parent, the Company and the
Interest Holders hereby covenant and agree with Acquiror, that, prior to the
Closing, unless the prior written consent of Acquiror shall have been obtained
and except as otherwise contemplated herein, the Company shall, and the Interest
Holders will cause Parent to cause the Company to, and Parent will cause the
Company to, operate its business only in the usual, regular and ordinary course
and in accordance with past practices and to conduct its business in compliance
in all material respects with the standards of the industry in which it operates
and provides services; and to preserve intact its current business organization,
keep available the services of the current officers, employees and agents of the
Company, and maintain the relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with the Company. From the date hereof until the Closing, except as otherwise
specifically provided in this Agreement (including, without limitation, Section
6.3), the Company agrees that it will not, and the Interest Holders covenant and
agree that they will not permit Parent to permit the Company to, and Parent will
not
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permit the Company to, do or agree or commit to do, without the prior written
consent of Acquiror, any of the following:
(i) incur any liabilities or obligations in excess of U.S.
$50,000, in the aggregate, whether directly or by way of guaranty,
including any obligation for borrowed money whether or not evidenced by
a note, bond, debenture or similar instrument;
(ii) acquire any equity, debt or other investment securities
except for acquisitions of such securities in the ordinary course of
business;
(iii) grant any increase in compensation (including any
salaries or bonuses) to its employees as a class, or to its officers or
directors, except as required by law or at times and in a manner
consistent with past practice; effect any change in retirement benefits
to any class of employees or officers (unless any such change shall be
required by applicable law); enter into any employment, severance or
similar agreements or arrangements with any directors, officers or
employees other than the agreements or severance and other plans
described in Part 5.27 of the Disclosure Letter, which in the case of
employment agreements would extend beyond the Closing Date (it being
understood that nothing contained herein shall prohibit the Company
from paying individual merit increases or promotional increases, or
performance bonuses to its employees based on formulas consistent with
those used in the past for similar levels of performance); or
establish, adopt, enter into or amend any employee benefit plan for the
benefit of any directors, officers or employees;
(iv) declare any profit to be distributed to the shareholders
or pay any profit and purchase, redeem or otherwise acquire any shares
of the Company;
(v) other than with respect to the loan and letter agreement
relating to the acquisition of real property in connection with
establishing a representative office in Lithuania, purchase or
otherwise acquire any substantial portion of the assets, or of any
class of stock or equity interests of any Person except in partial or
complete satisfaction of debts previously contracted; merge into any
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other Person or permit any other Person to merge into it or consolidate
with any other Person; liquidate, sell, dispose of, or encumber any
assets or acquire any assets, other than in the ordinary course of
business consistent with past practice, or issue any shares or permit
any shares held in its treasury to become outstanding; or issue or
grant or extend the term of any option, warrant, conversion or stock
appreciation right not in existence on the date hereof;
(vi) propose or adopt any amendments to its Certificate of
Incorporation;
(vii) enter into any type of business not conducted by the
Company as of the date of this Agreement or create or organize any new
subsidiary or enter into or participate in any joint venture or
partnership;
(viii) propose or adopt any material changes to the
accounting principles used by the Company except as required
by U.S. GAAP and then only in consultation with Acquiror;
(ix) enter into any agreement or transactions with any of the
Interest Holders or any Affiliate of the Interest Holders or make any
material amendment or modification to any such agreement, except as
contemplated by this Agreement; or
(x) agree or commit to do any of the foregoing.
Without limiting the foregoing, from the date hereof until the Closing, the
Company shall not, and the Interest Holders agree that they will not permit
Parent to permit the Company to, and Parent will not permit the Company to,
without first promptly notifying Acquiror and obtaining the prior written
consent of Acquiror, take any action or permit or suffer to be taken any action,
which is represented in Section 5.16 not to have been taken since the date of
the Balance Sheet.
(b) From the date hereof until the Closing, Acquiror shall
not, without first promptly notifying the Interest Holders and providing the
Interest Holders an opportunity to express their views, take any action or
permit or suffer to be taken any action, which is represented in Section 3.8 not
to have been taken since March 31, 1996.
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6.2. CONSENTS AND APPROVALS. (a) Subject to the terms and
conditions herein provided, each of the parties hereto agrees to cooperate with
the other and use all reasonable best efforts to satisfy the conditions set
forth in Article VIII to be satisfied and to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws, regulations and contractual arrangements to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. Each of the
parties hereto hereby covenants and agrees subject, in the case of Acquiror, to
the fiduciary obligations of Acquiror's Board of Directors, to take no action
(a) which would render any of its representations and warranties contained
herein untrue at and as of the Closing except as otherwise contemplated herein
or (b) which would adversely affect its ability to satisfy any of the conditions
set forth in Article VIII, including, without limitation, the ability to obtain
any necessary Governmental Authorizations required for the transactions
contemplated hereby or materially increase the period of time necessary to
obtain such authorizations.
(b) To the extent that the rights of the Company under any
agreement, arrangement or understanding may not be assigned without the consent
or approval of another party thereto, the Company shall, and the Interest
Holders shall cause Parent to cause the Company to, and Parent shall cause the
Company to, use all reasonable efforts to obtain any such consent or to amend
the agreement, arrangement or understanding such that no consent is required.
6.3. BOOKKEEPING, ACCOUNTING AND FINANCIAL REPORTING
CAPABILITIES. (a) The Company and the Interest Holders hereby covenant and agree
with Acquiror, that (i) prior to the Closing, the Company and the Interest
Holders will deliver to Acquiror: (A) an audited combined consolidated balance
sheet of the Company and the BioClin Affiliates as at December 31, 1994, and the
related audited combined consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal year then ended as well as
the fiscal year ended December 31, 1993, together with the report thereon of
KPMG Peat Marwick L.L.P.; and (B) an audited combined consolidated balance sheet
of the Company
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and the BioClin Affiliates as at December 31, 1995 and the related audited
combined consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal year then ended, together with the report thereon of
KPMG Peat Marwick L.L.P., including, in each case, the notes thereto, and (ii)
such financial statements will be prepared in accordance with U.S. GAAP (which
except where noted therein, will be consistently applied), and will fairly
present the financial condition and results of operations, changes in
stockholders' equity and cash flow of the Company and the BioClin Affiliates as
at the respective dates and for the periods referred to in such financial
statements.
(b) Parent, the Company and the Interest Holders hereby
covenant and agree with Acquiror, that, prior to the Closing, the Company shall,
and the Interest Holders shall cause Parent to cause the Company to, and Parent
shall cause the Company to, hire such number of bookkeepers and/or accountants,
or an accounting firm to provide such bookkeeping and accounting services,
reasonably acceptable to Acquiror, both in terms of number and identity, such
that the Company will, upon the Closing, have adequate financial reporting
capabilities to ensure that the reporting of consolidated financial results by
Acquiror on a post-Closing basis shall be made in a manner that will enable
Acquiror meet all reporting obligations applicable to it pursuant to the
Exchange Act.
(c) Notwithstanding any other provision hereof to the contrary
(including, without limitation, Section 10.2), to the extent Acquiror incurs any
fees or expenses in connection with the employment of Persons in connection with
the rendering of services contemplated by Section 6.3(b), Parent and the Company
shall promptly reimburse Acquiror for all such fees and expenses.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. CURRENT INFORMATION. During the period from the date of
this Agreement to the Closing, the Interest Holders, on the one hand, and
Acquiror, on the other hand, will cause one or more of their Representatives to
confer on a regular and frequent basis with Representatives of the other party
with respect to the status of the ongoing operations of the Company. Each party
will promptly notify the other party of any material
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change in the normal course of its business or in the operation of its
properties and, to the extent permitted by applicable law, of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of material
Proceedings involving such party which would in any manner, challenge, prevent,
alter or materially delay any of the transactions contemplated by this
Agreement, and each party will keep the other party fully informed with respect
to such events. Each party will also notify the other party of the status of
regulatory applications and third party consents related to the transactions
contemplated hereby.
7.2. ACCESS AND INVESTIGATION. To the full extent permitted by
applicable law, between the date of this Agreement and the Closing Date, the
Company shall, and the Interest Holders shall cause Parent to cause the Company
and its Representatives to, and Parent shall cause the Company and its
Representatives to, (a) afford Acquiror and its Representatives (collectively,
"Acquiror's Advisors") full and free access to the Company's personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data, (b) furnish Acquiror and Acquiror's Advisors with
copies of all such contracts, books and records, and other existing documents
and data as Acquiror may reasonably request, and (c) furnish Acquiror and
Acquiror's Advisors with such additional financial, operating, and other data
and information as Acquiror may reasonably request.
7.3. EFFECT OF INVESTIGATIONS. Notwithstanding the
notification and cure provisions of Sections 7.6(c) and (d), but subject to the
provisions of Sections 8.2 and 8.3, no investigation by the parties hereto made
heretofore or hereafter, whether pursuant to this Agreement or otherwise
(including without limitation, any action taken by or information provided to
Acquiror pursuant to the provisions of Sections 7.1 and 7.2) shall affect the
representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation.
7.4. PRESS RELEASES, ETC. Acquiror and the Interest Holders
will consult with each other as to the form, substance and timing of any press
release or other public disclosure of matters related to this Agreement or any
of the transactions contemplated hereby and no such press release or other
public disclosure shall be made without the consent of the other party, which
shall not be
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unreasonably withheld or delayed; provided, however, that either party may make
such disclosures as are required by law after making reasonable efforts in the
circumstances to consult in advance with the other party.
7.5. ACQUISITION PROPOSALS. Until such time, if any, as this
Agreement is terminated pursuant to Article IX, Parent, the Company and the
Interest Holders will not, and the Interest Holders will cause Parent to cause
the Company and its Representatives not to, and Parent will cause the Company
and its Representatives not to, directly or indirectly solicit, initiate, or
encourage or take any other action to facilitate (including by way of providing
information) any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Acquiror) relating to any
transaction involving the sale of the business or assets (other than in the
ordinary course of business) of the Company, or any of the equity interests of
the Company, or any merger, consolidation, business combination, or similar
transaction involving the Company. Parent, the Company and the Interest Holders
shall promptly advise Acquiror orally and in writing of any inquiry or proposal
which relates to such a transaction.
7.6. NOTIFICATION OF CERTAIN MATTERS. (a) Between the date of
this Agreement and the Closing Date, each Interest Holder will promptly notify
Acquiror in writing if such Interest Holder, Parent or the Company has
knowledge of any fact or condition that causes or constitutes a breach of
Parent's, the Company's or any of the Interest Holders' representations and
warranties as of the date of this Agreement, or if such Interest Holder, Parent
or the Company has knowledge of the occurrence after the date of this Agreement
of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition, or any
fact or condition disclosed to the Interest Holders by Acquiror pursuant to
Section 7.6(d), require any change in the Disclosure Letter, if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition, the Interest Holders will promptly deliver to Acquiror a supplement
to the Disclosure Letter specifying such change. During the same period, each
Interest Holder will promptly notify
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Acquiror if such Interest Holder, Parent or the Company has knowledge of the
occurrence of any breach of any covenant of the Interest Holders, Parent or the
Company in Article VI, this Article VII or of the occurrence of any event that
may make the satisfaction of the conditions in Article VIII impossible or
unlikely.
(b) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in writing if Acquiror has
knowledge of any fact or condition that causes or constitutes a breach of the
Acquiror's representations and warranties as of the date of this Agreement, or
if Acquiror has knowledge of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition, or any
fact or condition disclosed to Acquiror by any Interest Holder pursuant to
Section 7.6(c), require any change in the Acquiror Letter, if the Acquiror
Letter were dated the date of the occurrence or discovery of any such act or
condition, Acquiror will promptly deliver to the Interest Holders a supplement
to the Acquiror Letter specifying such change. During the same period, Acquiror
will promptly notify the Interest Holders if Acquiror has knowledge of the
occurrence of any breach of any covenant of Acquiror in Article VI, this Article
VII or of the occurrence of any event that may make the satisfaction of the
conditions in Article VIII impossible or unlikely.
(c) Between the date of this Agreement and the Closing Date,
each Interest Holder will promptly notify Acquiror in writing if such Interest
Holder, Parent or the Company has knowledge of any fact or condition that causes
or constitutes a breach of Acquiror's representations and warranties as of the
date of this Agreement, or if such Interest Holder, Parent or the Company has
knowledge of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, each Interest Holder will
promptly notify Acquiror if such Interest Holder, Parent or the Company has
knowledge of the occurrence of any
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breach of any covenant of Acquiror in Article VI, this Article VII or of the
occurrence of any event that may make the satisfaction of the conditions in
Article VIII impossible or unlikely.
(d) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in writing if Acquiror has
knowledge of any fact or condition that causes or constitutes a breach of
Parent's, the Company's or any of the Interest Holders' representations and
warranties as of the date of this Agreement, or if Acquiror has knowledge
of the occurrence after the date of this Agreement of any fact or condition
that would (except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Acquiror will promptly
notify the Interest Holders if Acquiror has knowledge of the occurrence of any
breach of any covenant of the Company, Parent or the Interest Holders in
Article VI, this Article VII or of the occurrence of any event that may make
the satisfaction of the conditions in Article VIII impossible or unlikely.
(e) For purposes of this Agreement, "knowledge" on the part of
Acquiror means the actual knowledge of Mr. Paul J. Schmitt, Mr. John G. Cooper
or Mr. Lief Modeweg, and knowledge on the part of Parent and the Company means
the actual knowledge of Dr. Jack Barbut or Dr. J. Chris Jensen; provided,
however, that all such Persons shall be deemed to have actual knowledge of all
matters disclosed in the Acquiror Letter and the Disclosure Letter.
(f) Not later than ten Business Days prior to the scheduled
Closing Date, (i) Acquiror shall deliver to the Interest Holders a supplement to
the Acquiror Letter and (ii) the Interest Holders shall deliver to Acquiror a
supplement to the Disclosure Letter, in each case, that updates such disclosure
from the date of this Agreement to such date of delivery. Thereafter, until the
Closing, Acquiror and the Interest Holders shall notify each other in writing of
any changes or supplements to the updated information necessary, to the
knowledge of Acquiror or the Interest Holders, as the case may be, to make such
information correct and complete at all times up to and including the Closing.
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(g) Notwithstanding the foregoing provisions of this Section
7.6, nothing herein contained shall be construed to, in any manner, (i) modify
the representations and warranties of the parties contained herein as made as of
the date hereof or (ii) affect any right or remedy of any party granted
hereunder or under the Stockholders' Agreement (including, without limitation,
the conditions to Closing set forth in Article VIII herein and the
indemnification provisions set forth in Article IV of the Stockholders'
Agreement).
7.7. CUSTOMERS. After execution of this Agreement and prior to
Closing, the Interest Holders, the Company and Acquiror shall, either
individually or jointly, notify the customers of the Company of the transactions
contemplated hereby. As promptly as practicable following the Closing, the
Interest Holders and Acquiror shall notify such customers thereof and shall
provide, or join in providing where appropriate, all notices to such customers
and other persons that the Interest Holders, the Company or Acquiror, as the
case may be, are or is required to give by any Governmental Body having
jurisdiction over any such Person or under applicable law or other terms of any
other agreement between the Company or its employees and any customer in
connection with the transactions contemplated hereby.
7.8. PRESERVATION OF RELATIONSHIPS. The Interest Holders
(excluding, for this purpose, Hackel) shall use their best efforts, and shall
use their best efforts to cause all their Affiliates including, without
limitation, Parent, the Company and their respective employees (in their
capacity as employees) to use their best efforts, to maintain in effect all
material contractual and business relationships with the Company or the
employees (in their capacity as employees) and to waive any and all rights to
terminate any such relationship arising as a result of the transactions
contemplated by this Agreement, except as otherwise contemplated by this
Agreement.
7.9. RESALE; LEGENDS. (a) The holders of the Company Shares
and the Employee Rightholders who shall receive Acquiror Shares in connection
with the Merger pursuant to Section 2.6 shall not sell or otherwise transfer any
of such Acquiror Shares until (a) such Acquiror Shares shall have been
registered under the Securities Act, or (b) Acquiror shall have received an
opinion of legal counsel, satisfactory to Acquiror, that such Acquiror Shares
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may be legally sold or otherwise transferred without such registration.
(b) The Acquiror Shares shall be imprinted with a
legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and
may not be sold or transferred in the absence of an effective
registration statement under the Act or an exemption from
registration thereunder. Prior to any sale or transfer of the
securities represented by this certificate, except pursuant to
an effective registration statement under the Act covering
such sale or transfer, the holder hereof shall have delivered
to the issuer hereof (the "Company") an opinion of counsel
reasonably satisfactory to the Company to the effect that such
sale or transfer is exempt from registration under the Act."
7.10. POOLING TREATMENT. Neither Acquiror nor any of Parent,
the Company nor the Interest Holders shall intentionally take, fail to take or
cause to be taken or not taken any action within its control, whether before or
after the Closing, which would disqualify the transactions consummated under
this Agreement as a "pooling of interests" for accounting purposes.
7.11. SHAREHOLDER APPROVAL; PROXY STATEMENT. (a) As soon as
practicable after the date hereof, Acquiror shall prepare a proxy statement (the
"Proxy Statement"), file it with the SEC, respond to comments of the Staff of
the SEC, clear the Proxy Statement with the Staff of the SEC and promptly
thereafter mail the Proxy Statement to all holders of Acquiror Common Stock. The
Company shall, and the Interest Holders shall cause Parent to cause the Company
to, and Parent shall cause the Company to, cooperate with Acquiror in the
preparation of the Proxy Statement.
(b) Acquiror shall take all action necessary, in accordance
with applicable law and its certificate of incorporation and by-laws, to convene
a meeting of the holders of Acquiror Common Stock (the "Stockholders Meeting")
for the purpose of
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considering and taking action with respect to the approval of the issuance of
the Acquiror Shares in the Merger as required by the rules of the National
Association of Securities Dealers, Inc. in connection with the transactions
contemplated by this Agreement and any of the other transactions pursuant to
which Acquiror shall acquire all of the outstanding capital stock or equity
interests in each of the BioClin Affiliates.
(c) As soon as practicable after the date hereof, subject to
availability of the Proxy Statement contemplated by Section 7.11(a), (i) the
Interest Holders shall take all action necessary, in accordance with applicable
law and Parent's organizational and organic documents, to cause (A) Parent to
cause the Company to, in accordance with applicable laws and the Certificate of
Incorporation of the Company, prepare a written consent of stockholders in lieu
of meeting for the purpose of considering and taking action with respect to the
approval of the Merger and the adoption of this Agreement and (B) Parent to vote
the Company Shares owned by it in favor of the Merger and the adoption of this
Agreement by virtue of its execution of such written consent of stockholders in
lieu of meeting, and (ii) the Company shall prepare such written consent of
stockholders in lieu of meeting and Parent shall execute such written consent
evidencing its approval of the Merger and the adoption of this Agreement.
(d) The Interest Holders shall take all action necessary, in
accordance with applicable law, to cause Parent to cause the Company to, and
Parent shall cause the Company to, and the Company shall, prepare and deliver to
Barr and the Employee Rightholders, promptly following the execution of the
written consent contemplated by Section 7.11(c), in form and substance
reasonably acceptable to Acquiror, (i) the statutory notice required by Section
228(d) of the DGCL, (ii) the statutory notice required by Section 262(d)(ii) of
the DGCL and (iii) any disclosure or information statements required to be
delivered under the Securities Act.
ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE THE
CLOSING. The respective obligations of each party to
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consummate the Closing shall be subject to the fulfillment or waiver at or prior
to the Closing of the following conditions:
(a) The Merger and this Agreement shall have been approved by
the requisite vote of the holders of Acquiror Common Stock.
(b) The Merger and this Agreement shall have been approved by
the requisite vote of the holders of the Company Shares by virtue of the
execution by Parent of the written consent in lieu of meeting as contemplated by
Section 7.11(c).
(c) The Merger and the Consideration therefor as contemplated
by this Agreement and the transactions contemplated hereby shall have been
approved by the Governmental Bodies whose approval is required to consummate the
transactions contemplated hereby without any condition which is reasonably
likely to have a material adverse effect on the financial condition, business or
results of operations of the Company or Acquiror taken as a whole; all
conditions required to be satisfied prior to the Closing imposed by the terms of
such approvals shall have been satisfied; and all notifications to any
Governmental Bodies that are required shall have been made.
(d) None of Acquiror, Sub, Parent, the Interest Holders nor
the Company shall be subject to any order, decree or injunction of any
Governmental Body which enjoins or prohibits the consummation of the
transactions contemplated by this Agreement.
(e) Acquiror, Sub, Parent, the Company and the Interest
Holders shall have received a letter, dated the Closing Date, from KPMG Peat
Marwick L.L.P. to the effect that, for financial reporting purposes, the
transactions contemplated hereby qualify for pooling-of-interests accounting
treatment under U.S. GAAP if consummated in accordance with this Agreement.
(f) The Stockholders' Agreement and the Employment Agreements
shall have been entered into by the parties thereto.
8.2. CONDITIONS TO OBLIGATION OF ACQUIROR AND SUB TO
CONSUMMATE THE CLOSING. The obligations of Acquiror and Sub to consummate the
Closing shall be subject to the fulfillment or
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waiver at or prior to the Closing of the following additional conditions:
(a) (i) The representations and warranties of Parent, the
Trustee, the Company and the Interest Holders set forth in Articles IV and V
hereof (A) that contain a materiality qualification shall be true and correct
and (B) that do not contain a materiality qualification shall be true and
correct in all material respects, as of the Closing as though made at and as of
the Closing (it being understood that representations and warranties that speak
as of a specified date shall continue to speak only as of the date so specified)
without giving effect to any supplement to the Disclosure Letter, except for
such changes occurring after the date hereof in the ordinary course of business
of the Company and in accordance with the terms and provisions of this Agreement
(including, without limitation, Section 6.1(a)), which, in the aggregate, would
not have a material adverse effect on the financial condition, operations or
prospects of the Company and the BioClin Affiliates taken as a whole, and (ii)
Acquiror shall have received a signed certificate of each of Parent (which is to
the knowledge of a principal executive officer), the Trustee, the Company (which
is to the knowledge of a principal executive officer) and the Interest Holders
to that effect. Acquiror's closing of the transactions contemplated by this
Agreement and the agreements with the BioClin Affiliates with respect to
Acquiror's acquisition of all of the outstanding capital stock or equity
interests of the BioClin Affiliates shall constitute acceptance of the
disclosures made by the Company and/or the Interest Holders prior to Closing in
the Disclosure Letter and waiver of any purported misrepresentation or breach of
any representation or warranty made by such Persons in Article V or any covenant
of such Persons contained in Article VI or VII to the extent the Disclosure
Letter, as supplemented pursuant to Section 7.6(a) and (f), discloses
information pertaining thereto.
(b) Parent, the Company and the Interest Holders shall have
in all material respects performed all obligations required to be performed by
them under this Agreement prior to the Closing, and Acquiror shall have
received a signed certificate of each of Parent, the Company and the
Interest Holders to that effect.
(c) Acquiror shall have received a legal opinion dated the
Closing, from Piper & Marbury, L.L.P., counsel of the Interest
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Holders, with respect to the transactions contemplated herein in form mutually
agreed upon by Acquiror and the Interest Holders.
(d) The Board of Directors of Acquiror shall have received an
opinion from Vector Securities International, Inc., dated not later than the
date of Acquiror's Proxy Statement (and such opinion shall not have been
withdrawn on or before the Closing Date) to the effect that as of the date
thereof, the number of Acquiror Shares to be delivered in consideration for the
transfer of the Company Shares, the capital stock or equity interests in each of
the BioClin Affiliates and the termination of the Rights is fair to Acquiror and
to Acquiror's stockholders from a financial point of view.
(e) Acquiror shall have acquired all of the outstanding
capital stock or equity interests in each of the BioClin
Affiliates.
(f) The Company shall have obtained the written consent(s) of
the Person(s) specified in Part 8.2 of the Acquiror Letter.
8.3. CONDITIONS TO OBLIGATION OF PARENT, THE COMPANY, AND THE
INTEREST HOLDERS TO CONSUMMATE THE CLOSING. The obligations of Parent, the
Company and the Interest Holders to consummate the Closing shall be subject to
the fulfillment or waiver at or prior to the Closing of the following
additional conditions:
(a) (i) The representations and warranties of Acquiror set
forth in Article III hereof (A) that contain a materiality qualification shall
be true and correct, and (B) that do not contain a materiality qualification
shall be true and correct in all material respects, as of the Closing as though
made at and as of the Closing (it being understood that representations and
warranties that speak as of a specified date shall continue to speak only as of
the date so specified) without giving effect to any supplement to the Acquiror
Letter, except for such changes occurring after the date hereof in the ordinary
course of business of Acquiror and in accordance with the terms and provisions
of this Agreement (including, without limitation, Section 6.1(b)), which, in the
aggregate, would not have a material adverse effect on the financial condition,
operations or prospects of Acquiror and its Subsidiaries taken as a whole, and
(ii) Parent,
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the Company and the Interest Holders shall have received a signed certificate
which is to the knowledge of a principal executive officer of Acquiror to that
effect. The closing of the transactions contemplated by this Agreement and the
agreements with the BioClin Affiliates with respect to Acquiror's acquisition
of all of the outstanding capital stock or equity interests of the BioClin
Affiliates shall constitute acceptance by the Company and the Interest Holders
of the disclosures made by Acquiror prior to the Closing in the Acquiror Letter
and waiver or any purported misrepresentation or breach of any representation
or warranty made by Acquiror in Article III or any covenant of Acquiror
contained in Article VI or VII to the extent the Acquiror Letter, as
supplemented pursuant to Section 7.6(b) and (f), discloses information
pertaining thereto.
(b) Acquiror shall have in all material respects performed all
obligations required to be performed by it under this Agreement prior to the
Closing, and Parent, the Company and the Interest Holders shall have received a
signed certificate which is to the knowledge of a principal executive
officer of Acquiror to that effect.
(c) The Interest Holders shall have received a legal opinion
dated the Closing from Jones, Day, Reavis & Pogue, counsel of Acquiror, with
respect to the transactions contemplated herein in form mutually agreed upon by
Acquiror and the Interest Holders.
(d) All labilities and obligations of Hackel (direct or
indirect) and Barbut pursuant to any guarantees of the indebtedness of the
Company and the BioClin Affiliates shall have been terminated.
ARTICLE IX
TERMINATION
9.1. TERMINATION. This Agreement may, by action taken by the
respective Board of Directors of Acquiror or the Company, as the case may be,
and by notice given prior to or at the Closing, be terminated, at any time
before or after the approval of the Merger and this Agreement by the holders
of Acquiror Common Stock as contemplated by Section 8.1(a) and the holders of
the Company Shares as contemplated by Section 8.1(b):
(a) by either Acquiror or the Interest Holders if a material
breach of any provision of this Agreement has been committed by the other party
and such breach has not been waived;
(b) (i) by Acquiror, if any of the conditions in Section 8.1
or 8.2 has not been satisfied as of the Closing Date or if
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satisfaction of such a condition is or becomes impossible (other than through
the failure of Acquiror to comply with its obligations under this Agreement)
and Acquiror has not waived such condition on or before the Closing Date; or
(ii) by the Interest Holders, if any of the conditions in Section 8.1 or 8.3
has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of the
Interest Holders to comply with their obligations under this Agreement) and the
Interest Holders have not waived such condition on or before the Closing Date;
(c) by mutual consent of Acquiror and the Interest Holders;
(d) by either Acquiror or the Interest Holders if any of the
agreements relating to the transfer and delivery of the Acquiror Common Stock in
consideration and exchange for the transfer of the outstanding capital stock or
equity interests in each of the BioClin Affiliates is terminated; or
(e) by either Acquiror or the Interest Holders if the Closing
has not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before December 31, 1996, or such later date as the parties may
agree upon.
9.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations set forth in Sections
6.3(c), 10.2 and 10.3 will survive; provided, however, that if this Agreement is
terminated by Acquiror or the Interest Holders because of the intentional breach
of this Agreement (including, without limitation, the making by any party hereto
of any representation or warranty hereunder that is known by such party not to
be true and correct in all material respects at the time such representation or
warranty is made) by the Interest Holders or Acquiror, as the case may be, or
because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's
intentional failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
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ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as specifically provided in this Agreement and the Stockholders'
Agreement, all representations, warranties and agreements of the parties hereto
in this Agreement or in any instrument delivered by the parties hereto pursuant
to this Agreement shall expire on the Report Date or upon termination of this
Agreement in accordance with its terms.
10.2. EXPENSES. Except as otherwise expressly provided in this
Agreement (including, without limitation, in Section 6.3(b)) and the Letter
Agreement, dated May 16, 1996, by and among Acquiror, the Company and the
BioClin Affiliates, each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and performance
of this Agreement and the transactions contemplated hereby, including all fees
and expenses of agents, representatives, counsel, and accountants. Acquiror will
pay all amounts payable to Vector Securities International, Inc. in connection
with this Agreement and the transactions contemplated hereby. In the event of
termination of this Agreement pursuant to Article IX, the obligation of each
party to pay its own expenses shall be subject to the right of such party to
pursue any legal remedies arising from the intentional breach of this Agreement
by the other party or the other party's intentional failure to comply with its
obligations under this Agreement as provided in Section 9.2.
10.3. CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Acquiror and the Interest Holders will maintain in confidence,
and will cause the directors, officers, employees, agents, and advisors of
Acquiror, Sub, Parent and the Company to maintain in confidence, and not use to
the detriment of another party hereto any written, oral, or other information
obtained in confidence from another party in connection with this Agreement or
the transactions contemplated hereby, unless (a) such information is already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby, or (c) the furnishing or use of such
information is required by or
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<PAGE> 81
necessary or appropriate in connection with legal proceedings. If any party
hereto or its Representatives are requested or become legally compelled (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil or criminal investigative demand, or similar process) or is
required by a regulatory body to make any disclosure that is prohibited or
otherwise constrained by this Agreement, such party or its Representative, as
the case may be, will provide the party providing the confidential information
with prompt notice of such request so that an appropriate protective order or
other appropriate remedy may be sought. Subject to the foregoing, such party or
its Representative may furnish that portion (and only that portion) of the
confidential information that, in the written opinion of its counsel reasonably
acceptable to the party providing such information, such party is legally
compelled or is otherwise required to disclose the information at issue or else
stand liable for contempt or suffer other material censure or material penalty.
If the transactions contemplated hereby are not consummated, each party hereto
will return or destroy as much of such written information as the other party
may reasonably request. Whether or not the Closing takes place, the Interest
Holders waive, and will upon Acquiror's request cause Parent to cause the
Company to, and Parent will cause the Company to, waive, any cause of action,
right, or claim arising out of the access of Acquiror or its Representatives to
any trade secrets or other confidential information of the Company except for
the intentional competitive misuse by Acquiror of such trade secrets or
confidential information. Each of Parent, the Company and the Interest Holders
acknowledges that, and agrees that it will advise its respective
Representatives and Affiliates, that any non-public information provided by or
relating to Acquiror may constitute material non-public information for
purposes of the Exchange Act, and agrees that it will not engage in any
transaction in violation of the restrictions on trading while in possession of
material non-public information under applicable securities laws or regulations
while in possession of such information.
10.4. NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized
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overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
(a) if to Acquiror or Sub:
DNX Corporation
303B College Road East
Princeton, New Jersey 08540
Attention: President
Telecopier No.: (908) 722-6677
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
Telecopier No.: (216) 579-0212
(b) if to the Interest Holders:
Jack Barbut
c/o Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020-1104
Telecopier No.: (212) 835-6001
Alec Hackel
Flueliweg 3
6045 Meggen
Switzerland
Telecopier No.: 011 41-41-377-3053
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<PAGE> 83
Dr. John Christian Jensen
Bohlstrasse 9a
6300 Zug
Switzerland
Telecopier No.: 011 41-41-710-2309
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
(c) if to Parent or the Company:
BioClin, Inc.
1001 East Main Street
Suite 808
Richmond, VA 23219
Attention: Chief Executive Officer
Telecopier No.: (804) 788-0040
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
10.5. JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
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10.6. FURTHER ASSURANCES. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
10.7. WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Except as otherwise specifically
provided by Sections 8.2 and 8.3 of this Agreement, neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law and except as
otherwise secifically provided by Sections 8.2 and 8.3 of this Agreement, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
10.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the Stockholders' Agreement and the documents
referred to in this Agreement and the documents executed in connection with
Acquiror's acquisition of the equity interests of the BioClin Affiliates) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may be amended by
the parties hereto, by action taken by their respective Boards of Directors, at
any time before or after the approval of the Merger and this Agreement by the
holders of Acquiror Common Stock as contemplated by Section 8.1(a) and the
holders of the Company Shares as contemplated by Section 8.1(b), provided,
however, that after such approval, no amendment will be made which by law
requires further approval of such holders without first obtaining such further
approval. This Agreement may not be amended except by a written agreement
executed by each of the parties hereto.
10.9. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No
party hereto may assign any of its rights under this
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Agreement without the prior consent of the other parties, except that Acquiror
may assign any of its rights under this Agreement to any Subsidiary of Acquiror.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement and
their successors and assigns any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
10.10. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
The invalid or unenforceable provision shall be replaced by a provision which
ensures the economic purpose of the invalid or unenforceable provision as far as
possible.
10.11. SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
10.12. GOVERNING LAW. This Agreement will be governed by the
laws of the State of New York (except, to the extent the DGCL applies to the
matters set forth in Article II, the DGCL shall govern) without regard to
conflicts of laws principles.
10.13. SPECIFIC PERFORMANCE. Each of Parent, the Company, the
Interest Holders and Acquiror acknowledges and agrees that the other parties
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or are
otherwise breached. Accordingly, each of Parent, the Company, the
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Interest Holders and Acquiror agrees that the other parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court in the United States or
in any state having jurisdiction over the parties and the matter in addition to
any other remedy to which they may be entitled pursuant hereto.
10.14. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
DNX CORPORATION
By: /s/ PAUL J. SCHMITT
--------------------------
Name: Paul J. Schmitt
Title: Chief Executive Officer
DNX ACQUISITION CORPORATION
By: /s/ PAUL J. SCHMITT
--------------------------
Name: Paul J. Schmitt
Title: President
/s/ DR. JACK BARBUT
-----------------------------
Dr. Jack Barbut
/s/ ALEC HACKEL
-----------------------------
Alec Hackel
/s/ DR. JOHN CHRISTIAN JENSEN
-----------------------------
Dr. John Christian Jensen
SHERBY N.V.
By: /s/ Curacao Corporation Company N.V.
-------------------------------------
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Title: Managing Director
BIOCLIN, INC.
By: /s/ DR. JACK BARBUT
------------------------
Name: Dr. Jack Barbut
Title: Chief Executive Officer
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EXHIBIT 2.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARE EXCHANGE AGREEMENT
among
DNX CORPORATION
(a Delaware corporation),
MR. MANFRED WISSMANN,
AS TRUSTEE,
DR. GERALD RITTERSHAUS, AS EMPLOYEE TRUSTEE,
DR. JACK BARBUT,
ALEC HACKEL,
DR. JOHN CHRISTIAN JENSEN,
BETTINA DONHARDT,
CHRISTINE DUNE-KRAATZ,
BIOCLIN GMBH
(a German corporation),
KILMER N.V.
(a Netherlands Antilles corporation)
and
BIOCLIN EUROPE AG
(a Swiss corporation)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 90
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Recitals ........................................................................................................ 1
ARTICLE I DEFINITIONS............................................................................................ 2
ARTICLE II PURCHASE, SALE AND EXCHANGE OF SHARES................................................................. 12
2.1. Exchange of the Company Shares............................................................. 12
2.2. Sale, Purchase and Assignment of the Sub Shares............................................ 13
2.3. Exchange of the Kilmer Shares.............................................................. 14
2.4. Closing.................................................................................... 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR........................................................... 15
3.1. Authorization, Validity and Effect......................................................... 15
3.2. Acquiror Shares............................................................................ 15
3.3. Conflicts; Defaults........................................................................ 15
3.4. Exchange Act Filings....................................................................... 16
3.5. Absence of Material Adverse Changes........................................................ 16
3.6. Taxes...................................................................................... 16
3.7. Legal Proceedings; Orders.................................................................. 17
3.8. Absence Of Certain Changes and Events...................................................... 17
3.9. Contracts; No Defaults..................................................................... 19
3.10. Insurance.................................................................................. 19
3.11. Environmental Matters...................................................................... 20
3.12. Labor Relations; Compliance................................................................ 20
3.13. Intellectual Property...................................................................... 21
3.14. Disclosure................................................................................. 21
3.15. Brokers and Finders........................................................................ 21
ARTICLE IV REPRESENTATIONS OF THE TRUSTEE AND THE EMPLOYEE TRUSTEE REGARDING THE TRUSTEE AND THE COMPANY SHARES
AND THE EMPLOYEE TRUSTEE AND THE SUB SHARES................................................ 21
4.1. Authorization, Validity and Effect......................................................... 21
4.2. Consents and Approvals; No Violation....................................................... 22
4.3. Title and Power to Sell.................................................................... 22
4.4. Litigation................................................................................. 22
4.5. Authorization, Validity and Effect......................................................... 23
4.6. Consents and Approvals; No Violation....................................................... 23
4.7. Title and Power to Sell.................................................................... 23
</TABLE>
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<TABLE>
<S> <C> <C> <C>
4.8. Litigation................................................................................. 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED
ENTITIES AND THE INTEREST HOLDERS WITH RESPECT TO THE
ACQUIRED ENTITIES.......................................................................... 24
5.1. Organization, Authority and Authorization.................................................. 24
5.2. Consents and Approvals; No Violation....................................................... 26
5.3. Title and Power to Sell.................................................................... 26
5.4. Capitalization............................................................................. 27
5.5. Company Financial Statements............................................................... 29
5.6. Books and Records.......................................................................... 30
5.7. Reports.................................................................................... 30
5.8. Absence of Material Adverse Changes........................................................ 31
5.9. Title to Properties; Encumbrances.......................................................... 31
5.10. Condition and Sufficiency of Assets........................................................ 32
5.11. Accounts Receivable........................................................................ 32
5.12. No Undisclosed Liabilities................................................................. 33
5.13. Taxes...................................................................................... 33
5.14. Compliance with Legal Requirements; Governmental
Authorizations............................................................................. 34
5.15. Legal Proceedings; Orders.................................................................. 35
5.16. Absence Of Certain Changes and Events...................................................... 37
5.17. Contracts; No Defaults..................................................................... 38
5.18. Insurance.................................................................................. 42
5.19. Environmental Matters...................................................................... 43
5.20. Employees.................................................................................. 46
5.21. Labor Relations; Compliance................................................................ 47
5.22. Intellectual Property...................................................................... 48
5.23. Certain Payments........................................................................... 53
5.24. Disclosure................................................................................. 53
5.25. Relationships with Related Persons......................................................... 54
5.26. Brokers and Finders........................................................................ 55
5.27. Employee Benefit Plans..................................................................... 55
5.28. Investment Intent; Accredited Investor..................................................... 55
ARTICLE VI CONDUCT OF BUSINESS PRIOR TO THE CLOSING.............................................................. 57
6.1. Conduct Prior to Closing................................................................... 57
6.2. Consents and Approvals..................................................................... 59
6.3. Bookkeeping, Accounting and Financial Reporting
Capabilities............................................................................... 60
ARTICLE VII ADDITIONAL AGREEMENTS................................................................................ 61
7.1. Current Information........................................................................ 61
7.2. Access and Investigation................................................................... 62
</TABLE>
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<TABLE>
<S> <C> <C> <C>
7.3. Effect of Investigations................................................................... 62
7.4. Press Releases, Etc........................................................................ 62
7.5. Acquisition Proposals...................................................................... 62
7.6. Notification of Certain Matters............................................................ 63
7.7. Customers.................................................................................. 65
7.8. Preservation of Relationships.............................................................. 66
7.9. Resale; Legends............................................................................ 66
7.10. Pooling Treatment.......................................................................... 68
7.11. Shareholder Approval; Proxy Statement...................................................... 68
ARTICLE VIII CONDITIONS.......................................................................................... 69
8.1. Conditions to Each Party's Obligation to
Consummate the Closing..................................................................... 69
8.2. Conditions to Obligation of Acquiror to
Consummate the Closing..................................................................... 70
8.3. Conditions to Obligation of the Acquired
Entities, the Trustee, the Employee Trustee, the
Employee Group and the Interest Holders to
Consummate the Closing..................................................................... 71
ARTICLE IX TERMINATION........................................................................................... 72
9.1. Termination................................................................................ 72
9.2. Effect of Termination...................................................................... 73
ARTICLE X GENERAL PROVISIONS..................................................................................... 74
10.1. Survival of Representations, Warranties and
Agreements................................................................................. 74
10.2. Expenses................................................................................... 74
10.3. Confidentiality............................................................................ 74
10.4. Notices.................................................................................... 76
10.5. Jurisdiction; Service of Process........................................................... 78
10.6. Further Assurances......................................................................... 78
10.7. Waiver..................................................................................... 78
10.8. Entire Agreement and Modification.......................................................... 79
Assignments, Successors, and No Third-Party
Rights..................................................................................... 79
10.10. Severability............................................................................... 79
10.11. Foreign Currencies......................................................................... 79
10.12. Section Headings, Construction............................................................. 80
10.13. Governing Law.............................................................................. 80
10.14. Specific Performance....................................................................... 80
10.15. Counterparts............................................................................... 80
Exhibits
</TABLE>
iii
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A-1 Employment Agreements between Acquiror and
Dr. Jack Barbut
A-2 Employment Agreement between Acquiror and
Dr. J. Chris Jensen
B Stockholders' Agreement
C Commercial Registry Extract
iv
<PAGE> 94
SHARE EXCHANGE AGREEMENT
------------------------
This Share Exchange Agreement (this "Agreement") made as of
the 19th day of August, 1996 by and among DNX Corporation, a Delaware
corporation ("Acquiror"), with its principal offices at 575 Route 28, Raritan,
New Jersey, Mr. Manfred Wissmann, acting solely in his capacity as trustee (the
"Trustee") pursuant to an Agreement among the Trustee, Dr. Jack Barbut and
Alec Hackel, dated March 22, 1990 (the "Trust Agreement"), Dr. Gerald
Rittershaus, acting solely in his capacity as trustee (the "Employee Trustee")
pursuant to an Agreement between the Employee Trustee and Ms. Christine
Dune-Kraatz ("Kraatz") dated December 12, 1989 (the "Employee Trust
Agreement"), Dr. Jack Barbut whose address is c/o Piper & Marbury, L.L.P.,
1251 Avenue of the Americas, New York, New York, 10020-1104 ("Barbut"), Alec
Hackel whose address is Fluelieweg 3, 6045 Meggen, Switzerland ("Hackel"), Dr.
John Christian Jensen whose address is Bohlstrasse 9a, 6300 Zug, Switzerland
("Jensen," collectively with Barbut and Hackel, the "Interest Holders"), as the
holders of all of the equity interests in the Company, Ms. Bettina Donhardt
("Donhardt"), Kraatz (together with Donhardt, collectively, the "Employee
Group"), BioClin GmbH, a German corporation and an indirect Subsidiary of the
Company ("Sub"), Kilmer N.V., a Netherlands Antilles corporation ("Kilmer"),
and BioClin Europe AG, a Swiss corporation (the "Company").
RECITALS
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A. The Trustee, for the benefit of Hackel and Barbut (the "Joint
Beneficial Shareholders"), and Jensen hold equity interests in the Company (the
"Company Shares"), which constitute all of the equity interests in the Company.
B. The Trustee, at the direction of the Joint Beneficial Shareholders,
and Jensen desire to transfer, and Acquiror desires to acquire, the Company
Shares, on the terms and subject to the conditions set forth in this Agreement.
<PAGE> 95
C. The Company (through BioClin AG, a wholly-owned Subsidiary), the
Employee Trustee, for the benefit of Kraatz, and Donhardt hold equity interests
(Geschaeftsanteile) in Sub (the "Sub Shares"), which constitute all of the
equity interests in Sub.
D. The Employee Trustee, for the benefit of Kraatz, and Donhardt desire
to sell, transfer and assign, and Acquiror desires to purchase and acquire, the
Sub Shares owned beneficially by the Employee Group, on the terms and subject to
the conditions set forth in this Agreement.
E. Barbut and Hackel hold equity interests in Kilmer (the "Kilmer
Shares"), which constitute all of the equity interests in Kilmer.
F. Barbut and Hackel desire to transfer and Acquiror desires to acquire
the Kilmer Shares, on the terms and subject to the conditions set forth in this
Agreement.
G. As a condition hereto and simultaneously herewith, Acquiror shall
acquire all of the issued and outstanding stock or equity interests of BioClin
Institute of Clinical Pharmacology GmbH, a German corporation ("BioClin
Institute"), and BioClin Inc., a Delaware corporation ("BioClin/U.S.," and
collectively with BioClin Institute, the "BioClin Affiliates").
H. Acquiror, the Interest Holders, the Employee Group, the Trustee, the
Employee Trustee, Sub, Kilmer and the Company wish to enter into this Agreement
for the purpose of making certain representations and warranties to each other
and entering into certain other obligations in favor of each other.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
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"Acquired Entities" means, collectively, the Company (and its
Subsidiaries), Sub and Kilmer.
"Acquiror" has the meaning given in the first paragraph of
this Agreement.
"Accounts Receivable" has the meaning given in Section 5.11.
"Acquiror's Advisors" has the meaning given in Section 7.2.
"Acquiror Common Stock" has the meaning given in Section 2.1.
"Acquiror Letter" means the disclosure letter delivered by Acquiror to
the Interest Holders concurrently with the execution and delivery of this
Agreement.
"Acquiror Shares" shall mean, collectively, the Europe Acquiror Shares,
the Sub Acquiror Shares and the Kilmer Acquiror Shares.
"Affiliate" of a specified Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified.
"Agreement" has the meaning given in the first paragraph of this
Agreement.
"Applicable Contract" means any Contract (a) under which any Acquired
Entity has or may acquire any rights, (b) under which any Acquired Entity has or
may become subject to any obligation or liability, or (c) by which any Acquired
Entity or any of the assets owned or used by it is or may become bound.
"Balance Sheet" has the meaning given in Section 5.5.
"Barbut" has the meaning given in the first paragraph of this
Agreement.
"BioClin Affiliates" has the meaning given in the Recitals of
this Agreement.
"BioClin Institute" has the meaning given in the Recitals of
this Agreement.
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"BioClin/U.S." has the meaning given in the Recitals of this
Agreement.
"Business Day" means any day on which banks are generally open to
conduct business in New York, New York.
"Closing" has the meaning given in Section 2.1.
"Closing Date" has the meaning given in Section 2.4.
"Company" has the meaning given in the first paragraph of
this Agreement.
"Company Reports" has the meaning given in Section 5.7.
"Company Shares" has the meaning given in the Recitals of
this Agreement.
"Company Subsidiaries" has the meaning given in Section
5.4(a)(iii).
"Competing Business" has the meaning given in Section 5.25.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights" has the meaning given in Section 5.22(a).
"CRAs" has the meaning given in Section 5.17(a)(ix)
"Disclosure Letter" means the disclosure letter delivered by the
Interest Holders to Acquiror concurrently with the execution and delivery of
this Agreement.
"DM" has the meaning given in Section 5.4(b)(i).
"Donhardt" has the meaning given in the first paragraph of
this Agreement.
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"Employee Group" means collectively Ms. Christine Dune-Kraatz
and Ms. Bettina Donhardt.
"Employee Trust Agreement" has the meaning given in the first
paragraph of this Agreement.
"Employee Trustee" has the meaning given in the first
paragraph of this Agreement.
"Employment Agreements" means collectively the Employment Agreements to
be entered at the Closing by and between Acquiror and each of Barbut and Jensen
in substantially the form attached hereto as Exhibits A-1 and A-2.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to: (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
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<PAGE> 99
requested by any Governmental Body or any other Person) and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
"Environmental Law" means any Legal Requirement that requires or
relates to: (a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment; (b) preventing or reducing to acceptable
levels the release of pollutants or hazardous substances or materials into the
Environment; (c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated; (d) assuring that
products are designed, formulated, packaged, and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of; (e) protecting resources, species, or ecological amenities; (f)
reducing to acceptable levels the risks inherent in the transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or (h) making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment, or permitting self-appointed representatives of
the public interest to recover for injuries done to public assets.
"Europe Acquiror Shares" has the meaning given in Section 2.1.
"Exchange Act" has the meaning given in Section 3.4.
"Facilities" means any real property, leaseholds or other interests
currently or formerly owned or operated by any Acquired Entity and any
buildings, plants, structures or equipment currently or formerly owned or
operated by any Acquired Entity.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
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<PAGE> 100
"Governmental Body" means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal (Bund),
canton, county (Land), commune, state, local, municipal, foreign, or other
government; (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); (d) multi-national organization or body; or (e)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hackel" has the meaning given in the first paragraph of this
Agreement.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" has the meaning given in
Section 5.22(a).
"Interest Holders" has the meaning given in the first paragraph of this
Agreement.
"IRC" has the meaning given in the definition of "Tax Laws"
in Article I.
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<PAGE> 101
"IRS" has the meaning given in the definition of "Tax Laws"
in Article I.
"Jensen" has the meaning given in the first paragraph of this
Agreement.
"Joint Beneficial Shareholders" has the meaning given in the
Recitals of this Agreement.
"Kilmer" has the meaning given in the first paragraph of this
Agreement.
"Kilmer Acquiror Shares" has the meaning given in
Section 2.3.
"Kilmer Shares" has the meaning given in the Recitals of this
Agreement.
"Kraatz" has the meaning given in the first paragraph of this
Agreement.
"knowledge" has the meaning given in Section 7.6(e).
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Marks" has the meaning given in Section 5.22(a).
"Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Patents" has the meaning given in Section 5.22(a).
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<PAGE> 102
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership (Personengesellschaft), limited
liability company (Kapitalgesellschaft), Aktiengesellschaft, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement" has the meaning given in
Section 5.20(b).
"Proxy Statement" has the meaning given in Section 7.11(a).
"Related Person" means (i) with respect to a particular individual: (a)
each other member of such individual's Family; (b) any Person that is directly
or indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, managing director, Prokurist,
holder of procuration, commercial mandate holder, officer, partner, executor, or
trustee (or in a similar capacity); and (ii) with respect to a specified Person
other than an individual: (a) any Person that directly or indirectly controls,
is directly or indirectly controlled by, or is directly or indirectly under
common control with such specified Person; (b) any Person that holds a Material
Interest in such specified Person; (c) each Person that serves as a director,
managing director, Prokurist, holder of procuration, commercial mandate holder,
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity); (d) any Person in which such specified Person holds a Material
Interest; (e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and (f) any Related
Person of any individual described in clause (b) or (c). For purposes of this
definition, (a) the "Family" of an individual includes (i) the individual, (ii)
the individual's spouse and former spouses,
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<PAGE> 103
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"Report Date" has the meaning given in the Stockholders'
Agreement.
"Representative" means, with respect to a particular Person, any
director, managing director, Prokurist, holder of procuration, commercial
mandate holder, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.
"SEC" has the meaning given in Section 3.4.
"SEC Documents" has the meaning given in Section 3.4.
"Securities Act" means the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SFR" has the meaning given in Section 5.4(a)(i).
"Stockholders' Agreement" means the Stockholders' Agreement to be
entered into at the Closing by, among others, Acquiror, the Trustee, the
Interest Holders, Sherby N.V., the Employee Trustee, Martha Lee Reynolds, Barry
Dvorchik, Kraatz and Donhardt, in substantially the form attached hereto
as Exhibit B.
"Stockholders Meeting" has the meaning given in Section
7.11(b).
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<PAGE> 104
"Sub" has the meaning given in the first paragraph of this
Agreement.
"Sub Acquiror Shares" has the meaning given in Section 2.2.
"Sub Shares" has the meaning given in the Recitals of this
Agreement.
"Subsidiary" means, with respect to any Person, any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Swiss GAAP" means generally accepted accounting principals
prevailing in Switzerland.
"Taxes" means, to the extent applicable to any party hereto, all Swiss
federal, cantonal and communal, German, Netherlands Antilles and U.S. or other
foreign and all state, municipal and local taxes, charges, fees, levies or other
assessments of whatever kind or nature, including without limitation, all net
income, gross income, gross receipts, sales, value added, use, services, ad
valorem, occupation, transfer, franchise, capital stock, profits, license,
withholding, payroll, employment, unemployment, excise, estimated, severance,
stamp, occupancy or property taxes, custom duties, assessments or governmental
fiscal charges of any kind whatever (together with any interest, penalty, or
addition to tax).
"Taxing Authority" means, to the extent applicable to any party hereto,
the Swiss Federal, Cantonal and Communal Tax Administration (Kantonale
Steuerverwaltung), the German tax authorities (Finanzamt Dusseldorf Sued) the
Netherlands Antilles Tax Inspectorate (Inspectie der Belastingen), the United
States Internal Revenue Service (the "IRS") or, in each case, any successor
agency, and, to the extent applicable to any party hereto, any similar foreign,
state, municipal or local Governmental Body.
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"Tax Laws" means, to the extent applicable to any party hereto, all
Swiss federal, cantonal and communal tax laws, the German tax laws
(Umsatzsteuergesetz, Mehrwertsteuergesetz und Gewerbesteuergesetz) and
regulations issued by the German tax authorities (Finanzamt Dusseldorf Sued)
pursuant thereto, the Netherlands Antilles Profit Tax Ordinance (Winstbelasting)
and regulations issued by the Netherlands Antilles Tax Inspectorate (Inspectie
der Belastingen) pursuant thereto, the Internal Revenue Code of 1986, as amended
(the "IRC"), and regulations issued by the IRS thereunder, or, in each case, any
successor law or regulations, and, to the extent applicable to any party hereto,
any similar foreign, state, municipal or local laws and regulations.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Trade Secrets" has the meaning given in Section 5.22(a).
"Trust Agreement" has the meaning given in the first
paragraph of this Agreement.
"Trustee" has the meaning given in the first paragraph of
this Agreement.
"U.S. GAAP" has the meaning given in Section 3.4.
ARTICLE II
PURCHASE, SALE AND EXCHANGE OF SHARES
2.1. EXCHANGE OF THE COMPANY SHARES. Subject to and upon the
terms and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"),
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(i) the Trustee (at the express direction of the Joint Beneficial Shareholders)
and Jensen shall transfer to Acquiror, and Acquiror shall acquire from the
Trustee and Jensen, all of the Company Shares, free and clear of any claims,
liens, restrictions on transfer or voting or encumbrances with respect thereto,
and (ii) subject to the provisions of Section 4.7 of the Stockholders' Agreement
and the restrictions on transfer contemplated by Section 7.9 of this Agreement,
Acquiror shall transfer and deliver to the Trustee and Jensen in proportion to
their respective ownership of Company Shares and in consideration and exchange
for the transfer of the Company Shares to Acquiror 1,105,690 shares of Common
Stock, par value U.S. $.01 per share, of Acquiror ("Acquiror Common Stock")
(such aggregate number of shares of Acquiror Common Stock to be delivered to the
Trustee and Jensen in respect of the Company Shares being herein referred to as
the "Europe Acquiror Shares"), free and clear of any claims, liens, restrictions
on transfer or voting or encumbrances with respect thereto, other than those
required by law and those contained in the Stockholders' Agreement. At the
Closing, Acquiror shall deliver to the Trustee and Jensen certificates
evidencing the Europe Acquiror Shares as specified herein.
2.2. SALE, PURCHASE AND ASSIGNMENT OF THE SUB SHARES. Subject
to and upon the terms and conditions of this Agreement, at the Closing, (i) the
Employee Trustee (at the express direction of Kraatz) and Donhardt shall sell,
transfer and assign to Acquiror, and Acquiror shall purchase, acquire and accept
such sale, transfer and assignment from the Employee Trustee (on behalf of
Kraatz) and Donhardt of, all of the Sub Shares owned beneficially by the
Employee Group, free and clear of any claims, liens, restrictions on transfer or
voting or encumbrances with respect thereto, and (ii) subject to the
restrictions on transfer contemplated by Section 7.9 of this Agreement, Acquiror
shall transfer and deliver to the Employee Trustee (on behalf of Kraatz) and
Donhardt in proportion to their respective ownership of Sub Shares and in
consideration for the sale, transfer and assignment of such Sub Shares to
Acquiror 52,652 shares of Acquiror Common Stock (such aggregate number of shares
of Acquiror Common Stock to be delivered to the Employee Trustee (on behalf of
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<PAGE> 107
Kraatz) and Donhardt in respect of such Sub Shares being herein referred to as
the "Sub Acquiror Shares"), free and clear of any claims, liens, restrictions on
transfer or voting or encumbrances with respect thereto, other than those
required by law. At the Closing, Acquiror shall deliver to the Employee Trustee
(on behalf of Kraatz) and Donhardt certificates evidencing the Sub Acquiror
Shares as specified herein and this Agreement (or a separate transfer document
meeting the requirements of German law) shall be notarized by a German public
notary to validate the sale and assignment of the Sub Shares by the Employee
Trustee (on behalf of Kraatz) and Donhardt to Acquiror.
2.3. EXCHANGE OF THE KILMER SHARES. Subject to and upon the
terms and conditions of this Agreement, at the Closing, (i) Barbut and Hackel
shall transfer to Acquiror, and Acquiror shall acquire from Barbut and Hackel,
all of the Kilmer Shares, free and clear of any claims, liens, restrictions on
transfer or voting or encumbrances with respect thereto, and (ii) subject to the
provisions of Section 4.7 of the Stockholders' Agreement and the restrictions on
transfer contemplated by Section 7.9 of this Agreement, Acquiror shall transfer
and deliver to Barbut and Hackel in proportion to their respective ownership of
Kilmer Shares and in consideration and exchange for the transfer of the Kilmer
Shares to Acquiror 2 shares of Acquiror Common Stock (such aggregate number of
shares of Acquiror Common Stock to be delivered to Barbut and Hackel in respect
of the Kilmer Shares being herein referred to as the "Kilmer Acquiror Shares"),
free and clear of any claims, liens, restrictions on transfer or voting or
encumbrances with respect thereto, other than those required by law and those
contained in the Stockholders' Agreement. At the Closing, Acquiror shall deliver
to Barbut and Hackel certificates evidencing the Kilmer Acquiror Shares as
specified herein.
2.4. CLOSING. The Closing shall take place at the New York
offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
10022, at 10:00 a.m., local time, on such date within five Business Days
following the date on which the last of the conditions (excluding conditions
that by their terms cannot be satisfied until the Closing Date) set forth in
Article VIII is satisfied or waived in accordance herewith or at such other
place, time or date as the parties may agree upon in writing. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants, in the form of an
independent promise of guarantee (selbstaendiges Garantieuversprechen) in the
case of Sub, to the Company, Sub, Kilmer, the Trustee and the Interest Holders
as follows:
3.1. AUTHORIZATION, VALIDITY AND EFFECT. Acquiror is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquiror has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements and documents
contemplated hereby to be executed and delivered by it, and subject to receipt
of necessary shareholder approval with respect to this Agreement and the other
agreements with the BioClin Affiliates with respect to the acquisition of all of
the equity interests of the BioClin Affiliates, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and such other
agreements and documents, and the consummation of the transactions contemplated
herein and therein, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Acquiror, subject, with
respect to this Agreement, to the approval of the stockholders of Acquiror. This
Agreement has been duly and validly executed and delivered by Acquiror and, once
approved by the stockholders of Acquiror, represents the legal, valid and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its terms.
3.2. ACQUIROR SHARES. Assuming that all required stockholder
action has been taken and all conditions set forth in Article VIII have been
satisfied or waived, the Acquiror Shares to be issued hereunder have been duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable.
3.3. CONFLICTS; DEFAULTS. Neither the execution and delivery
of this Agreement by Acquiror, nor the performance of its obligations hereunder,
will conflict with or constitute a default under any of the terms or provisions
of Acquiror's Second Restated Certificate of Incorporation or Second Amended and
Restated ByLaws or any material agreement or other material instrument to which
Acquiror is a party or by which it or its properties are bound or subject.
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3.4. EXCHANGE ACT FILINGS. Since December 10, 1991, Acquiror
has filed all documents (the "SEC Documents") required to be filed by it with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). As of their respective filing dates
(and as amended through the date hereof), the SEC Documents complied in all
material respects with the requirements of the Exchange Act and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances in which they were
made, not misleading except to the extent corrected by a subsequently filed SEC
Document. The financial statements of Acquiror included in the SEC Documents
complied as to form in all material respects with then applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto, or
in the case of unaudited statements, as permitted by Form 10-Q and Regulation
S-X of the SEC) and fairly present the consolidated financial position of
Acquiror and its consolidated subsidiaries as at the dates thereof and the
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments).
3.5. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 3.5 of the Acquiror Letter or in any SEC Document, since March 31, 1996,
there has not been any material adverse change in the business, operations,
properties, prospects, assets or condition of Acquiror that would be required to
be disclosed by Acquiror in a report required to be filed with the SEC pursuant
to the Exchange Act, and no event has occurred or circumstance exists that may
result in such a material adverse change that would be required to be disclosed
by Acquiror in any such report.
3.6. TAXES. (a) Except as set forth in Part 3.6 of the
Acquiror Letter, (i) all Tax Returns with respect to Taxes that were required to
be filed by or on behalf of Acquiror at and prior to the date of this Agreement
have been duly filed on a timely basis (giving effect to any extensions granted
to Acquiror) and are true, correct and complete in all material respects, (ii)
all Taxes due with respect to periods covered by the Tax Returns
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referred to in clause (i) have been paid in full or Acquiror has adequately
reserved or made adequate accruals (in accordance with U.S. GAAP) with respect
to any such Taxes which are due and payable by Acquiror and Acquiror has not had
and will not have any liability for Taxes materially in excess of the amounts so
paid or so reserved or accrued, and (iii) Acquiror is not a party to or the
subject of any action, investigation or proceeding, exclusive of normal
recurring audits, nor, to the knowledge of Acquiror, is any such action,
investigation or proceeding threatened, by any Governmental Authority for the
assessment or collection of any Taxes and no deficiency notices or reports have
been received by Acquiror with respect to any deficiency of Acquiror for any
Taxes.
(b) The statute of limitations for the assessment of
U.S. federal income taxes and all state income taxes of Acquiror
has expired for each period through December 31, 1990.
3.7. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 3.7 of the Acquiror Letter or in any SEC Document, since March 31, 1996, no
Proceeding has been instituted or threatened by or against Acquiror or that
otherwise relates to or may materially affect the business of, or any of the
assets owned or used by, Acquiror that would be required to be disclosed by
Acquiror in a report required to be filed with the SEC pursuant to the Exchange
Act.
(b) Except as set forth in Part 3.7 of the Acquiror Letter or
in any SEC Document, since March 31, 1996, no Order has arisen or been
threatened to which Acquiror or any of the assets owned or used by Acquiror is
subject that would be required to be disclosed by Acquiror in a report required
to be filed with the SEC pursuant to the Exchange Act.
3.8. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in Part 3.8 of the Acquiror Letter or in any SEC Document, since
March 31, 1996, Acquiror has conducted its business only in the ordinary course
of business and there has not occurred any:
(a) change in Acquiror's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock
of Acquiror (other than as contemplated by this Agreement); issuance of
any security convertible into such capital stock; grant of any
registration rights;
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purchase, redemption, retirement, or other acquisition by Acquiror of
any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Second Restated Certificate of
Incorporation of Acquiror;
(c) payment or increase by Acquiror of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except
in the ordinary course of business consistent with past practice)
employee or entry into any employment, severance, or similar Contract
with any director, officer, or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of Acquiror;
(e) damage to or destruction or loss of any asset or property
of Acquiror, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of Acquiror, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any material Contract or any material license,
distributorship, dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) transaction involving a total remaining
commitment by or to Acquiror of at least U.S. $500,000;
(g) sale (other than sales of inventory in the ordinary course
of business), lease, or other disposition of any material asset or
property of Acquiror;
(h) cancellation or waiver of any claims or rights with a
value to Acquiror in excess of U.S. $500,000;
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(i) material change in the accounting methods used by
Acquiror, except for any change required as a result of a change in
U.S. GAAP;
(j) incurrence or payment of any indebtedness for borrowed
money other than pursuant to Acquiror's financing arrangements in
existence on March 31, 1996;
(k) acquisition of any assets or properties or any commitment
to do so other than in the ordinary course of business; or
(l) agreement, whether oral or written, by Acquiror to do any
of the foregoing.
3.9. CONTRACTS; NO DEFAULTS. (a) Except as set forth in Part
3.9(a) of the Acquiror Letter, the SEC Documents contain as exhibits all of the
material Contracts, other than those entered into by Acquiror subsequent to
March 31, 1996, to which Acquiror is a party or by which it or its properties or
assets are bound or subject.
(b) Part 3.9(b) of the Acquiror Letter sets forth a summary
schedule of certain of such Contracts produced by Acquiror in the ordinary
course of its business which sets forth, among other things, the parties to such
Contracts and the amount of the remaining commitment of Acquiror under such
Contracts.
3.10. INSURANCE. Except as set forth in Part 3.10 of
the Acquiror Letter:
(i) All insurance policies to which Acquiror is a party or
that provide coverage to any of Acquiror or any director or officer of
Acquiror: (A) to Acquiror's knowledge, are valid, outstanding, and
enforceable; (B) are issued by an insurer that is financially sound and
reputable; (C) taken together, provide adequate insurance coverage for
the assets and the operations of Acquiror for all risks to which
Acquiror is normally exposed; (D) are sufficient for compliance in all
material respects with all Legal Requirements that are or were
applicable to Acquiror or to the conduct or operation of its business
or the ownership or use of any of its properties or assets and all
Contracts to which Acquiror is a party or by which it is bound; (E)
will
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continue in full force and effect following the consummation of the
transactions contemplated hereby; and (F) do not provide for any
retrospective premium adjustment or other experienced-based liability
on the part of Acquiror.
(ii) Acquiror has not received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights,
or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any insurance policy is not willing or
able to perform its obligations thereunder.
(iii) Acquiror has paid all premiums due, and has otherwise
performed in all material respects all of its obligations, under each
insurance policy to which Acquiror is a party or that provides coverage
to Acquiror or any director or officer thereof.
(iv) Acquiror has given notice to the insurer of all
claims that may be insured thereby.
3.11. ENVIRONMENTAL MATTERS. Except as set forth in Part 3.11
of the Acquiror Letter or in any SEC Document, since March 31, 1996, Acquiror
has not been in material violation of or liable under, any Environmental Law to
an extent that would be required to be disclosed by Acquiror in a report
required to be filed with the SEC pursuant to the Exchange Act.
3.12. LABOR RELATIONS; COMPLIANCE. Part 3.12 of the Acquiror
Letter sets forth each collective bargaining or other labor contract to which
Acquiror is a party or otherwise subject. Since December 10, 1991, there has not
been, there is not presently pending or existing, and there is not threatened,
(a) any strike, slowdown, picketing, work stoppage, or employee grievance
process, (b) any Proceeding against or affecting Acquiror relating to the
alleged material violation of any Legal Requirement applicable to Acquiror
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with any Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting Acquiror or its premises, or (c) any application for certification of
a collective bargaining agent. No event has occurred or circumstance exists that
could provide the basis for
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any work stoppage or other labor dispute. There is no lockout of any employees
by Acquiror, and no such action is contemplated by Acquiror. Acquiror has
complied in all material respects with all Legal Requirements applicable to
Acquiror relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Acquiror is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to materially comply with any of the foregoing Legal
Requirements.
3.13. INTELLECTUAL PROPERTY. Except as set forth in Part 3.13
of the Acquiror Letter, all intellectual property necessary for the conduct of
Acquiror's business as currently conducted has been disclosed in the SEC
Documents.
3.14. DISCLOSURE. No notice given by Acquiror pursuant to
Section 7.6 will contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
3.15. BROKERS AND FINDERS. Except with respect to arrangements
with Vector Securities International, Inc., neither Acquiror nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Acquiror in connection with this Agreement or the transactions contemplated
hereby.
ARTICLE IV
REPRESENTATIONS OF THE TRUSTEE AND THE EMPLOYEE
TRUSTEE REGARDING THE TRUSTEE AND THE COMPANY SHARES
AND THE EMPLOYEE TRUSTEE AND THE SUB SHARES
The Trustee represents and warrants to Acquiror, in the form
of an independent promise of guarantee (selbstaendiges Garantieversprechen), as
follows:
4.1. AUTHORIZATION, VALIDITY AND EFFECT. The Trustee, at the
explicit direction of the Joint Beneficial Shareholders,
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has all requisite power and authority to carry out his obligations arising in
connection with the transactions contemplated by this Agreement. This Agreement
and all other agreements and documents to be executed and delivered by the
Trustee in connection with this Agreement constitute in all respects the valid
and binding obligation of the Trustee, enforceable against the Trustee in
accordance with their respective terms. The execution, delivery and performance
of this Agreement by the Trustee on behalf of the Joint Beneficial Shareholders
are within the Trustee's powers and have been duly authorized by all necessary
action on the part of the Trustee or the Joint Beneficial Shareholders, as
applicable.
4.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by the Trustee and the consummation
of the transactions contemplated hereby do not and will not (i) require the
advance consent or approval of, or filing with, any person or public authority
(other than the express direction of the Joint Beneficial Shareholders) or (ii)
constitute or result in the breach of any provision of, or constitute a default
under, the Trust Agreement or any material agreement or other material
instrument to which the Trustee is a party or by which he (or the Company
Shares) is bound or subject.
4.3. TITLE AND POWER TO SELL. The Trustee is the legal owner
of the Company Shares owned beneficially by the Joint Beneficial Shareholders,
which, together with the Company Shares owned by Jensen, constitute all of the
equity interests of the Company. Good, valid and marketable title to such equity
interests is held by the Trustee free and clear of any claims, liens,
restrictions on transfer or voting or encumbrances. The Company Shares owned by
the Trustee are validly issued, fully paid and non-assessable. The Trustee has
full power and authority, at the express direction of the Joint Beneficial
Shareholders, to transfer to Acquiror at the Closing the Company Shares owned
beneficially by the Joint Beneficial Shareholders, and upon consummation of the
transactions contemplated by this Agreement, Acquiror will have acquired good,
valid and marketable title to the Company Shares owned beneficially by the Joint
Beneficial Shareholders, free and clear of any claims, liens, restrictions on
transfer or voting or encumbrances.
4.4. LITIGATION. As of the date of this Agreement, there is no
action, suit or proceeding pending against, or to the knowledge of the Trustee,
threatened against or affecting, the Trustee or the Company Shares owned by the
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Trustee before any court or arbitrator or any Governmental Body or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated by this Agreement.
The Employee Trustee represents and warrants to Acquiror, in
the form of an independent promise of guarantee (selbstaendiges
Garantieversprechen), as follows:
4.5. AUTHORIZATION, VALIDITY AND EFFECT. The Employee Trustee,
at the explicit direction of Kraatz, has all requisite power and authority to
carry out his obligations arising in connection with the transactions
contemplated by this Agreement. This Agreement and all other agreements and
documents to be executed and delivered by the Employee Trustee in connection
with this Agreement constitute in all respects the valid and binding obligation
of the Employee Trustee, enforceable against the Employee Trustee in accordance
with their respective terms. The execution, delivery and performance of this
Agreement by the Employee Trustee on behalf of Kraatz are within the Employee
Trustee's powers and have been duly authorized by all necessary action on the
part of the Employee Trustee or Kraatz, as applicable.
4.6. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by the Employee Trustee and the
consummation of the transactions contemplated hereby do not and will not (i)
require the advance consent or approval of, or filing with, any person or public
authority (other than a public notary and the express direction of Kraatz) or
(ii) constitute or result in the breach of any provision of, or constitute a
default under, the Employee Trust Agreement or any material agreement or other
material instrument to which the Employee Trustee is a party or by which he (or
the Sub Shares owned by the Employee Trustee) is bound or subject.
4.7. TITLE AND POWER TO SELL. The Employee Trustee is the
legal owner of the Sub Shares owned beneficially by Kraatz, which, together with
the Sub Shares owned by Donhardt and the Sub Shares owned by the Company
(through a wholly-owned subsidiary), constitute all of the equity interests of
the Company. Good, valid and marketable title to such equity interests is held
by the Employee Trustee free and clear of any claims, liens, restrictions
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on transfer or voting or encumbrances. The Sub Shares owned by the Employee
Trustee are fully paid up, not repaid and non-assessable (keine
Nachschusspflict). The Employee Trustee has full power and authority, at the
express direction of Kraatz, to sell, transfer and assign to Acquiror at the
Closing the Sub Shares owned beneficially by Kraatz, and upon consummation of
the transactions contemplated by this Agreement, Acquiror will have acquired
good, valid and marketable title to the Sub Shares owned beneficially by Kraatz,
free and clear of any claims, liens, restrictions on transfer or voting or
encumbrances.
4.8. LITIGATION. As of the date of this Agreement, there is no
action, suit or proceeding pending against, or to the knowledge of the Employee
Trustee, threatened against or affecting, the Employee Trustee or the Sub Shares
owned by the Employee Trustee before any court or arbitrator or any Governmental
Body or official which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
ACQUIRED ENTITIES AND THE INTEREST HOLDERS
WITH RESPECT TO THE ACQUIRED ENTITIES
Each of the Acquired Entities and the Interest Holders hereby
jointly and severally represent and warrant, in the form of an independent
promise of guarantee (selbstaendiges Garantieversprechen) in the case of Sub, to
Acquiror that:
5.1. ORGANIZATION, AUTHORITY AND AUTHORIZATION. (a) (i) The
Company is a corporation duly organized, validly existing and in good standing
under the Canton of Zug, and federal laws of Switzerland. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby to be executed and
delivered by it and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and such other agreements and
documents, and the consummation of the transactions contemplated herein and
therein, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of the Company. This Agreement has been duly and
validly executed and delivered by the Company and represents
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the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(ii) The extract from the Commercial Registry of the Canton of
Zug with respect to the Company, attached hereto as Exhibit C, is true, correct
and complete.
(b) Sub is a Gellschaft mit beschraenkter Haftung (GmbH) duly
organized and validly existing under the laws of the State of Baden-Wuertenberg,
Germany. Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby to
be executed and delivered by it and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and such other agreements
and documents, and the consummation of the transactions contemplated herein and
therein, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Sub. This Agreement has been duly and validly
executed and delivered by Sub and represents the legal, valid and binding
obligation of Sub, enforceable against Sub in accordance with its terms.
(c) Kilmer is a corporation duly organized, validly existing
and in good standing under the laws of the Netherlands Antilles. Kilmer has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby to be executed and
delivered by it and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and such other agreements and
documents, and the consummation of the transactions contemplated herein and
therein, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Kilmer. This Agreement has been duly and
validly executed and delivered by Kilmer and represents the legal, valid and
binding obligation of Kilmer, enforceable against Kilmer in accordance with its
terms.
(d) Each Acquired Entity has the full corporate power and
authority to own its properties and assets, to carry on its business as it is
now being conducted and to perform all its obligations under Applicable
Contracts and this Agreement. No Acquired Entity is required to qualify to do
business in any jurisdiction where not already so qualified except where a
failure
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to so qualify would not, individually or in the aggregate, have a material
adverse effect on the financial condition, business or results of operations of
the Acquired Entities taken as a whole. Each Acquired Entity has all
Governmental Authorizations required in order to own or lease its properties and
assets and to carry on its business as now being conducted in all respects
material to the financial condition, business or results of operations of the
Acquired Entities taken as a whole. The Interest Holders have delivered to
Acquiror copies of the organizational and organic documents of each of the
Acquired Entities, as currently in effect.
5.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by each of the Acquired Entities and
each of the Interest Holders and the consummation of the transactions
contemplated hereby do not and will not (i) require the advance consent or
approval of, or filing with, any person or public authority (other than a public
notary with respect to Sub) or (ii) constitute or result in the breach of any
provision of, or constitute a default under, the organizational or organic
documents of any Acquired Entity, the Trust Agreement or any material agreement
or other material instrument to which any Acquired Entity or any Interest Holder
is a party or by which such Person (or the Company Shares, the Sub Shares or the
Kilmer Shares) is bound or subject; provided, however, that Acquiror must
register as the shareholder of Sub before its acquisition of the Sub Shares will
become fully effective under German law.
5.3. TITLE AND POWER TO SELL. (a) The Trustee (for the benefit
of the Joint Beneficial Shareholders) and Jensen are the legal owners of the
Company Shares, which constitute all of the equity interests of the Company.
Good, valid and marketable title to such equity interests is held by the Trustee
and Jensen free and clear of any claims, liens, restrictions on transfer or
voting or encumbrances. The Company Shares are validly issued, fully paid and
non-assessable. The Trustee (at the express direction of the Joint Beneficial
Shareholders) and Jensen have full power and authority to transfer to Acquiror
at the Closing the Company Shares, and upon consummation of the transactions
contemplated by this Agreement, Acquiror will have acquired good, valid and
marketable title to the Company Shares, free and clear of any claims, liens,
restrictions on transfer or voting or encumbrances.
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(b) The Company (through its wholly owned Subsidiary, BioClin
AG), the Employee Trustee (for the benefit of Kraatz) and Donhardt are the legal
owners of the Sub Shares, which constitute all of the equity interests of Sub.
Good, valid and marketable title to such equity interests is held by the Company
(through its wholly owned Subsidiary, BioClin AG), the Employee Trustee (for the
benefit of Kraatz) and Donhardt free and clear of any claims, liens,
restrictions on transfer or voting or encumbrances. The Sub Shares are fully
paid up, not repaid and non-assessable (keine Nachschusspflicht). The Employee
Trustee (for the benefit of Kraatz) and Donhardt have full power and authority
to sell, transfer and assign to Acquiror at the Closing the Sub Shares
beneficially owned by the Employee Group, and upon consummation of the
transactions contemplated by this Agreement, Acquiror will have acquired good,
valid and marketable title to the Sub Shares beneficially owned by the Employee
Group, free and clear of any claims, liens, restrictions on transfer or voting
or encumbrances.
(c) Barbut and Hackel are the legal owners of the Kilmer
Shares, which constitute all of the equity interests of Kilmer. Good, valid and
marketable title to such equity interests is held by Barbut and Hackel free and
clear of any claims, liens, restrictions on transfer or voting or encumbrances.
The Kilmer Shares are validly issued, fully paid and non-assessable. Barbut and
Hackel have full power and authority to transfer to Acquiror at the Closing the
Kilmer Shares, and upon consummation of the transactions contemplated by this
Agreement, Acquiror will have acquired good, valid and marketable title to the
Kilmer Shares, free and clear of any claims, liens, restrictions on transfer or
voting or encumbrances.
5.4. CAPITALIZATION. (a) (i) The Company has a stated capital
of 50,000 Swiss Francs ("SFR") which is divided into 100 bearer shares
of 500 SFR each, fully paid up, of which the Trustee (for the benefit
of the Joint Beneficial Shareholders) contributed 25,050 SFR and
Jensen contributed 24,950 SFR. There are no other equity interests in
the Company and no outstanding options, warrants, scrip, participation
capital, rights to subscribe to, calls, commitments or agreements of
any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, equity interests of the Company.
The Company does not hold any treasury shares. Except for the Trust
Agreement, there are no voting trusts or other
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agreements or understandings with respect to the voting of the equity
interests of the Company.
(ii) The Company does not hold, directly or
indirectly, nor is it a member nor does it have any Contract to
acquire, any share, equity or other interest in any corporation (other
than BioClin AG, a Swiss corporation, Sub, Pulpwood Investments N.V., a
Netherlands Antilles corporation, Merlik B.V., a Dutch corporation, and
Merlik CV, a Dutch corporation) or limited liability company,
partnership, limited partnership or other entity including single
partnerships, cooperatives and joint ventures.
(iii) As of the date hereof, the Subsidiaries of the
Company (the "Company Subsidiaries") consist only of BioClin AG, Sub,
Pulpwood Investments N.V., Merlik Holding B.V. and Merlik C.V. All
outstanding capital stock or equity interests in each of the Company
Subsidiaries (other than Sub and Merlik C.V.) are held by the Company
or a direct or indirect wholly-owned Company Subsidiary, free and clear
of any claims, liens, restrictions on transfer or voting or
encumbrances.
(iv) As of the date hereof, there are (A) outstanding
no options, warrants or other rights to acquire, or obligations of the
Company or any Company Subsidiary to issue, shares of capital stock or
other equity interests in, or securities convertible into or
exchangeable for capital stock of or equity interests in any Company
Subsidiary and (B) no agreements restricting the transfer of, or
affecting the rights of the Company in, the capital stock or equity
interests in any of the Company Subsidiaries.
(b) (i) Sub has a stated capital of 100,000 Deutschmarks
("DM") which is fully paid up, of which the Trustee (for the benefit of
Kraatz) contributed 25,000 DM, Ms. Donhardt contributed 24,900 DM and
BioClin AG, a wholly-owned Subsidiary of the Company, contributed
50,000 DM. There are no other equity interests in Sub and no
outstanding options, warrants, scrip, rights to subscribe to, calls,
commitments or agreements of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, equity
interests of Sub. Sub does not hold any treasury shares (eigne
Geschaeftsanteile). There are no
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loans or economically corresponding transactions, the repayment of
which would constitute a violation of Section 32 a and 32 b of the
German law of limited liability companies ("GmbHG"). Except for the
trust agreement with respect to the Sub Shares beneficially owned by
Ms. DuneKraatz, there are no voting trusts or other agreements or
understandings to which Sub is a party with respect to the voting of
the equity interests of Sub.
(ii) Sub does not hold, directly or indirectly, nor
is it a member nor does it have any Contract to acquire, any share,
equity or other interest in any corporation or limited liability
company (Kapitalgesellschaft), partnership (Personengesellschaft), or
other entity including silent partnerships, cooperatives and joint
ventures.
(iii) There are no enterprise contracts
(Unternehmensvertraege) as defined in Sections 291 and 292 of the
German Stock Corporation Act (Aktiengesetz) to which Sub
is or has been a party.
(c) (i) Kilmer has a stated capital of $6,000 which is
fully paid up, of which Barbut contributed $3,000 and Hackel
contributed $3,000. There are no other equity interests in Kilmer
and no outstanding options, warrants, scrip, rights to subscribe to,
calls, commitments or agreements of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for,
equity interests of Kilmer. Kilmer does not hold any treasury shares.
There are no voting trusts or other agreements or understandings to
which Kilmer is a party with respect to the voting of the equity
interests of Kilmer.
(ii) Kilmer does not hold, directly or indirectly,
nor is it a member nor does it have any Contract to acquire, any share,
equity or other interest in any corporation (other than Merlik C.V.) or
limited liability company, partnership or other entity including silent
partnerships, cooperatives and joint ventures.
5.5. COMPANY FINANCIAL STATEMENTS. The Acquired Entities and
the Interest Holders have delivered to Acquiror as Part 5.5 of the Disclosure
Letter: (i) an unaudited combined consolidated balance sheet of the Company and
the BioClin
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Affiliates as at December 31, 1994, and the related unaudited combined
consolidated statement of income for the fiscal year then ended as well as the
fiscal year ended December 31, 1993, and (ii) an unaudited combined consolidated
balance sheet of the Company and the BioClin Affiliates as at December 31, 1995
(the "Balance Sheet") and the related unaudited combined consolidated statement
of income for the fiscal year then ended. The financial statements with respect
to fiscal 1995 have been prepared in accordance with U.S. GAAP (which except
where noted therein, have been consistently applied), and fairly present the
financial condition and results of operations, changes in stockholders' equity
and cash flow of the Company as at the respective dates and for the periods
referred to in such financial statements. The financial statements with respect
to fiscal 1993 and 1994 have been prepared in accordance with Swiss GAAP and
have been reconciled to U.S. GAAP.
5.6. BOOKS AND RECORDS. Except as set forth in Part 5.6 of the
Disclosure Letter, the books of account and other records of the Acquired
Entities, including records of all meetings held by, and the corporate action
taken by, the shareholders of the Acquired Entities and the directors, managing
directors, "Prokurists," holders of procuration and commercial mandate holders
of the Acquired Entities, all of which have been made available to Acquiror, are
complete and correct and have been maintained in accordance with sound business
practices and in compliance in all material respects with all applicable Legal
Requirements and accounting requirements. At the Closing, all of the foregoing
books and records will be in the possession of the Acquired Entities.
5.7. REPORTS. Except as set forth in Part 5.7 of the
Disclosure Letter, since June 26, 1987 with respect to the Company, February 9,
1990 with respect to Sub and October 12, 1989 with respect to Kilmer, each
Acquired Entity has filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed with respect to such Acquired Entity with any Governmental Body with
jurisdiction over such Acquired Entity or its employees, assets or properties
(all such reports and statements are collectively referred to herein as the
"Company Reports"). As of their respective dates, the Company Reports complied
in all material respects with the statutes, rules, regulations and orders
enforced or promulgated by the regulatory authority with which they were filed.
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5.8. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 5.8 of the Disclosure Letter, since December 31, 1995, there has not
been any material adverse change in the business, operations, properties,
prospects, assets or condition of any Acquired Entity, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
5.9. TITLE TO PROPERTIES; ENCUMBRANCES. The Acquired Entities
do not own any real property. Part 5.9 of the Disclosure Letter contains a
complete and accurate list of all leaseholds or other interests in real property
held or possessed by the Acquired Entities and a summary of the material
provisions of any lease or other Applicable Contract relating to such leasehold
or other interest, including the identity of the other party thereto, a
description of the interest held, the location of the real property, the
duration thereof, payment terms and any rights of termination. The Acquired
Entities and the Interest Holders have made available to Acquiror copies of all
leases and other instruments (as recorded) by which the Acquired Entities
acquired such real property interests, and copies of any title insurance
policies, opinions, abstracts and surveys in the possession of the Interest
Holders or the Acquired Entities and relating to such interests. Each of the
Acquired Entities owns all of the properties and assets (whether real, personal
or mixed and whether tangible or intangible) that it purports to own, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be disclosed
on Part 5.9 of the Disclosure Letter, licenses for intangible personal property
(including software licenses) and personal property sold since the date of the
Balance Sheet, in the ordinary course of business), and all of the properties
and assets purchased or otherwise acquired by such Acquired Entity since the
date of the Balance Sheet. Except as set forth in Part 5.9 of the Disclosure
Letter, all material properties and assets reflected in the Balance Sheet are
free and clear of all Encumbrances and are not, in the case of real property
interests, subject to any rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature except, with respect to all
such properties and assets (i) security interests shown on the Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (ii) security interests incurred in connection with the
purchase of property or assets after the date of the Balance Sheet (such
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security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, and (iii) liens for current taxes not
yet due. To the knowledge of the Acquired Entities, all buildings and structures
occupied by the Acquired Entities lie wholly within the boundaries of the real
property leased by the Acquired Entities and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person.
5.10. CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth
in Part 5.10 of the Disclosure Letter, the buildings and structures conform to
applicable code requirements and commercial standards for the localities where
the premises are located, and the equipment and other tangible personal property
of the Acquired Entities are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such buildings,
structures, equipment and other tangible personal property is in need of
maintenance or repair, except ordinary, routine maintenance and repairs that are
not material in nature or cost. The buildings, structures, equipment and other
tangible personal property of each Acquired Entity are sufficient for the
continued conduct of such Acquired Entity's business after the Closing in
substantially the same manner as conducted prior to the Closing.
5.11. ACCOUNTS RECEIVABLE. All accounts receivable of the
Acquired Entities that are reflected on the Balance Sheet (collectively, the
"Accounts Receivable") represent valid obligations arising from sales actually
made or services actually performed in the ordinary course of business. Except
as set forth in Part 5.11 of the Disclosure Letter, unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the reserves, if any, shown on the Balance Sheet
or on the accounting records of the Company on the Closing Date (which, in the
case of the reserve as of the Closing Date, is adequate and will not represent a
material adverse change in the composition of such Accounts Receivable in terms
of aging since the date of the Balance Sheet). To the knowledge of the Acquired
Entities and the Interest Holders, no event has occurred nor circumstances exist
which make it improbable that any of the Acquired Entities will be able to
collect the Accounts Receivable outstanding as of the date of this Agreement or
as of the Closing Date consistent with its prior collection experience.
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5.12. NO UNDISCLOSED LIABILITIES. Except as set forth in Part
5.12 of the Disclosure Letter, the Acquired Entities have no material
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet and current
liabilities incurred in the ordinary course of business since the date thereof.
5.13. TAXES. (a) Except as set forth in Part 5.13 of the
Disclosure Letter, (i) all Tax Returns with respect to Taxes that were required
to be filed by or on behalf of each Acquired Entity at or prior to the date of
this Agreement have been duly filed on a timely basis (giving effect to any
extensions granted to such Acquired Entity) and are true, correct and complete
in all material respects, (ii) all Taxes due with respect to periods covered by
the Tax Returns referred to in clause (i) have been paid in full or each of the
Acquired Entities has adequately reserved or made adequate accruals (which are
reflected on the Balance Sheet) with respect to any such Taxes which are due and
payable by such Acquired Entity, and the Acquired Entities have not had and will
not have any liability for Taxes materially in excess of the amounts so paid,
reserved or accrued, and (iii) no Acquired Entity is a party to or the subject
of any action, investigation or proceeding, exclusive of normal recurring
audits, nor to the knowledge of the Acquired Entities and the Interest Holders,
is any such action, investigation or proceeding threatened, by any Governmental
Authority for the assessment or collection of any Taxes, and no deficiency
notices or reports have been received by any Acquired Entity or any of the
Interest Holders with respect to any deficiency of the Acquired Entities for any
Taxes.
(b) The statute of limitations for the assessment of (i) Swiss
income and other Taxes of the Company has expired for each period through
December 31, 1991, (ii) German income and other Taxes of Sub has expired for
each period through December 31, 1991, and (iii) Netherland Antilles income and
other Taxes of Kilmer has expired for each period through December 31, 1991.
(c) No Tax is required to be withheld as a result of
the transactions contemplated by this Agreement.
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(d) As a result of compliance with this Agreement and the
matters referred to herein, none of the Acquired Entities nor the Interest
Holders will be obligated to make any payment to any individual that would be a
"parachute payment" to a "disqualified individual" as those terms are defined in
Section 280G of the IRC without regard to whether such payment is to be made in
the future.
5.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (a) Except as set forth in Part 5.14(a) of the Disclosure
Letter: (i) each Acquired Entity is, and has been, in compliance in all material
respects with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
properties or assets; (ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result in a
material violation by any Acquired Entity of, or a failure on the part of any
Acquired Entity to comply in all material respects with, any Legal Requirement
that is or was applicable to it or to the conduct or operation of its business
or the ownership or use of any of its properties or assets, or (B) may give rise
to any material obligation on the part of any Acquired Entity to undertake, or
to bear all or any portion of the cost of, any remedial action of any nature;
and (iii) no Acquired Entity has received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement that is or was applicable to it or
to the conduct or operation of its business or the ownership or use of any of
its properties or assets, or (B) any actual, alleged, possible, or potential
obligation on the part of such Acquired Entity to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Except as set forth in Part 5.14 (b) of the Disclosure
Letter: (i) each Acquired Entity is, and has been, in full compliance with all
of the terms and requirements of each Governmental Authorization owned,
possessed or otherwise applicable to such Acquired Entity, the conduct of its
business or any assets owned or used by it; (ii) no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement
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of any Governmental Authorization owned, possessed or otherwise applicable to
any Acquired Entity, the conduct of its business or any assets owned or used by
it, or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to, any such
Governmental Authorization; (iii) no Acquired Entity has received any notice or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential violation
of or failure to comply with any term or requirement of any Governmental
Authorization owned, possessed or otherwise applicable to such Acquired Entity,
the conduct of its business or any assets owned or used by it, or (B) any
actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any such Governmental
Authorization; and (iv) all applications required to have been filed for the
renewal of the Governmental Authorizations owned, possessed or otherwise
applicable to each Acquired Entity, the conduct of its business or any assets
owned or used by it have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
(c) Except as set forth in Part 5.14(c) of the Disclosure
Letter, the Governmental Authorizations owned, possessed or otherwise applicable
to the Acquired Entities, the conduct of their respective businesses or the
assets owned or used by them collectively constitute all of the Governmental
Authorizations required in order to permit each of the Acquired Entities to
lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit each of the Acquired Entities to own
and use its assets in the manner in which it currently owns and uses such
assets.
5.15. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 5.15(a) of the Disclosure Letter, there is no pending Proceeding: (i) that
has been commenced by or against any Acquired Entity or any of the Interest
Holders or that otherwise relates to or may materially affect the business of,
or any of the assets owned or used by, any Acquired Entity; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
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(b) Except as set forth in Part 5.15(b) of the Disclosure
Letter, to the knowledge of the Acquired Entities and the Interest Holders, (i)
no such Proceeding has been threatened, and (ii) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. The Acquired Entities and the Interest
Holders have delivered to Acquiror copies of all pleadings, correspondence with
third parties, and other non-privileged documents relating to each Proceeding
listed in Part 5.15 of the Disclosure Letter. The Proceedings listed in Part
5.15 of the Disclosure Letter will not have a material adverse effect on the
business, operations, assets, condition, or prospects of the Acquired Entities
taken as a whole.
(c) Except as set forth in Part 5.15(c) of the Disclosure
Letter: (i) there is no Order to which any Acquired Entity, or any of the assets
owned or used by any Acquired Entity, is subject; (ii) none of the Interest
Holders is subject to any Order that relates to the business of, or any of the
assets owned or used by, any Acquired Entity; and (iii) no officer, director,
managing director, Prokurist, holder of procuration, commercial mandate holder,
agent or employee of any Acquired Entity is subject to any Order that prohibits
such officer, director, managing director, Prokurist, holder of procuration,
commercial mandate holder, agent or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of such Acquired Entity.
(d) Except as set forth in Part 5.15(d) of the Disclosure
Letter: (i) each Acquired Entity is, and at all times has been, in compliance in
all material respects with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject; (ii)
no event has occurred or circumstance exists that may constitute or result in
(with or without notice or lapse of time) a material violation of or failure to
comply in all material respects with any term or requirement of any Order to
which any Acquired Entity, or any of the assets owned or used by it, is subject;
and (iii) no Acquired Entity has received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which any Acquired
Entity, or any of the assets owned or used by it, is or has been subject.
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5.16. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Part 5.16 of the Disclosure Letter, since the date of the Balance
Sheet, each Acquired Entity has conducted its business only in the ordinary
course of business and there has not been any:
(a) change in such Acquired Entity's stated capital or equity
interests; grant of any option or right to purchase shares of such
Acquired Entity; issuance of any security convertible into such shares;
grant of any registration rights; purchase, redemption, retirement, or
other acquisition by such Acquired Entity of any such shares; or
declaration or payment of any shares in such Acquired Entity's profits;
(b) amendment to the organizational or organic documents of
such Acquired Entity;
(c) payment or increase by such Acquired Entity of any
bonuses, salaries, or other compensation to any shareholder, director,
managing director, Prokurist, holder of procuration, commercial mandate
holder, officer, or (except in the ordinary course of business
consistent with past practice) employee or entry into any employment,
severance, or similar Contract with any director, managing director,
Prokurist, holder of procuration, commercial mandate holder, officer,
or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of such Acquired Entity;
(e) damage to or destruction or loss of any asset or property
of such Acquired Entity, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition, or prospects of such Acquired Entity;
(f) entry into, termination of, or receipt of notice of
termination of (i) any Contract, any license, distributorship, dealer,
sales representative, joint venture,
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credit, or similar agreement, or (ii) any transaction involving a total
remaining commitment by or to such Acquired Entity of at least 60,000
SFR, 70,000 DM or U.S. $50,000;
(g) sale (other than sales of inventory in the ordinary course
of business), lease, or other disposition of any asset or property of
such Acquired Entity or mortgage, pledge, or imposition of any
Encumbrance on any material asset or property of such Acquired Entity,
including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to such Acquired Entity in excess of 60,000 SFR, 70,000 DM or
U.S. $50,000;
(i) material change in the accounting methods used by such
Acquired Entity;
(j) incurrence or payment (other than regularly scheduled
payments under debt obligations existing as of the date of this
Agreement) of any indebtedness for borrowed money or any incurrence of
or commitment to incur any material capital expenditures by such
Acquired Entity, in each case, in excess of U.S. $30,000;
(k) acquisition of any assets or properties or any commitment
to do so other than in the ordinary course of business by such Acquired
Entity; or
(l) agreement, whether oral or written, by such Acquired
Entity to do any of the foregoing.
5.17. CONTRACTS; NO DEFAULTS. (a) Part 5.17(a) of the
Disclosure Letter contains a complete and accurate list, and the
Company, Sub, Kilmer and the Interest Holders have delivered to
Acquiror true and complete copies, of:
(i) each Applicable Contract that involves performance of
services by any Acquired Entity of an amount or value in excess of
125,000 SFR, 150,000 DM or U.S. $100,000, except any such Applicable
Contract that can be terminated without cause by either party thereto
without penalty on 30 days or less notice;
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(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to any Acquired Entity of an
amount or value in excess of 125,000 SFR, 150,000 DM or U.S. $100,000,
except any such Applicable Contract that can be terminated without
cause by either party thereto without penalty on 30 days or less
notice;
(iii) each Applicable Contract that was not entered into in
the ordinary course of business and that involves expenditures or
receipts by any Acquired Entity in excess of 125,000 SFR, 150,000 DM or
U.S. $100,000, except any such Applicable Contract that can be
terminated without cause by either party thereto without penalty on 30
days or less notice;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any personal property of any
Acquired Entity (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than U.S. $20,000);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement, voluntary company
agreement between an employer and employees (or works council)
concerning working conditions (Betriebsvereinbarung) and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees or with a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by any Acquired Entity with any other Person;
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(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of any Acquired
Entity or any Affiliate thereof or limit the freedom of any Acquired
Entity or any Affiliate thereof to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods, except that, with respect to all Applicable
Contracts relating to the retaining of Clinical Research Assistants
("CRAs") by any Acquired Entity, Part 5.17(a) of the Disclosure Letter
need only set forth the aggregate payments made by the Acquired
Entities to all such CRAs during fiscal 1995;
(x) each power of attorney with respect to any Acquired
Entity or any Interest Holder that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
ordinary course of business that contains or provides for an express
undertaking by any Acquired Entity to be responsible for consequential
damages;
(xii) each Applicable Contract for capital expenditures
by any Acquired Entity in excess of 70,000 SFR, 75,000 DM or
U.S. $50,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any
Acquired Entity other than in the ordinary course of business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 5.17(b) of the Disclosure
Letter: (i) none of the Interest Holders (and no Related Person of any Interest
Holder) has or may acquire any material rights under, and none of the Interest
Holders have or may become subject to any material obligation or liability
under, any Contract that relates to the business of, or any of the assets owned
or used by, any Acquired Entity; and (ii) no officer, director, managing
director, Prokurist, holder of procuration,
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commercial mandate holder, officer, agent, employee, consultant, or contractor
of any Acquired Entity is bound by any Contract that purports to limit the
ability of such officer, director, managing director, Prokurist, holder of
procuration, commercial mandate holder, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of such Acquired Entity, or (B) assign to such Acquired
Entity or to any other Person any rights to any invention, improvement, or
discovery.
(c) Except as set forth in Part 5.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 5.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 5.17(d) of the Disclosure
Letter:
(i) each Acquired Entity is, and at all times has been, in
full compliance with all material terms and requirements of each
Contract under which it has or had any obligation or liability or by
which it or any of its assets is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which any Acquired Entity has or had
any rights is, and at all times has been, in full compliance with all
material terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene in any material
respect, conflict in any material respect with, or result in a material
violation or breach of, or give any Acquired Entity or other Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract; and
(iv) no Acquired Entity has given to or received from any
other Person, at any time any notice or other communication (whether
oral or written) regarding any actual,
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alleged, possible, or potential material violation or breach of, or
default under, any Contract.
(e) Except as set forth in Part 5.17(e) of the Disclosure
Letter, there are no renegotiations of, attempts to renegotiate, written demands
to renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to or by any Acquired Entity under current or completed Contracts with
any Person, other than any reduction of less than 10% of the aggregate amount
due to any Acquired Entity under any Applicable Contract with a sponsor which is
proportional to a corresponding reduction of services to be performed by such
Acquired Entity under such Contract.
(f) Except as set forth in Part 5.23 of the Disclosure Letter,
the Contracts relating to the sale, design, manufacture, or provision of
products or services by any Acquired Entity have been entered into in the
ordinary course of business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in material violation of any Legal
Requirement that is or was applicable to any Acquired Entity or to the conduct
or operation of its business or the ownership or use of any of its properties or
assets.
5.18. INSURANCE. (a) The Company, Sub, Kilmer and the Interest
Holders have delivered to Acquiror: (i) true and complete copies of all policies
of insurance to which any Acquired Entity is a party or under which any Acquired
Entity, or any director, managing director, Prokurist, holder of procuration,
commercial mandate holder, or officer of any Acquired Entity, is or has been
covered at any time within the two years preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for policies of
insurance; and (iii) any statement by the auditor of any Acquired Entity's
financial statements with regard to the adequacy of such Acquired Entity's
coverage or of the reserves for claims.
(b) Except as set forth on Part 5.18(b) of the Disclosure
Letter:
(i) All insurance policies to which any Acquired Entity is a
party or that provide coverage to any of the Interest Holders, any
Acquired Entity or any director, managing
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director, Prokurist, holder of procuration, commercial mandate holder,
or officer of any Acquired Entity; (A) to such Person's knowledge, are
valid, outstanding, and enforceable; (B) are issued by an insurer that
is financially sound and reputable; (C) taken together, provide
adequate insurance coverage for the assets and the operations of the
Acquired Entities taken as a whole for all risks to which the Acquired
Entities are normally exposed; (D) are sufficient for compliance in all
material respects with all Legal Requirements that are or were
applicable to the Acquired Entities or to the conduct or operation of
their business or the ownership or use of any of their properties or
assets and all Contracts to which the Acquired Entities are party or by
which they are bound; (E) will continue in full force and effect
following the consummation of the transactions contemplated hereby; and
(F) do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Acquired Entities.
(ii) None of the Interest Holders, Sub, Kilmer nor the Company
has received (A) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the
issuer of any insurance policy is not willing or able to perform its
obligations thereunder.
(iii) Each Acquired Entity has paid all premiums due, and has
otherwise performed in all material respects all of its obligations,
under each insurance policy to which it is a party or that provides
coverage to such Acquired Entity or a director, managing director,
Prokurist, holder of procuration, commercial mandate holder, or officer
thereof.
(iv) The Acquired Entities have given notice to the insurer of
all claims that may be insured thereby.
5.19. ENVIRONMENTAL MATTERS. Except as set forth in
Part 5.19 of the Disclosure Letter:
(a) Each of the Acquired Entities is, and at all times has
been, in compliance in all material respects with, and has not been and is not
in material violation of or liable under, any
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Environmental Law that is or was applicable to it or to the conduct or operation
of its business or the ownership or use of any of its properties or assets. None
of the Interest Holders, Sub, Kilmer nor the Company has any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held to be responsible received, any actual or threatened order, notice, or
other communication from (i) any Governmental Body or private citizen acting or
purporting to act in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential material violation or
failure to comply in all material respects with any Environmental Law that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its properties or assets, or of any actual or
threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or mixed) in which any of
the Interest Holders or any Acquired Entity has or had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
the Interest Holders, the Acquired Entities, or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) There are no pending or, to the knowledge of the Acquired
Entities or the Interest Holders, threatened claims, Encumbrances, or other
restrictions of a material nature, resulting from any Environmental, Health, and
Safety Liabilities or arising under or pursuant to any Environmental Law that is
or was applicable to any of the Acquired Entities or to the conduct or operation
of its business or the ownership or use of any of its properties or assets, with
respect to or affecting any of the Facilities or any other properties and assets
(whether real, personal, or mixed) in which any of the Interest Holders or any
Acquired Entity has or had an interest.
(c) None of the Acquired Entities nor the Interest Holders has
any basis to expect, nor has any of them or any other Person for whose conduct
they are or may be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or
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potential material violation or failure to comply in all material respects with
any Environmental Law that is or was applicable to any Acquired Entity or to
the conduct or operation of its business or the ownership or use of any of its
properties or assets, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or assets (whether
real, personal, or mixed) in which any of the Interest Holders or any Acquired
Entity has or had an interest, or with respect to any property or Facility to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by the Interest Holders, the Acquired Entities, or
any other Person for whose conduct they are or may be held responsible, have
been transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) None of the Acquired Entities nor the Interest Holders, or
any other Person for whose conduct they are or may be held responsible, has any
material Environmental, Health, and Safety Liabilities with respect to the
Facilities or with respect to any other properties and assets (whether real,
personal, or mixed) in which any of the Interest Holders or the Acquired
Entities (or any predecessor), has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. None
of the Interest Holders, the Acquired Entities, any other Person for whose
conduct they are or may be held responsible, or any other Person, has permitted
or conducted, or is aware of, any Hazardous Activity conducted with respect to
the Facilities or any other properties or assets (whether real, personal, or
mixed) in which any of the Interest Holders or the Acquired Entities has or had
an interest except in compliance in all material respects with all Environmental
Laws that are or were applicable to any Acquired
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Entity or to the conduct or operation of its business or the ownership or use of
any of its properties or assets.
(f) There has been no Release or, to the knowledge of the
Acquired Entities or the Interest Holders, Threat of Release, of any Hazardous
Materials at or from the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which any
of the Interest Holders or the Acquired Entities has or had an interest, or any
geologically or hydrologically adjoining property, whether by the Interest
Holders, the Acquired Entities, or any other Person.
(g) The Interest Holders and the Acquired Entities have
delivered to Acquiror true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed or initiated by the Interest
Holders or the Acquired Entities pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by the
Interest Holders, the Acquired Entities, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws that are or were
applicable to any of the Acquired Entities or to the conduct or operation of its
business or the ownership or use of any of its properties or assets.
5.20. EMPLOYEES. (a) Part 5.20 of the Disclosure Letter
contains a complete and accurate summary of the following information for each
employee, officer or director, managing director or Prokurist, holder of
procuration or commercial mandate holder of each Acquired Entity, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since December 31,
1995; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any pension, retirement, profit-sharing,
thrift-savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), other equity participation arrangement, severance pay, insurance,
medical, welfare, or vacation plan or any other employee benefit plan.
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(b) Except as set forth in Part 5.20 of the Disclosure Letter,
no employee, officer or director, managing director or Prokurist, holder of
procuration or commercial mandate holder of any Acquired Entity is a party to,
or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee, officer or director, managing director or Prokurist, holder of
procuration or commercial mandate holder and any other Person ("Proprietary
Rights Agreement") that in any way adversely affects or will affect the ability
of such Acquired Entity to conduct its business, including any Proprietary
Rights Agreement with the Interest Holders or the Acquired Entities by any such
employee, officer or director, managing director or Prokurist, holder of
procuration or commercial mandate holder. Except as set forth in Part 5.20 of
the Disclosure Letter, to the knowledge of the Acquired Entities and the
Interest Holders, no director, managing director, Prokurist, holder of
procuration, commercial mandate holder, officer, or other key employee of any
Acquired Entity intends to terminate his employment with the Acquired Entities.
(c) Part 5.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee, officer or director, managing director or Prokurist, holder of
procuration or commercial mandate holder of any Acquired Entity, or their
dependents, receiving benefits or scheduled to receive benefits in the future:
name, pension benefit, pension option election, retiree medical insurance
coverage, retiree life insurance coverage, and other benefits.
5.21. LABOR RELATIONS; COMPLIANCE. Except as set forth in Part
5.21 of the Disclosure Letter, since June 26, 1987 with respect to the Company,
February 9, 1990 with respect to Sub and October 12, 1989 with respect to
Kilmer, no Acquired Entity has been nor is it currently a party to any
collective bargaining or other labor Contract. Since June 26, 1987 with respect
to the Company, February 9, 1990 with respect to Sub and October 12, 1989 with
respect to Kilmer, there has not been, there is not presently pending or
existing, and, to the knowledge of the Acquired Entities, there is not
threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any Proceeding against or affecting any Acquired Entity
relating to the alleged material violation of any Legal Requirement applicable
to such Acquired Entity pertaining to labor relations or employment matters,
including any charge or complaint filed by an
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employee or union with any Governmental Body, organizational activity, or other
labor or employment dispute against or affecting any Acquired Entity or its
premises, or (c) any application for certification of a collective bargaining
agent. Except as set forth in Part 5.21 of the Disclosure Letter, no event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any
Acquired Entity, and no such action is contemplated by any Acquired Entity.
Except as set forth in Part 5.21 of the Disclosure Letter, each Acquired Entity
has complied in all material respects with all Legal Requirements applicable to
it relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. Except as set forth in Part 5.21 of the Disclosure Letter, no Acquired
Entity is liable for the payment of any compensation, damages, Taxes, fines,
penalties, or other amounts, however designated, for failure to comply in all
material respects with any of the foregoing Legal Requirements.
5.22. INTELLECTUAL PROPERTY. (a) The term "Intellectual
Property Assets" includes: (i) the name "BioClin Europe AG," "BioClin AG,"
"BioClin GmbH" and all fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications (collectively,
"Marks"); (ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "Patents"); (iii) all copyrights in both
published works and unpublished works (collectively, "Copyrights"); and (iv) all
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints (collectively, "Trade Secrets"); owned, used, or licensed by any Acquired
Entity as licensee or licensor.
(b) Part 5.22(b) of the Disclosure Letter contains a complete
and accurate list and summary description, including any royalties paid or
received by any Acquired Entity, of all Contracts relating to the Intellectual
Property Assets to which any Acquired Entity is a party or by which it is bound,
except for any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of less than
40,000 SFR, 50,000 DM or U.S. $30,000 under which any Acquired Entity is the
licensee. There are no
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outstanding and, to the knowledge of the Interest Holders and the Acquired
Entities, no threatened disputes or disagreements with respect to any such
agreement.
(c) (i) The Intellectual Property Assets are all those
necessary for the operation of each Acquired Entity's business as it is
currently conducted. The Acquired Entities are the owners or licensees of all
right, title, and interest in and to the Intellectual Property Assets (other
than to the extent that any Acquired Entity is obligated to assign any
application, invention, development, etc. relating to such Intellectual Property
Assets to another Person under an Applicable Contract with a sponsor), free and
clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims, and, except as set forth in Part 5.17(a) of the Disclosure
Letter, have the right to use without payment to a third party all of the
Intellectual Property Assets.
(ii) Except as set forth in Part 5.22(c) of the Disclosure
Letter, all former and current employees of each Acquired Entity have executed
written Contracts with such Acquired Entity that assign to it all rights to any
inventions, improvements, discoveries, or information relating to the business
of such Acquired Entity. Except as set forth in Part 5.22(c) of the Disclosure
Letter, no employee of any Acquired Entity has entered into any Contract that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than such Acquired Entity.
(d) (i) Part 5.22(d) of the Disclosure Letter contains a
complete and accurate list and summary description of all Patents owned by or
licensed to the Acquired Entities. Except as set forth in Part 5.22(d) of the
Disclosure Letter, the Acquired Entities are the owners or licensees of all
right, title, and interest in and to such Patents, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all of the issued Patents owned by the Acquired Entities are currently
in compliance in all material respects with applicable Legal Requirements
(including payment of filing, examination, and maintenance fees and proofs of
working or use),
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are valid and enforceable, and are not subject to any maintenance fees or Taxes
or actions falling due within ninety days after the Closing Date.
(iii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent owned by the Acquired Entities has been or is now involved in
any interference, reissue, reexamination, or opposition proceeding nor to the
knowledge of the Interest Holders and the Acquired Entities is there any
potentially interfering patent or patent application of any third
party.
(iv) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent is infringed or, to the knowledge of the Interest Holders and
the Acquired Entities, has been challenged or threatened in any way. Except as
set forth in Part 5.22(d) of the Disclosure Letter, none of the products
manufactured and sold, nor any process or know-how used, by the Acquired
Entities infringes or is alleged to infringe any patent or other proprietary
right of any other Person.
(v) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all products made, used, or sold under the Patents owned by the Acquired
Entities have been marked with the proper patent notice.
(e) (i) Part 5.22(e) of Disclosure Letter contains a complete
and accurate list and summary description of all Marks owned by or licensed to
the Acquired Entities. Except as set forth in Part 5.22(e) of the Disclosure
Letter, the Acquired Entities are the owners or licensees of all right, title,
and interest in and to such Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all Marks owned by the Acquired Entities that have been registered with
the Swiss Federal Intellectual Property Office or similar foreign Governmental
Body are currently in compliance in all material respects with applicable Legal
Requirements (including the timely post-registration filing of affidavits of use
and incontestability and renewal applications), are valid and enforceable, and
are not subject to any maintenance
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fees or Taxes or actions falling due within ninety days after the Closing Date.
(iii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Acquired Entities has been or is now involved in
any opposition, invalidation, or cancellation and, to the knowledge of the
Acquired Entities and the Interest Holders, no such action is threatened with
the respect to any of such Marks.
(iv) Except as set forth in Part 5.22(e) of the Disclosure
Letter, to the knowledge of the Acquired Entities and the Interest Holders,
there is no potentially interfering trademark or trademark application of any
third party.
(v) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Acquired Entities is infringed or, to the knowledge
of the Acquired Entities and the Interest Holders, has been challenged or
threatened in any way. Except as set forth in Part 5.22(e) of the Disclosure
Letter, none of the Marks used by the Acquired Entities infringes or is alleged
to infringe any trade name, trademark, or service mark of any third party.
(vi) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all products and materials containing a Mark owned by the Acquired
Entities bear the proper federal registration notice where permitted by law.
(f) (i) Part 5.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all Copyrights owned by or
licensed to the Acquired Entities. Except as set forth in Part 5.22(f) of the
Disclosure Letter, the Acquired Entities are the owners or licensees of all
right, title, and interest in and to such Copyrights, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims.
(ii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all the Copyrights owned by the Acquired Entities have been registered
(to the extent required to protect such Copyrights) and are currently in
compliance in all material respects with applicable Legal Requirements, are
valid and enforceable, and are not subject to any maintenance fees or Taxes
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or actions falling due within ninety days after the date of Closing.
(iii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, no Copyright owned by the Acquired Entities is infringed or, to the
knowledge of the Acquired Entities and the Interest Holders, has been challenged
or threatened in any way. Except as set forth in Part 5.22(f) of the Disclosure
Letter, none of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a derivative work
based on the work of a third party.
(iv) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all works encompassed by the Copyrights owned by the Acquired Entities
have been marked with the proper copyright notice (to the extent required to
protect such Copyrights).
(g) (i) With respect to each Trade Secret owned by the
Acquired Entities, the documentation relating to such Trade Secret is current,
accurate, and sufficient in detail and content to identify and explain it and to
allow its full and proper use without reliance on the knowledge or memory of any
individual.
(ii) Except as set forth in Part 5.22(g) of the Disclosure
Letter, the Interest Holders and the Acquired Entities have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of the Trade
Secrets owned by the Acquired Entities.
(iii) Except as set forth in Part 5.22(g) of the Disclosure
Letter, the Acquired Entities have good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. Except as set forth in
Part 5.22(g) of the Disclosure Letter, the Trade Secrets owned by the Acquired
Entities are not part of the public knowledge or literature, and, to the
knowledge of the Acquired Entities and the Interest Holders, have not been used,
divulged, or appropriated either for the benefit of any Person (other than the
Acquired Entities) or to the detriment of the Acquired Entities. Except as set
forth in Part 5.22(g) of the Disclosure Letter, no Trade Secret owned by the
Acquired Entities is subject to any adverse claim or has been challenged or
threatened in any way.
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(h) Except as set forth in Part 5.22(h) of the Disclosure
Letter, no Contract (whether or not related to the Intellectual Property Assets)
obligates the Acquired Entities or any director, managing director, Prokurist,
holder of procuration, commercial mandate holder, officer or employee of the
Acquired Entities to disclose and/or assign to another Person, any Intellectual
Property Asset or any developments, inventions, etc. relating to the
Intellectual Property Assets.
5.23. CERTAIN PAYMENTS. Except as set forth in Part 5.23 of
the Disclosure Letter, none of the Acquired Entities nor any director, managing
director, Prokurist, holder of procuration, commercial mandate holder, officer,
agent, or employee of the Acquired Entities, or any other Person associated with
or acting for or on behalf of the Acquired Entities, has directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of any Acquired Entity, or any Affiliate of any Acquired
Entity, or (iv) in violation of any Legal Requirement that is or was applicable
to any of the Acquired Entities or to the conduct or operation of its business
or the ownership or use of any of its properties or assets; (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Entities.
5.24. DISCLOSURE. (a) No representation or warranty of the
Acquired Entities or the Interest Holders in this Agreement and no statement in
the Disclosure Letter omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading. None of the information to be supplied by the Acquired
Entities or the Interest Holders for inclusion in, or to be incorporated by
reference in, the Proxy Statement will, at the time of the mailing of the Proxy
Statement and the time of the Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
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(b) No notice given by the Acquired Entities or any of the
Interest Holders pursuant to Section 7.6 will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.
(c) There is no fact known to any of the Acquired Entities or
the Interest Holders that has specific application to the Interest Holders or
the Acquired Entities (other than general economic or industry conditions) and
that materially adversely affects the assets, business, prospects, financial
condition, or results of operations of the Acquired Entities taken as a whole
that has not been set forth in this Agreement or the Disclosure Letter.
5.25. RELATIONSHIPS WITH RELATED PERSONS. Except as set forth
in Part 5.25 of the Disclosure Letter, none of the Interest Holders or any
Related Person of such Interest Holders or of the Acquired Entities has, or
since the first day of the next to last completed fiscal year of the Company has
had, any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to any Acquired Entity's
business. Except as set forth in Part 5.25 of the Disclosure Letter, none of the
Interest Holders or any Related Person of such Interest Holders or of the
Acquired Entities owns, or since the first day of the next to last completed
fiscal year of the Company owned (of record or as a beneficial owner), an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with any
Acquired Entity, or (ii) engaged in competition with any Acquired Entity with
respect to any line of the products or services of the Acquired Entities (a
"Competing Business") in any market presently served by the Acquired Entities,
except for less than one percent of the outstanding capital stock or stated
capital of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Part 5.25 of
the Disclosure Letter, none of the Interest Holders or any Related Person of
such Interest Holders or of the Acquired Entities is a party to any Contract
with, or has any claim or right against, any Acquired Entity, other than
Contracts relating to their employment with such Acquired Entity and claims for
ordinary compensation as provided by any such Contract.
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5.26. BROKERS AND FINDERS. Neither the Interest Holders nor
the Acquired Entities nor any of their respective officers, directors, managing
directors, Prokurists, holder of procuration, commercial mandate holder, or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted, directly or indirectly, for any of the Interest
Holders or the Acquired Entities, in connection with this Agreement or the
transactions contemplated hereby or thereby.
5.27. EMPLOYEE BENEFIT PLANS. (a) Part 5.27 of the Disclosure
Letter sets forth a complete and accurate list and summary description of each
employee benefit plan or arrangement, including, without limitation, bonus,
savings or profit sharing plan, deferred compensation plan, pension or
retirement plan, stock option plan, stock appreciation right plan, executive
compensation practice and other executive perquisite, each plan or arrangement
providing for insurance (including, without limitation, health and life
insurance) coverage, severance, termination or similar coverage and each written
compensation policy and practice, which in each case, covers any current or
former employee, officer, director, managing director, Prokurist, holder of
procuration, commercial mandate holder, or agent of any Acquired Entity, and
which is or was maintained or contributed to by any Acquired Entity, other than
those benefit plans or arrangements mandated by applicable Legal Requirements.
(b) Except as set forth in Part 5.27 of the Disclosure Letter,
each Acquired Entity has (i) complied in all material respects with all Legal
Requirements applicable to the employee benefit plans and arrangements listed in
Part 5.27 of the Disclosure Letter applicable to it, (ii) made all contributions
to such plans and arrangements that were required to be made pursuant to
applicable Legal Requirements; (iii) in the Balance Sheet, made adequate
provision for pension obligations that have been accrued but are not yet due and
payable and (iv) no pension obligations other than those required by Swiss or
German law, as the case may be.
5.28. INVESTMENT INTENT; ACCREDITED INVESTOR. (a) The Interest
Holders are acquiring the Acquiror Shares pursuant to Article II of this
Agreement for their own accounts and not with the view to, or for resale in
connection with, any distribution or public offering thereof with the meaning of
the Securities
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Act, except as contemplated by the Stockholders' Agreement. Each Interest Holder
is either (i) an "accredited investor" as such term is defined in Section 501(a)
of Regulation D promulgated under the Securities Act or (ii) otherwise has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and the risks of the Acquiror Shares being delivered
pursuant to Section 2.1 of this Agreement so that such delivery of Acquiror
Shares is eligible for exemption from the registration and prospectus delivery
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act or Regulation S thereunder. Each Interest Holder has had an opportunity to
ask questions and receive answers concerning the terms and conditions of the
offering of the Acquiror Shares, has had full access to such information
concerning Acquiror as such Person has requested and possesses substantial
information about, and familiarity with, Acquiror as a result of the information
provided to such Person. The Interest Holders understand that the Acquiror
Shares have not been registered under the Securities Act by reason of their
contemplated issuance by Acquiror in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act pursuant to Section
4(2) thereof, and that the reliance of Acquiror upon this exemption is
predicated in part upon this representation and warranty by the Interest
Holders.
(b) Each member of the Employee Group is acquiring the
Acquiror Shares pursuant to Article II of this Agreement for her own account and
not with the view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act. Each member of
the Employee Group is not a "U.S. Person" as such term is defined in Section
901(o) of Regulation S promulgated under the Securities Act. Each member of the
Employee Group understands that the Acquiror Shares have not been registered
under the Securities Act by reason of their contemplated issuance by Acquiror in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Regulation S promulgated thereunder, and that
the reliance of Acquiror upon this exemption is predicated in part upon this
representation and warranty by the Employee Group.
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ARTICLE VI
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
6.1. CONDUCT PRIOR TO CLOSING. (a) The Acquired Entities and
the Interest Holders hereby covenant and agree with Acquiror, that, prior to the
Closing, unless the prior written consent of Acquiror shall have been obtained
and except as otherwise contemplated herein, each of the Acquired Entities
shall, and the Interest Holders will cause each Acquired Entity to, operate its
business only in the usual, regular and ordinary course and in accordance with
past practices and to conduct its business in compliance in all material
respects with the standards of the industry in which it operates and provides
services; and to preserve intact its current business organization, keep
available the services of its current officers, employees and agents, and
maintain the relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with the
Acquired Entities. From the date hereof until the Closing, except as otherwise
specifically provided in this Agreement (including, without limitation, Section
6.3), each of the Acquired Entities agrees that it will not, and the Interest
Holders covenant and agree that they will not permit any Acquired Entity to, do
or agree or commit to do, without the prior written consent of Acquiror, any of
the following:
(i) incur any liabilities or obligations in excess of
U.S. $50,000, in the aggregate, whether directly or by way of
guaranty, including any obligation for borrowed money whether
or not evidenced by a note, bond, debenture or similar
instrument;
(ii) acquire any equity, debt or other investment
securities except for acquisitions of such securities in
the ordinary course of business;
(iii) grant any increase in compensation (including any
salaries or bonuses) to its employees as a class, or to its officers or
directors, managing director or Prokurist, holder of procuration or
commercial mandate holder, except as required by law or at times and in
a manner consistent with past practice; effect any change in retirement
benefits to any class of employees or officers (unless any such change
shall be required by applicable law); enter into any employment,
severance or similar agreements or arrangements
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with any director, managing director or Prokurist, holder of
procuration, commercial mandate holder, or officer or employee other
than the agreements or severance and other plans described in Part 5.27
of the Disclosure Letter, which in the case of employment agreements
would extend beyond the Closing Date (it being understood that nothing
contained herein shall prohibit any Acquired Entity from paying
individual merit increases or promotional increases, or performance
bonuses to its employees based on formulas consistent with those used
in the past for similar levels of performance); or establish, adopt,
enter into or amend any employee benefit plan for the benefit of any
director, managing director or Prokurist, holder of procuration,
commercial mandate holder, or officer or employee;
(iv) declare any profit to be distributed to its shareholders
or pay any profit and purchase, redeem or otherwise acquire any of
its shares;
(v) other than with respect to the loan and letter agreement
relating to the acquisition of real property in connection with
establishing a representative office in Lithuania, purchase or
otherwise acquire any substantial portion of the assets, or of any
class of stock or equity interests of any Person except in partial or
complete satisfaction of debts previously contracted; merge into any
other Person or permit any other Person to merge into it or consolidate
with any other Person; liquidate, sell, dispose of, or encumber any
assets or acquire any assets, other than in the ordinary course of
business consistent with past practice, or issue any shares or permit
any shares held in its treasury to become outstanding; or issue or
grant or extend the term of any option, warrant, conversion or stock
appreciation right not in existence on the date hereof;
(vi) propose or adopt any amendments to its organizational or
organic documents;
(vii) enter into any type of business not conducted by such
Acquired Entity as of the date of this Agreement or create or organize
any new Subsidiary or enter into or participate in any joint venture or
partnership;
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(viii) propose or adopt any material changes to the accounting
principles used by such Acquired Entity except as required by
applicable generally accepted accounting principles and then only in
consultation with Acquiror;
(ix) enter into any agreement or transactions with any of the
Interest Holders, another Acquired Entity or any Affiliate thereof or
make any material amendment or modification to any such agreement,
except as contemplated by this Agreement; or
(x) agree or commit to do any of the foregoing.
Without limiting the foregoing, from the date hereof until the Closing, the
Acquired Entities shall not, and the Interest Holders agree that they will not
permit any Acquired Entity to, without first promptly notifying Acquiror and
obtaining the prior written consent of Acquiror, take any action or permit or
suffer to be taken any action, which is represented in Section 5.16 not to have
been taken since the date of the Balance Sheet.
(b) From the date hereof until the Closing, Acquiror shall
not, without first promptly notifying the Interest Holders and providing the
Interest Holders an opportunity to express their views, take any action or
permit or suffer to be taken any action, which is represented in Section 3.8 not
to have been taken since March 31, 1996.
6.2. CONSENTS AND APPROVALS. (a) Subject to the terms and
conditions herein provided, each of the parties hereto agrees to cooperate with
the other and use all reasonable best efforts to satisfy the conditions set
forth in Article VIII to be satisfied and to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws, regulations and contractual arrangements to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. Each of the
parties hereto hereby covenants and agrees subject, in the case of Acquiror to
the fiduciary obligations of Acquiror's Board of Directors, to take no action
(a) which would render any of its representations and warranties contained
herein untrue at and as
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of the Closing except as otherwise contemplated herein or (b) which would
adversely affect its ability to satisfy any of the conditions set forth in
Article VIII, including, without limitation, the ability to obtain any necessary
Governmental Authorizations required for the transactions contemplated hereby or
materially increase the period of time necessary to obtain such authorizations.
(b) To the extent that the rights of any Acquired Entity under
any agreement, arrangement or understanding may not be assigned without the
consent or approval of another party thereto, such Acquired Entity shall, and
the Interest Holders shall cause such Acquired Entity to, use all reasonable
efforts to obtain any such consent or to amend the agreement, arrangement or
understanding such that no consent is required.
6.3. BOOKKEEPING, ACCOUNTING AND FINANCIAL REPORTING
CAPABILITIES. (a) The Acquired Entities and the Interest Holders hereby covenant
and agree with Acquiror, that (i) prior to the Closing, the Acquired Entities
and the Interest Holders will deliver to Acquiror: (A) an audited combined
consolidated balance sheet of the Company and the BioClin Affiliates as at
December 31, 1994, and the related audited combined consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal year then
ended as well as the fiscal year ended December 31, 1993, together with the
report thereon of KPMG Peat Marwick L.L.P., and (B) an audited combined
consolidated balance sheet of the Company and the BioClin Affiliates as at
December 31, 1995 and the related audited combined consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal year then
ended, together with the report thereon of KPMG Peat Marwick L.L.P., including,
in each case, the notes thereto, and (ii) (A) the financial statements with
respect to fiscal 1995 will be prepared in accordance with U.S. GAAP (which
except where noted therein, will be consistently applied), and will fairly
present the financial condition and results of operations, changes in
stockholders' equity and cash flow of the Company and the BioClin Affiliates as
at the respective dates and for the periods referred to in such financial
statements and (B) the financial statements with respect to fiscal 1993 and 1994
will be prepared in accordance with Swiss GAAP and will be reconciled to U.S.
GAAP.
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(b) The Acquired Entities and the Interest Holders hereby
covenant and agree with Acquiror, that, prior to the Closing, the Acquired
Entities shall, and the Interest Holders shall cause the Acquired Entities to,
hire such number of bookkeepers and/or accountants, or an accounting firm to
provide such bookkeeping and accounting services, reasonably acceptable to
Acquiror, both in terms of number and identity, such that the Acquired Entities
will, upon the Closing, have adequate financial reporting capabilities to ensure
that the reporting of consolidated financial results by Acquiror on a
post-Closing basis shall be made in a manner that will enable Acquiror meet all
reporting obligations applicable to it pursuant to the Exchange Act.
(c) Notwithstanding any other provision hereof to the contrary
(including, without limitation, Section 10.2), to the extent Acquiror incurs any
fees or expenses in connection with the employment of Persons in connection with
the rendering of services contemplated by Section 6.3(b), the Acquired Entities
shall promptly reimburse Acquiror for all such fees and expenses.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. CURRENT INFORMATION. During the period from the date of
this Agreement to the Closing, the Interest Holders, on the one hand, and
Acquiror, on the other hand, will cause one or more of their Representatives to
confer on a regular and frequent basis with Representatives of the other party
with respect to the status of the ongoing operations of the Acquired Entities.
Each party will promptly notify the other party of any material change in the
normal course of its business or in the operation of its properties and, to the
extent permitted by applicable law, of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material Proceedings
involving such party which would in any manner, challenge, prevent, alter or
materially delay any of the transactions contemplated by this Agreement, and
each party will keep the other party fully informed with respect to such events.
Each party will also notify the other party of the status of regulatory
applications and third party consents related to the transactions contemplated
hereby.
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7.2. ACCESS AND INVESTIGATION. To the full extent permitted by
applicable law, between the date of this Agreement and the Closing Date, the
Acquired Entities shall, and the Interest Holders shall cause the Acquired
Entities and its Representatives to, (a) afford Acquiror and its Representatives
(collectively, "Acquiror's Advisors") full and free access to the personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data of the Acquired Entities, (b) furnish Acquiror and
Acquiror's Advisors with copies of all such contracts, books and records, and
other existing documents and data as Acquiror may reasonably request, and (c)
furnish Acquiror and Acquiror's Advisors with such additional financial,
operating, and other data and information as Acquiror may reasonably request.
7.3. EFFECT OF INVESTIGATIONS. Notwithstanding the
notification and cure provisions of Sections 7.6(c) and (d), but subject to the
provisions of Sections 8.2 and 8.3, no investigation by the parties hereto made
heretofore or hereafter, whether pursuant to this Agreement or otherwise
(including without limitation, any action taken by or information provided to
Acquiror pursuant to the provisions of Sections 7.1 and 7.2) shall affect the
representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation.
7.4. PRESS RELEASES, ETC. Acquiror and the Interest Holders
will consult with each other as to the form, substance and timing of any press
release or other public disclosure of matters related to this Agreement or any
of the transactions contemplated hereby and no such press release or other
public disclosure shall be made without the consent of the other party, which
shall not be unreasonably withheld or delayed; provided, however, that either
party may make such disclosures as are required by law after making reasonable
efforts in the circumstances to consult in advance with the other party.
7.5. ACQUISITION PROPOSALS. Until such time, if any, as this
Agreement is terminated pursuant to Article IX, the Acquired Entities and the
Interest Holders will not, and the Interest Holders will cause the Acquired
Entities and its Representatives not to, directly or indirectly solicit,
initiate, or encourage or take any other action to facilitate (including by way
of providing information) any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the
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merits of any unsolicited inquiries or proposals from, any Person (other than
Acquiror) relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of business) of the Acquired Entities,
or any of the equity interests of the Acquired Entities, or any merger,
consolidation, business combination, or similar transaction involving the
Acquired Entities. The Acquired Entities and the Interest Holders shall promptly
advise Acquiror orally and in writing of any inquiry or proposal which relates
to such a transaction.
7.6. NOTIFICATION OF CERTAIN MATTERS. (a) Between the date of
this Agreement and the Closing Date, each Interest Holder will promptly notify
Acquiror in writing if such Interest Holder or any Acquired Entity has knowledge
of any fact or condition that causes or constitutes a breach of the Trustee's,
or any of the Interest Holders' or any Acquired Entity's representations and
warranties as of the date of this Agreement, or if such Interest Holder or any
Acquired Entity has knowledge of the occurrence after the date of this Agreement
of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition, or any
fact or condition disclosed to the Interest Holders by Acquiror pursuant to
Section 7.6(d), require any change in the Disclosure Letter, if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition, the Interest Holders will promptly deliver to Acquiror a supplement
to the Disclosure Letter specifying such change. During the same period, each
Interest Holder will promptly notify Acquiror if such Interest Holder or any
Acquired Entity has knowledge of the occurrence of any breach of any covenant of
the Interest Holders or the Acquired Entities in Article VI, this Article VII or
of the occurrence of any event that may make the satisfaction of the conditions
in Article VIII impossible or unlikely.
(b) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in writing if Acquiror has
knowledge of any fact or condition that causes or constitutes a breach of the
Acquiror's representations and warranties as of the date of this Agreement, or
if Acquiror has knowledge of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly
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contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition, or any fact or condition disclosed to Acquiror by any
Interest Holder pursuant to Section 7.6(c), require any change in the Acquiror
Letter, if the Acquiror Letter were dated the date of the occurrence or
discovery of any such act or condition, Acquiror will promptly deliver to the
Interest Holders a supplement to the Acquiror Letter specifying such change.
During the same period, Acquiror will promptly notify the Interest Holders if
Acquiror has knowledge of the occurrence of any breach of any covenant of
Acquiror in Article VI, this Article VII or of the occurrence of any event that
may make the satisfaction of the conditions in Article VIII impossible or
unlikely.
(c) Between the date of this Agreement and the Closing Date,
each Interest Holder will promptly notify Acquiror in writing if such Interest
Holder or any Acquired Entity has knowledge of any fact or condition that causes
or constitutes a breach of Acquiror's representations and warranties as of the
date of this Agreement, or if such Interest Holder or any Acquired Entity has
knowledge of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, each Interest Holder will
promptly notify Acquiror if such Interest Holder or any Acquired Entity has
knowledge of the occurrence of any breach of any covenant of Acquiror in Article
VI, this Article VII or of the occurrence of any event that may make the
satisfaction of the conditions in Article VIII impossible or unlikely.
(d) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in writing if Acquiror has
knowledge of any fact or condition that causes or constitutes a breach of the
Trustee's, any Acquired Entity's or any of the Interest Holders' representations
and warranties as of the date of this Agreement, or if Acquiror has knowledge of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty
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had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period, Acquiror will
promptly notify the Interest Holders if Acquiror has knowledge of the occurrence
of any breach of any covenant of the Acquired Entities or the Interest Holders
in Article VI, this Article VII or of the occurrence of any event that may make
the satisfaction of the conditions in Article VIII impossible or unlikely.
(e) For purposes of this Agreement, "knowledge" on the part of
Acquiror means the actual knowledge of Mr. Paul J. Schmitt, Mr. John G. Cooper
or Mr. Lief Modeweg, and knowledge on the part of the Acquired Entities means
the actual knowledge of Dr. Jack Barbut or Dr. J. Chris Jensen; provided,
however, that all such Persons shall be deemed to have actual knowledge of all
matters disclosed in the Acquiror Letter and the Disclosure Letter.
(f) Not later than ten Business Days prior to the scheduled
Closing Date, (i) Acquiror shall deliver to the Interest Holders a supplement to
the Acquiror Letter and (ii) the Interest Holders shall deliver to Acquiror a
supplement to the Disclosure Letter, in each case, that updates such disclosure
from the date of this Agreement to such date of delivery. Thereafter, until the
Closing, Acquiror and the Interest Holders shall notify each other in writing of
any changes or supplements to the updated information necessary, to the
knowledge of Acquiror or the Interest Holders, as the case may be, to make such
information correct and complete at all times up to and including the Closing.
(g) Notwithstanding the foregoing provisions of this Section
7.6, nothing herein contained shall be construed to, in any manner, (i) modify
the representations and warranties of the parties contained herein as made as of
the date hereof or (ii) affect any right or remedy of any party granted
hereunder or under the Stockholders' Agreement (including, without limitation,
the conditions to Closing set forth in Article VIII herein and the
indemnification provisions set forth in Article IV of the Stockholders'
Agreement).
7.7. CUSTOMERS. After execution of this Agreement and prior to
Closing, the Interest Holders, the Acquired Entities and Acquiror shall, either
individually or jointly, notify the customers of the Acquired Entities of the
transactions contemplated hereby. As promptly as practicable following the
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Closing, the Interest Holders and Acquiror shall notify such customers thereof
and shall provide, or join in providing where appropriate, all notices to such
customers and other persons that the Interest Holders, the Acquired Entities or
Acquiror, as the case may be, are or is required to give by any Governmental
Body having jurisdiction over any such Person or under applicable law or other
terms of any other agreement between any Acquired Entity or its employees and
any customer in connection with the transactions contemplated hereby.
7.8. PRESERVATION OF RELATIONSHIPS. The Interest Holders
(excluding, for this purpose, Hackel) shall use their best efforts, and shall
use their best efforts to cause all of their Affiliates including, without
limitation, the Acquired Entities and their respective employees (in their
capacity as employees) to use their best efforts, to maintain in effect all
material contractual and business relationships with the Acquired Entities or
the employees (in their capacity as employees) and to waive any and all rights
to terminate any such relationship arising as a result of the transactions
contemplated by this Agreement, except as otherwise contemplated by this
Agreement.
7.9. RESALE; LEGENDS. (a) The Interest Holders and the
Acquired Entities shall not sell or otherwise transfer any of their Acquiror
Shares until (a) such Acquiror Shares shall have been registered under the
Securities Act, or (b) Acquiror shall have received an opinion of legal counsel,
satisfactory to Acquiror, that such Acquiror Shares may be legally sold or
otherwise transferred without such registration.
(b) For a period of forty days following the Closing, no
member of the Employee Group shall sell or otherwise transfer, or offer to sell
or otherwise transfer, any of their Acquiror Shares in the United States or to
or for the account or the benefit of a "U.S. Person" as such term is defined in
Section 901(o) of Regulation S promulgated under the Securities Act. Thereafter,
no member of the Employee Group shall sell or otherwise transfer, or offer to
sell or otherwise transfer, any of their Acquiror Shares in the United States or
to or for the account or the benefit of a U.S. Person until (a) such Acquiror
Shares shall have been registered under the Securities Act, or (b) Acquiror
shall have received an opinion of legal counsel, satisfactory to Acquiror, that
such Acquiror Shares may be legally offered, sold or otherwise transferred in
the United States or to
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or for the account or the benefit of a U.S Person without such registration.
(c) The Acquiror Shares to be delivered to the Interest
Holders and/or the Acquired Entities shall be imprinted with a legend, in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and
may not be sold or transferred in the absence of an effective
registration statement under the Act or an exemption from
registration thereunder. Prior to any sale or transfer of the
securities represented by this certificate, except pursuant to
an effective registration statement under the Act covering
such sale or transfer, the holder hereof shall have delivered
to the issuer hereof (the "Company") an opinion of counsel
reasonably satisfactory to the Company to the effect that such
sale or transfer is exempt from registration under the Act."
(d) The Acquiror Shares to be delivered to the Employee
Group shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and,
for a period of 40 days after delivery pursuant to the Share
Exchange Agreement dated August 19, 1996, may not be sold or
otherwise transferred or offered for sale or transfer in the
United States or to or for the account or the benefit of a
U.S. Person (as such term is defined in Section 901(o) of
Regulation S promulgated under the Act) or at any time
thereafter in the absence of an effective registration
statement under the Act or an exemption from registration
thereunder. Prior to any offer, sale or transfer of the
securities represented by
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this certificate following such 40 day period in the United
States or to or for the account or the benefit of a U.S.
Person, except pursuant to an effective registration statement
under the Act covering such offer, sale or transfer, the
holder hereof shall have delivered to the issuer hereof (the
"Company") an opinion of counsel reasonably satisfactory to
the Company to the effect that such offer, sale or transfer is
exempt from registration under the Act."
7.10. POOLING TREATMENT. Neither Acquiror nor any Acquired
Entity nor any of the Interest Holders shall intentionally take, fail to take or
cause to be taken or not taken any action within its control, whether before or
after the Closing, which would disqualify the transactions consummated under
this Agreement as a "pooling of interests" for accounting purposes.
7.11. SHAREHOLDER APPROVAL; PROXY STATEMENT. (a) As soon as
practicable after the date hereof, Acquiror shall prepare a proxy statement (the
"Proxy Statement"), file it with the SEC, respond to comments of the Staff of
the SEC, clear the Proxy Statement with the Staff of the SEC and promptly
thereafter mail the Proxy Statement to all holders of Acquiror Common Stock. The
Interest Holders shall, and shall cause the Acquired Entities to, cooperate with
Acquiror in the preparation of the Proxy Statement.
(b) Acquiror shall take all action necessary, in accordance
with applicable law and its certificate of incorporation and by-laws, to convene
a meeting of the holders of Acquiror Common Stock (the "Stockholders Meeting")
for the purpose of considering and taking action with respect to the approval of
the issuance of the Acquiror Shares as required by the rules of the National
Association of Securities Dealers, Inc. in connection with the transactions
contemplated by this Agreement and any of the other transactions pursuant to
which Acquiror shall acquire all of the outstanding capital stock or equity
interests in each of the BioClin Affiliates.
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ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE
THE CLOSING. The respective obligations of each party to consummate the
Closing shall be subject to the fulfillment or waiver at or prior to the
Closing of the following conditions:
(a) The issuance of the Acquiror Shares shall have been
approved by the requisite vote of the holders of Acquiror Common Stock.
(b) The transfer of the Company Shares and the Kilmer Shares
and the sale, transfer and assignment of Sub Shares and the transfer and
delivery of the Acquiror Shares in consideration and in exchange therefor as
contemplated by this Agreement and the transactions contemplated hereby shall
have been approved by the Governmental Bodies whose approval is required to
consummate the transactions contemplated hereby without any condition which is
reasonably likely to have a material adverse effect on the financial condition,
business or results of operations of the Acquired Entities or Acquiror taken as
a whole; all conditions required to be satisfied prior to the Closing imposed by
the terms of such approvals shall have been satisfied; and all notifications to
any Governmental Bodies that are required shall have been made.
(c) None of Acquiror, the Trustee, the Interest Holders nor
the Acquired Entities shall be subject to any order, decree or injunction of any
Governmental Body which enjoins or prohibits the consummation of the
transactions contemplated by this Agreement.
(d) Acquiror, the Acquired Entities and the Interest Holders
shall have received a letter, dated the Closing Date, from KPMG Peat Marwick
L.L.P. to the effect that, for financial reporting purposes, the transactions
contemplated hereby qualify for pooling-of-interests accounting treatment under
U.S. GAAP if consummated in accordance with this Agreement.
(e) The Stockholders' Agreement and the Employment Agreements
shall have been entered into by the parties thereto.
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8.2. CONDITIONS TO OBLIGATION OF ACQUIROR TO CONSUMMATE THE
CLOSING. The obligations of Acquiror to consummate the Closing shall be subject
to the fulfillment or waiver at or prior to the Closing of the following
additional conditions:
(a) (i) The representations and warranties of the Acquired
Entities, the Trustee, the Employee Trustee and the Interest Holders set forth
in Articles IV and V hereof (A) that contain a materiality qualification shall
be true and correct and (B) that do not contain a materiality qualification
shall be true and correct in all material respects, as of the Closing as though
made at and as of the Closing (it being understood that representations and
warranties that speak as of a specified date shall continue to speak only as of
the date so specified) without giving effect to any supplement to the Disclosure
Letter, except for such changes occurring after the date hereof in the ordinary
course of business of the Acquired Entities and in accordance with the terms and
provisions of this Agreement (including, without limitation, Section 6.1(a)),
which, in the aggregate, would not have a material adverse effect on the
financial condition, operations or prospects of the Acquired Entities and the
BioClin Affiliates taken as a whole, and (ii) Acquiror shall have received a
signed certificate of each of the Acquired Entities (which is to the knowledge
of a principal executive officer thereof), the Trustee and the Interest Holders
to that effect. Acquiror's closing of the transactions contemplated by this
Agreement and the agreements with the BioClin Affiliates with respect to
Acquiror's acquisition of all of the outstanding capital stock or equity
interests of the BioClin Affiliates shall constitute acceptance of the
disclosures made by the Acquired Entities and/or the Interest Holders prior to
Closing in the Disclosure Letter and waiver of any purported misrepresentation
or breach of any representation or warranty made by such Persons in Article V or
any covenant of such Persons contained in Article VI or VII to the extent the
Disclosure Letter, as supplemented pursuant to Section 7.6(a) and (f), discloses
information pertaining thereto.
(b) The Acquired Entities, the Trustee and the Interest
Holders shall have in all material respects performed all obligations required
to be performed by them under this Agreement prior to the Closing, and Acquiror
shall have received a signed certificate of each of the Acquired Entities, the
Trustee and the Interest Holders to that effect.
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(c) Acquiror shall have received a legal opinion dated the
Closing, from Piper & Marbury, L.L.P., counsel of the Interest Holders, with
respect to the transactions contemplated herein in form mutually agreed upon by
Acquiror and the Interest Holders.
(d) The Board of Directors of Acquiror shall have received an
opinion from Vector Securities International, Inc., dated not later than the
date of Acquiror's Proxy Statement (and such opinion shall not have been
withdrawn on or before the Closing Date) to the effect that as of the date
thereof, the number of Acquiror Shares to be delivered in consideration for the
transfer of the Company Shares, the Sub Shares, the Kilmer Shares and the
capital stock or equity interests in each of the BioClin Affiliates is fair to
Acquiror and to Acquiror's stockholders from a financial point of view.
(e) Acquiror shall have acquired all of the outstanding
capital stock or equity interests in each of the BioClin Affiliates.
(f) The Acquired Entities shall have obtained the written
consent(s) of the Person(s) specified in Part 8.2 of the Acquiror Letter.
8.3. CONDITIONS TO OBLIGATION OF THE ACQUIRED ENTITIES, THE
TRUSTEE, THE EMPLOYEE TRUSTEE, THE EMPLOYEE GROUP AND THE INTEREST HOLDERS TO
CONSUMMATE THE CLOSING. The obligations of the Acquired Entities, the Trustee,
the Employee Trustee, the Employee Group and the Interest Holders to consummate
the Closing shall be subject to the fulfillment or waiver at or prior to the
Closing of the following additional conditions:
(a) (i) The representations and warranties of Acquiror set
forth in Article III hereof (A) that contain a materiality qualification shall
be true and correct, and (B) that do not contain a materiality qualification
shall be true and correct in all material respects, as of the Closing as though
made at and as of the Closing (it being understood that representations and
warranties that speak as of a specified date shall continue to speak only as of
the date so specified) without giving effect to any supplement to the Acquiror
Letter, except for such changes occurring after the date hereof in the ordinary
course of business of Acquiror and in accordance with the terms and
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provisions of this Agreement (including, without limitation, Section 6.1(b)),
which, in the aggregate, would not have a material adverse effect on the
financial condition, operations or prospects of Acquiror and its Subsidiaries
taken as a whole, and (ii) each of the Acquired Entities and the Interest
Holders shall have received a signed certificate which is to the knowledge of a
principal executive officer of Acquiror to that effect. The closing of the
transactions contemplated by this Agreement and the agreements with the BioClin
Affiliates with respect to Acquiror's acquisition of all of the outstanding
capital stock or equity interests of the BioClin Affiliates shall constitute
acceptance by the Acquired Entities, the Trustee and the Interest Holders of the
disclosures made by Acquiror prior to the Closing in the Acquiror Letter and
waiver of any purported misrepresentation or breach of any representation or
warranty made by Acquiror in Article III or any covenant of Acquiror contained
in Article VI or VII to the extent the Acquiror Letter, as supplemented pursuant
to Section 7.6(b) and (f), discloses information pertaining thereto.
(b) Acquiror shall have in all material respects performed all
obligations required to be performed by it under this Agreement prior to the
Closing, and each of the Acquired Entities, the Trustee and the Interest Holders
shall have received a signed certificate which is to the knowledge of a
principal executive officer of Acquiror to that effect.
(c) The Interest Holders shall have received a legal opinion
dated the Closing from Jones, Day, Reavis & Pogue, counsel of Acquiror, with
respect to the transactions contemplated herein in form mutually agreed upon by
Acquiror and the Interest Holders.
(d) All liabilities and obligations of Hackel (direct or
indirect) and Barbut pursuant to any guarantees of the indenbtedness of the
Acquired Entities and the BioClin Affiliates shall have been terminated.
ARTICLE IX
TERMINATION
9.1. TERMINATION. This Agreement may, by notice given
prior to or at the Closing, be terminated:
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(a) by either Acquiror or the Interest Holders if a material
breach of any provision of this Agreement has been committed by the other party
and such breach has not been waived;
(b) (i) by Acquiror, if any of the conditions in Section 8.1
or 8.2 has not been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Acquiror
to comply with its obligations under this Agreement) and Acquiror has not waived
such condition on or before the Closing Date; or (ii) by the Interest Holders,
if any of the conditions in Section 8.1 or 8.3 has not been satisfied as of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of the Trustee, the Acquired Entities or the
Interest Holders to comply with their obligations under this Agreement) and the
Interest Holders have not waived such condition on or before the Closing Date;
(c) by mutual consent of Acquiror and the Interest Holders;
(d) by either Acquiror or the Interest Holders if any of the
agreements relating to the transfer and delivery of the Acquiror Common Stock in
consideration for the sale, transfer and assignment of the outstanding capital
stock or equity interests in each of the BioClin Affiliates is terminated; or
(e) by either Acquiror or the Interest Holders if the Closing
has not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before December 31, 1996, or such later date as the parties may
agree upon.
9.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations set forth in Sections
6.3(c), 10.2 and 10.3 will survive; provided, however, that if this Agreement is
terminated by Acquiror or the Interest Holders because of the intentional breach
of the Agreement (including, without limitation, the making by any party hereto
of any representation or warranty hereunder that is known by such party not to
be true and correct in all material respects at the time such representation or
warranty is made) by the Interest Holders or Acquiror, as the
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case may be, or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's intentional failure to comply with its obligations under this Agreement,
the terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as specifically provided in the this Agreement and the Stockholders'
Agreement, all representations, warranties and agreements of the parties hereto
in this Agreement or in any instrument delivered by the parties hereto pursuant
to this Agreement shall expire on the Report Date or upon termination of this
Agreement in accordance with its terms.
10.2. EXPENSES. Except as otherwise expressly provided in this
Agreement (including, without limitation, in Section 6.3(b)) and the Letter
Agreement, dated May 16, 1996, by and among Acquiror, the Company, and the
BioClin Affiliates, each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and performance
of this Agreement and the transactions contemplated hereby, including all fees
and expenses of agents, representatives, counsel, and accountants. Acquiror will
pay all amounts payable to Vector Securities International, Inc. in connection
with this Agreement and the transactions contemplated hereby. In the event of
termination of this Agreement pursuant to Article IX, the obligation of each
party to pay its own expenses shall be subject to the right of such party to
pursue any legal remedies arising from the intentional breach of this Agreement
by the other party or the other party's failure to comply with its obligations
under this Agreement as provided in Section 9.2.
10.3. CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Acquiror and the Interest Holders will maintain in confidence,
and will cause the directors, managing directors, Prokurists, holders of
procuration, commercial mandate holders, officers, employees, agents, and
advisors of Acquiror and the Acquired Entities to maintain in
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confidence, and not use to the detriment of another party hereto any written,
oral, or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated hereby, unless
(a) such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby, or (c) the
furnishing or use of such information is required by or necessary or appropriate
in connection with legal proceedings. If any party hereto or its Representatives
are requested or become legally compelled (by oral questions, interrogatories,
requests for information or documents, subpoena, civil or criminal investigative
demand, or similar process) or is required by a regulatory body to make any
disclosure that is prohibited or otherwise constrained by this Agreement, such
party or its Representative, as the case may be, will provide the party
providing the confidential information with prompt notice of such request so
that an appropriate protective order or other appropriate remedy may be sought.
Subject to the foregoing, such party or its Representative may furnish that
portion (and only that portion) of the confidential information that, in the
written opinion of its counsel reasonably acceptable to the party providing such
information, such party is legally compelled or is otherwise required to
disclose the information at issue or else stand liable for contempt or suffer
other material censure or material penalty. If the transactions contemplated
hereby are not consummated, each party hereto will return or destroy as much of
such written information as the other party may reasonably request. Whether or
not the Closing takes place, the Interest Holders waive, and will upon
Acquiror's request cause the Acquired Entities to waive, any cause of action,
right, or claim arising out of the access of Acquiror or its Representatives to
any trade secrets or other confidential information of the Acquired Entities
except for the intentional competitive misuse by Acquiror of such trade secrets
or confidential information. Each of the Acquired Entities and each Interest
Holder acknowledges that, and agrees that it will advise its Representatives and
Affiliates, that any non-public information provided by or relating to Acquiror
may constitute material non-public information for purposes of the Exchange Act,
and agrees that it will not engage in any transaction in violation of the
restrictions on trading while in possession of
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material non-public information under applicable securities laws or regulations
while in possession of such information.
10.4. NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
(a) if to Acquiror:
DNX Corporation
303B College Road East
Princeton, New Jersey 08540
Attention: President
Telecopier No.: (908) 722-6677
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
Telecopier No.: (216) 579-0212
(b) if to the Employee Trustee:
Dr. Gerald Rittershaus
Theodor-Heuss-Anlage 2
68165 Mannheim
Germany
Telecopier No.: (621) 4256-250
(c) if to the Trustee:
Mr. Manfred Wissmann
Theodor-Heuss-Anlage 2
68165 Mannheim
Germany
Telecopier No: (621) 4256-250
(d) if to the Interest Holders:
Jack Barbut
c/o Piper & Marbury, L.L.P.
1251 Avenue of the Americas
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<PAGE> 170
New York, New York 10020-1104
Telecopier No.: (212) 835-6001
Alec Hackel
Flueliweg 3
6045 Meggen
Switzerland
Telecopier No.: (011) 41-41-377-3053
Dr. John Christian Jensen
Bohlstrasse 9a
6300 Zug
Switzerland
Telecopier No.: (011) 41-41-710-2341
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
(e) if to any Acquired Entity:
c/o BioClin, Inc.
1001 East Main Street
Suite 808
Richmond, Virginia 23219
Attention: Chief Executive Officer
Telecopier No.: (804) 788-0040
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
77
<PAGE> 171
10.5. JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
10.6. FURTHER ASSURANCES. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
10.7. WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Except as otherwise specifically
provided by Sections 8.2 and 8.3 of this Agreement, neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, and except as
otherwise specifically provided by Sections 8.2 and 8.3 of this Agreement (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
78
<PAGE> 172
10.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the Stockholders' Agreement and the other
documents referred to in this Agreement and the documents executed in connection
with Acquiror's acquisition of the equity interests of the BioClin Affiliates) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by each of the parties hereto.
10.9. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No
party hereto may assign any of its rights under this Agreement without the prior
consent of the other parties, except that Acquiror may assign any of its rights
under this Agreement to any Subsidiary of Acquiror. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement and their successors and assigns
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
10.10. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
The invalid or unenforceable provision shall be replaced by a provision which
ensures the economic purpose of the invalid or unenforceable provision as far as
possible.
10.11. FOREIGN CURRENCIES. For purposes of the representations
and warranties set forth in this Agreement, any reference to "U.S. $" shall be
construed to include the U.S. dollar equivalent of any foreign currency (other
than DM and SFR) computed using the noon buying rate in New York City for cable
transfers of such foreign currency as announced for customs
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purposes by the Federal Reserve Bank of New York prevailing on the date of this
Agreement.
10.12. SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
10.13. GOVERNING LAW. This Agreement will be governed by the
laws of the State of New York without regard to conflicts of laws principles.
10.14. SPECIFIC PERFORMANCE. Each of the Acquired Entities,
the Interest Holders, the Trustee, the Employee Trustee, the Employee Group and
Acquiror acknowledges and agrees that the other parties would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached.
Accordingly, each of the Acquired Entities, the Interest Holders, the Trustee
and Acquiror agrees that the other parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court in the United States or in any state having
jurisdiction over the parties and the matter in addition to any other remedy to
which they may be entitled pursuant hereto.
10.15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
DNX CORPORATION
By: /s/ Paul J. Schmitt
----------------------------
Name: Paul J. Schmitt
Title: Chief Executive Officer
/s/ Dr. Gerald Rittershaus
-------------------------------
Dr. Gerald Rittershaus,
as Employee Trustee
/s/ Mr. Manfred Wissmann
-------------------------------
Mr. Manfred Wissmann,
as Trustee
/s/ Dr. Jack Barbut
-------------------------------
Dr. Jack Barbut
/s/ Alec Hackel
-------------------------------
Alec Hackel
/s/ Dr. John Christian Jensen
-------------------------------
Dr. John Christian Jensen
/s/ Bettina Donhardt
-------------------------------
Ms. Bettina Donhardt
/s/ Christine Dune-Kraatz
-------------------------------
Ms. Christine Dune-Kraatz
BIOCLIN EUROPE AG
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<PAGE> 175
By: /s/ Dr. John Christian Jensen
-------------------------------
Name: Dr. John Christian Jensen
Title: Managing Director
BIOCLIN GMBH
By: /s/ Dr. John Christian Jensen
-------------------------------
Name: Dr. John Christian Jensen
Title: Managing Director
KILMER N.V.
By: /s/ Curacao Corporation Company N.V.
-------------------------------------
Title: Managing Director
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EXHIBIT 2.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARE ACQUISITION AGREEMENT
among
DNX CORPORATION
(a Delaware corporation),
DR. GERALD RITTERSHAUS, AS TRUSTEE,
DR. JACK BARBUT,
ALEC HACKEL,
DR. JOHN CHRISTIAN JENSEN
and
BIOCLIN INSTITUTE OF CLINICAL PHARMACOLOGY GMBH
(a German corporation)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 177
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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----
<S> <C> <C> <C>
Recitals................................................................................................ 1
ARTICLE I DEFINITIONS................................................................................... 3
ARTICLE II PURCHASE AND SALE OF THE COMPANY SHARES...................................................... 12
2.1. Sale, Purchase and Assignment of the Company
Shares.............................................................................. 12
2.2. Closing............................................................................. 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR.................................................. 13
3.1. Authorization, Validity and Effect.................................................. 13
3.2. Acquiror Shares..................................................................... 13
3.3. Conflicts; Defaults................................................................. 14
3.4. Exchange Act Filings................................................................ 14
3.5. Absence of Material Adverse Changes................................................. 14
3.6. Taxes............................................................................... 15
3.7. Legal Proceedings; Orders........................................................... 15
3.8. Absence Of Certain Changes and Events............................................... 16
3.9. Contracts; No Defaults.............................................................. 17
3.10. Insurance........................................................................... 18
3.11. Environmental Matters............................................................... 18
3.12. Labor Relations; Compliance......................................................... 19
3.13. Intellectual Property............................................................... 19
3.14. Disclosure.......................................................................... 19
3.15. Brokers and Finders................................................................. 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE REGARDING
THE TRUSTEE AND THE COMPANY SHARES.................................................. 20
4.1. Authorization, Validity and Effect.................................................. 20
4.2. Consents and Approvals; No Violation................................................ 20
4.3. Title and Power to Sell............................................................. 21
4.4. Litigation.......................................................................... 21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY
</TABLE>
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TABLE OF CONTENTS (cont'd)
--------------------------
<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C>
AND THE INTEREST HOLDERS WITH RESPECT TO THE COMPANY................................ 21
5.1. Organization, Authority and Authorization........................................... 21
5.2. Consents and Approvals; No Violation................................................ 22
5.3. Title and Power to Sell............................................................. 23
5.4. Capitalization of the Company; Subsidiaries......................................... 23
5.5. Company Financial Statements........................................................ 24
5.6. Books and Records................................................................... 24
5.7. Reports............................................................................. 24
5.8. Absence of Material Adverse Changes................................................. 25
5.9. Title to Properties; Encumbrances................................................... 25
5.10. Condition and Sufficiency of Assets................................................. 26
5.11. Accounts Receivable................................................................. 26
5.12. No Undisclosed Liabilities.......................................................... 27
5.13. Taxes............................................................................... 27
5.14. Compliance with Legal Requirements; Governmental
Authorizations...................................................................... 28
5.15. Legal Proceedings; Orders........................................................... 30
5.16. Absence Of Certain Changes and Events............................................... 31
5.17. Contracts; No Defaults.............................................................. 32
5.18. Insurance........................................................................... 36
5.19. Environmental Matters............................................................... 37
5.20. Employees........................................................................... 40
5.21. Labor Relations; Compliance......................................................... 41
5.22. Intellectual Property............................................................... 42
5.23. Certain Payments.................................................................... 46
5.24. Disclosure.......................................................................... 47
5.25. Relationships with Related Persons.................................................. 47
5.26. Brokers and Finders................................................................. 48
5.27. Employee Benefit Plans.............................................................. 48
5.28. Investment Intent; Accredited Investor.............................................. 49
ARTICLE VI CONDUCT OF BUSINESS PRIOR TO THE CLOSING..................................................... 50
6.1. Conduct Prior to Closing............................................................ 50
6.2. Consents and Approvals.............................................................. 52
6.3. Bookkeeping, Accounting and Financial Reporting
</TABLE>
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TABLE OF CONTENTS (cont'd)
--------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
Capabilities........................................................................ 53
ARTICLE VII ADDITIONAL AGREEMENTS....................................................................... 54
7.1. Current Information................................................................. 54
7.2. Access and Investigation............................................................ 55
7.3. Effect of Investigations............................................................ 55
7.4. Press Releases, Etc................................................................. 55
7.5. Acquisition Proposals............................................................... 55
7.6. Notification of Certain Matters..................................................... 56
7.7. Customers........................................................................... 59
7.8. Preservation of Relationships....................................................... 59
7.9. Resale; Legends..................................................................... 59
7.10. Pooling Treatment................................................................... 60
7.11. Shareholder Approval; Proxy Statement............................................... 60
ARTICLE VIII CONDITIONS................................................................................. 61
8.1. Conditions to Each Party's Obligation to
Consummate the Closing.............................................................. 61
8.2. Conditions to Obligation of Acquiror to
Consummate the Closing.............................................................. 61
8.3. Conditions to Obligation of Interest Holders
Owner to Consummate the Closing..................................................... 63
ARTICLE IX TERMINATION.................................................................................. 64
9.1. Termination......................................................................... 64
9.2. Effect of Termination............................................................... 65
ARTICLE X GENERAL PROVISIONS............................................................................ 66
10.1. Survival of Representations, Warranties and
Agreements.......................................................................... 66
10.2. Expenses............................................................................ 66
10.3. Confidentiality..................................................................... 66
10.4. Notices............................................................................. 67
</TABLE>
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TABLE OF CONTENTS (cont'd)
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<TABLE>
<CAPTION>
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<S> <C> <C> <C>
10.5. Jurisdiction; Service of Process.................................................... 70
10.6. Further Assurances.................................................................. 70
10.7. Waiver.............................................................................. 70
10.8. Entire Agreement and Modification................................................... 71
10.9. Assignments, Successors, and No Third-Party
Rights.............................................................................. 71
10.10. Severability........................................................................ 71
10.11. Foreign Currencies.................................................................. 71
10.12. Section Headings, Construction...................................................... 72
10.13. Governing Law....................................................................... 72
10.14. Specific Performance................................................................ 72
10.15. Counterparts........................................................................ 72
</TABLE>
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TABLE OF CONTENTS (cont'd)
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<TABLE>
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<S> <C> <C> <C>
Exhibits
A-1 Employment Agreements between Acquiror and
Dr. Jack Barbut
A-2 Employment Agreement between Acquiror and
Dr. J. Chris Jensen
B Stockholders' Agreement
</TABLE>
iv
<PAGE> 182
SHARE ACQUISITION AGREEMENT
---------------------------
This Share Acquisition Agreement (this "Agreement") made as of
the 19th day of August, 1996 by and among DNX Corporation, a Delaware
corporation ("Acquiror"), with its principal offices at 575 Route 28, Raritan,
New Jersey, Dr. Gerald Rittershaus, acting solely in his capacity as trustee
(the "Trustee") pursuant to an Agreement among the Trustee, Dr. Jack Barbut and
Alec Hackel, dated August 29, 1991 (the "Trust Agreement"), Dr. Jack Barbut
whose address is c/o Piper & Marbury, L.L.P. 1251 Avenue of the Americas, New
York, New York 10020-1104 ("Barbut"), Alec Hackel whose address is Flueliweg 3,
6045 Meggen, Switzerland ("Hackel"), Dr. John Christian Jensen whose address is
Bohlstrasse 9a, 6300 Zug, Switzerland ("Jensen," collectively with Barbut and
Hackel, the "Interest Holders"), as the holders of all of the equity interests
in the Company, and BioClin Institute of Clinical Pharmacology GmbH, a German
corporation (the "Company").
RECITALS
--------
A. The Trustee, for the benefit of Hackel and Barbut (the "Joint
Beneficial Shareholders"), and Jensen hold equity interests (Geschaeftsanteile)
in the Company (the "Company Shares"), which constitute all of the equity
interests in the Company.
B. The Trustee, at the direction of the Joint Beneficial Shareholders,
and Jensen desire to sell, transfer and assign, and Acquiror desires to purchase
and acquire, the Company Shares, on the terms and subject to the conditions set
forth in this Agreement.
C. As a condition hereto and simultaneously herewith, Acquiror shall
purchase and acquire all of the issued and outstanding stock or equity interests
of BioClin Europe AG, a Swiss corporation, BioClin GmbH, a German corporation,
and Kilmer N.V., a Netherlands Antilles corporation (collectively,
"BioClin/Europe"), and BioClin Inc., a Delaware corporation,
<PAGE> 183
("BioClin/U.S.," and collectively with BioClin/Europe, the "BioClin
Affiliates").
D. The Interest Holders, the Trustee, the Company and Acquiror wish to
enter into this Agreement for the purpose of making certain representations and
warranties to each other and entering into certain other obligations in favor of
each other.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
2
<PAGE> 184
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
"Acquiror" has the meaning given in the first paragraph of
this Agreement.
"Accounts Receivable" has the meaning given in Section 5.11.
"Acquiror's Advisors" has the meaning given in Section 7.2.
"Acquiror Common Stock" has the meaning given in
Section 2.1(a).
"Acquiror Letter" means the disclosure letter delivered by Acquiror to
the Interest Holders concurrently with the execution and delivery of this
Agreement.
"Acquiror Shares" has the meaning given in Section 2.1(a).
"Affiliate" of a specified Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified.
"Agreement" has the meaning given in the first paragraph of
this Agreement.
"Applicable Contract" means any Contract (a) under which the Company
has or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any of
the assets owned or used by it is or may become bound.
"Balance Sheet" has the meaning given in Section 5.5.
"Barbut" has the meaning given in the first paragraph of this
Agreement.
3
<PAGE> 185
"BioClin Affiliates" has the meaning given in the Recitals of
this Agreement.
"BioClin/Europe" has the meaning given in the Recitals of
this Agreement.
"BioClin/U.S." has the meaning given in the Recitals of this
Agreement.
"Business Day" means any day on which banks are generally open to
conduct business in New York, New York.
"Closing" has the meaning given in Section 2.1(a).
"Closing Date" has the meaning given in Section 2.2.
"Company" has the meaning given in the first paragraph of
this Agreement.
"Company Reports" has the meaning given in Section 5.7.
"Company Shares" has the meaning given in the Recitals of
this Agreement.
"Competing Business" has the meaning given in Section 5.25.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights" has the meaning given in Section 5.22(a).
"CRAs" has the meaning given in Section 5.17(a)(ix).
"Disclosure Letter" means the disclosure letter delivered by the
Interest Holders to Acquiror concurrently with the execution and delivery of
this Agreement.
"DM" has the meaning given in Section 5.4.
4
<PAGE> 186
"Employment Agreements" means collectively the Employment Agreements to
be entered at the Closing by and between Acquiror and each of Barbut and Jensen,
in substantially the form attached hereto as Exhibits A-1 and A-2.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to: (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
"Environmental Law" means any Legal Requirement that requires or
relates to: (a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or
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hazardous substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment; (c) reducing the
quantities, preventing the release, or minimizing the hazardous characteristics
of wastes that are generated; (d) assuring that products are designed,
formulated, packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of; (e) protecting
resources, species, or ecological amenities; (f) reducing to acceptable levels
the risks inherent in the transportation of hazardous substances, pollutants,
oil, or other potentially harmful substances; (g) cleaning up pollutants that
have been released, preventing the threat of release, or paying the costs of
such clean up or prevention; or (h) making responsible parties pay private
parties, or groups of them, for damages done to their health or the Environment,
or permitting self-appointed representatives of the public interest to recover
for injuries done to public assets.
"Exchange Act" has the meaning given in Section 3.4.
"Facilities" means any real property, leaseholds or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment currently or formerly owned or operated by the
Company.
"German GAAP" means generally accepted accounting principles
prevailing in Germany (Grundsaetze ordnungsgemaesser Buchfuehrung
und Bilanzierung).
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal (Bund),
county (Land), state, local, municipal, foreign, or other government; (c)
governmental or quasi-governmental authority of any nature (including any
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governmental agency, branch, department, official, or entity and any court or
other tribunal); (d) multi-national organization or body; or (e) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.
"Hackel" has the meaning given in the first paragraph of this
Agreement.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" has the meaning given in
Section 5.22(a).
"Interest Holders" has the meaning given in the first paragraph of this
Agreement.
"IRC" has the meaning given in the definition of "Tax Laws"
in Article I.
"IRS" has the meaning given in the definition of "Tax Laws"
in Article I.
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"Jensen" has the meaning given in the first paragraph of this
Agreement.
"Joint Beneficial Shareholders" has the meaning given in the
Recitals of this Agreement.
"knowledge" has the meaning given in Section 7.6(e).
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Marks" has the meaning given in Section 5.22(a).
"Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Patents" has the meaning given in Section 5.22(a).
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership (Personengesellschaft), limited
liability company (Kapitalgesellschaft), joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
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"Proprietary Rights Agreement" has the meaning given in
Section 5.20(b).
"Proxy Statement" has the meaning given in Section 7.11(a).
"Related Person" means (i) with respect to a particular individual: (a)
each other member of such individual's Family; (b) any Person that is directly
or indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, managing director, Prokurist,
officer, partner, executor, or trustee (or in a similar capacity); and (ii) with
respect to a specified Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person; (b) any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, managing director, Prokurist, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity); (d)
any Person in which such specified Person holds a Material Interest; (e) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and (f) any Related Person of any
individual described in clause (b) or (c). For purposes of this definition, (a)
the "Family" of an individual includes (i) the individual, (ii) the individual's
spouse and former spouses, (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree, and (iv) any
other natural person who resides with such individual, and (b) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 5% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 5%
of the outstanding equity securities or equity interests in a Person.
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
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"Report Date" has the meaning given in the Stockholders'
Agreement.
"Representative" means, with respect to a particular Person, any
director, managing director, Prokurist, officer, employee, agent, consultant,
advisor, or other representative of such Person, including legal counsel,
accountants, and financial advisors.
"SEC" has the meaning given in Section 3.4.
"SEC Documents" has the meaning given in Section 3.4.
"Securities Act" means the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Stockholders' Agreement" means the Stockholders' Agreement to be
entered into at the Closing by, among others, Acquiror, the Trustee, the
Interest Holders, Sherby N.V., Martha Lee Reynolds, Barry Dvorchik, Christine
Dune-Kraatz, Dr. Gerald Rittershaus, acting solely in his capacity as trustee
(the "Employee Trustee") pursuant to a Trust Agreement between the Employee
Trustee and Christine Dune-Kraatz, and Bettina Donhardt, in substantially the
form attached hereto as Exhibit B.
"Stockholders Meeting" has the meaning given in Section 7.11(b).
"Subsidiary" means, with respect to any Person, any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Taxes" means, to the extent applicable to any party hereto, all
German, U.S. and foreign and all state, municipal and local taxes, charges,
fees, levies or other assessments of whatever kind
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or nature, including without limitation, all net income, gross income, gross
receipts, sales, value added, use, services, ad valorem, occupation, transfer,
franchise, capital stock, profits, license, withholding, payroll, employment,
unemployment, excise, estimated, severance, stamp, occupancy or property taxes,
custom duties, assessments or governmental fiscal charges of any kind whatever
(together with any interest, penalty, or addition to tax).
"Taxing Authority" means, to the extent applicable to any party hereto,
the German tax authorities (Finanzamt Duesseldorf Sued), the United States
Internal Revenue Service (the "IRS") or, in either case, any successor agency,
and, to the extent applicable to any party hereto, any similar foreign, state,
municipal or local Governmental Body.
"Tax Laws" means, to the extent applicable to any party hereto, the
German tax laws (Umsatzsteuergesetz, Mehrwertsteuergesetz und
Gewerbesteuergesetz) and regulations issued by the German tax authorities
(Finanzamt Duesseldorf Sued) pursuant thereto, the Internal Revenue Code of
1986, as amended (the "IRC"), and regulations issued by the IRS thereunder, or,
in either case, any successor law or regulations, and, to the extent applicable
to any party hereto, any similar foreign, state, municipal or local laws and
regulations.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Trade Secrets" has the meaning given in Section 5.22(a).
"Trust Agreement" has the meaning given in the first
paragraph of this Agreement.
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"Trustee" has the meaning given in the first paragraph of
this Agreement.
"U.S. GAAP" has the meaning given in Section 3.4.
ARTICLE II
PURCHASE AND SALE OF THE COMPANY SHARES
2.1. SALE, PURCHASE AND ASSIGNMENT OF THE COMPANY SHARES.
Subject to and upon the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), (i) the
Trustee (at the express direction of the Joint Beneficial Shareholders) and
Jensen shall sell, transfer and assign to Acquiror, and Acquiror shall purchase,
acquire and accept such sale, transfer and assignment from the Trustee and
Jensen of, all of the Company Shares, free and clear of any claims, liens,
restrictions on transfer or voting or encumbrances with respect thereto, and
(ii) subject to the provisions of Section 4.7 of the Stockholders' Agreement and
the restrictions on transfer contemplated by Section 7.9 of this Agreement, the
Acquiror shall transfer and deliver in consideration for the sale, transfer and
assignment of the Company Shares to Acquiror 816,106 shares of Common Stock, par
value U.S. $.01 per share, of Acquiror ("Acquiror Common Stock") to the Trustee
and Jensen in proportion to their respective ownership of Company Shares (such
aggregate number of shares of Acquiror Common Stock to be delivered to the
Trustee and Jensen being herein referred to as the "Acquiror Shares"), free and
clear of any claims, liens, restrictions on transfer or voting or encumbrances
with respect thereto, other than those required by law and those contained in
the Stockholders' Agreement. At the Closing, Acquiror shall deliver to the
Trustee and Jensen certificates evidencing the Acquiror Shares as specified
herein and this Agreement (or a separate transfer document meeting the
requirements of German law) shall be notarized by a German public notary to
validate the sale and assignment of the Company Shares by the Trustee (on behalf
of the Joint Beneficial Shareholders) and Jensen to Acquiror.
2.2. CLOSING. The Closing shall take place at the New York
offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
10022, at 10:00 a.m., local time, on such date
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within five Business Days following the date on which the last of the conditions
(excluding conditions that by their terms cannot be satisfied until the Closing
Date) set forth in Article VIII is satisfied or waived in accordance herewith or
at such other place, time or date as the parties may agree upon in writing. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants, in the form of an
independent promise of guarantee (selbstaendiges Garantieversprechen), to the
Company, the Trustee and the Interest Holders as follows:
3.1. AUTHORIZATION, VALIDITY AND EFFECT. Acquiror is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquiror has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements and documents
contemplated hereby to be executed and delivered by it, and subject to receipt
of necessary shareholder approval with respect to this Agreement and the other
agreements with the BioClin Affiliates with respect to the acquisition of all of
the equity interests of the BioClin Affiliates, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and such other
agreements and documents, and the consummation of the transactions contemplated
herein and therein, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Acquiror, subject, with
respect to this Agreement, to the approval of the stockholders of Acquiror. This
Agreement has been duly and validly executed and delivered by Acquiror and, once
approved by the stockholders of Acquiror, represents the legal, valid and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its terms.
3.2. ACQUIROR SHARES. Assuming that all required stockholder
action has been taken and all conditions set forth in Article VIII have been
satisfied or waived, the Acquiror Shares to be issued to the Trustee (on behalf
of the Joint Beneficial
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Shareholders) and Jensen hereunder have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable.
3.3. CONFLICTS; DEFAULTS. Neither the execution and delivery
of this Agreement by Acquiror, nor the performance of its obligations hereunder,
will conflict with or constitute a default under any of the terms or provisions
of Acquiror's Second Restated Certificate of Incorporation or Second Amended and
Restated ByLaws or any material agreement or other material instrument to which
Acquiror is a party or by which it or its properties are bound or subject.
3.4. EXCHANGE ACT FILINGS. Since December 10, 1991, Acquiror
has filed all documents (the "SEC Documents") required to be filed by it with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). As of their respective filing dates
(and as amended through the date hereof), the SEC Documents complied in all
material respects with the requirements of the Exchange Act and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances in which they were
made, not misleading except to the extent corrected by a subsequently filed SEC
Document. The financial statements of Acquiror included in the SEC Documents
complied as to form in all material respects with then applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto, or
in the case of unaudited statements, as permitted by Form 10-Q and Regulation
S-X of the SEC) and fairly present the consolidated financial position of
Acquiror and its consolidated subsidiaries as at the dates thereof and the
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments).
3.5. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 3.5 of the Acquiror Letter or in any SEC Document, since March 31, 1996,
there has not been any material adverse
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change in the business, operations, properties, prospects, assets or condition
of Acquiror that would be required to be disclosed by Acquiror in a report
required to be filed with the SEC pursuant to the Exchange Act, and no event has
occurred or circumstance exists that may result in such a material adverse
change that would be required to be disclosed by Acquiror in any such report.
3.6. TAXES. (a) Except as set forth in Part 3.6 of the
Acquiror Letter, (i) all Tax Returns with respect to Taxes that were required to
be filed by or on behalf of Acquiror at and prior to the date of this Agreement
have been duly filed on a timely basis (giving effect to any extensions granted
to Acquiror) and are true, correct and complete in all material respects, (ii)
all Taxes due with respect to periods covered by the Tax Returns referred to in
clause (i) have been paid in full or Acquiror has adequately reserved or made
adequate accruals (in accordance with U.S. GAAP) with respect to any such Taxes
which are due and payable by Acquiror and Acquiror has not had and will not have
any liability for Taxes materially in excess of the amounts so paid or so
reserved or accrued, and (iii) Acquiror is not a party to or the subject of any
action, investigation or proceeding, exclusive of normal recurring audits, nor,
to the knowledge of Acquiror, is any such action, investigation or proceeding
threatened, by any Governmental Authority for the assessment or collection of
any Taxes and no deficiency notices or reports have been received by Acquiror
with respect to any deficiency of Acquiror for any Taxes.
(b) The statute of limitations for the assessment of U.S.
federal income Taxes and all state income Taxes of Acquiror has expired for each
period through December 31, 1990.
3.7. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 3.7 of the Acquiror Letter or in any SEC Document, since March 31, 1996, no
Proceeding has been instituted or threatened by or against Acquiror or that
otherwise relates to or may materially affect the business of, or any of the
assets owned or used by, Acquiror that would be required to be disclosed by
Acquiror in a report required to be filed with the SEC pursuant to the Exchange
Act.
(b) Except as set forth in Part 3.7 of the Acquiror Letter or
in any SEC Document, since March 31, 1996, no Order has arisen or been
threatened to which Acquiror or any of the assets
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owned or used by Acquiror is subject that would be required to be disclosed by
Acquiror in a report required to be filed with the SEC pursuant to the Exchange
Act.
3.8. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Part 3.8 of the Acquiror Letter or in any SEC Document, since March 31,
1996, Acquiror has conducted its business only in the ordinary course of
business and there has not occurred any:
(a) change in Acquiror's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock
of Acquiror (other than as contemplated by this Agreement); issuance of
any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by Acquiror of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment
in respect of shares of capital stock;
(b) amendment to the Second Restated Certificate of
Incorporation of Acquiror;
(c) payment or increase by Acquiror of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except
in the ordinary course of business consistent with past practice)
employee or entry into any employment, severance, or similar Contract
with any director, officer, or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of Acquiror;
(e) damage to or destruction or loss of any asset or property
of Acquiror, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of Acquiror, taken as a whole;
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(f) entry into, termination of, or receipt of notice of
termination of (i) any material Contract or any material license,
distributorship, dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) transaction involving a total remaining
commitment by or to Acquiror of at least U.S. $500,000;
(g) sale (other than sales of inventory in the ordinary course
of business), lease, or other disposition of any material asset or
property of Acquiror;
(h) cancellation or waiver of any claims or rights with a
value to Acquiror in excess of U.S. $500,000;
(i) material change in the accounting methods used by
Acquiror, except for any change required as a result of a change in
U.S. GAAP;
(j) incurrence or payment of any indebtedness for borrowed
money other than pursuant to Acquiror's financing arrangements in
existence on March 31, 1996;
(k) acquisition of any assets or properties or any commitment
to do so other than in the ordinary course of business; or
(l) agreement, whether oral or written, by Acquiror to do any
of the foregoing.
3.9. CONTRACTS; NO DEFAULTS. (a) Except as set forth in Part
3.9(a) of the Acquiror Letter, the SEC Documents contain as exhibits all of the
material Contracts, other than those entered into by Acquiror subsequent to
March 31, 1996, to which Acquiror is a party or by which it or its properties or
assets are bound or subject.
(b) Part 3.9(b) of the Acquiror Letter sets forth a summary
schedule of certain of such Contracts produced by Acquiror in the ordinary
course of its business which sets forth, among other things, the parties to such
Contracts and the amount of the remaining commitment of Acquiror under such
Contracts.
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3.10. INSURANCE. Except as set forth in Part 3.10 of
the Acquiror Letter:
(i) All insurance policies to which Acquiror is a party or
that provide coverage to any of Acquiror or any director or officer of
Acquiror: (A) to Acquiror's knowledge, are valid, outstanding, and
enforceable; (B) are issued by an insurer that is financially sound and
reputable; (C) taken together, provide adequate insurance coverage for
the assets and the operations of Acquiror for all risks to which
Acquiror is normally exposed; (D) are sufficient for compliance in all
material respects with all Legal Requirements that are or were
applicable to Acquiror or to the conduct or operation of its business
or the ownership or use of any of its properties or assets and all
Contracts to which Acquiror is a party or by which it is bound; (E)
will continue in full force and effect following the consummation of
the transactions contemplated hereby; and (F) do not provide for any
retrospective premium adjustment or other experienced-based liability
on the part of Acquiror.
(ii) Acquiror has not received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights,
or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any insurance policy is not willing or
able to perform its obligations thereunder.
(iii) Acquiror has paid all premiums due, and has otherwise
performed in all material respects all of its obligations, under each
insurance policy to which Acquiror is a party or that provides coverage
to Acquiror or any director or officer thereof.
(iv) Acquiror has given notice to the insurer of all
claims that may be insured thereby.
3.11. ENVIRONMENTAL MATTERS. Except as set forth in Part 3.11
of the Acquiror Letter or in any SEC Document, since March 31, 1996, Acquiror
has not been in material violation of or liable under, any Environmental Law to
an extent that would be
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required to be disclosed by Acquiror in a report required to be filed with the
SEC pursuant to the Exchange Act.
3.12. LABOR RELATIONS; COMPLIANCE. Part 3.12 of the Acquiror
Letter sets forth each collective bargaining or other labor contract to which
Acquiror is a party or otherwise subject. Since December 10, 1991, there has not
been, there is not presently pending or existing, and there is not threatened,
(a) any strike, slowdown, picketing, work stoppage, or employee grievance
process, (b) any Proceeding against or affecting Acquiror relating to the
alleged material violation of any Legal Requirement applicable to Acquiror
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with any Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting Acquiror or its premises, or (c) any application for certification of
a collective bargaining agent. No event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by Acquiror, and no such action is contemplated by
Acquiror. Acquiror has complied in all material respects with all Legal
Requirements applicable to Acquiror relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Acquiror is not liable for the payment of
any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to materially comply with any of the foregoing Legal
Requirements.
3.13. INTELLECTUAL PROPERTY. Except as set forth in Part 3.13
of the Acquiror Letter, all intellectual property necessary for the conduct of
Acquiror's business as currently conducted has been disclosed in the SEC
Documents.
3.14. DISCLOSURE. No notice given by Acquiror pursuant to
Section 7.6 will contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
3.15. BROKERS AND FINDERS. Except with respect to arrangements
with Vector Securities International, Inc., neither
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Acquiror nor any of its officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Acquiror in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE REGARDING
THE TRUSTEE AND THE COMPANY SHARES
The Trustee represents and warrants, in the form of an
independent promise of guarantee (selbstaendiges Garantieversprechen), to
Acquiror as follows:
4.1. AUTHORIZATION, VALIDITY AND EFFECT. The Trustee, at the
explicit direction of the Joint Beneficial Shareholders, has all requisite power
and authority to carry out his obligations arising in connection with the
transactions contemplated by this Agreement. This Agreement and all other
agreements and documents to be executed and delivered by the Trustee in
connection with this Agreement constitute in all respects the valid and binding
obligation of the Trustee, enforceable against the Trustee in accordance with
their respective terms. The execution, delivery and performance of this
Agreement by the Trustee on behalf of the Joint Beneficial Shareholders are
within the Trustee's powers and have been duly authorized by all necessary
action on the part of the Trustee or the Joint Beneficial Shareholders, as
applicable.
4.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by the Trustee and the consummation
of the transactions contemplated hereby do not and will not (i) require the
advance consent or approval of, or filing with, any person or public authority
(other than a public notary and the express direction of the Joint Beneficial
Shareholders) or (ii) constitute or result in the breach of any provision of, or
constitute a default under, the Trust Agreement or any material agreement or
other material instrument to which the Trustee is a party or by which he (or the
Company Shares) is bound or subject.
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4.3. TITLE AND POWER TO SELL. The Trustee is the legal owner
of the Company Shares owned beneficially by the Joint Beneficial Shareholders,
which, together with the Company Shares owned by Jensen, constitute all of the
equity interests of the Company. Good, valid and marketable title to such equity
interests is held by the Trustee free and clear of any claims, liens,
restrictions on transfer or voting or encumbrances. The Company Shares owned by
the Trustee are fully paid up, not repaid and non-assessable (keine
Nachschusspflicht). The Trustee has full power and authority, at the express
direction of the Joint Beneficial Shareholders, to sell, transfer and assign to
Acquiror at the Closing the Company Shares owned beneficially by the Joint
Beneficial Shareholders, and upon consummation of the transactions contemplated
by this Agreement, Acquiror will have acquired good, valid and marketable title
to the Company Shares owned beneficially by the Joint Beneficial Shareholders,
free and clear of any claims, liens, restrictions on transfer or voting or
encumbrances.
4.4. LITIGATION. As of the date of this Agreement, there is no
action, suit or proceeding pending against, or to the knowledge of the Trustee,
threatened against or affecting, the Trustee or the Company Shares owned by the
Trustee before any court or arbitrator or any Governmental Body or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE INTEREST HOLDERS
WITH RESPECT TO THE COMPANY
Each of the Company and the Interest Holders hereby jointly
and severally represent and warrant, in the form of an independent promise of
guarantee (selbstaendiges Garantieversprechen), to Acquiror that:
5.1. ORGANIZATION, AUTHORITY AND AUTHORIZATION. (a) The
Company is a Gellschaft mit beschraenkter Haftung (GmbH) duly organized and
validly existing under the laws of the State of Northrhine Westphalen, Germany.
The Company has the requisite
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corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby to be executed and delivered by it
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and such other agreements and documents, and the
consummation of the transactions contemplated herein and therein, have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of the Company. This Agreement has been duly and validly executed and
delivered by the Company and represents the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
(b) The Company has the full corporate power and authority to
own its properties and assets, to carry on the Company's business as it is now
being conducted and to perform all its obligations under Applicable Contracts
and this Agreement. The Company is not required to qualify to do business in any
jurisdiction where not already so qualified except where a failure to so qualify
would not, individually or in the aggregate, have a material adverse effect on
the financial condition, business or results of operations of the Company. The
Company has all Governmental Authorizations required in order to own or lease
its properties and assets and to carry on its business as now being conducted in
all respects material to the financial condition, business or results of
operations of the Company. The Interest Holders have delivered to Acquiror
copies of the Articles of Association of the Company, as currently in effect.
5.2. CONSENTS AND APPROVALS; NO VIOLATION. The execution,
delivery and performance of this Agreement by the Company and each of the
Interest Holders and the consummation of the transactions contemplated hereby do
not and will not (i) require the advance consent or approval of, or filing with,
any person or public authority (other than a public notary) or (ii) constitute
or result in the breach of any provision of, or constitute a default under, the
Articles of Association of the Company, the Trust Agreement or any material
agreement or other material instrument to which the Company or any Interest
Holder is a party or by which such Person (or the Company Shares) is bound or
subject; provided, however, that Acquiror must register as the shareholder of
the Company before its acquisition of the Company Shares will become fully
effective under German Law.
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5.3. TITLE AND POWER TO SELL. The Trustee (for the benefit of
the Joint Beneficial Shareholders) and Jensen are the legal owners of the
Company Shares, which constitute all of the equity interests of the Company.
Good, valid and marketable title to such equity interests is held by the Trustee
and Jensen free and clear of any claims, liens, restrictions on transfer or
voting or encumbrances. The Company Shares are fully paid up, not repaid and
non-assessable (keine Nachschuspflicht). The Trustee (at the express direction
of the Joint Beneficial Shareholders) and Jensen have full power and authority
to sell, transfer and assign to Acquiror at the Closing the Company Shares, and
upon consummation of the transactions contemplated by this Agreement, Acquiror
will have acquired good, valid and marketable title to the Company Shares, free
and clear of any claims, liens, restrictions on transfer or voting or
encumbrances.
5.4. CAPITALIZATION OF THE COMPANY; SUBSIDIARIES. (a) The
Company has a stated capital of 150,000 Deutschmarks ("DM") which is fully paid
up, of which the Trustee (for the benefit of the Joint Beneficial Shareholders)
contributed 127,500 DM and Jensen contributed 22,500 DM. There are no other
equity interests in the Company and no outstanding options, warrants, scrip,
rights to subscribe to, calls, commitments or agreements of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, equity interests of the Company. The Company does not hold any treasury
shares (eigne Geschaeftsanteile). There are no loans or economically
corresponding transactions, the repayment of which would constitute a violation
of Section 32 a and 32 b of the German law of limited liability companies
("GmbHG"). Except for the Trust Agreement, there are no voting trusts or other
agreements or understandings to which the Company is a party with respect to the
voting of the equity interests of the Company.
(b) The Company does not hold, directly or indirectly, nor is
it a member nor does it have any Contract to acquire, any share, equity or other
interest in any corporation or limited liability company (Kapitalgesellschaft),
partnership (Personengesellschaft), or other entity including silent
partnerships, cooperatives and joint ventures.
(c) There are no enterprise contracts (Unternehmensvertraege)
as defined in Sections 291 and 292 of the
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German Stock Corporation Act (Aktiengesetz) to which the Company is or has been
a party.
5.5. COMPANY FINANCIAL STATEMENTS. The Company and the
Interest Holders have delivered to Acquiror as Part 5.5 of the Disclosure
Letter: (i) an unaudited combined consolidated balance sheet of the Company and
the BioClin Affiliates as at December 31, 1994, and the related unaudited
combined consolidated statement of income for the fiscal year then ended as well
as the fiscal year ended December 31, 1993, and (ii) an unaudited combined
consolidated balance sheet of the Company and the BioClin Affiliates as at
December 31, 1995 (the "Balance Sheet") and the related unaudited combined
consolidated statement of income for the fiscal year then ended. The financial
statements with respect to fiscal 1995 have been prepared in accordance with
U.S. GAAP (which except where noted therein, have been consistently applied),
and fairly present the financial condition and results of operations, changes in
stockholders' equity and cash flow of the Company as at the respective dates and
for the periods referred to in such financial statements. The financial
statements with respect to fiscal 1993 and 1994 have been prepared in accordance
with German GAAP (Grundsaetze ordnungsgemaesser Buchfuehrung und Bilanzierung)
including the principle of balance sheet consistency (Bilanskontinuitast) and
have been reconciled to U.S. GAAP.
5.6. BOOKS AND RECORDS. Except as set forth in Part 5.6 of the
Disclosure Letter, the books of account and other records of the Company,
including records of all meetings held by, and the corporate action taken by,
the shareholders of the Company and the managing director or directors or
"Prokurist" of the Company, all of which have been made available to Acquiror,
are complete and correct and have been maintained in accordance with sound
business practices and in compliance in all material respects with all
applicable Legal Requirements and accounting requirements. At the Closing, all
of the foregoing books and records will be in the possession of the Company.
5.7. REPORTS. Except as set forth in Part 5.7 of the
Disclosure Letter, since November 11, 1991, the Company has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with respect to the Company
with any
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Governmental Body with jurisdiction over the Company or its employees, assets or
properties (all such reports and statements are collectively referred to herein
as the "Company Reports"). As of their respective dates, the Company Reports
complied in all material respects with the statutes, rules, regulations and
orders enforced or promulgated by the regulatory authority with which they were
filed.
5.8. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth
in Part 5.8 of the Disclosure Letter, since December 31, 1995, there has not
been any material adverse change in the business, operations, properties,
prospects, assets or condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
5.9. TITLE TO PROPERTIES; ENCUMBRANCES. The Company does not
own any real property. Part 5.9 of the Disclosure Letter contains a complete and
accurate list of all leaseholds or other interests in real property held or
possessed by the Company and a summary of the material provisions of any lease
or other Applicable Contract relating to such leasehold or other interest,
including the identity of the other party thereto, a description of the interest
held, the location of the real property, the duration thereof, payment terms and
any rights of termination. The Company and the Interest Holders have made
available to Acquiror copies of all leases and other instruments (as recorded)
by which the Company acquired such real property interests, and copies of any
title insurance policies, opinions, abstracts and surveys in the possession of
the Interest Holders or the Company and relating to such interests. The Company
owns all of the properties and assets (whether real, personal or mixed and
whether tangible or intangible) that it purports to own, including all of the
properties and assets reflected in the Balance Sheet (except for assets held
under capitalized leases disclosed or not required to be disclosed on Part 5.9
of the Disclosure Letter, licenses for intangible personal property (including
software licenses) and personal property sold since the date of the Balance
Sheet, in the ordinary course of business), and all of the properties and assets
purchased or otherwise acquired by the Company since the date of the Balance
Sheet. Except as set forth in Part 5.9 of the Disclosure Letter, all material
properties and assets reflected in the Balance Sheet are free and clear of all
Encumbrances and are not, in the case of real property interests, subject to any
rights
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of way, building use restrictions, exceptions, variances, reservations or
limitations of any nature except, with respect to all such properties and assets
(i) security interests shown on the Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists, (ii)
security interests incurred in connection with the purchase of property or
assets after the date of the Balance Sheet (such security interests being
limited to the property or assets so acquired), with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, and (iii) liens for current taxes not yet due. To the
Company's knowledge, all buildings and structures occupied by the Company lie
wholly within the boundaries of the real property leased by the Company and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
5.10. CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth
in Part 5.10 of the Disclosure Letter, the buildings and structures conform to
applicable code requirements and commercial standards for the localities where
the premises are located and the equipment and other tangible personal property
of the Company are in good operating condition and repair, and are adequate for
the uses to which they are being put, and none of such equipment and other
tangible personal property is in need of maintenance or repair, except ordinary,
routine maintenance and repairs that are not material in nature or cost. The
buildings, structures, equipment and other tangible personal property of the
Company are sufficient for the continued conduct of the Company's business after
the Closing in substantially the same manner as conducted prior to the Closing.
5.11. ACCOUNTS RECEIVABLE. All accounts receivable of the
Company that are reflected on the Balance Sheet (collectively, the "Accounts
Receivable") represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. Except as set
forth in Part 5.11 of the Disclosure Letter, unless paid prior to the Closing
Date, the Accounts Receivable are or will be as of the Closing Date current and
collectible net of the reserves, if any, shown on the Balance Sheet or on the
accounting records of the Company on the Closing Date (which, in the case of the
reserve as of the Closing Date, is adequate and will not represent a material
adverse change in the
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composition of such Accounts Receivable in terms of aging since the date of the
Balance Sheet). To the knowledge of the Company and the Interest Holders, no
event has occurred nor circumstances exist which make it improbable that the
Company will be able collect the Accounts Receivable outstanding as of the date
of this Agreement or as of the Closing Date consistent with its prior collection
experience.
5.12. NO UNDISCLOSED LIABILITIES. Except as set forth in Part
5.12 of the Disclosure Letter, the Company has no material liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for liabilities or obligations
reflected or reserved against in the Balance Sheet and current liabilities
incurred in the ordinary course of business since the date thereof.
5.13. TAXES. (a) Except as set forth in Part 5.13 of the
Disclosure Letter, (i) all Tax Returns with respect to Taxes that were required
to be filed by or on behalf of the Company at or prior to the date of this
Agreement have been duly filed on a timely basis (giving effect to any
extensions granted to the Company) and are true, correct and complete in all
material respects, (ii) all Taxes due with respect to periods covered by the Tax
Returns referred to in clause (i) have been paid in full or the Company has
adequately reserved or made adequate accruals in accordance with German GAAP
(Grundsaetze ordnungsgemaesser Buchfuehrung und Bilanzierung) including the
principle of balance sheet consistency (Bilanskontinuitast) (which are reflected
on Balance Sheet) with respect to any such Taxes which are due and payable by
the Company and the Company has not had and will not have any liability for
Taxes materially in excess of the amounts so paid, reserved or accrued, and
(iii) the Company is not a party to or the subject of any action, investigation
or proceeding, exclusive of normal recurring audits, nor to the knowledge of the
Company and the Interest Holders, is any such action, investigation or
proceeding threatened, by any Governmental Authority for the assessment or
collection of any Taxes and no deficiency notices or reports have been received
by either the Company or any of the Interest Holders with respect to any
deficiency of the Company for any Taxes.
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(b) The statute of limitations for the assessment of German
income and other Taxes of the Company has expired for each period through
December 31, 1991.
(c) No Tax is required to be withheld pursuant to German tax
laws (Umsatzsteuergesetz, Mehrwertsteuergesetz und Gewerbesteuergesetz) as a
result of the transactions contemplated by this Agreement.
(d) As a result of compliance with this Agreement and the
matters referred to herein, neither the Company nor the Interest Holders will be
obligated to make any payment to any individual that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the IRC without regard to whether such payment is to be made in the
future.
5.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (a) Except as set forth in Part 5.14(a) of the Disclosure
Letter: (i) the Company is, and has been, in compliance in all material respects
with each Legal Requirement that is or was applicable to the Company or to the
conduct or operation of its business or the ownership or use of any of its
properties or assets; (ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result in a
material violation by the Company of, or a failure on the part of the Company to
comply in all material respects with, any Legal Requirement that is or was
applicable to the Company or to the conduct or operation of its business or the
ownership or use of any of its properties or assets, or (B) may give rise to any
material obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature; and (iii) the
Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement that is or was applicable to the Company or to the conduct
or operation of its business or the ownership or use of any of its properties or
assets, or (B) any actual, alleged, possible, or potential obligation on the
part of the Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
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(b) Except as set forth in Part 5.14 (b) of the Disclosure
Letter: (i) the Company is, and has been, in full compliance with all of the
terms and requirements of each Governmental Authorization owned, possessed or
otherwise applicable to the Company, the conduct of its business or any assets
owned or used by the Company; (ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization owned, possessed or otherwise
applicable to the Company, the conduct of its business or any assets owned or
used by the Company, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification to,
any such Governmental Authorization; (iii) the Company has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or requirement of any
Governmental Authorization owned, possessed or otherwise applicable to the
Company, the conduct of its business or any assets owned or used by the Company,
or (B) any actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any such
Governmental Authorization ; and (iv) all applications required to have been
filed for the renewal of the Governmental Authorizations owned, possessed or
otherwise applicable to the Company, the conduct of its business or any assets
owned or used by the Company have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
(c) Except as set forth in Part 5.14(c) of the Disclosure
Letter, the Governmental Authorizations owned, possessed or otherwise applicable
to the Company, the conduct of its business or any assets owned or used by the
Company collectively constitute all of the Governmental Authorizations required
in order to permit the Company to lawfully conduct and operate its business in
the manner it currently conducts and operates such business and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets.
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5.15. LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in
Part 5.15(a) of the Disclosure Letter, there is no pending Proceeding: (i) that
has been commenced by or against the Company or any of the Interest Holders or
that otherwise relates to or may materially affect the business of, or any of
the assets owned or used by, the Company; or (ii) that challenges, or that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement.
(b) Except as set forth in Part 5.15(b) of the Disclosure
Letter, to the knowledge of the Company and the Interest Holders, (i) no such
Proceeding has been threatened, and (ii) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. The Company and the Interest Holders have delivered to Acquiror
copies of all pleadings, correspondence with third parties, and other
non-privileged documents relating to each Proceeding listed in Part 5.15 of the
Disclosure Letter. The Proceedings listed in Part 5.15 of the Disclosure Letter
will not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
(c) Except as set forth in Part 5.15(c) of the Disclosure
Letter: (i) there is no Order to which the Company, or any of the assets owned
or used by the Company, is subject; (ii) none of the Interest Holders is subject
to any Order that relates to the business of, or any of the assets owned or used
by, the Company; and (iii) no officer, director, managing director, Prokurist,
agent or employee of the Company is subject to any Order that prohibits such
officer, director, managing director, Prokurist, agent or employee from engaging
in or continuing any conduct, activity, or practice relating to the business of
the Company.
(d) Except as set forth in Part 5.15(d) of the Disclosure
Letter: (i) the Company is, and at all times has been, in compliance in all
material respects with all of the terms and requirements of each Order to which
it, or any of the assets owned or used by it, is or has been subject; (ii) no
event has occurred or circumstance exists that may constitute or result in (with
or without notice or lapse of time) a material violation of or failure to comply
in all material respects with any term
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or requirement of any Order to which the Company, or any of the assets owned or
used by the Company, is subject; and (iii) the Company has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of any Order to
which the Company, or any of the assets owned or used by the Company, is or has
been subject.
5.16. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Part 5.16 of the Disclosure Letter, since the date of the Balance
Sheet, the Company has conducted its business only in the ordinary course of
business and there has not been any:
(a) change in the Company's stated capital or equity
interests; grant of any option or right to purchase shares of the
Company; issuance of any security convertible into such shares; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any such shares; or declaration or
payment of any shares in the Company's profits;
(b) amendment to the Articles of Association of the Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any shareholder, director, managing
director, Prokurist, officer, or (except in the ordinary course of
business consistent with past practice) employee or entry into any
employment, severance, or similar Contract with any director, managing
director, Prokurist, officer, or employee;
(d) adoption of, or increase (except in the ordinary course of
business consistent with past practice) in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Company;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets,
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business, financial condition, or prospects of the Company, taken as a
whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any Contract, any license, distributorship, dealer,
sales representative, joint venture, credit, or similar agreement, or
(ii) any transaction involving a total remaining commitment by or to
the Company of at least 70,000 DM or U.S. $50,000;
(g) sale (other than sales of inventory in the ordinary course
of business), lease, or other disposition of any asset or property of
the Company or mortgage, pledge, or imposition of any Encumbrance on
any material asset or property of the Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of 70,000 DM or U.S. $50,000;
(i) material change in the accounting methods used by the
Company;
(j) incurrence or payment (other than regularly scheduled
payments under debt obligations existing as of the date of this
Agreement) of any indebtedness for borrowed money or any incurrence of
or commitment to incur any material capital expenditures, in each case,
in excess of 50,000 DM or U.S. $30,000;
(k) acquisition of any assets or properties or any commitment
to do so other than in the ordinary course of business; or
(l) agreement, whether oral or written, by the Company to do
any of the foregoing.
5.17. CONTRACTS; NO DEFAULTS. (a) Part 5.17(a) of the
Disclosure Letter contains a complete and accurate list, and the Company and the
Interest Holders have delivered to Acquiror true and complete copies, of:
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(i) each Applicable Contract that involves performance of
services by the Company of an amount or value in excess of 150,000 DM
or U.S. $100,000, except any such Applicable Contract that can be
terminated without cause by either party thereto without penalty on 30
days or less notice;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an amount
or value in excess of 150,000 DM or U.S. $100,000, except any such
Applicable Contract that can be terminated without cause by either
party thereto without penalty on 30 days or less notice;
(iii) each Applicable Contract that was not entered into in
the ordinary course of business and that involves expenditures or
receipts by Company in excess of 150,000 DM or U.S. $100,000, except
any such Applicable Contract that can be terminated without cause by
either party thereto without penalty on 30 days or less notice;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
U.S. $20,000);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement, voluntary company
agreement between an employer and employees (or works council)
concerning working conditions (Betriebsvereinbarung) and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees or with a group of employees;
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(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Affiliate of the Company or limit the freedom of the Company or any
Affiliate of the Company to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods, except that, with respect to all Applicable
Contracts relating to the retaining of Clinical Research Assistants
("CRAs") by the Company, Part 5.17(a) of the Disclosure Letter need
only set forth the aggregate payments made by the Company to such CRAs
during fiscal 1995;
(x) each power of attorney that is currently effective
and outstanding;
(xi) each Applicable Contract entered into other than in the
ordinary course of business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures
in excess of 75,000 DM or U.S. $50,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company other than in the ordinary course of business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 5.17(b) of the Disclosure
Letter: (i) none of the Interest Holders (and no Related Person of any Interest
Holder) has or may acquire any material rights under, and none of the Interest
Holders have or
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may become subject to any material obligation or liability under, any Contract
that relates to the business of, or any of the assets owned or used by, the
Company; and (ii) no officer, director, managing director, Prokurist, agent,
employee, consultant, or contractor of the Company is bound by any Contract that
purports to limit the ability of such officer, director, managing director,
Prokurist, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of the
Company, or (B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Part 5.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 5.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 5.17(d) of the Disclosure
Letter:
(i) the Company is, and at all times has been, in full
compliance with all material terms and requirements of each Contract
under which it has or had any obligation or liability or by which it or
any of its assets is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which the Company has or had any
rights is, and at all times has been, in full compliance with all
material terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene in any material
respect, conflict in any material respect with, or result in a material
violation or breach of, or give the Company or other Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Applicable Contract; and
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(iv) the Company has not given to or received from any other
Person, at any time any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential material
violation or breach of, or default under, any Contract.
(e) Except as set forth in Part 5.17(e) of the Disclosure
Letter, there are no renegotiations of, attempts to renegotiate, written demands
to renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to or by the Company under current or completed Contracts with any
Person, other than any reduction of less than 10% of the aggregate amount due to
the Company under any Applicable Contract with a sponsor which is proportional
to a corresponding reduction of services to be performed by the Company under
such Contract.
(f) Except as set forth in Part 5.23 of the Disclosure Letter,
the Contracts relating to the sale, design, manufacture, or provision of
products or services by the Company have been entered into in the ordinary
course of business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in material violation of any Legal Requirement
that is or was applicable to the Company or to the conduct or operation of its
business or the ownership or use of any of its properties or assets.
5.18. INSURANCE. (a) The Company and the Interest Holders have
delivered to Acquiror: (i) true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or any director,
managing director or Prokurist of the Company, is or has been covered at any
time within the two years preceding the date of this Agreement; (ii) true and
complete copies of all pending applications for policies of insurance; and (iii)
any statement by the auditor of the Company's financial statements with regard
to the adequacy of such entity's coverage or of the reserves for claims.
(b) Except as set forth on Part 5.18(b) of the Disclosure
Letter:
(i) All insurance policies to which the Company is a party or
that provide coverage to any of the Interest
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Holders, the Company or any director, managing director, Prokurist, or
officer of the Company: (A) to the Company's knowledge, are valid,
outstanding, and enforceable; (B) are issued by an insurer that is
financially sound and reputable; (C) taken together, provide adequate
insurance coverage for the assets and the operations of the Company for
all risks to which the Company is normally exposed; (D) are sufficient
for compliance in all material respects with all Legal Requirements
that are or were applicable to the Company or to the conduct or
operation of its business or the ownership or use of any of its
properties or assets and all Contracts to which the Company is a party
or by which it is bound; (E) will continue in full force and effect
following the consummation of the transactions contemplated hereby; and
(F) do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Company.
(ii) None of the Interest Holders or the Company has received
(A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of cancellation
or any other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
insurance policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and have
otherwise performed in all material respects all of their respective
obligations, under each insurance policy to which the Company is a
party or that provides coverage to the Company or any director,
managing director, Prokurist or officer thereof.
(iv) The Company has given notice to the insurer of all claims
that may be insured thereby.
5.19. ENVIRONMENTAL MATTERS. Except as set forth in
Part 5.19 of the Disclosure Letter:
(a) The Company is, and at all times has been, in compliance
in all material respects with, and has not been and is not in material violation
of or liable under, any Environmental
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Law that is or was applicable to the Company or to the conduct or operation of
its business or the ownership or use of any of its properties or assets. None of
the Interest Holders or the Company has any basis to expect, nor has any of them
or any other Person for whose conduct they are or may be held to be responsible
received, any actual or threatened order, notice, or other communication from
(i) any Governmental Body or private citizen acting or purporting to act in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential material violation or failure to comply
in all material respects with any Environmental Law that is or was applicable to
the Company or to the conduct or operation of its business or the ownership or
use of any of its properties or assets, or of any actual or threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which any of the Interest
Holders or the Company has or had an interest, or with respect to any property
or Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by Interest Holders, the
Company, or any other Person for whose conduct they are or may be held
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the knowledge of the Company
or the Interest Holders, threatened claims, Encumbrances, or other restrictions
of a material nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law that is or was
applicable to the Company or to the conduct or operation of its business or the
ownership or use of any of its properties or assets, with respect to or
affecting any of the Facilities or any other properties and assets (whether
real, personal, or mixed) in which any of the Interest Holders or the Company
has or had an interest.
(c) None of the Company or the Interest Holders has any basis
to expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential material
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violation or failure to comply in all material respects with any Environmental
Law that is or was applicable to the Company or to the conduct or operation of
its business or the ownership or use of any of its properties or assets, or of
any alleged, actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any of the Interest Holders or the Company has or had an interest, or
with respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by the Interest
Holders, the Company, or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) None of the Company or the Interest Holders, or any other
Person for whose conduct they are or may be held responsible, has any material
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets (whether real, personal, or
mixed) in which any of the Interest Holders or the Company (or any predecessor),
has or had an interest, or at any property geologically or hydrologically
adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. None
of the Interest Holders, the Company, any other Person for whose conduct they
are or may be held responsible, or any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to the Facilities
or any other properties or assets (whether real, personal, or mixed) in which
any of the Interest Holders or the Company has or had an interest except in
compliance in all material respects with all Environmental Laws that are or were
applicable to the Company or to the conduct or operation of
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its business or the ownership or use of any of its properties or assets.
(f) There has been no Release or, to the knowledge of Interest
Holders, Threat of Release, of any Hazardous Materials at or from the Facilities
or at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which any of the Interest Holders or the Company
has or had an interest, or any geologically or hydrologically adjoining
property, whether by the Interest Holders, the Company, or any other Person.
(g) the Interest Holders have delivered to Acquiror true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Interest Holders or the Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by the Interest Holders, the Company, or
any other Person for whose conduct they are or may be held responsible, with
Environmental Laws that are or were applicable to the Company or to the conduct
or operation of its business or the ownership or use of any of its properties or
assets.
5.20. EMPLOYEES. (a) Part 5.20 of the Disclosure Letter
contains a complete and accurate summary of the following information for each
employee, officer or director, managing director or Prokurist of the Company,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable and any change in compensation since
December 31, 1995; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), other equity participation arrangement, severance pay,
insurance, medical, welfare, or vacation plan or any other employee benefit
plan.
(b) Except as set forth in Part 5.20 of the Disclosure Letter,
no employee, officer or director, managing director or Prokurist of the Company
is a party to, or is otherwise bound by,
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any agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee, officer or director,
managing director or Prokurist and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect the ability of the
Company to conduct its business, including any Proprietary Rights Agreement with
the Interest Holders or the Company by any such employee, officer or director,
managing director or Prokurist. Except as set forth in Part 5.20 of the
Disclosure Letter, to the knowledge of the Company and the Interest Holders, no
director, managing director, Prokurist, officer, or other key employee of the
Company intends to terminate his employment with the Company.
(c) Part 5.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee, officer or director, managing director or Prokurist of the Company, or
their dependents, receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.
5.21. LABOR RELATIONS; COMPLIANCE. Except as set forth in Part
5.21 of the Disclosure Letter, since November 11, 1991, the Company has not been
nor is it currently a party to any collective bargaining or other labor
Contract. Since November 11, 1991, there has not been, there is not presently
pending or existing, and, to the Company's knowledge, there is not threatened,
(a) any strike, slowdown, picketing, work stoppage, or employee grievance
process, (b) any Proceeding against or affecting the Company relating to the
alleged material violation of any Legal Requirement applicable to the Company
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with any Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting the Company or its premises, or (c) any application for certification
of a collective bargaining agent. Except as set forth in Part 5.21 of the
Disclosure Letter, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by the Company, and no such action is contemplated by
the Company. Except as set forth in Part 5.21 of the Disclosure Letter, the
Company has complied in all material respects with all Legal Requirements
applicable to the Company relating to employment,
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equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. Except as set forth in
Part 5.21 of the Disclosure Letter, the Company is not liable for the payment of
any compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply in all material respects with any of the
foregoing Legal Requirements.
5.22. INTELLECTUAL PROPERTY. (a) The term "Intellectual
Property Assets" includes: (i) the name "BioClin Institute of Clinical
Pharmacology GmbH", all fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications (collectively,
"Marks"); (ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "Patents"); (iii) all copyrights in both
published works and unpublished works (collectively, "Copyrights"); and (iv) all
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints (collectively, "Trade Secrets"); owned, used, or licensed by the Company
as licensee or licensor.
(b) Part 5.22(b) of the Disclosure Letter contains a complete
and accurate list and summary description, including any royalties paid or
received by the Company, of all Contracts relating to the Intellectual Property
Assets to which the Company is a party or by which the Company is bound, except
for any license implied by the sale of a product and perpetual, paid-up licenses
for commonly available software programs with a value of less than 50,000 DM or
U.S. $30,000 under which the Company is the licensee. There are no outstanding
and, to the knowledge of the Interest Holders, no threatened disputes or
disagreements with respect to any such agreement.
(c) (i) The Intellectual Property Assets are all those
necessary for the operation of the Company's business as it is currently
conducted. The Company is the owner or licensee of all right, title, and
interest in and to each of the Intellectual Property Assets (other than to the
extent that the Company is obligated to assign any application, invention,
development, etc. relating to such Intellectual Property Assets to another
Person under an Applicable Contract with a sponsor), free and clear of
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all liens, security interests, charges, encumbrances, equities, and other
adverse claims, and, except as set forth in Part 5.22(c) of the Disclosure
Letter, has the right to use without payment to a third party all of the
Intellectual Property Assets.
(ii) Except as set forth in Part 5.22(c) of the Disclosure
Letter, all former and current employees of the Company have executed written
Contracts with the Company that assign to it all rights to any inventions,
improvements, discoveries, or information relating to the business of the
Company. Except as set forth in Part 5.22(c) of the Disclosure Letter, no
employee of the Company has entered into any Contract that restricts or limits
in any way the scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information concerning
his work to anyone other than the Company.
(d) (i) Part 5.22(d) of the Disclosure Letter contains a
complete and accurate list and summary description of all Patents owned by or
licensed to the Company. Except as set forth in Part 5.22(d) of the Disclosure
Letter, the Company is the owner or licensee of all right, title, and interest
in and to each of such Patents, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all of the issued Patents owned by the Company are currently in
compliance in all material respects with applicable Legal Requirements
(including payment of filing, examination, and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or Taxes or actions falling due within ninety days after the
Closing Date.
(iii) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent owned by the Company has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding, nor to the
knowledge of the Company and the Interest Holders, is there any potentially
interfering patent or patent application of any third party.
(iv) Except as set forth in Part 5.22(d) of the Disclosure
Letter, no Patent owned by the Company is infringed or, to the knowledge of the
Company and the Interest Holders,
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has been challenged or threatened in any way. Except as set forth in Part
5.22(d) of the Disclosure Letter, none of the products manufactured and sold,
nor any process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other Person.
(v) Except as set forth in Part 5.22(d) of the Disclosure
Letter, all products made, used, or sold under the Patents owned by the Company
have been marked with the proper patent notice.
(e) (i) Part 5.22(e) of Disclosure Letter contains a complete
and accurate list and summary description of all Marks owned by or licensed to
the Company. Except as set forth in Part 5.22(e) of the Disclosure Letter, the
Company is the owner or licensee of all right, title, and interest in and to
each of such Marks, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all Marks owned by the Company that have been registered with the German
patent office (Bundespatentamt) or similar foreign Governmental Body are
currently in compliance in all material respects with applicable Legal
Requirements (including the timely post-registration filing of affidavits of use
and incontestability and renewal applications), are valid and enforceable, and
are not subject to any maintenance fees or Taxes or actions falling due within
ninety days after the Closing Date.
(iii) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Company has been or is now involved in any
opposition, invalidation, or cancellation and, to the knowledge of the Company
and the Interest Holders, no such action is threatened with the respect to any
of such Marks.
(iv) Except as set forth in Part 5.22(e) of the Disclosure
Letter, to the knowledge of the Company and the Interest Holders, there is no
potentially interfering trademark or trademark application of any third party.
(v) Except as set forth in Part 5.22(e) of the Disclosure
Letter, no Mark owned by the Company is infringed or, to the knowledge of the
Company and the Interest Holders, has been
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challenged or threatened in any way. Except as set forth in Part 5.22(e) of the
Disclosure Letter, none of the Marks used by the Company infringes or is alleged
to infringe any trade name, trademark, or service mark of any third party.
(vi) Except as set forth in Part 5.22(e) of the Disclosure
Letter, all products and materials containing a Mark owned by the Company bear
the proper federal registration notice where permitted by law.
(f) (i) Part 5.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all Copyrights owned by or
licensed to the Company. Except as set forth in Part 5.22(f) of the Disclosure
Letter, the Company is the owner or licensee of all right, title, and interest
in and to each of such Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all the Copyrights owned by the Company have been registered (to the
extent required to protect such Copyrights) and are currently in compliance in
all material respects with applicable Legal Requirements, are valid and
enforceable, and are not subject to any maintenance fees or Taxes or actions
falling due within ninety days after the date of Closing.
(iii) Except as set forth in Part 5.22(f) of the Disclosure
Letter, no Copyright owned by the Company is infringed or, to the knowledge of
the Company and the Interest Holders, has been challenged or threatened in any
way. Except as set forth in Part 5.22(f) of the Disclosure Letter, none of the
subject matter of any of such Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iv) Except as set forth in Part 5.22(f) of the Disclosure
Letter, all works encompassed by the Copyrights owned by the Company have been
marked with the proper copyright notice (to the extent required to protect such
Copyrights).
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(g) (i) With respect to each Trade Secret owned by the
Company, the documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual.
(ii) The Interest Holders and the Company have taken all
reasonable precautions to protect the secrecy, confidentiality, and value of the
Trade Secrets owned by the Company.
(iii) Except as set forth in Part 5.22(g) of the Disclosure
Letter, the Company has good title and an absolute (but not necessarily
exclusive) right to use the Trade Secrets owned by the Company. Except as set
forth in Part 5.22(g) of the Disclosure Letter, the Trade Secrets owned by the
Company are not part of the public knowledge or literature, and, to the
knowledge of the Company and the Interest Holders, have not been used, divulged,
or appropriated either for the benefit of any Person (other than the Company) or
to the detriment of the Company. Except as set forth in Part 5.22(g) of the
Disclosure Letter, no Trade Secret owned by the Company is subject to any
adverse claim or has been challenged or threatened in any way.
(h) Except as set forth in Part 5.22(h) of the Disclosure
Letter, no Contract (whether or not related to the Intellectual Property Assets)
obligates the Company or any director, managing director, Prokurist, officer or
employee of the Company to disclose and/or assign to another Person, any
Intellectual Property Asset or any developments, inventions, etc. relating to
the Intellectual Property Assets.
5.23. CERTAIN PAYMENTS. Except as set forth in Part 5.23 of
the Disclosure Letter, neither the Company nor any director, managing director,
Prokurist, officer, agent, or employee of the Company, or any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Affiliate of the
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Company, or (iv) in violation of any Legal Requirement that is or was applicable
to the Company or to the conduct or operation of its business or the ownership
or use of any of its properties or assets; (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
5.24. DISCLOSURE. (a) No representation or warranty of the
Company or the Interest Holders in this Agreement and no statement in the
Disclosure Letter omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading. None of the information to be supplied by the Company or
the Interest Holders for inclusion in, or to be incorporated by reference in,
the Proxy Statement will, at the time of the mailing of the Proxy Statement and
the time of the Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) No notice given by the Company or any of the Interest
Holders pursuant to Section 7.6 will contain any untrue statement or omit to
state a material fact necessary to make the statements therein or in this
Agreement, in light of the circumstances in which they were made, not
misleading.
(c) There is no fact known to any of the Interest Holders that
has specific application to the Interest Holders or the Company (other than
general economic or industry conditions) and that materially adversely affects
the assets, business, prospects, financial condition, or results of operations
of the Company (on a consolidated basis) that has not been set forth in this
Agreement or the Disclosure Letter.
5.25. RELATIONSHIPS WITH RELATED PERSONS. Except as set forth
in Part 5.25 of the Disclosure Letter, none of the Interest Holders or any
Related Person of such Interest Holders or of the Company has, or since the
first day of the next to last completed fiscal year of the Company has had, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Company's business. Except as set
forth in Part 5.25 of the Disclosure Letter, none of the Interest Holders or any
Related Person of such Interest Holders or of the Company owns, or since the
first day of the
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next to last completed fiscal year of the Company owned (of record or as a
beneficial owner), an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with the Company, or (ii) engaged in competition with the
Company with respect to any line of the products or services of the Company (a
"Competing Business") in any market presently served by the Company, except for
less than one percent of the outstanding capital stock or stated capital of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in Part 5.25 of the Disclosure
Letter, none of the Interest Holders or any Related Person of such Interest
Holders or of the Company is a party to any Contract with, or has any claim or
right against, the Company, other than Contracts related to their employment
with the Company and claims for ordinary compensation as provided by any such
Contract.
5.26. BROKERS AND FINDERS. Neither the Interest Holders nor
the Company nor any of its officers, directors, managing director, Prokurist, or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted, directly or indirectly, for any of the Interest
Holders or the Company, in connection with this Agreement or the transactions
contemplated hereby or thereby.
5.27. EMPLOYEE BENEFIT PLANS. (a) Part 5.27 of the Disclosure
Letter sets forth a complete and accurate list and summary description of each
employee benefit plan or arrangement, including, without limitation, bonus,
savings or profit sharing plan, deferred compensation plan, pension or
retirement plan, stock option plan, stock appreciation right plan, executive
compensation practice and other executive perquisite, each plan or arrangement
providing for insurance (including, without limitation, health and life
insurance) coverage, severance, termination or similar coverage and each written
compensation policy and practice, which in each case, covers any current or
former employee, officer, director, managing director, Prokurist or agent of the
Company, and which is or was maintained or contributed to by the Company, other
than those benefit plans or arrangements mandated by applicable Legal
Requirements.
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(b) Except as set forth in Part 5.27 of the Disclosure Letter,
the Company has (i) complied in all material respects with all Legal
Requirements applicable to all employee benefit plans and arrangements
maintained or contributed to by the Company (whether or not listed or required
to be listed in Part 5.27 of the Disclosure Letter), (ii) made all contributions
to such plans and arrangements that were required to be made pursuant to
applicable Legal Requirements; and (iii) in the Balance Sheet, made adequate
provision for existing pension obligations on the basis of actuarial opinions
(versicherungsmathematische Gutachten) up to the maximum amount permitted under
generally accepted valuation methods.
5.28. INVESTMENT INTENT; ACCREDITED INVESTOR. The Interest
Holders are acquiring the Acquiror Shares pursuant to Article II of this
Agreement for their own accounts and not with the view to, or for resale in
connection with, any distribution or public offering thereof with the meaning of
the Securities Act, except as contemplated by the Stockholders' Agreement. Each
Interest Holder is either (i) an "accredited investor" as such term is defined
in Section 501(a) of Regulation D promulgated under the Securities Act or (ii)
otherwise has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and the risks of the Acquiror Shares
being delivered pursuant to Section 2.1 of this Agreement so that such delivery
of Acquiror Shares is eligible for exemption from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
of the Securities Act or Regulation S thereunder. Each Interest Holder has had
an opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Acquiror Shares, has had full access to such
information concerning Acquiror as each Interest Holder has requested and
possesses substantial information about, and familiarity with, Acquiror as a
result of the information provided to each Interest Holder. The Interest Holders
understand that the Acquiror Shares have not been registered under the
Securities Act by reason of their contemplated issuance by Acquiror in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to Section 4(2) thereof, and that the reliance of
Acquiror upon this exemption is predicated in part upon this representation and
warranty by the Interest Holders.
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ARTICLE VI
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
6.1. CONDUCT PRIOR TO CLOSING. (a) The Company and the
Interest Holders hereby covenant and agree with Acquiror, that, prior to the
Closing, unless the prior written consent of Acquiror shall have been obtained
and except as otherwise contemplated herein, the Company shall, and the Interest
Holders will cause the Company to, operate its business only in the usual,
regular and ordinary course and in accordance with past practices and to conduct
its business in compliance in all material respects with the standards of the
industry in which it operates and provides services; and to preserve intact its
current business organization, keep available the services of the current
officers, employees and agents of the Company, and maintain the relations and
goodwill with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with the Company. From the date hereof
until the Closing, except as otherwise specifically provided in this Agreement
(including, without limitation, Section 6.3), the Company agrees that it will
not, and the Interest Holders covenant and agree that they will not permit the
Company to, do or agree or commit to do, without the prior written consent of
Acquiror, any of the following:
(i) incur any liabilities or obligations in excess of U.S.
$50,000, in the aggregate, whether directly or by way of guaranty,
including any obligation for borrowed money whether or not evidenced by
a note, bond, debenture or similar instrument, provided that the
settlement of the VCU litigation on the terms described in the
Disclosure Letter and the settlement of the pending litigation filed in
Texas titled Linda Gail Frase v. BioClin, Inc. and Jack Barbut on the
terms previously discussed with Acquiror shall not be within such
limitation;
(ii) acquire any equity, debt or other investment securities
except for acquisitions of such securities in the ordinary course of
business;
(iii) grant any increase in compensation (including any
salaries or bonuses) to its employees as a class, or to its officers or
directors, managing director or Prokurist, except as required by law or
at times and in a manner consistent
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with past practice; effect any change in retirement benefits to any
class of employees or officers (unless any such change shall be
required by applicable law); enter into any employment, severance or
similar agreements or arrangements with any directors, managing
director or Prokurist or officers or employees other than the
agreements or severance and other plans described in Part 5.27 of the
Disclosure Letter, which in the case of employment agreements would
extend beyond the Closing Date (it being understood that nothing
contained herein shall prohibit the Company from paying individual
merit increases or promotional increases, or performance bonuses to its
employees based on formulas consistent with those used in the past for
similar levels of performance); or establish, adopt, enter into or
amend any employee benefit plan for the benefit of any officers,
directors, managing director or Prokurist or employees;
(iv) declare any profit to be distributed to theshareholders
or pay any profit and purchase, redeem or otherwise acquire any
shares of the Company;
(v) other than with respect to the loan and letter agreement
relating to the acquisition of real property in connection with
establishing a representative office in Lithuania, purchase or
otherwise acquire any substantial portion of the assets, or of any
class of stock or equity interests of any Person except in partial or
complete satisfaction of debts previously contracted; merge into any
other Person or permit any other Person to merge into it or consolidate
with any other Person; liquidate, sell, dispose of, or encumber any
assets or acquire any assets, other than in the ordinary course of
business consistent with past practice, or issue any shares or permit
any shares held in its treasury to become outstanding; or issue or
grant or extend the term of any option, warrant, conversion or stock
appreciation right not in existence on the date hereof;
(vi) propose or adopt any amendments to its Articles of
Association;
(vii) enter into any type of business not conducted by the
Company as of the date of this Agreement or create or
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organize any new subsidiary or enter into or participate in any joint
venture or partnership (Personengesellschaft);
(viii) propose or adopt any material changes to the accounting
principles used by the Company except as required by German GAAP
(Grundsaetze ordnungsgemaesser Buchfuehrung und Bilanzierung) and then
only in consultation with
Acquiror;
(ix) enter into any agreement or transactions with any of the
Interest Holders or any Affiliate of the Interest Holders or make any
material amendment or modification to any such agreement, except as
contemplated by this Agreement; or
(x) agree or commit to do any of the foregoing.
Without limiting the foregoing, from the date hereof until the Closing, the
Company shall not, and the Interest Holders agree that they will not permit the
Company to, without first promptly notifying Acquiror and obtaining the prior
written consent of Acquiror, take any action or permit or suffer to be taken any
action, which is represented in Section 5.16 not to have been taken since the
date of the Balance Sheet.
(b) From the date hereof until the Closing, Acquiror shall
not, without first promptly notifying the Interest Holders and providing the
Interest Holders an opportunity to express their views, take any action or
permit or suffer to be taken any action, which is represented in Section 3.8 not
to have been taken since March 31, 1996.
6.2. CONSENTS AND APPROVALS. (a) Subject to the terms and
conditions herein provided, each of the parties hereto agrees to cooperate with
the other and use all reasonable best efforts to satisfy the conditions set
forth in Article VIII to be satisfied and to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws, regulations and contractual arrangements to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. Each of the
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parties hereto hereby covenants and agrees subject, in the case of Acquiror, to
the fiduciary obligations of Acquiror's Board of Directors, to take no action
(a) which would render any of its or his representations and warranties
contained herein untrue at and as of the Closing except as otherwise
contemplated herein or (b) which would adversely affect its or his ability to
satisfy any of the conditions set forth in Article VIII, including, without
limitation, the ability to obtain any necessary Governmental Authorizations
required for the transactions contemplated hereby or materially increase the
period of time necessary to obtain such authorizations.
(b) To the extent that the rights of the Company under any
agreement, arrangement or understanding may not be assigned without the consent
or approval of another party thereto, the Company shall, and the Interest
Holders shall cause the Company to, use all reasonable efforts to obtain any
such consent or to amend the agreement, arrangement or understanding such that
no consent is required.
6.3. BOOKKEEPING, ACCOUNTING AND FINANCIAL REPORTING
CAPABILITIES. (a) The Company and the Interest Holders hereby covenant and agree
with Acquiror, that (i) prior to the Closing, the Company and the Interest
Holders will deliver to Acquiror: (A) an audited combined consolidated balance
sheet of the Company and the BioClin Affiliates as at December 31, 1994, and the
related audited combined consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal year then ended as well as
the fiscal year ended December 31, 1993, together with the report thereon of
KPMG Peat Marwick L.L.P., and (B) an audited combined consolidated balance sheet
of the Company and the BioClin Affiliates as at December 31, 1995 and the
related audited combined consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal year then ended, together
with the report thereon of KPMG Peat Marwick L.L.P., including, in each case,
the notes thereto, and (ii) (A) the financial statements with respect to fiscal
1995 will be prepared in accordance with U.S. GAAP (which except where noted
therein, will be consistently applied), and will fairly present the financial
condition and results of operations, changes in stockholders' equity and cash
flow of the Company and the BioClin Affiliates as at the respective dates and
for the periods referred to in such financial statements and (B) the
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financial statements with respect to fiscal 1993 and 1994 will be prepared in
accordance with German GAAP (Grundsaetze ordnungsgemaesser Buchfuehrung und
Bilanzierung) including the principle of balance sheet consistency
(Bilanskontinuitast) and will be reconciled to U.S. GAAP.
(b) The Company and the Interest Holders hereby covenant and
agree with Acquiror, that, prior to the Closing, the Company shall, and the
Interest Holders shall cause the Company to, hire such number of bookkeepers
and/or accountants, or an accounting firm to provide such bookkeeping and
accounting services, reasonably acceptable to Acquiror, both in terms of number
and identity, such that the Company will, upon the Closing, have adequate
financial reporting capabilities to ensure that the reporting of consolidated
financial results by Acquiror on a post-Closing basis shall be made in a manner
that will enable Acquiror meet all reporting obligations applicable to it
pursuant to the Exchange Act.
(c) Notwithstanding any other provision hereof to the contrary
(including, without limitation, Section 10.2), to the extent Acquiror incurs any
fees or expenses in connection with the employment of Persons in connection with
the rendering of services contemplated by Section 6.3(b), the Company shall
promptly reimburse Acquiror for all such fees and expenses.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. CURRENT INFORMATION. During the period from the date of
this Agreement to the Closing, the Interest Holders, on the one hand, and
Acquiror, on the other hand, will cause one or more of their Representatives to
confer on a regular and frequent basis with Representatives of the other party
with respect to the status of the ongoing operations of the Company. Each party
will promptly notify the other party of any material change in the normal course
of its business or in the operation of its properties and, to the extent
permitted by applicable law, of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material Proceedings involving such party which
would in any manner, challenge, prevent, alter or materially delay any of the
transactions contemplated by this
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Agreement, and each party will keep the other party fully informed with respect
to such events. Each party will also notify the other party of the status of
regulatory applications and third party consents related to the transactions
contemplated hereby.
7.2. ACCESS AND INVESTIGATION. To the full extent permitted by
applicable law, between the date of this Agreement and the Closing Date, the
Company shall, and the Interest Holders shall and shall cause the Company and
its Representatives to, (a) afford Acquiror and its Representatives
(collectively, "Acquiror's Advisors") full and free access to the Company's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Acquiror and Acquiror's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Acquiror may reasonably request, and (c) furnish
Acquiror and Acquiror's Advisors with such additional financial, operating, and
other data and information as Acquiror may reasonably request.
7.3. EFFECT OF INVESTIGATIONS. Notwithstanding the
notification and cure provisions of Sections 7.6(c) and (d), but subject to the
provisions of Section 8.2 and 8.3, no investigation by the parties hereto made
heretofore or hereafter, whether pursuant to this Agreement or otherwise
(including without limitation, any action taken by or information provided to
Acquiror pursuant to the provisions of Sections 7.1 and 7.2) shall affect the
representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation.
7.4. PRESS RELEASES, ETC. Acquiror and the Interest Holders
will consult with each other as to the form, substance and timing of any press
release or other public disclosure of matters related to this Agreement or any
of the transactions contemplated hereby and no such press release or other
public disclosure shall be made without the consent of the other party, which
shall not be unreasonably withheld or delayed; PROVIDED, HOWEVER, that either
party may make such disclosures as are required by law after making reasonable
efforts in the circumstances to consult in advance with the other party.
7.5. ACQUISITION PROPOSALS. Until such time, if any, as this
Agreement is terminated pursuant to Article IX, the Company and the Interest
Holders will not, and the Interest Holders will
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cause the Company and its Representatives not to, directly or indirectly
solicit, initiate, or encourage or take any other action to facilitate
(including by way of providing information) any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Acquiror) relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of business) of the Company, or any of
the equity interests of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company. The Company and the
Interest Holders shall promptly advise Acquiror orally and in writing of any
inquiry or proposal which relates to such a transaction.
7.6. NOTIFICATION OF CERTAIN MATTERS. (a) Between the date of
this Agreement and the Closing Date, each Interest Holder will promptly notify
Acquiror in writing if such Interest Holder or the Company has knowledge of any
fact or condition that causes or constitutes a breach of the Trustee's, the
Company's or any of the Interest Holders' representations and warranties as of
the date of this Agreement, or if such Interest Holder or the Company has
knowledge of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition, or any fact or
condition disclosed to the Interest Holders by Acquiror pursuant to Section
7.6(d), require any change in the Disclosure Letter, if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, the Interest Holders will promptly deliver to Acquiror a supplement
to the Disclosure Letter specifying such change. During the same period, each
Interest Holder will promptly notify Acquiror if such Interest Holder or the
Company has knowledge of the occurrence of any breach of any covenant of the
Interest Holders or the Company in Article VI, this Article VII or of the
occurrence of any event that may make the satisfaction of the conditions in
Article VIII impossible or unlikely.
(b) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in
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writing if Acquiror has knowledge of any fact or condition that causes or
constitutes a breach of the Acquiror's representations and warranties as of the
date of this Agreement, or if Acquiror has knowledge of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition, or any fact or condition disclosed to Acquiror by the Company
or any Interest Holder pursuant to Section 7.6(c), require any change in the
Acquiror Letter, if the Acquiror Letter were dated the date of the occurrence or
discovery of any such act or condition, Acquiror will promptly deliver to the
Interest Holders a supplement to the Acquiror Letter specifying such change.
During the same period, Acquiror will promptly notify the Interest Holders if
Acquiror has knowledge of the occurrence of any breach of any covenant of
Acquiror in Article VI, this Article VII or of the occurrence of any event that
may make the satisfaction of the conditions in Article VIII impossible or
unlikely.
(c) Between the date of this Agreement and the Closing Date,
each Interest Holder will promptly notify Acquiror in writing if such Interest
Holder or the Company has knowledge of any fact or condition that causes or
constitutes a breach of Acquiror's representations and warranties as of the date
of this Agreement, or if such Interest Holder or the Company has knowledge of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, each Interest Holder will promptly notify
Acquiror if such Interest Holder or the Company has knowledge of the occurrence
of any breach of any covenant of Acquiror in Article VI, this Article VII or of
the occurrence of any event that may make the satisfaction of the conditions in
Article VIII impossible or unlikely.
(d) Between the date of this Agreement and the Closing Date,
Acquiror will promptly notify the Interest Holders in writing if Acquiror has
knowledge of any fact or condition that causes or constitutes a breach of the
Trustee's, the Company's
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or any of the Interest Holders' representations and warranties as of the date of
this Agreement, or if Acquiror has knowledge of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, Acquiror will promptly notify the Interest Holders if Acquiror has
knowledge of the occurrence of any breach of any covenant of the Company or the
Interest Holders in Article VI, this Article VII or of the occurrence of any
event that may make the satisfaction of the conditions in Article VIII
impossible or unlikely.
(e) For purposes of this Agreement, "knowledge" on the part of
Acquiror means the actual knowledge of Mr. Paul J. Schmitt, Mr. John G. Cooper
or Mr. Lief Modeweg, and knowledge on the part of the Company means the actual
knowledge of Dr. Jack Barbut or Dr. J. Chris Jensen; provided, however, that all
such Persons shall be deemed to have actual knowledge of all matters disclosed
in the Acquiror Letter and the Disclosure Letter.
(f) Not later than ten Business Days prior to the scheduled
Closing Date, (i) Acquiror shall deliver to the Interest Holders a supplement to
the Acquiror Letter and (ii) the Interest Holders shall deliver to Acquiror a
supplement to the Disclosure Letter, in each case, that updates such disclosure
from the date of this Agreement to such date of delivery. Thereafter, until the
Closing, Acquiror and the Interest Holders shall notify each other in writing of
any changes or supplements to the updated information necessary, to the
knowledge of Acquiror or the Interest Holders, as the case may be, to make such
information correct and complete at all times up to and including the Closing.
(g) Notwithstanding the foregoing provisions of this Section
7.6, nothing herein contained shall be construed to, in any manner, (i) modify
the representations and warranties of the parties contained herein as made as of
the date hereof or (ii) affect any right or remedy of any party granted
hereunder or under the Stockholders' Agreement (including, without limitation,
the conditions to Closing set forth in Article VIII herein and the
indemnification provisions set forth in Article IV of the Stockholders'
Agreement).
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'
7.7. CUSTOMERS. After execution of this Agreement and prior to
Closing, the Interest Holders, the Company and Acquiror shall, either
individually or jointly, notify the customers of the Company of the transactions
contemplated hereby. As promptly as practicable following the Closing, the
Interest Holders, and Acquiror shall notify such customers thereof and shall
provide, or join in providing where appropriate, all notices to such customers
and other persons that the Interest Holders the Company, or Acquiror, as the
case may be, are or is required to give by any Governmental Body having
jurisdiction over any such Person or under applicable law or other terms of any
other agreement between the Company or its employees and any customer in
connection with the transactions contemplated hereby.
7.8. PRESERVATION OF RELATIONSHIPS. The Interest Holders
(excluding, for this purpose, Hackel) shall use their best efforts, and shall
use their best efforts to cause all their Affiliates including, without
limitation, the Company and its employees (in their capacity as employees) to
use their best efforts, to maintain in effect all material contractual and
business relationships with the Company or the employees (in their capacity as
employees) and to waive any and all rights to terminate any such relationship
arising as a result of the transactions contemplated by this Agreement, except
as otherwise contemplated by this Agreement.
7.9. RESALE; LEGENDS. (a) The Interest Holders shall not sell
or otherwise transfer any of their Acquiror Shares until (a) such Acquiror
Shares shall have been registered under the Securities Act, or (b) Acquiror
shall have received an opinion of legal counsel, satisfactory to Acquiror, that
such Acquiror Shares may be legally sold or otherwise transferred without such
registration.
(b) The Acquiror Shares shall be imprinted with a legend in
substantially the following form:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933 (the "Act"), and may not be sold or
transferred in the absence of an effective registration
statement under the Act or an exemption from registration
thereunder. Prior to any sale or transfer
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of the securities represented by this certificate, except
pursuant to an effective registration statement under the Act
covering such sale or transfer, the holder hereof shall have
delivered to the issuer hereof (the "Company") an opinion of
counsel reasonably satisfactory to the Company to the effect
that such sale or transfer is exempt from registration under
the Act."
7.10. POOLING TREATMENT. None of Acquiror, the Company nor any
of the Interest Holders shall intentionally take, fail to take or cause to be
taken or not taken any action within its control, whether before or after the
Closing, which would disqualify the transactions consummated under this
Agreement as a "pooling of interests" for accounting purposes.
7.11. SHAREHOLDER APPROVAL; PROXY STATEMENT. (a) As soon as
practicable after the date hereof, Acquiror shall prepare a proxy statement (the
"Proxy Statement"), file it with the SEC, respond to comments of the Staff of
the SEC, clear the Proxy Statement with the Staff of the SEC and promptly
thereafter mail the Proxy Statement to all holders of Acquiror Common Stock. The
Interest Holders shall, and shall cause the Company to, cooperate with Acquiror
in the preparation of the Proxy Statement.
(b) Acquiror shall take all action necessary, in accordance
with applicable law and its certificate of incorporation and by-laws, to convene
a meeting of the holders of Acquiror Common Stock (the "Stockholders Meeting")
for the purpose of considering and taking action with respect to the approval of
the issuance of the Acquiror Shares as required by the rules of the National
Association of Securities Dealers, Inc. in connection with the transactions
contemplated by this Agreement and any of the other transactions pursuant to
which Acquiror shall acquire all of the outstanding capital stock or equity
interests in each of the BioClin Affiliates.
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ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE THE
CLOSING. The respective obligations of each party to consummate the Closing
shall be subject to the fulfillment or waiver at or prior to the Closing of the
following conditions:
(a) The issuance of the Acquiror Shares shall have been
approved by the requisite vote of the holders of Acquiror Common Stock.
(b) The sale, transfer and assignment of Company Shares and
the transfer and delivery of the Acquiror Shares in consideration therefor as
contemplated by this Agreement and the transactions contemplated hereby shall
have been approved by the Governmental Bodies whose approval is required to
consummate the transactions contemplated hereby without any condition which is
reasonably likely to have a material adverse effect on the financial condition,
business or results of operations of the Company or Acquiror taken as a whole;
all conditions required to be satisfied prior to the Closing imposed by the
terms of such approvals shall have been satisfied; and all notifications to any
Governmental Bodies that are required shall have been made.
(c) None of Acquiror, the Trustee, the Interest Holders nor
the Company shall be subject to any order, decree or injunction of any
Governmental Body which enjoins or prohibits the consummation of the
transactions contemplated by this Agreement.
(d) Acquiror, the Company and the Interest Holders shall have
received a letter, dated the Closing Date, from KPMG Peat Marwick L.L.P. to the
effect that, for financial reporting purposes, the transactions contemplated
hereby qualify for pooling-of-interests accounting treatment under U.S. GAAP if
consummated in accordance with this Agreement.
(e) The Stockholders' Agreement and the Employment Agreements
shall have been entered into by the parties thereto.
8.2. CONDITIONS TO OBLIGATION OF ACQUIROR TO CONSUMMATE THE
CLOSING. The obligations of Acquiror to consummate the
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Closing shall be subject to the fulfillment or waiver at or prior to the Closing
of the following additional conditions:
(a) (i) The representations and warranties of the Company, the
Trustee and the Interest Holders set forth in Articles IV and V hereof (A) that
contain a materiality qualification shall be true and correct and (B) that do
not contain a materiality qualification shall be true and correct in all
material respects, as of the Closing as though made at and as of the Closing (it
being understood that representations and warranties that speak as of a
specified date shall continue to speak only as of the date so specified) without
giving effect to any supplement to the Disclosure Letter, except for such
changes occurring after the date hereof in the ordinary course of business of
the Company and in accordance with the terms and provisions of this Agreement
(including, without limitation, Section 6.1(a)), which, in the aggregate, would
not have a material adverse effect on the financial condition, operations or
prospects of the Company and the BioClin Affiliates taken as a whole, and (ii)
Acquiror shall have received a signed certificate of each of the Company (which
is to the knowledge of a principal executive officer), the Trustee and the
Interest Holders to that effect. Acquiror's closing of the transactions
contemplated by this Agreement and the agreements with the BioClin Affiliates
with respect to Acquiror's acquisition of all of the outstanding capital stock
or equity interests of the BioClin Affiliates shall constitute acceptance of the
disclosures made by the Company and/or the Interest Holders prior to Closing in
the Disclosure Letter and waiver of any purported misrepresentation or breach of
any representation or warranty made by such Persons in Article V or any covenant
of such Persons contained in Article VI or VII to the extent the Disclosure
Letter, as supplemented pursuant to Section 7.6(a) and (f), discloses
information pertaining thereto.
(b) The Company, the Trustee and the Interest Holders shall
have in all material respects performed all obligations required to be performed
by them under this Agreement prior to the Closing, and Acquiror shall have
received a signed certificate of each of the Company (which is to the knowledge
of a principal executive officer), the Trustee and the Interest Holders to that
effect.
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(c) Acquiror shall have received a legal opinion dated the
Closing, from Piper & Marbury, L.L.P., counsel of the Interest Holders, with
respect to the transactions contemplated herein in form mutually agreed upon by
Acquiror and the Interest Holders.
(d) The Board of Directors of Acquiror shall have received an
opinion from Vector Securities International, Inc., dated not later than the
date of Acquiror's Proxy Statement (and such opinion shall not have been
withdrawn on or before the Closing Date) to the effect that as of the date
thereof, the number of Acquiror Shares to be delivered in consideration for the
transfer of the Company Shares and the capital stock or equity interests in each
of the BioClin Affiliates is fair to Acquiror and Acquiror's stockholders from a
financial point of view.
(e) Acquiror shall have acquired all of the outstanding
capital stock or equity interests in each of the BioClin Affiliates.
(f) The Company shall have obtained the written consent(s) of
the Person(s) specified in Part 8.2 of the Acquiror Letter.
8.3. CONDITIONS TO OBLIGATION OF INTEREST HOLDERS OWNER TO
CONSUMMATE THE CLOSING. The obligations of the Company, the Trustee and Interest
Holders to consummate the Closing shall be subject to the fulfillment or waiver
at or prior to the Closing of the following additional conditions:
(a)(i) The representations and warranties of Acquiror set
forth in Article III hereof (A) that contain a materiality qualification shall
be true and correct, and (B) that do not contain a materiality qualification
shall be true and correct in all material respects, as of the Closing as though
made at and as of the Closing (it being understood that representations and
warranties that speak as of a specified date shall continue to speak only as of
the date so specified) without giving effect to any supplement to the Acquiror
Letter, except for such changes occurring after the date hereof in the ordinary
course of business of Acquiror and in accordance with the terms and provisions
of this Agreement (including, without limitation, Section 6.1(b)), which, in the
aggregate, would not have a material adverse effect on the financial condition,
operations or prospects of Acquiror
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and its Subsidiaries taken as a whole, and (ii) each of the Company, the Trustee
and the Interest Holders shall have received a signed certificate which is to
the knowledge of a principal executive officer of Acquiror to that effect. The
closing of the transactions contemplated by this Agreement and the agreements
with the BioClin Affiliates with respect to Acquiror's acquisition of all of the
outstanding capital stock or equity interests of the BioClin Affiliates shall
constitute acceptance by the Company and the Interest Holders of the disclosures
made by Acquiror prior to the Closing in the Acquiror Letter and waiver of any
purported misrepresentation or breach of any representation or warranty made by
Acquiror in Article III or any covenant of Acquiror contained in Article VI or
VII to the extent the Acquiror Letter, as supplemented pursuant to Section
7.6(b) and (f), discloses information pertaining thereto.
(b) Acquiror shall have in all material respects performed all
obligations required to be performed by it under this Agreement prior to the
Closing, and each of the Company, the Trustee and the Interest Holders shall
have received a signed certificate which is to the knowledge of a principal
executive officer of Acquiror to that effect.
(c) The Interest Holders shall have received a legal opinion
dated the Closing from Jones, Day, Reavis & Pogue, counsel of Acquiror, with
respect to the transactions contemplated herein in form mutually agreed upon by
Acquiror and the Interest Holders.
(d) All liabilities and obligations of Hackel (direct or
indirect) and Barbut pursuant to any guarantees of the indebtedness of the
Company and the BioClin Affiliates shall have been terminated.
ARTICLE IX
TERMINATION
9.1. TERMINATION. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by either Acquiror or the Interest Holders if a material
breach of any provision of this Agreement has been committed by the other party
and such breach has not been waived;
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(b) (i) by Acquiror, if any of the conditions in Section 8.1
or 8.2 has not been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Acquiror
to comply with its obligations under this Agreement) and Acquiror has not waived
such condition on or before the Closing Date; or (ii) by the Interest Holders,
if any of the conditions in Section 8.1 or 8.3 has not been satisfied as of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of the Trustee or the Interest Holders to comply
with their obligations under this Agreement) and the Interest Holders have not
waived such condition on or before the Closing Date;
(c) by mutual consent of Acquiror and the Interest Holders;
(d) by either Acquiror or the Interest Holders if any of the
agreements relating to the transfer and delivery of the Acquiror Common Stock in
consideration and exchange for the transfer of the outstanding capital stock or
equity interests in each of the BioClin Affiliates is terminated; or
(e) by either Acquiror or the Interest Holders if the Closing
has not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before December 31, 1996, or such later date as the parties may
agree upon.
9.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations set forth in Sections
6.3(c), 10.2 and 10.3 will survive; provided, however, that if this Agreement is
terminated by Acquiror or the Interest Holders because of the intentional breach
of this Agreement (including, without limitation, the making by any party hereto
of any representation or warranty hereunder that is known by such party not to
be true and correct in all material respects at the time such representation or
warranty is made) by the Interest Holders or Acquiror, as the case may be, or
because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's
intentional failure to comply with its obligations under this Agreement, the
terminating
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party's right to pursue all legal remedies will survive such termination
unimpaired.
ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as specifically provided in this Agreement and the Stockholders'
Agreement, all representations, warranties and agreements of the parties hereto
in this Agreement or in any instrument delivered by the parties hereto pursuant
to this Agreement shall expire on the Report Date or upon termination of this
Agreement in accordance with its terms.
10.2. EXPENSES. Except as otherwise expressly provided in this
Agreement (including, without limitation, in Section 6.3(b)) and the Letter
Agreement, dated May 16, 1996, by and among Acquiror, the Company and the
BioClin Affiliates, each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and performance
of this Agreement and the transactions contemplated hereby, including all fees
and expenses of agents, representatives, counsel, and accountants. Acquiror will
pay all amounts payable to Vector Securities International, Inc. in connection
with this Agreement and the transactions contemplated hereby. In the event of
termination of this Agreement pursuant Article IX, the obligation of each party
to pay its own expenses shall be subject to the right of such party to pursue
any legal remedies arising from the intentional breach of this Agreement by the
other party or the other party's intentional failure to comply with its
obligations under this Agreement as provided in Section 9.2.
10.3. CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Acquiror and the Interest Holders will maintain in confidence,
and will cause the directors, managing director, Prokurist, officers, employees,
agents, and advisors of Acquiror and the Company to maintain in confidence, and
not use to the detriment of another party hereto any written, oral, or other
information obtained in confidence from another party or the Company in
connection with this Agreement or the transactions contemplated hereby, unless
(a) such information is already known to such party or to others not bound by a
duty of
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confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the transactions contemplated hereby, or (c) the furnishing or
use of such information is required by or necessary or appropriate in connection
with legal proceedings. If any party hereto or its Representatives are requested
or become legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoena, civil or criminal investigative demand, or
similar process) or is required by a regulatory body to make any disclosure that
is prohibited or otherwise constrained by this Agreement, such party or its
Representative, as the case may be, will provide the party providing the
confidential information with prompt notice of such request so that an
appropriate protective order or other appropriate remedy may be sought. Subject
to the foregoing, such party or its Representative may furnish that portion (and
only that portion) of the confidential information that, in the written opinion
of its counsel reasonably acceptable to the party providing such information,
such party is legally compelled or is otherwise required to disclose the
information at issue or else stand liable for contempt or suffer other material
censure or material penalty. If the transactions contemplated hereby are not
consummated, each party hereto will return or destroy as much of such written
information as the other party may reasonably request. Whether or not the
Closing takes place, the Interest Holders waive, and will upon Acquiror's
request cause the Company to waive, any cause of action, right, or claim arising
out of the access of Acquiror or its Representatives to any trade secrets or
other confidential information of the Company except for the intentional
competitive misuse by Acquiror of such trade secrets or confidential
information. The Trustee and the Interest Holders acknowledge that, and agree
that they will advise their respective Representatives and Affiliates, that any
non-public information provided by or relating to Acquiror may constitute
material non-public information for purposes of the Exchange Act, and agrees
that it will not engage in any transaction in violation of the restrictions on
trading while in possession of material non-public information under applicable
securities laws or regulations while in possession of such information.
10.4. NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and
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will be deemed to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
(a) if to Acquiror:
DNX Corporation
303B College Road East
Princeton, New Jersey 08540
Attention: President
Telecopier No.: (908) 722-6677
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
Telecopier No.: (216) 579-0212
(b) if to the Trustee:
Dr. Gerald Rittershaus
Theodor-Heuss-Anlage 2
68165 Mannheim
Germany
Telecopier No.: 011-49-621-42-56-250
(c) if to the Interest Holders:
Jack Barbut
c/o Piper & Marbury, L.L.P.
1251 Avenue of the Americas
New York, New York 10020-1104
Telecopier No.: (212) 835-6001
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Alec Hackel
Flueliweg 3
6045 Meggen
Switzerland
Telecopier No.: 011-41-41-377-3053
Dr. John Christian Jensen
Bohlstrasse 9a
6300 Zug
Switzerland
Telecopier No.: 011-41-41-71-2341
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
(d) if to the Company:
c/o BioClin, Inc.
1001 East Main Street
Suite 808
Richmond, Virginia 23219
Attention: Chief Executive Officer
Telecopier No.: (804) 788-0040
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telecopier No.: (212) 835-6001
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10.5. JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
10.6. FURTHER ASSURANCES. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
10.7. WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Except as otherwise specifically
provided by Sections 8.2 and 8.3 of this Agreement, neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law and except as
otherwise specifically provided by Sections 8.2 and 8.3 of this Agreement, (a)
no claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
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10.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the Stockholders' Agreement and the other
documents referred to in this Agreement and the documents executed in connection
with Acquiror's acquisition of the equity interests of the BioClin Affiliates) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by each of the parties hereto.
10.9. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No
party hereto may assign any of its rights under this Agreement without the prior
consent of the other parties, except that Acquiror may assign any of its rights
under this Agreement to any Subsidiary of Acquiror. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement and their successors and assigns
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
10.10. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
The invalid or unenforceable provision shall be replaced by a provision which
ensures the economic purpose of the invalid or unenforceable provision as far as
possible.
10.11. FOREIGN CURRENCIES. For purposes of the representations
and warranties set forth in this Agreement, any reference to "U.S. $" shall be
construed to include the U.S. dollar equivalent of any foreign currency (other
than DM) computed using the noon buying rate in New York City for cable
transfers of such foreign currency as announced for customs purposes by the
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Federal Reserve Bank of New York prevailing on the date of this Agreement.
10.12. SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
10.13. GOVERNING LAW. This Agreement will be governed by
the laws of the State of New York without regard to conflicts of
laws principles.
10.14. SPECIFIC PERFORMANCE. Each of the Company, the Interest
Holders, the Trustee and Acquiror acknowledges and agrees that the other parties
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or are
otherwise breached. Accordingly, each of the Company, the Interest Holders, the
Trustee and Acquiror agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court in the United States or
in any state having jurisdiction over the parties and the matter in addition to
any other remedy to which they may be entitled pursuant hereto.
10.15. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
DNX CORPORATION
By: /s/ Paul J. Schmitt
------------------------------
Name: Paul J. Schmitt
Title: Chief Executive Officer
/s/ Dr. Gerald Rittershaus
---------------------------------
Dr. Gerald Rittershaus, as
Trustee
/s/ Dr. Jack Barbut
---------------------------------
Dr. Jack Barbut
/s/ Alec Hackel
---------------------------------
Alec Hackel
/s/ Dr. John Christian Jensen
---------------------------------
Dr. John Christian Jensen
BIOCLIN INSTITUTE OF CLINICAL
PHARMACOLOGY GMBH
By: /s/ Dr. John Christian Jensen
-------------------------------
Name: Dr. John Christian Jensen
Title: Managing Director
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Exhibit 99.1
STOCKHOLDERS' AGREEMENT
-----------------------
This STOCKHOLDERS' AGREEMENT (the "Agreement") is being
entered into this _____ day of _______________, 1996, by and between DNX
Corporation, a Delaware corporation (together with its successors and permitted
assigns, the "Issuer"), Sherby N.V., a Netherlands Antilles corporation
("Sherby"), Dr. Gerald Rittershaus, acting solely in his capacity as trustee
("Rittershaus") pursuant to an Agreement among Rittershaus, Dr. Jack Barbut and
Alec Hackel, dated August 29, 1991 (the "Rittershaus Trust Agreement"), Manfred
Wissmann, acting solely in his capacity as trustee ("Wissmann" and, together
with Rittershaus, the "Trustees") pursuant to an Agreement among Wissmann, Dr.
Jack Barbut and Alec Hackel, dated March 22, 1990 (the "Wissmann Trust
Agreement" and, together with the Rittershaus Trust Agreement, the "Trust
Agreements"), Dr. Jack Barbut ("Barbut"), Alec Hackel ("Hackel"), Dr. John
Christian Jensen ("Jensen", collectively with Sherby, Barbut and Hackel, the
"Stockholders") and Ms. Martha Lee Reynolds ("Reynolds"), Mr. Barry Dvorchik
("Dvorchik"), Ms. Christine Dune-Kraatz ("Kraatz"), Dr. Gerald Rittershaus,
acting solely in his capacity as trustee (the "Employee Trustee") pursuant to a
Trust Agreement between the Employee Trustee and Kraatz dated December 12, 1989
(the "Employee Trust Agreement"), and Ms. Bettina Donhardt ("Donhardt" and,
together with Reynolds, Dvorchik and Kraatz, collectively, the "Employee
Stockholders").
RECITALS
--------
A. The Issuer, the Trustees and the Stockholders, among
others, are parties to each of (i) a Share Exchange Agreement (the "Exchange
Agreement") with respect to BioClin Europe AG, a Swiss corporation ("BioClin
Europe"), Kilmer N.V., a Netherlands Antilles corporation ("Kilmer"), and
BioClin GmbH, a German corporation ("BioClin Germany"), (ii) a Share
Acquisition Agreement (the "Acquisition Agreement") with respect to BioClin
Institute of Clinical Pharmacology GmbH, a German corporation ("BioClin
Institute"), and (iii) a Merger Agreement (the "Merger Agreement") with respect
to BioClin, Inc., a Delaware corporation ("BioClin/U.S." and, together with
BioClin Europe, Kilmer, BioClin Germany and BioClin Institute, collectively,
the "BioClin Affiliates"), each dated August 19, 1996 (the Exchange Agreement,
the Acquisition Agreement and the Merger Agreement collectively, the
"Securities Exchange Agreements"), pursuant to which the Issuer will, among
other things, directly, or indirectly, issue to the Stockholders (or to the
Trustees on behalf of Barbut and Hackel) and the Employee Stockholders (or
to
<PAGE> 256
the Employee Trustee on behalf of Kraatz) shares (the "Acquiror Shares") of its
Common Stock, par value $0.01 per share (the "Common Stock").
B. The Issuer has agreed to provide the Stockholders with the
right to designate one, or upon the earlier of March 31, 1997 or the next
vacancy, two, directors, for election to the Board of Directors of the Issuer
(the "Board").
C. The Issuer has agreed to provide to the Stockholders and
the Employee Stockholders certain registration rights with respect to the Common
Stock.
D. The Issuer, the Trustees, the Stockholders and the Employee
Stockholders are entering into this Agreement to set forth the terms and
conditions applicable to such designation of directors to the Board, the grant
and exercise of such registration rights and certain indemnification
arrangements.
E. Capitalized terms used herein, unless otherwise defined
herein, shall have the meaning given to such terms in the Securities Exchange
Agreements.
NOW THEREFORE, for the consideration set forth in the
Securities Exchange Agreements and other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Issuer agrees with
the Trustees and the Stockholders as follows:
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ARTICLE I
---------
DEFINITIONS
-----------
1.1 As used in this Agreement, the following terms have the
following meanings:
(i) "AFFILIATE" means, as to any Person, another
Person which controls, is controlled by or
is under common control with, such Person;
(ii) "COMMISSION" means the Securities and
Exchange Commission.
(iii) "CUTBACK REGISTRATION" means any
registration in which the managing
underwriter advises the Issuer that
marketing factors require a limitation of
the number of shares of Common Stock to be
underwritten in such registration;
(iv) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended, including the rules
and regulations promulgated thereunder;
(v) "PERSON" means a corporation, association,
joint venture, partnership, limited
liability company, trust, business,
individual, government or political
subdivision thereof, or any governmental
agency;
(vi) "PERMITTED INTERRUPTION" has the meaning set
forth in Section 3.8.
(vii) "PIGGYBACK REGISTRATION" means any
registration which is not a First Tranche
Requested Registration (other than a
registration on Form S-4 or Form S-8
promulgated pursuant to the Securities Act);
(viii) "REGISTER", "REGISTERED" and "REGISTRATION"
refer to a registration of Common Stock
effected by preparing and filing with the
Commission a registration statement in
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compliance with the Securities Act and the
declaration or ordering of the effectiveness
of such registration statement by the
Commission;
(ix) "REGISTRABLE SECURITIES" means the Common
Stock issued or issuable to any Stockholder
(or to the Trustees on behalf of any
Stockholder) or any Employee Stockholder (or
the Employee Trustee on behalf of any
Employee Stockholder) pursuant to the
Securities Exchange Agreements; PROVIDED
that, as to any particular securities, such
securities will cease to be Registrable
Securities upon the first to occur of the
following: (i) such securities have been
sold to the public pursuant to a
registration or pursuant to Rule 144
promulgated by the Commission pursuant to
the Securities Act (or any similar rule
then in force); or (ii) such securities
have been exchanged, substituted or
replaced by securities that have been
registered under the Securities Act.
(x) "REQUESTED REGISTRATION" means a
registration requested under Section 3.2 by
the Stockholders.
(xi) "SECURITIES ACT" means the Securities Act of
1933, as amended, including the rules and
regulations promulgated thereunder.
ARTICLE II
----------
DESIGNATION OF DIRECTORS
------------------------
2.1 RIGHT TO NOMINATE A DIRECTOR OF ISSUER. (a) The Issuer
shall take all actions reasonably within its power on or prior to the fifth
(5th) business day after the closing of the transactions contemplated by the
Securities Exchange Agreements (the "Closing") to elect to the Board one (1)
member who is designated by the Stockholders, and upon the earlier to occur of
March 31, 1997 or the next vacancy on the Board, one (1)
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additional member who is designated by the Stockholders (each person so
designated, a "Stockholder Nominee").
(b) Each Stockholder Nominee, regardless of whether to be
appointed or elected, shall be reasonably acceptable to the Issuer, except that
the Issuer hereby agrees that Barbut and Jensen are acceptable Stockholder
Nominees.
(c) Notwithstanding any provision contained herein to the
contrary, at any time prior to the election of the second Stockholder Nominee to
the Board, in accordance with Section 2.1(a), one other person (the "Auditing
Nominee") shall have the right to attend and speak (but not vote) at all regular
and special meetings of the Board and, upon notice from the Stockholders of the
identity and address of such Auditing Nominee, the Issuer will cause all notices
of such meetings and all written materials prepared for such meetings to be sent
to such Auditing Nominee at the same time that such notices and materials are
sent to the members of the Board. Any Auditing Nominee shall be reasonably
acceptable to the Issuer, except that the Issuer hereby agrees that each of
Barbut and Jensen is an acceptable Auditing Nominee. Any Auditing Nominee shall
become a party hereto unless already a party hereto. Such Auditing Nominee
hereby acknowledges its obligations under the federal securities laws to not
trade in the Common Stock while in possession of material non-public information
relating to the Issuer and hereby agrees to not so trade.
ARTICLE III
-----------
REGISTRATION PROVISIONS
-----------------------
3.1 PIGGYBACK REGISTRATION. Subject to Permitted Interruptions
as provided for in Section 3.8, if at any time after the Closing, and from time
to time thereafter, the Issuer proposes to effect a Piggyback Registration for
its account or for the account of a security holder or holders, the Issuer
shall:
(a) promptly give to each Stockholder and Employee Stockholder
written notice thereof (which written notice shall include a list of the
jurisdictions in which the Issuer intends to attempt to qualify such securities
under or otherwise comply with the applicable blue sky or other state securities
laws); and
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(b) include in such registration (and any related
qualification under or other compliance with blue sky or other state securities
laws), and in any underwriting involved therein, all the Registrable Securities
specified in a written request, made within fifteen (15) days after receipt of
such written notice from the Issuer, by any Stockholder (or the Trustees on
behalf of any Stockholder) or any Employee Stockholder (or the Employee Trustee
on behalf of any Employee Stockholder); PROVIDED, HOWEVER, that if such
registration is a Cutback Registration, then (i) if such registration is a
registration on behalf of the Issuer for its own account, the Issuer shall
register in such registration (A) first, the shares of Common Stock the Issuer
proposes to sell in such registration, and (B) second, the shares of Common
Stock that are Registrable Securities held by the Stockholders, the Employee
Stockholders and any other shares of Common Stock requested to be included
therein by persons entitled to piggyback registration rights (the "Other
Holders"), on a pro rata basis, based upon the number of shares of Common Stock
each Stockholder, Employee Stockholder and each Other Holder originally sought
to include in such registration; and (ii) if such registration is a Piggyback
Registration that is solely a secondary registration requested by, and being
made on behalf of, holders of Common Stock other than the Stockholders or the
Employee Stockholders (the "Demanding Holders"), the Issuer shall register in
such registration (A) first, the shares of Common Stock proposed to be sold by
the Demanding Holders, and (B) second, the shares of Common Stock that are
Registrable Securities held by the Stockholders, the Employee Stockholders and
any other shares of Common Stock requested to be included therein by the Other
Holders, on a pro rata basis, based upon the number of shares of Common Stock
each Stockholder, Employee Stockholder and each Other Holder originally sought
to include in such registration.
3.2 REQUESTED REGISTRATION. Subject to Permitted
Interruptions as provided for in Section 3.8:
(a) FIRST TRANCHE REQUESTED REGISTRATION. At any time
following the second anniversary of the Closing, the Stockholders, acting
together, may make a written request to the Issuer for one (1) registration
(including any related qualification under or compliance with blue sky or other
state securities laws) of up to thirty-eight percent (38%) of the Registrable
Securities owned by them (or by the Trustees on their
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behalf) to be allocated among the Stockholders as agreed by them
("First Tranche Requested Registration").
(b) SECOND TRANCHE REQUESTED REGISTRATION. At any time
following the fifth anniversary of the Closing, the Stockholders, acting
together, may make a written request to the Issuer for one (1) registration
(including any related qualification under or compliance with blue sky or other
state securities laws) of all or part of the Registrable Securities owned by
them (or by the Trustees on their behalf) to be allocated among the Stockholders
as agreed by them ("Second Tranche Requested Registration").
(c) REQUEST AND REGISTRATION PROCEDURES. The offering of such
Registrable Securities pursuant to such Requested Registration shall be in the
form of an underwritten public offering. Each request to the Issuer for
registration shall specify whether the registration is a First Tranche Requested
Registration or a Second Tranche Requested Registration and the number of shares
of Common Stock that are Registrable Securities proposed to be registered and
the allocation of such Registrable Securities among the Stockholders. After
receipt of such request, the Issuer shall, subject to Permitted Interruptions,
use its best efforts diligently to effect such Requested Registration (and
related qualifications and compliances (including, without limitation, the
execution of an undertaking to file post-effective amendments and appropriate
qualifications under or other compliance with the applicable blue sky or other
state securities laws)) of the Registrable Securities which the Issuer has been
so requested to register by the Stockholders exercising the Requested
Registration rights ("Requesting Holders").
(d) PRIORITY ON REQUESTED REGISTRATIONS. If any Requested
Registration is a Cutback Registration, the Issuer shall register in such
registration (i) first, the Registrable Securities which any Requesting Holder
seeks to include in such registration, on a pro rata basis based upon the number
of shares of Common Stock each such Requesting Holder seeks to include in such
registration and (ii) second, the Registrable Securities held by the Employee
Stockholders that have exercised their Piggyback Registration rights in
accordance with Section 3.1 (the "Piggyback Holders") (with respect to a Second
Tranche Requested Registration) and any other shares of Common Stock requested
to be included in such registration by the Other Holders, on a pro
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rata basis, based upon the number of shares of Common Stock each Piggyback
Holder and each Other Holder, as applicable, seeks to include in such
registration.
(e) UNDERWRITING. Any Requesting Holder shall so advise the
Issuer as a part of the request made pursuant to this Section 3.2 of such
Requesting Holder's selection of an underwriter for the offering; PROVIDED that
such underwriter must be reasonably satisfactory to the Issuer. If another
Stockholder disapproves of the terms of the underwriting, such Stockholder may
elect to withdraw therefrom by written notice to the Issuer and the managing
underwriter, and each of the remaining Stockholders shall be entitled to
increase the number of shares being registered, to the extent permitted by the
managing underwriter, in the proportion which the number of shares of
Registrable Securities being registered by such Stockholder bears to the total
number of shares being registered by all such remaining Stockholders.
3.3 EXPENSES OF REGISTRATION.
-------------------------
(a) PIGGYBACK REGISTRATION. All expenses incurred in
connection with a Piggyback Registration which, but for such Piggyback
Registration, would not have been incurred by the Issuer (including, without
limitation, fees and disbursements of counsel or independent certified public
accountants for any Stockholder or Employee Stockholder, additional filing
and/or listing fees, additional expenses to secure qualification of such
securities under state securities laws, additional reasonable fees and
disbursements of counsel or independent certified public accountants for the
Issuer) shall be for the account of, and shall be paid by the Stockholders and
the Employee Stockholders participating in such Piggyback Registration or, to
the extent such expenses have already been paid by the Issuer, shall be promptly
reimbursed to the Issuer by the Stockholders and the Employee Stockholders
participating in such Piggyback Registration within ten (10) business days after
written request therefor by the Issuer. The Stockholders and the Employee
Stockholders shall pay all underwriters' fees, discounts or commissions relating
to any Registrable Securities included in any Piggyback Registration.
(b) REQUESTED REGISTRATION. All expenses incurred by the
Issuer or the Stockholders in connection with a Requested Registration
(including, without limitation, all registration,
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filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Issuer and the Issuer's independent certified public accountants
(subject to the exceptions described herein) and all underwriters' fees,
discounts or commissions relating to any Registrable Securities included in any
such registration) shall be for the account of and paid by the Stockholders
whose Registrable Securities are included in the Requested Registration, except
that the Issuer shall pay up to $75,000 of the fees and disbursements of the
Issuer's counsel and independent certified public accountants in connection with
any Requested Registration.
(c) Notwithstanding any provision of this Section 3.3 to the
contrary, in no event shall the Issuer be required to pay underwriters' fees,
discounts or commissions relating to any Registrable Securities.
(d) In the event that a Requested Registration is withdrawn
prior to the effective disposition under a registration statement of the
Registerable Securities thereby registered, the request relating to such
Requested Registration shall be deemed not to have been made and registration
shall be deemed not to have been effected under this Article III if the Issuer
is reimbursed by the relevant Stockholders for the expenses incurred by it in
connection with the withdrawn Requested Registration.
3.4 REGISTRATION PROCEDURES.
------------------------
(a) In the case of each registration, qualification or
compliance effected by the Issuer pursuant to this Article III, the Issuer shall
keep each Stockholder and Employee Stockholder included in such registration
advised in writing as to the initiation, progress, and effective date of each
registration, qualification and compliance, and, at its or such Stockholder's or
Employee Stockholder's expense to the extent provided in Section 3.3, the Issuer
shall:
(i) before filing a registration statement or
prospectus or any amendment or supplements thereto subject to
this Article III, the Issuer shall furnish to counsel selected
by any Stockholder or Employee Stockholder such copies of all
such documents proposed to be filed and the portions of such
documents provided in writing by such Stockholder or Employee
Stockholder for use therein and for which such Stockholder or
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Employee Stockholder shall indemnify the Issuer pursuant to
Section 4.1(b) of this Agreement, as such counsel shall
reasonably request;
(ii) subject to Section 3.4(b) below, keep each
registration, qualification or compliance effective for (A)
the period required by the managing underwriter in the case of
an underwritten offering of Registerable Securities, but in no
event for more than ninety (90) days, or (B) a period of
ninety (90) days in the case of a non-underwritten offering of
Registerable Securities, in either case, plus any number of
days that the Stockholders are unable to use a prospectus
pursuant to Section 3.4(b) below (the "Registration Period");
and
(iii) furnish such number of prospectuses (including
preliminary prospectuses) and other documents filed with the
Commission as part of the registration statement as such
Stockholders or Employee Stockholders from time to time may
reasonably request.
(b) If, within the Registration Period, there occurs any
development or any event which makes any statement in the registration statement
or any post-effective amendment thereto, or any document incorporated therein by
reference, untrue in any material respect or which requires the making of any
changes in the registration statement or post-effective amendment thereto or
prospectus or amendment or supplement thereto, so that they will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein (in the case of
any prospectus, in the light of the circumstances under which they were made)
not misleading, the Issuer shall immediately notify each Stockholder and
Employee Stockholder whose Registrable Securities are included in such
registration of the occurrence thereof and, as soon as reasonably practicable,
prepare and furnish to each such Stockholder and Employee Stockholder, a
reasonable number of copies of an amended or supplemented prospectus so that, as
thereafter delivered to purchasers of Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Each Stockholder and Employee
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Stockholder agrees that, upon receipt of any notice from the Issuer pursuant to
this Section 3.4(b), such Stockholder or Employee Stockholder shall forthwith
discontinue disposition of Registrable Securities until it shall have received
copies of such amended or supplemented prospectus, and, if so directed by the
Issuer, shall deliver to the Issuer all copies, other than permanent file
copies, then in its possession of the prospectus covering Registrable Securities
at the time of receipt of such notice.
(c) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration requested under
this Agreement, the Issuer shall enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Issuer and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution to
the effect and to the extent provided in Section 4.1 and an opinion of counsel
for the Issuer dated the date of the closing under the underwriting agreement,
and providing that the Issuer shall use its best efforts to furnish a "comfort"
letter signed by the independent public accountants who have audited the
Issuer's financial statements included in such registration statement, in each
such case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of Issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements. The Stockholders and the Employee Stockholders on whose
behalf the Registrable Securities are to be distributed by such underwriters
shall be parties to any such underwriting agreement.
(d) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act, the Issuer shall give the underwriters, and their counsel and accountants,
such reasonable and customary access to its books and records and such
opportunities to discuss the business of the Issuer with its officers and the
independent public accountants who have certified the Issuer's financial
statements as shall be necessary, in the opinion of such
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underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
(e) If at any time the Commission should institute or threaten
to institute any proceeding for the purposes of issuing, or should issue, a stop
order suspending the effectiveness of a registration statement which registered
Registrable Securities under the Securities Act, the Issuer will promptly notify
each Stockholder and Employee Stockholder whose Registerable Securities are
registered thereunder and will use its best efforts to prevent the issuance of
any such stop order or to obtain the withdrawal thereof as soon as possible. The
Issuer will advise each Stockholder and Employee Stockholder whose Registerable
Securities are registered promptly of any order or communication of any public
board or body addressed to the Issuer suspending or threatening to suspend the
qualification of any Registerable Securities for sale in any jurisdiction.
3.5 INFORMATION BY STOCKHOLDERS. If Registrable Securities
owned by any Stockholder or any Employee Stockholder are included in any
registration, such Stockholder or Employee Stockholder shall furnish to the
Issuer such information regarding itself and the distribution proposed by such
Stockholder or Employee Stockholder as the Issuer may reasonably request and as
shall be required in connection with any registration, qualification or
compliance referred to in this Article III.
3.6 HOLDBACK AGREEMENTS.
--------------------
(a) In connection with the registration of Registrable
Securities on behalf of any Stockholder or any Employee Stockholder, or in the
event that any Stockholder or any Employee Stockholder was offered an
opportunity to participate in a Piggyback Registration pursuant to Section 3.1
but declined to so participate, such Stockholder or Employee Stockholder will
agree not to effect any public sale or distribution of the issue of securities
being registered or a similar security of the Issuer or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the fourteen (14)
days prior to, and during the ninety (90) day period beginning on, the effective
date of such registration statement (except as part of such registration), if
and to the extent requested by the Issuer or
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the managing underwriter or underwriters in the case of an underwritten public
offering.
(b) The Issuer on its own behalf and on behalf of affiliates
controlled by the Issuer agrees not to effect any public sale or distribution of
any securities similar to those being registered in accordance with Sections 3.1
and 3.2 (other than similar securities registered on Form S-4 or Form S-8 or any
successor forms) or any securities convertible into or exchangeable or
exercisable for such securities, during the fourteen (14) days prior to, and
during the ninety (90) day period beginning on, the effective date of any
registration statement (except as part of such registration).
3.7 FUTURE REGISTRATION RIGHTS.
---------------------------
(a) The Issuer shall not hereafter agree with the holders of
any securities issued or to be issued by the Issuer to register such securities
under the Securities Act unless such agreement specifically provides that (a)
such holder of securities may not participate in any Piggyback Registration
except as provided in Section 3.1, (b) such holder of such securities may not
participate in any Requested Registration except as provided in Section 3.2, and
(c) such securities may not be publicly offered or sold for a period beginning
at least fourteen (14) days before and ending at least ninety (90) days after
the date upon which such registration statement becomes effective. No provision
of this Section 3.7 shall be deemed violated by the future grants of
registration rights provided that such rights are subject to the foregoing
restrictions and are exercisable on a pro rata basis with all other holders of
such rights and the Issuer will not be required to obtain the consent of any
party hereto with respect to such future grants.
(b) From and after the date hereof, the Issuer shall not enter
into any agreement with any holder or prospective holder of any securities of
the Issuer providing for the granting to such holder of registration rights
(including demand registration rights which, by their terms, do not permit the
inclusion of shares of parties other than the holders of such demand
registration rights) that entitle such holder to priority over the Stockholders
or the Employee Stockholders with respect to registration of the securities of
the Issuer.
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3.8 PERMITTED INTERRUPTION. Notwithstanding any provision of
this Article III to the contrary, the Issuer shall not be required to prepare or
file a registration statement, amendment or post-effective amendment thereto or
prospectus supplement or to supplement or amend any registration statement or
otherwise facilitate the offering and sale of Registrable Securities, and the
Issuer shall be free to take or omit to take any other action that would result
in the impracticality of such filing, supplement or amendment, if (a) financial
statements satisfying the requirements of the Securities Act and Regulation S-X
promulgated by the Commission cannot with reasonable efforts be obtained, (b)
the Issuer is in possession of material non-public information, which, in the
exercise of reasonable judgment by the Issuer's Board, the Issuer deems
advisable not to disclose in a registration statement at that time or (c) such
filing, supplement or amendment (and any required disclosure therein), in the
good faith and reasonable judgment of the Issuer's Board, would jeopardize the
completion of an acquisition, divestiture or other similar transaction that the
Issuer is in at such time negotiations therefor (any period described in this
Section 3.8 during which the Issuer is not required to make such filing,
supplement or amendment being herein a "PERMITTED INTERRUPTION"). The Issuer
agrees to notify each Stockholder and Employee Stockholder upon each of the
commencement and termination of each Permitted Interruption. The Issuer shall
state in the notice to the Stockholders and the Employee Stockholders of the
commencement of a Permitted Interruption the general nature of the cause for
such Permitted Interruption, subject to any restrictions against such disclosure
imposed by applicable confidentiality arrangements. Each Stockholder and
Employee Stockholder hereby acknowledges its obligations under the federal
securities laws to not trade in the Common Stock while in possession of material
non-public information relating to the Issuer and hereby agrees to not so trade.
3.9 DELIVERY OF TRANSFERABLE CERTIFICATES. Upon a registration
statement applicable thereto becoming effective, the Issuer shall issue to each
Stockholder and Employee Stockholder whose Registerable Securities are
registered thereunder certificates representing the Registerable Securities
whose sale has been so registered in exchange for certificates bearing a
restrictive legend. Each such Stockholder and Employee Stockholder hereby agrees
that in the event of a stop order being issued in respect of the registration
statement relating to the sale of Registerable Securities registered on its or
his behalf,
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such Stockholder or Employee Stockholder will, without prejudice to any rights
hereunder, surrender or cause to be surrendered to the Issuer those certificates
delivered pursuant to this Section 3.9 without legend and will accept, in
exchange therefor, substitute certificates or instruments bearing an appropriate
legend.
3.10 TRANSFERABILITY OF RIGHTS. Each Stockholder and Employee
Stockholder, and any permitted transferee of such Stockholder or Employee
Stockholder, may transfer to one (but only one) person all (but not less than
all) of his rights under this Article III in connection with the transfer of
Registrable Securities to such person; provided, however, that such transferee
shall become a party to this Agreement and such transferee's rights shall be
subject to the provisions and limitations of this Agreement.
ARTICLE IV
----------
INDEMNIFICATION AND REMEDIES
----------------------------
4.1 INDEMNIFICATION RELATING TO REGISTRATION RIGHTS.
------------------------------------------------
(a) With respect to any registration, qualification or
compliance effected or to be effected pursuant to Article III of this Agreement,
the Issuer shall indemnify each Stockholder and Employee Stockholder whose
securities are included or are to be included therein, each underwriter (as
defined in the Securities Act) of the securities sold by such Stockholder or
Employee Stockholder, and each Person who controls (within the meaning of the
Securities Act) any such Stockholder, Employee Stockholder or underwriter (a
"CONTROLLING PERSON") from and against all losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any claim, cause of
action, proceeding or litigation asserted or commenced or threatened against any
such Stockholder, Employee Stockholder or any such underwriter or Controlling
Person concerning:
(i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or
any related registration statement incident to any such
registration, qualification or compliance;
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(ii) any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make any statement therein, in the light of the
circumstances under which it was made, not misleading; or
(iii) any violation by the Issuer of the Securities
Act or any rule or regulation promulgated thereunder
applicable to the Issuer, or of any blue sky or other state
securities laws or any rule or regulation promulgated
thereunder applicable to the Issuer;
in each case, relating to action or inaction required of the Issuer in
connection with any such registration, qualification or compliance, and subject
to Section 4.6 below, shall reimburse each such Person entitled to indemnity
under this Section 4.1(a) for all legal and other expenses incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; PROVIDED, HOWEVER, that, the foregoing indemnity and
reimbursement obligation shall not be applicable to the extent that any such
claim, loss, damage or liability arises out of or is based on (i) any untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in reliance upon and in conformity with written information furnished to the
Issuer by or on behalf of such Stockholder, Employee Stockholder or by or on
behalf of such an underwriter specifically for use in such prospectus or
registration statement; or (ii) any untrue statement (or alleged untrue
statement) or omission (or alleged omission) contained in a prospectus delivered
prior to the delivery by the Issuer to the Stockholders and the Employee
Stockholders of a notice pursuant to Section 3.4(b); PROVIDED that the Issuer
made available to the Stockholders and the Employee Stockholders a corrected
prospectus which the Stockholders and the Employee Stockholders failed to
deliver to holders who had received the prior inaccurate prospectus.
(b) With respect to any registration, qualification or
compliance effected or to be effected pursuant to this Agreement, each
Stockholder and Employee Stockholder whose securities are included or are to be
included therein, shall indemnify the Issuer, its directors and officers, and,
if and to the extent required by the underwriters of an underwritten offering in
which such Stockholder or Employee Stockholder will be selling Registrable
Securities, each underwriter (as defined in the
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Securities Act) of the securities sold by such Stockholder or Employee
Stockholder and each Person who controls (within the meaning of the Securities
Act) the Issuer or any such underwriter (a "CONTROLLER") from and against all
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any claim, cause of action, proceeding or litigation asserted or
commenced against the Issuer or any of its directors and officers or any such
underwriter or Controller concerning:
(i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or
related registration statement incident to any such
registration, qualification or compliance;
(ii) any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make any statement therein, in the light of the
circumstances under which it was made, not misleading; or
(iii) any violation by such Stockholder of the
Securities Act or any rule or regulation promulgated
thereunder applicable to the Issuer or such Stockholder or of
any blue sky or other state securities laws or any rule or
regulation promulgated thereunder applicable to the Issuer or
such Stockholder;
in each case, relating to action or inaction required of such Stockholder or
Employee Stockholder in connection with any such registration, qualification or
compliance, and subject to Section 4.6 below, shall reimburse each such Person
entitled to indemnity under this Section 4.1(b) for all legal and other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; PROVIDED, HOWEVER, that, the foregoing
indemnity and reimbursement obligation shall only be applicable to the extent
that any such claim, loss, damage or liability arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
made in reliance upon and in conformity with written information furnished to
the Issuer by or on behalf of such Stockholder or Employee Stockholder
specifically for use in such prospectus or other document.
4.2 INDEMNIFICATION BY THE STOCKHOLDERS. (a) Subject to the
limitations set forth in this Article IV, the
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Stockholders, jointly and severally, shall indemnify and hold harmless the
Issuer and its Representatives, stockholders, controlling persons and Affiliates
(collectively, the "Issuer Indemnified Persons") for, and shall pay (in the
manner provided in Section 4.7(b)) to the Issuer Indemnified Persons the amount
of, any loss, liability, claim, damage (including, with respect to matters
unrelated to the Identified Liabilities (as defined in Section 4.5), incidental
and consequential damages), expense (including, without limitation, defense
costs in connection with third-party claims) or deficiency (including interest,
penalties and reasonable attorneys' fees), whether or not involving a
third-party claim (collectively, "Damages"), that any Issuer Indemnified Person
may suffer, sustain, incur or become subject to arising out of or due to any
Identified Liability (as defined in Section 4.5) or any inaccuracy of any
representation or the breach of any warranty, covenant, undertaking or other
agreement of the Trustees, the BioClin Affiliates or the Stockholders contained
in this Agreement, any Share Exchange Agreement or in any other document or
instrument delivered pursuant hereto or thereto.
(b) The indemnity by the Stockholders set forth in Section
4.2(a) with respect to Damages arising out of any Identified Liability shall
continue until the earlier of December 31, 1999 and the date on which the
amount, if any, of all such Damages is finally determined, and the indemnity by
the Stockholders set forth in Section 4.2(a) with respect to all other Damages
shall continue until the date of the independent auditor's report with respect
to the audited consolidated financial statements of the Issuer for fiscal 1996
(the "Report Date"); provided, however, that in the event that as of December
31, 1999 with respect to any Identified Liability or as of the Report Date with
respect to all other Damages any Issuer Indemnified Person can establish the
existence but not the amount of any such Damages, and shall have given written
notice thereof to the Stockholders on or prior to December 31, 1999 or the
Report Date, as applicable, depending upon the facts and circumstances existing
at such time, the Stockholders and the Issuer may agree to extend the indemnity
with respect to any such Damages until the date on which the amount, if any, of
all such Damages is finally determined.
4.3 INDEMNIFICATION BY ISSUER. (a) Subject to the limitations
set forth in this Article IV, the Issuer shall indemnify and hold harmless the
Trustees and the Stockholders and
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their Representatives, shareholders, controlling persons and Affiliates
(collectively, the "Stockholders' Indemnified Persons") for, and shall pay (in
the manner provided in Section 4.7(a)) to the Stockholders' Indemnified Persons
the amount of, any Damages that any Stockholders' Indemnified Person may suffer,
sustain, incur or become subject to arising out of or due to any inaccuracy of
any representation or the breach of any warranty, covenant, undertaking or other
agreement of the Issuer contained in this Agreement, any Securities Exchange
Agreement or in any other document or instrument delivered pursuant hereto or
thereto.
(b) The indemnity by the Issuer set forth in Section 4.3(a)
shall continue until the Report Date; provided, however, that in the event that
as of the Report Date any Stockholders' Indemnified Person can establish the
existence but not the amount of any such Damages, and shall have given written
notice thereof to the Issuer on or prior to the Report Date, depending upon the
facts and circumstances existing at such time, the Stockholders and the Issuer
may agree to extend the indemnity with respect to any such Damages until the
date on which the amount, if any, of all such Damages is finally determined.
4.4 THRESHOLD AND CAP. Notwithstanding any provision contained
herein or in any Securities Exchange Agreement to the contrary, with respect to
Damages contemplated by Sections 4.2 and 4.3 other than those arising, directly
or indirectly, from or in connection with any Identified Liability, (i) no party
shall be entitled to any recovery from any other party with respect to any such
inaccuracy or breach which, pursuant to any Securities Exchange Agreement, would
have entitled such party not to perform its obligations thereunder, if such
party is informed in writing pursuant to Section 7.6 of any Securities Exchange
Agreement or otherwise has knowledge of such inaccuracy or breach prior to
Closing and such party nonetheless consummates the Closing, and (ii) no party
shall be entitled to recover Damages from any other party until the Damages
sustained by such party under this Agreement and the Securities Exchange
Agreements exceed, in the aggregate, U.S. $100,000 (the "Threshold"), and then
only amounts over and above such Threshold, and in no event shall the amount of
all such Damages to be recovered by the Issuer Indemnified Persons and the
Stockholders' Indemnified Persons exceed an aggregate amount of U.S. $ (the
"Cap") [10% OF THE CLOSING VALUE OF THE ACQUIROR SHARES.] Neither the Threshold
nor the Cap shall apply to any Damages arising, directly or indirectly, from or
in connection with any Identified Liability.
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4.5 IDENTIFIED LIABILITIES. For purposes of this Agreement,
"Identified Liabilities" means any and all liabilities or Damages (including,
without limitation, defense costs in connection with any third-party claim) that
any Issuer Indemnified Person may suffer, sustain, incur or become subject to
arising out of or due to (i) the pending or threatened litigation involving,
among others, BioClin, Inc. and Dr. William H. Barr and/or any recovery by Dr.
Barr, pursuant to any statutory dissenter's rights to which Dr. Barr may be
entitled with respect to the common stock of BioClin, Inc. that he owns, of any
amounts that exceed the market value on the Closing Date of the Acquiror Shares
issuable to Dr. Barr pursuant to the Merger Agreement (collectively, the "Barr
Liability"); (ii) the pending litigation between BioClin, Inc. and Virginia
Commonwealth University, but only to the extent the aggregate amount of such
liability or Damages (including for this purpose the amount of such liability
previously satisfied by BioClin through the payment of amounts due to employees
and contractors ($ in the aggregate), cash payments ($ through June 30, 1996),
the transfer of non-cash assets to VCU ($107,000 in aggregate value), all
payments received by VCU with respect to analytical contracts assigned to VCU
and the value of services provided by BioClin, Inc. which are applied to reduce
such liability) exceed $1,080,000 (the "VCU Liability"); and (iii) the pending
litigation filed in Texas titled Linda Gail Frase v. BioClin, Inc. and Jack
Barbut, but only to the extent such liability or Damages exceed $25,000 (the
"Barbut Liability").
4.6 PROCEDURE. (a) Any party seeking indemnification pursuant
to this Article IV (the "Indemnified Person") from another party (the
"Indemnifying Person") may proceed directly against such Indemnifying Person
under this Section 4.6 without first resorting to any other rights of
indemnification; PROVIDED, HOWEVER, that no Indemnifying Person shall be
obligated hereunder to the extent an Indemnified Person has already received, or
shall receive, full indemnification or reimbursement from another source.
(b) In the event any action, suit or proceeding shall be
brought against any Indemnified Person in connection with any matter for which
indemnification may be sought by such Indemnified Person pursuant to this
Article IV, the Indemnifying Person may, and upon the request of such
Indemnified Person shall, at the Indemnifying Person's expense, resist and
defend
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such action, suit or proceeding, or cause the same to be resisted or defended,
by counsel selected by the Indemnifying Person, subject to the approval, which
shall not be unreasonably withheld, of such Indemnified Person and, in the event
of any failure by the Indemnifying Person to do so, the Indemnifying Person
shall pay all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by such Indemnified Person in
connection with such action, suit or proceeding.
(c) In case any claim is made, or any suit or action is
commenced, against an Indemnified Person in respect of which indemnification may
be sought by such Indemnified Person pursuant to this Article IV, such
Indemnified Person shall promptly give the Indemnifying Person notice thereof.
If any Indemnified Person fails to give prompt notice of any claim being made or
any suit or action being commenced in respect of which indemnification under
this Article IV may be sought, such failure shall not limit the liability of the
Indemnifying Person; PROVIDED, HOWEVER, that this provision shall not be deemed
to limit the Indemnifying Person's rights to recover for any loss, cost or
expense which such Indemnifying Person can establish resulted from such failure
to give prompt notice.
4.7 PAYMENT OF INDEMNITY. (a) The Issuer shall pay all amounts
in satisfaction of its indemnification obligations under Section 4.3 by
delivering to such Stockholders' Indemnified Persons such number of shares of
Common Stock computed by dividing the aggregate dollar amount of such Damages
subject to indemnification thereunder by the closing sales price of the Common
Stock as reported on the NASDAQ National Market for the Business Day immediately
preceding the Closing Date (the "Closing Price").
(b) Except as provided in Section 4.7(f), the Stockholders
shall pay all amounts in satisfaction of their respective indemnification
obligations under Section 4.2 by delivering to such Issuer Indemnified Persons
such number of Acquiror Shares computed by dividing the dollar amount of such
Damages subject to indemnification thereunder by the Closing Price.
(c) In order to secure the payment by the Stockholders to the
Issuer Indemnified Persons of any Damages relating to Identified Liabilities and
the inaccuracy of the representations
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or breach of the warranties, covenants, undertakings or other agreements of the
Trustees, the BioClin Affiliates and the Stockholders made hereunder or pursuant
to any Securities Exchange Agreement (collectively, the "General Liabilities"),
a total of 599,260 shares (the "Recovery Shares") of the Acquiror Shares
delivered to the Stockholders pursuant to the Securities Exchange Agreements
shall be subject to the escrow provisions set forth in paragraph (d) of this
Section 4.7. Such aggregate number of Recovery Shares shall be allocated as
follows: with respect to (i) the General Liabilities, 263,260 Recovery Shares
(the "General Recovery Shares"); (ii) the Barr Liability, [200,000] Recovery
Shares; (iii) the VCU Liability, [112,000] Recovery Shares; and (iv) the Barbut
Liability, [24,000] Recovery Shares. (items (ii) through (iv) above being
hereinafter referred to collectively as the "Identified Recovery Shares"). The
aggregate number of Recovery Shares has been determined, and the Recovery
Shares have been allocated as set forth above, in reasonable relation to the
dollar value reasonably estimated to be attributable to the respective
contingencies existing as of the date of this Agreement against which such
Recovery Shares secure payment of indemnity. The Recovery Shares shall be
allocated among the Stockholders in proportion to their respective
ownership of the Acquiror Shares.
(d) If at any time prior to, with respect to (i) the General
Recovery Shares, the date on which the indemnity by the Stockholders with
respect to General Liabilities terminates as provided in Section 4.2(b) of this
Agreement and (ii) each group of Identified Recovery Shares, the date on which
the indemnity with respect to Damages relating to such corresponding Identified
Liability terminates pursuant to Section 4.2(b), the Stockholders shall sell,
assign, hypothecate, pledge or otherwise transfer any Acquiror Shares such that
thereafter the aggregate number of Acquiror Shares held by the Stockholders free
and clear of all such liens and encumbrances is less than the aggregate number
of Recovery Shares contemplated by this Section 4.7 (an "Early Transfer"), then
the Stockholders shall deposit the portion of the cash proceeds from such Early
Transfer as computed in accordance with Section 4.7(e) into an escrow account
(the "Escrow Account") with a national bank or other financial institution (the
"Escrow Agent") agreed to by the Trustees, the Stockholders and the Issuer
pursuant to an escrow agreement, in form and substance reasonably satisfactory
to the Trustees, the Stockholders and the Issuer to be held and dispersed
subject to the provisions of Section 4.7(f).
22
<PAGE> 277
(e) The cash proceeds from an Early Transfer to be deposited
into the Escrow Account pursuant to Section 4.7(d) shall be computed as follows:
(i) the aggregate number of Recovery Shares contemplated by Section 4.7 less
(ii) the aggregate number of Acquiror Shares held by the Stockholders free and
clear of all such liens and encumbrances following such Early Transfer
multiplied by (iii) the Closing Price.
(f) In the event an Early Transfer has occurred, to the extent
that a sufficient number of Acquiror Shares are not then held by the
Stockholders in order to enable the Stockholders to satisfy their respective
indemnification obligations as contemplated by Section 4.7(b), the Stockholders
and the Escrow Agent shall deliver to the Issuer Indemnified Persons (i) all
Acquiror Shares then held by the Stockholders free and clear of all such liens
and encumbrances (the "Delivered Shares") and (ii) that portion of the cash
proceeds deposited in the Escrow Account computed by subtracting from (A) the
aggregate dollar amount of Damages subject to indemnification pursuant to
Section 4.2, (B) the product of the Delivered Shares and the Closing Price. The
Issuer and the Stockholders hereby agree to cause the Escrow Agent to promptly
release all remaining cash proceeds from the Escrow Account upon expiration of
the Stockholders' indemnification obligations or confirmation that the
Stockholders then hold the aggregate number of Recovery Shares contemplated by
this Section 4.7.
4.8 EXCLUSIVITY. The rights and remedies of the parties hereto
under this Article IV shall be the exclusive rights and remedies with respect to
the matters set forth herein, except for (i) the rights of any party to seek
equitable relief and (ii) any other rights and remedies provided by this
Agreement or any Securities Exchange Agreement.
ARTICLE V
---------
MISCELLANEOUS
-------------
5.1 AMENDMENTS. The parties may, from time to time, enter into
written amendments, supplements, or modifications hereto for the purpose of
adding any provisions to this Agreement or changing in any manner the rights of
either of the parties hereunder. No amendment, supplement, or modification shall
be binding on any party unless made in writing and signed by a duly authorized
representative of such party.
23
<PAGE> 278
5.2 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission, which transmission is confirmed by first
class mail (postage pre-paid) or guaranteed overnight delivery:
(a) if to the Issuer to:
DNX Corporation
575 Route 28
Raritan, NJ 08869
Attention: John G. Cooper
Chief Financial Officer
Telephone: (908) 722-7900
Facsimile: (908) 722-6677
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
Telephone: (216) 586-3939
Facsimile: (216) 579-0212
(b) if to Hackel to:
Alec Hackel
Flueliweg 3
6045 Meggen
Switzerland
Telephone: 011-41-41-377-3961
Facsimile: 011-41-41-377-3053
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020-1104
Attention: Ray A. Mantle, Esq.
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
(c) if to Barbut to:
Dr. Jack Barbut
c/o Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020-1104
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
24
<PAGE> 279
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
(d) if to Jensen to:
Dr. John Christian Jensen
Bohlstiasse 9a
6300 Zug
Switzerland
Telephone: 011-41-41-710-2309
Facsimile: 011-41-41-710-2341
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
(e) if to Sherby to:
c/o CITCO
De Ruyterkade 62
P.O. Box 812
Curacao, Netherlands Autilles
Telephone: 599-9-322555
Facsimile: 599-9-322500
with copies to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ray A. Mantle, Esq.
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
25
<PAGE> 280
(f) if to the Trustees/Employee Trustee:
Dr. Gerald Rittershaus
c/o Rittershaus, Wissmann & von Rosenstiel
Theodor-Heuss-Anlage 2
68165 Mannheim
Germany
Telephone: 011-49-621-42-560
Facsimile: 011-49-621-42-56-250
(g) if to Reynolds:
Ms. Martha Lee Reynolds
5105 King William Road
Richmond, VA 23225
(h) if to Dvorchik:
Mr. Barry Dvorchik
1400 Worcester Road
Apt. 405
Framingham, MA 01701
(i) if to Kraatz:
Ms. Christine Dune-Kraatz
c/o BioClin GmbH
Klinische Forschung
Augusta-aulage 21-23
68165 Mannheim, Germany
26
<PAGE> 281
(j) if to Donhardt:
Ms. Bettina Donhardt
c/o BioClin GmbH
Klinische Forschung
Augusta-aulage 21-23
68165 Mannheim, Germany
(k) or, in each case, at such other address or to such
other person as may be specified in writing to the other parties.
5.3 WAIVER BY CONSENT. Any party hereto may execute and
deliver to the other parties hereto a written instrument waiving, on such terms
and conditions as such party may specify in such instrument, any of the
requirements of this Agreement.
5.4 NO IMPLIED WAIVER; RIGHTS ARE CUMULATIVE. The failure to
exercise or the delay in exercising by any party of any right, remedy, power, or
privilege under this Agreement, shall not operate as a waiver thereof. The
single or partial exercise of any right, remedy, or privilege under this
Agreement shall not preclude any other or further exercise thereof or the
exercise of any other right, remedy, power, or privilege. The rights, remedies,
powers, and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers, and privileges provided by law.
5.5 GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, construed and
interpreted in accordance with the laws of the State of New York (except, to the
extent the General Corporation Law of the State of Delaware (the "DGCL") applies
to the matters set forth in Article II, the DGCL shall govern) applicable to
agreements executed by residents of that state, and fully to be performed in
that state.
5.6 SEVERABILITY. If any provision of this Agreement is found
to be unenforceable for any reason whatsoever, such provision shall be deemed
null and void to the extent of such unenforceability but shall be deemed
separable from and shall not invalidate any other provision of this Agreement.
27
<PAGE> 282
5.7 CAPTIONS. Captions to the various paragraphs of this
Agreement are provided for convenience only and shall not be used to construe
the provisions of this Agreement.
5.8 ENTIRE AGREEMENT. This Agreement, the Securities Exchange
Agreements and the other agreements contemplated hereby and thereby, constitute
the entire understanding of the parties hereto with respect to the subject
matter of this Agreement and supersedes all prior discussions, agreements, and
representations, whether oral or written, concerning the subject matter hereof
and whether or not executed by the parties hereto.
5.9 FURTHER ASSURANCES. From and after the Closing, upon the
reasonable request of any of the parties hereto, each of the other parties
hereto shall execute, acknowledge, and deliver all such further acts, deeds,
bills of sale, certificates, assignments, transfers, conveyances, sales, use or
other transfer tax documentation, powers of attorney, and assurances as may be
required to evidence the consummation of the transactions contemplated hereby
and as may be appropriate to carry out the transactions contemplated by this
Agreement.
5.10 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and legal representatives. Except as specifically provided
herein, no party hereto may assign its rights or delegate its duties hereunder
without the prior written consent of the other parties hereto.
5.11 EXECUTION IN 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 agreement.
28
<PAGE> 283
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered or caused this Agreement to be duly executed and delivered by the
proper and duly authorized officers, as the case may be, as of the day and year
first above written.
ISSUER:
DNX CORPORATION
By:
-----------------------------------
Name:
Title:
TRUSTEES:
By:
-----------------------------------
Dr. Gerald Rittershaus, as Trustee
under the Rittershaus Trust Agreement
By:
-----------------------------------
Manfred Wissmann, as Trustee
under the Wissmann Trust Agreement
STOCKHOLDERS:
--------------------------------------
Alec Hackel
--------------------------------------
Dr. Jack Barbut
--------------------------------------
Dr. John Christian Jensen
SHERBY N.V.
By:
-----------------------------------
Name:
Title:
29
<PAGE> 284
EMPLOYEE STOCKHOLDERS:
--------------------------------------
Martha Lee Reynolds
--------------------------------------
Barry Dvorchik
--------------------------------------
Christine Dune-Kraatz
--------------------------------------
Bettina Donhardt
EMPLOYEE TRUSTEE:
--------------------------------------
Dr. Gerald Rittershaus, as Trustee
under the Employee Trust Agreement
30
<PAGE> 285
Exhibit 99.2
FOR IMMEDIATE RELEASE
- ---------------------
Contacts:
Paul J. Schmitt
Chairman, President and CEO Harvey A. Goralnick
DNX Corporation Focus Partners LLC
908-722-7900 212-752-9445
DNX CORPORATION AND BIOCLIN TO MERGE
- THE NEW COMPANY WILL BE RANKED AMONG THE TOP TEN CROS -
Raritan, NJ, August 19, 1996 -- DNX Corporation (NASDAQ:DNXX) announced today
that it has signed a definitive agreement to combine its organization, in a
pooling of interests transaction with BioClin International, a privately held
contract research organization (CRO) based in Cham, Switzerland and Richmond,
VA.
This merger combines the clinical expertise of BioClin (Phase I-IV) with DNX
Corporation, which is focused on providing extensive and unique pre-clinical
drug development services to the pharmaceutical and biotechnology industry
through its subsidiaries, Pharmakon Research International and DNX Transgenics.
BioClin is an international CRO with a presence throughout all major European
countries, the U.S. and Israel. The company's success in managing local and
multinational projects is founded on its extensive industry and scientific
experience, expertise in data management and familiarity with local regulations.
BioClin, active in international clinical drug development since 1982, has
forged unique collaborations with hospitals allowing access to large patient and
special populations.
The combined enterprise will create a CRO which in 1995 generated revenues of
$40 million. In 1995, BioClin generated revenues of $14.3 million versus
approximately $9.7 million of revenues in 1994.
Under the terms of the transaction agreements, DNX Corp. will issue 2.6 million
shares
-more-
<PAGE> 286
of its common stock to the shareholders of BioClin. The transaction, which is
expected to be treated as a pooling of interests for accounting purposes, is
subject to various conditions including DNX stockholder approval and is expected
to close late in the fourth quarter or in the first quarter of 1997.
"This is a merger of highly complementary services, technologies and client
bases that puts the combined company squarely on track as a world leader in
providing drug development services," said Paul J. Schmitt, Chairman of the
Board, President and CEO. "The company's multinational capabilities span the
entire spectrum of drug development from pre-clinical through clinical to
product registration," continued Mr. Schmitt, "therefore, this new company is
the ideal partner for biotechnology companies seeking the full-range of
comprehensive services and resources, as well as large pharmaceutical industry
clients looking for select expertise and a broad global reach."
The combined companies will emerge with a critical mass at a crucial time and
will benefit greatly from this merger. DNX has already built substantial
credibility, which it has demonstrated in a number of areas in pre-clinical
testing including continuous infusion, immunotoxicology, specialty pharmacology
assays and transgenic animal technology. With world-class facilities in the
U.S., Europe, and new markets in Eastern Europe, the combined company's presence
and regulatory expertise will extend to 26 countries. In addition, this new
company will have over 300 pharmaceutical and biotech clients, and 450 employees
worldwide.
Paul J. Schmitt will continue as Chairman, President and CEO of the combined
company and John G. Cooper as Senior Vice President and Chief Financial Officer.
Leif Modeweg, D.V.M., President of Pharmakon and Jack Barbut, Sc.D., founder and
President of BioClin, will continue to manage the day-to-day worldwide
pre-clinical and clinical operations respectively. Chris Jensen, Priv. Doz. Dr.,
currently the President of
-more-
<PAGE> 287
BioClin Europe, will assume responsibilities for managing a wide range of new
synergistic opportunities for the company with an emphasis on the development
and management of full-scale pre-clinical through clinical drug development
programs. Drs. Barbut and Jensen will also be joining the combined company's
Board of Directors.
Vector Securities International, Inc. acted as financial advisor to DNX
Corporation.
DNX Corporation is focused on providing drug development services to the
pharmaceutical and biotech industries through its subsidiaries, Pharmakon
Research International, Inc. and DNX Transgenics. The Company provides
pre-clinical drug development services to over 250 clients in 16 countries.
Since 1982, BioClin has been an active international Clinical Drug Development
company with the capacity to manage entire development programs. The company
offers a full range of drug development services from Phase I to Phase IV,
including protocol design, monitoring, data management, quality assurance and
report writing.
This press release contains forward looking statements. The actual results might
differ materially from those projected in the forward looking statements.
Additional information concerning this transaction, as well as information that
could cause actual results to materially differ from those in forward looking
statements is contained in DNX Corporation's SEC filings, including periodic
reports under the Securities Exchange Act of 1934, as amended.
###
<PAGE> 288
Exhibit 99.3
BioClin Group
Unaudited Combined Balance Sheets
December 31, 1995 and 1994
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Assets 1995 1994
------ ---- ----
Current assets:
<S> <C> <C>
Cash $ 1,126 995
Marketable debt securities 386 -
Trade accounts receivable 3,245 2,452
Prepaid expenses and other current assets 187 336
------ ------
Total current assets 4,944 3,783
Marketable debt securities 547 835
Property and equipment, net 871 963
Other assets 215 81
------ ------
Total assets $ 6,577 5,662
====== ======
Liabilities and Stockholders' Deficiency
----------------------------------------
Current liabilities:
Short-term borrowings 9,834 9,589
Note payable - related party 326 287
Accounts payable 1,073 2,607
Accrued expenses 3,102 990
Deferred revenue 2,569 2,065
------ ------
Total current liabilities 16,904 15,538
Deferred income taxes 14 154
------ ------
Total liabilities 16,918 15,692
------ ------
Stockholders' deficiency:
Series I redeemable, noncumulative preferred stock, BioClin, Inc., par
value $.01 per share, with a liquidation preference in the amount of
$1,374 plus 10% per annum from date of issuance; authorized, issued and
outstanding 91 shares in 1995 and 1994 1 1
Common stock, BioClin, Inc., par value $.01 per share;
authorized 50,000 shares, issued and outstanding
9 shares in 1995 and 1994 - -
Common stock, BioClin Europe AG, par value SFr500
per share; authorized 100 shares, issued and
outstanding 100 bearer shares in 1995 and 1994 105 105
Common stock, BioClin Institute of Clinical Pharmacology GmbH, par value
DM100 per share; authorized 1,500 shares, issued and outstanding 1,500
shares in 1995 and 1994 86 86
Additional paid-in capital 125 125
Foreign currency translation adjustment (409) (234)
Employee stock purchase loans (93) (99)
Accumulated deficit (10,233) (10,092)
Net unrealized gain on marketable debt securities 77 78
------ ------
Total stockholders' deficiency (10,341) (10,030)
------ ------
Commitments and contingencies
Total liabilities and stockholders' deficiency $ 6,577 5,662
====== ======
</TABLE>
<PAGE> 289
BioClin Group
Unaudited Combined Statements of Operations
For the Years ended December 31, 1995, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Gross revenues $ 18,837 11,386 8,536
Less reimbursed costs (4,551) (1,727) (1,361)
------ ------ -----
Net revenues 14,286 9,659 7,175
------ ------ -----
Operating costs and expenses:
Direct costs 8,456 7,528 6,072
Selling, general and administrative 4,467 3,537 2,824
Depreciation and amortization 445 366 237
------ ------ -----
13,368 11,431 9,133
------ ------ -----
Income (loss) from operations 918 (1,772) (1,958)
Other income (expense):
Interest income 85 66 142
Interest expense (700) (599) (450)
Foreign currency losses, net (292) (25) (215)
Other (38) 3 72
------ ------ -----
Loss before income taxes (27) (2,327) (2,409)
Income taxes 114 58 28
------ ------ -----
Net loss $ (141) (2,385) (2,437)
====== ====== =====
</TABLE>
