<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 11, 1999
STRATEGIC DIAGNOSTICS INC.
--------------------------
(Exact name of Registrant as specified in charter)
Delaware 0-68440 56-1581761
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or file Identification
Organization) number) Number)
111 Pencader Drive
Newark, Delaware 19702
(Address of principal executive offices)
(302) 456-6789
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
(a) On May 11, 1999, Strategic Diagnostics Inc. (the "Company")
acquired certain assets of Atlantic Antibodies, Inc., a Delaware corporation
("AA") pursuant to an Asset Purchase Agreement among the Company, DiaSorin Inc.,
a Delaware corporation ("DiaSorin") and AA (DiaSorin and AA collectively
referred to as "Sellers"). The aggregate consideration paid by the Company was
determined pursuant to arms' length negotiations and consisted of approximately
$3 million in cash. In addition, the Company is obligated to pay to AA a
deferred payment of $150,000 upon the occurrence of certain events, but in any
event not later than November 11, 2000. The Company's primary source for the
funds used in the transaction was acquisition financing from the Company's
commercial bank in the amount of $3 million.
The Company is not aware of any material relationship that existed
prior to the transaction between the Company and its officers and directors, on
the one hand and the Sellers, on the other hand.
(b) The assets of AA acquired as a result of the transaction include
real property, animals, animal facilities, laboratories, customer lists, certain
contracts relating to the business, inventories and other equipment used by AA
to manufacture bulk antisera products. The Company intends to utilize these
assets to continue the business of AA substantially as conducted prior to the
transaction except for certain activities already conducted by the Company and
its subsidiaries such as bioprocessing of raw materials, accounting, human
resources, selling and general administration, which will be integrated and
which the Company expects will result in efficiencies and cost savings.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
2.1 Asset Purchase Agreement dated as of May 11, 1999 by
and among Strategic Diagnostics Inc., DiaSorin Inc.,
a Delaware corporation and Atlantic Antibodies, Inc.,
a Delaware corporation.
10.1 Promissory Note in the amount of $3 million, dated
May 11, 1999, payable to First Union National Bank.
99 Press Release dated May 12, 1999.
<PAGE>
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.
STRATEGIC DIAGNOSTICS INC.
Date: May 25, 1999 By: /s/ Arthur A. Koch, Jr.
------------------------------
Name: Arthur A. Koch, Jr.
Title: Vice President - Finance and
Chief Operating Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
2.1 Asset Purchase Agreement dated as of May 11, 1999 by and
among Strategic Diagnostics Inc., a Delaware corporation,
DiaSorin Inc., a Delaware corporation, and Atlantic
Antibodies, Inc., a Delaware corporation.
10.1 Promissory Note in the amount of $3 million, dated May 11,
1999, payable to First Union National Bank.
99 Press Release dated May 12, 1999.
<PAGE>
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ASSET PURCHASE AGREEMENT
among
STRATEGIC DIAGNOSTICS INC.
(a Delaware corporation),
DIASORIN INC.
(a Delaware corporation)
and
ATLANTIC ANTIBODIES, INC.,
(a Delaware corporation),
May 11, 1999
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions..............................................................................................1
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2. Sale and Purchase........................................................................................8
-----------------
2.1 Purchased Assets................................................................................8
----------------
2.2 Common Intellectual Property....................................................................9
----------------------------
2.3 Excluded Assets.................................................................................9
---------------
2.4 Purchase Price.................................................................................10
--------------
2.5 Allocation of Purchase Price...................................................................10
----------------------------
2.6 Assumption of Liabilities......................................................................10
-------------------------
2.7 Limitation on Assumption of Liabilities........................................................10
---------------------------------------
2.8 Trademark License..............................................................................11
-----------------
3. Employee Matters........................................................................................12
----------------
3.1 Offers of Employment..........................................................................12
---------------------
3.2 Employees......................................................................................12
---------
3.3 Transferred Employees..........................................................................12
---------------------
3.4 Certain Employee Benefits......................................................................13
-------------------------
3.5 WARN Act.......................................................................................14
--------
4. Representations and Warranties of the Seller and DSI....................................................14
----------------------------------------------------
4.1 Corporate Status...............................................................................14
----------------
4.2 Authorization..................................................................................14
-------------
4.3 Consents and Approvals.........................................................................14
----------------------
4.4 Financial Data.................................................................................15
--------------
4.5 Inventory......................................................................................15
---------
4.6 Absence of Certain Changes or Events...........................................................15
------------------------------------
4.7 Personal Property..............................................................................16
-----------------
4.8 Real Property..................................................................................16
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4.9 Intellectual Property, Software and Confidential Information...................................17
------------------------------------------------------------
4.10 Contracts......................................................................................18
---------
4.11 Governmental Permits...........................................................................19
--------------------
4.12 Legal Proceedings and Compliance with Laws; Environmental Matters..............................19
-----------------------------------------------------------------
4.13 Absence of Undisclosed Liabilities.............................................................20
----------------------------------
4.14 Books and Records..............................................................................20
-----------------
4.15 Employees and Employee Relations; Independent Contractors......................................20
---------------------------------------------------------
4.16 Employee Benefit Plans.........................................................................20
----------------------
4.17 Finder's Fee...................................................................................22
------------
4.18 Interest in Business...........................................................................22
--------------------
4.19 Condition of Assets............................................................................22
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</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
4.20 Insurance......................................................................................23
---------
4.21 Previous Sales; Warranties.....................................................................23
--------------------------
4.22 Customers and Suppliers........................................................................23
-----------------------
4.23 Completeness and Accuracy of Information.......................................................24
----------------------------------------
5. Representations and Warranties of the Buyer.............................................................24
-------------------------------------------
5.1 Corporate Status...............................................................................24
----------------
5.2 Authorization..................................................................................24
-------------
5.3 Consents and Approvals.........................................................................24
----------------------
5.4 Finder's Fees..................................................................................24
-------------
6. Deliverables of Selling Parties.........................................................................25
-------------------------------
6.1 Transaction Documents and Instruments of Transfer..............................................25
-------------------------------------------------
6.2 Certificates of Selling Parties................................................................25
-------------------------------
6.3 Secretary's Certificates.......................................................................25
------------------------
6.4 Good Standing Certificates.....................................................................25
--------------------------
6.5 Consents.......................................................................................26
--------
6.6 Legal Opinion..................................................................................26
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7. Deliverables of Buyer...................................................................................26
---------------------
7.1 Transactional Documents and Instruments of Transfer............................................26
---------------------------------------------------
7.2 Certificate of Buyer...........................................................................26
--------------------
7.3 Secretary's Certificates.......................................................................26
------------------------
7.4 Good Standing Certificates.....................................................................27
--------------------------
7.5 Title Insurance and Surveys....................................................................27
---------------------------
8. Competition and Confidentiality.........................................................................27
-------------------------------
8.1 Noncompetition.................................................................................27
--------------
8.2 Confidentiality................................................................................28
---------------
8.3 Injunctive Relief..............................................................................28
-----------------
9. Additional Covenants....................................................................................28
--------------------
9.1 Approvals......................................................................................28
---------
9.2 Use of Proceeds................................................................................28
---------------
9.3 Post-Effective Date Receipts...................................................................28
----------------------------
9.4 Transfer Taxes.................................................................................29
--------------
9.5 Liquidation....................................................................................29
-----------
9.6 Administrative and Technical Assistance by the Selling Parties.................................29
--------------------------------------------------------------
9.7 Processing Services............................................................................29
-------------------
9.8 Sale of Real Property..........................................................................29
---------------------
9.9 Further Assurances of the Selling Parties......................................................30
-----------------------------------------
9.10 Further Assurances of the Buyer................................................................30
-------------------------------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
10. Survival of Representations and Warranties; Indemnification.............................................30
-----------------------------------------------------------
10.1 Survival of Representations and Warranties.....................................................30
------------------------------------------
10.2 Indemnification by the Selling Parties.........................................................30
--------------------------------------
10.3 Limitations on Obligation of Selling Parties to Indemnify......................................31
---------------------------------------------------------
10.4 Indemnification by the Buyer...................................................................31
----------------------------
10.5 Limitations on Obligation of Buyer to Indemnify................................................31
-----------------------------------------------
10.6 Environmental Losses...........................................................................32
--------------------
10.7 Indemnification Procedure......................................................................34
-------------------------
10.8 Payment of Indemnification Obligations.........................................................36
--------------------------------------
10.9 Interest on Unpaid Obligations.................................................................36
------------------------------
10.10 Monetary Limitation on Indemnification.........................................................36
--------------------------------------
10.11 Exclusive Remedy...............................................................................36
----------------
11. Dispute Resolution......................................................................................36
------------------
11.1 Mediation; Arbitration.........................................................................36
----------------------
11.2 Arbitrators....................................................................................36
-----------
11.3 Procedure......................................................................................36
---------
11.4 Objections; Binding Nature.....................................................................37
--------------------------
11.5 Continued Performance..........................................................................37
---------------------
12. General.................................................................................................37
-------
12.1 Expenses.......................................................................................37
--------
12.2 Publicity......................................................................................37
---------
12.3 Amendment, Severability, Parties in Interest, Assignment, Etc..................................38
--------------------------------------------------------------
12.4 Waivers........................................................................................38
-------
12.5 Notices........................................................................................38
-------
12.6 Entire Agreement...............................................................................39
----------------
12.7 Interpretation.................................................................................39
--------------
12.8 Governing Law..................................................................................40
-------------
12.9 Counterparts...................................................................................40
------------
</TABLE>
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<PAGE>
SCHEDULES
1(a) Financial Data
1(b) Persons with Knowledge
1(c) Permitted Encumbrances
2.1.1 Animals
2.1.2 Real Property
2.1.3 Equipment, Machinery and Other Tangible Personal Property
2.1.4 Contracts
2.1.6 Governmental Permits
2.1.7 Intellectual Property
2.1.9 Inventory
2.1.10 Prepaid Expenses
2.1.11 Software
2.2 Common Intellectual Property
2.3.5 Excluded Contracts
2.3.7 Excluded Intellectual Property
2.5 Allocation of Purchase Price
3.1 Employees
3.3.3 Employment Period
3.3.4 Paid Time Off
3.3.6 Severance Benefits
4.3 Required Consents
4.6 Certain Changes or Events
4.8 Exceptions to Real Property
4.9 Intellectual Property, Common Intellectual Property and Software
4.12 Legal Proceedings and Court Orders; Environmental Matters
4.13 Other Liabilities
4.16 Employee Benefit Plans
4.20 Insurance
4.21 Previous Sales
4.22 Customers and Suppliers
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of May 11, 1999 (the
"Effective Date") by and among STRATEGIC DIAGNOSTICS INC., a Delaware
corporation ("Buyer"), DIASORIN INC., a Delaware corporation and wholly-owned
subsidiary of American Standard Medical Systems, Inc. ("DSI") and ATLANTIC
ANTIBODIES, INC., a Delaware corporation and wholly-owned subsidiary of DSI
("Seller," and together with DSI, collectively the "Selling Parties"). Certain
other terms are used herein as defined below in Section 1 or elsewhere in this
Agreement.
Background
----------
This Agreement sets forth the terms and conditions under which, among
other things, Buyer is purchasing certain assets of Seller used by Seller in the
conduct of its business, and Seller is selling to Buyer such assets.
Witnesseth
----------
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions.
For convenience, certain terms used in more than one part of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms as well as any other terms defined elsewhere in this Agreement shall
be equally applicable to both the singular and plural forms of the terms
defined).
"Accounts Receivable" means as of any date any trade accounts
receivable, notes receivable, bid or performance deposits, employee advances and
other miscellaneous receivables included in the assets of or that arose in
connection with the Business.
"Affiliates" means, with respect to a particular Party, Persons or
entities controlling, controlled by or under common control with that Party, as
well as any officers and directors of that Party or any Affiliates of any of the
foregoing. For the purposes of the foregoing, ownership, directly or indirectly,
of 20% or more of the voting stock or other equity interest shall be deemed to
constitute control.
"Agreement" means this Agreement and the Schedules hereto.
"Appraisal" means that certain appraisal prepared by Southern Maine
Appraisal Service dated March 11, 1998 relating to the real property located at
52 Anderson Road, Windham, Maine.
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<PAGE>
"Benefit Plan" means any (i) "employee benefit plan" as defined in
Section 3(3) of ERISA and any related or separate Contract, plan, trust,
program, policy and arrangement and (ii) supplemental retirement, bonus,
vacation, deferred compensation, severance, incentive or other employee benefit
plan, program, arrangement, practice, custom or understanding, in each case
whether formal or informal, that provides benefits of economic value to any
Employee or any present or former beneficiary, dependent or assignee of any such
Employee.
"Books and Records" is defined in Section 4.4.
"Business" means (i) the OEM business of Seller as conducted as of the
Effective Date, including the business of providing manufacturers and
distributors with bulk antisera products to human serum proteins that are
monospecific, avid and of high titer, including nephelometric quality,
turbidimetric quality, standard antisera, IgG fractions, fluorescent and enzyme
conjugated preparations, and calibrators used as reference standards in
conjunction with antisera products and (ii) the business of providing custom
immunization services to raise antisera for customer projects at the Farm.
"Business" expressly excludes the business of selling medical diagnostic kits to
medical laboratories.
"Buyer" is defined above in the preamble.
"Buyer Competing Business" is defined in Section 8.1.2.
"Buyer Employee Benefit Plans" means any (i) "employee benefit plan" as
defined in Section 3(3) of ERISA and any related or separate Contract, plan,
trust, program, policy and arrangement and (ii) supplemental retirement, bonus,
vacation, deferred compensation, severance, incentive or other employee benefit
plan, program, arrangement, practice, custom or understanding, in each case
whether formal or informal, that provides benefits of economic value to any
employee of Buyer or any present or former beneficiary, dependent or assignee of
any such employee.
"Buyers' General Liabilities" is defined in Section 10.4.
"Buyer Indemnified Party" is defined in Section 10.2.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited
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partnership agreement, certificate of limited partnership, certificate of
formation, operating agreement, joint venture agreement or similar document
governing the entity.
"Claim" is defined in Section 10.7.
"Closing" means the consummation of the Transactions.
"Closing Payment" is defined in Section 2.4.2.1.
"Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time, and any successor thereto.
"Common Intellectual Property" means any and all Copyrights, Patents,
Trademarks, Technology rights and licenses, Trade Secrets, franchises, know-how,
inventions, method, techniques and other intellectual property used both in the
conduct of the Business and otherwise by the Selling Parties or any Affiliates
of the Selling Parties.
"Confidential Information" is defined in Section 8.2.
"Contract" means any written or oral contract, agreement, purchase
order, lease, instrument or other commitment that is binding on any Person or
its property under applicable Law.
"Copyrights" means any registered copyrights, copyright applications
and unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or regulatory body
or authority that is binding on any Person or its property under applicable Law.
"Custom Immunization Agreement" means the Custom Immunization Agreement
dated as of the Effective Date between Buyer and the Selling Parties.
"Customer Records" is defined in Section 2.1.5.
"Default" means (i) a breach, default or violation, (ii) the occurrence
of an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (iii) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
"Deferred Payment" is defined in Section 2.4.2.3.
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<PAGE>
"DSI Products" means products manufactured and sold by DSI.
"Effective Date" is defined above in the preamble.
"Employees" is defined in Section 3.1.
"Encumbrances" means any lien, mortgage, security interest, license
right, pledge, restriction on transferability, defect of title, encroachment,
boundary dispute, covenant, restriction, easement, right of way, charge or
encumbrance of any nature whatsoever on any property or property interest, other
than Permitted Encumbrances.
"Environmental Condition" is defined in Section 4.12.2.
"Environmental Law" means any Law (including, but not limited, to the
Clean Water Act, 33 U.S.C. ss.ss. 1251 et seq., the Toxic Substances Control
Act, 15 U.S.C. ss.ss. 2601 et seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss.ss. 300f et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss.ss. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss. 6901 et seq., the River and Harbor Act, 33 U.S.C. ss. 407, and the
Occupational Safety and Health Act, 29 U.S.C. ss.ss. 651 et seq.), Court Order
(whether or not by consent), any duties imposed by common law and any provision
or condition of any Governmental Permit relating to (i) the protection of the
environment or the public welfare from actual or potential exposure (or the
effects of exposure) to any actual or potential release, discharge, disposal or
emission (whether past or present) of any Hazardous Substance or (ii) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Substance.
"Environmental Losses" is defined in Section 10.6.1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" is defined in Section 2.3.
"Farm" means the real property identified as "the site" on lots 39, 25
and 24(c) in the Appraisal.
"Financial Data" means collectively, (i) a statement setting forth the
fixed assets and inventory of Seller relating to the Business as of December 31,
1997 and 1998 and (ii) a statement setting forth all revenues, and expenses of
the Seller relating to the Business for the 12-month periods ending December 31,
1997 and 1998, which statements are attached hereto as Schedule 1(a). Certain
expenses relate exclusively to the Business and have been allocated in their
entirety to the Business, while others relate partially to the Business and have
been so allocated.
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<PAGE>
"Findings" is defined in Section 10.6.5.
"Governmental Permits" means all governmental permits, licenses,
registrations, certificates of occupancy, orders, approvals and other
governmental authorizations.
"Hazardous Substances" means any toxic or hazardous gaseous, liquid or
solid material or waste that may or could pose a hazard to the environment or
human health or safety including (i) any "hazardous substances" as defined by
the federal Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss.ss. 9601 et seq., (ii) any "extremely hazardous substance,"
"hazardous chemical" or "toxic chemical" as those terms are defined by the
federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. ss.ss.
11001 et seq., (iii) any "hazardous waste," as defined under the federal Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss. 6901 et seq., (iv) any "pollutant," as defined under the federal
Water Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq., and (v) any
regulated substance or waste under any Environmental Laws or Court Orders.
"Indemnified Party" means either a Seller Indemnified Party or a Buyer
Indemnified Party, as the context so requires.
"Indemnifying Party" means a Party against whom a Claim for
indemnification has been asserted under this Agreement.
"Intellectual Property" means any and all Copyrights, Patents,
Trademarks, technology rights and licenses, Trade Secrets, franchises, know-how,
inventions, methods, techniques and other intellectual property used by a
Selling Party exclusively in the conduct of the Business.
"Inventory" means the inventory of processed antibodies, antisera and
all other items of inventory related to the Business.
"Knowledge" and words of similar import means, with respect to Buyer,
knowledge of a particular fact (i) being known by any officer or director of
Buyer, or (ii) which any such person reasonably should have known in the
exercise of his or her duties; and with respect to Seller, knowledge of a
particular fact (i) being known by those individuals identified on Schedule 1(b)
or (ii) which any such person reasonably should have known in the exercise of
his or her duties..
"Law" means any statute, law, ordinance, regulation, order or rule of
any federal, state, local, foreign or other governmental agency or body or of
any other type of regulatory body, including those covering environmental,
energy, safety, health, transportation, bribery, record keeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
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<PAGE>
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"License" is defined in Section 2.2.
"License Agreement" means the License Agreement dated as of the
Effective Date between Buyer and the Selling Parties.
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Losses" means all losses, costs, claims, Liabilities, demands, fines,
judgments, penalties, damages and expenses of any nature whatsoever, including
interest which may be imposed in connection therewith and court costs and
reasonable fees and disbursements of counsel and consultants of every kind,
nature and description charged to or incurred by them in connection therewith.
"Lots 24(c) and 25" is defined in Section 2.4.1.2.
"Maine DEP" is defined in Section 10.6.5.
"Material Adverse Effect" means a material adverse effect on the
Business, including the Purchased Assets, manufacturing capabilities, financial
condition, results of operations, sales volumes, liquidity, costs of operations,
Products, prospects, customers and customer relations thereof.
"Net Proceeds" is defined in Section 2.4.1.2.
"Ordinary course" or "ordinary course of business" means the ordinary
course of business that is consistent with past practice.
"Party" means Buyer, Seller or DSI, individually, as the context so
requires, and the term "Parties" means Buyer, Seller and DSI, collectively.
"Patents" means any patents, patent applications, reissue patents,
patents of addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"Permitted Encumbrances" means (i) liens for current taxes and special
assessments not yet due and payable; and (ii) the Encumbrances identified on
Schedule 1.1(c).
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<PAGE>
"Person" means any natural person, corporation, company, partnership,
proprietorship, trust or estate, joint venture, association or other legal
entity.
"Prime Rate" means the prime lending rate as published from time to
time in The Wall Street Journal.
"Product" means any of the products or product lines manufactured
and/or marketed by Seller in the conduct of the Business as of the Effective
Date.
"Purchased Assets" is defined in Section 2.1.
"Purchase Price" is defined in Section 2.4.1.
"Real Property" is defined in Section 2.1.2.
"Required Consents" is defined in Section 4.3.
"Seller" is defined above in the preamble.
"Seller Indemnified Party" is defined in Section 10.4.
"Sellers' General Liabilities" is defined in Section 10.2.
"Selling Parties" is defined above in the preamble.
"Selling Party Competing Business" is defined in Section 8.1.1.
"Software" means any computer software of any nature whatsoever,
including all systems software, all applications software, whether for general
business usage (e.g., accounting, finance, word processing, graphics,
spreadsheet analysis, etc.) or specific, unique-to-the-Business usage (e.g.,
purchase or service order processing, etc.) and all computer operating, security
or programming software, that is owned by or licensed to a Selling Party for use
exclusively in the Business or has been developed or designed for, or is in the
process of being developed or designed for use exclusively in, the Business, and
any and all documentation and object and source codes related thereto.
"Supply Agreement" means the Supply Agreement dated as of the Effective
Date between Buyer and DSI.
"Taxes" means all taxes, duties, charges, fees, levies or other
assessments imposed by any taxing authority, including, without limitation,
income, gross receipts, value-added, excise, withholding, personal property,
real estate, sale, use, ad valorem, license, lease, service, severance, stamp,
transfer, payroll, employment, customs, duties, alternative, add-on minimum,
estimated and
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<PAGE>
franchise taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment).
"Trademarks" means any registered trademarks, registered service marks,
logos, trade names, trademark and service mark applications and unregistered
trademarks and service marks and associated goodwill.
"Trade Secrets" means any trade secrets, methods, processes and
procedures, engineering, production, assembly, design, installation, other
technical drawings and specifications, working notes and memos, market studies,
consultants' reports, know-how, proprietary information, research, product
plans, products, services plans, services, customer lists, marketing,
distribution and sales methods and systems, formulae, technical and laboratory
data, competitive samples, engineering prototypes, and all similar property of
any nature, tangible or intangible, used, in whole or in part, or related to,
directly or indirectly, the Business.
"Transaction Documents" means, collectively, this Agreement, the Supply
Agreement, the real property conveyances described in Section 6.1.2, the Bill of
Sale, Assignment and Assumption described in Section 6.1.3, the License
Agreement described in Section 6.1.4 and the Custom Immunization Agreement
described in Section 6.1.5.
"Transactions" means the sale of the Purchased Assets and the other
transactions contemplated by the Transaction Documents.
"Transferred Employees" is defined in Section 3.2.4.
"Warn Act" is defined in Section 3.5.
2. Sale and Purchase.
2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Seller grants, sells, conveys, assigns, transfers and delivers to
Buyer, free and clear of all Encumbrances whatsoever, and Buyer purchases from
Seller, all right, title and interest of Seller in and to all of the assets,
properties and rights, other than the Excluded Assets, owned by Seller and used
in the conduct of the Business, including the following (the "Purchased
Assets"):
2.1.1 Animals. The animals owned by Seller and maintained by
Seller on the Farm as more fully described in Schedule 2.1.1.
2.1.2 Real Property. The real property owned by Seller and
defined herein as the "Farm," as more fully described in Schedule
2.1.2, together with the buildings, structures, improvements and
fixtures located thereon, and all rights, privileges, easements,
licenses, hereditaments and other appurtenances relating thereto (the
"Real Property");
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2.1.3 Equipment, Machinery and Other Tangible Personal
Property. All machinery, equipment, leasehold improvements, trucks,
automobiles, supplies, office furniture and office equipment, computers
and telecommunications equipment and other items of personal property
that are owned by Seller and located at the Farm, including those
described in Schedule 2.1.3, as well as certain other items of personal
property owned by Seller and identified on Schedule 2.1.3;
2.1.4 Contracts Relating to the Business. All of the interest
of Seller in the Contracts listed in Schedule 2.1.4;
2.1.5 Customer Records, Sales and Marketing Materials. All
customer records, including principal contacts, address and telephone
number, purchasing history, payment information and any other
information with respect to the customers of the Business (the
"Customer Records"), sales data, catalogs, brochures, suppliers' names,
mailing lists, art work, photographs and advertising material that
relate to or are used, in whole or in part, in connection with the
operations of the Business, whether in electronic form or otherwise;
2.1.6 Governmental Permits. All rights under Governmental
Permits relating to the Business, including those listed in Schedule
2.1.6, to the extent such Governmental Permits are transferable to
Buyer;
2.1.7 Intellectual Property. All Intellectual Property
described in Schedule 2.1.7;
2.1.8 Property, Personnel and Accounting Records. All other
records of Seller relating to the Business, including property records;
2.1.9 Inventory. All Inventory identified on Schedule 2.1.9,
as updated on the Effective Date due to changes in the ordinary course;
2.1.10 Prepaid Expenses. All rights relating to any prepaid
expenses of or arising in connection with the Business at the Effective
Date described in Schedule 2.1.10; and
2.1.11 Software. All Software described in Schedule 2.1.11.
2.2 Common Intellectual Property. The Selling Parties shall license to
Buyer the Common Intellectual Property described in Schedule 2.2 (the "License")
pursuant to the terms of the License Agreement.
2.3 Excluded Assets. The following property and assets of the Seller
are excluded from sale to Buyer (the "Excluded Assets"):
2.3.1 Cash and cash equivalents;
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2.3.2 All securities owned by Seller;
2.3.3 All rights of Seller under any claims, deposits,
prepayments, refunds, causes of action, chooses in action, rights of
recovery, rights of set off and rights of recoupment (including any
such items relating to the payment of taxes);
2.3.4 All Accounts Receivable;
2.3.5 Seller's rights under the contracts, indentures,
guarantees, leases, commitments and other agreements listed in Schedule
2.3.5 hereto ("Excluded Contracts");
2.3.6 Benefits payable under any policies of insurance.
2.3.7 All Intellectual Property and Common Intellectual
Property listed in Schedule 2.3.7 hereto.
2.4 Purchase Price.
2.4.1 The total purchase price for the Purchased Assets is
Three Million One Hundred Fifty Thousand Dollars ($3,150,000) in cash
(the "Purchase Price").
2.4.2 Subject to the terms and conditions of this Agreement,
Buyer shall pay the Purchase Price to Seller as set forth below:
2.4.2.1 Upon the Closing, Buyer shall pay by a
wire transfer of immediately available funds to Seller the sum
of Three Million Dollars ($3,000,000), less the amount of any
real estate taxes attributable to time periods prior to the
Effective Date to Seller in accordance with instructions
provided by Seller.
2.4.2.2 Within thirty (30) days after the first to
occur of (i) the final closing of the sale of Lots 24(c) and
25; (ii) the closing of a sale of the Business by Buyer; or
(iii) the closing of a transaction pursuant to which Buyer is
acquired by a third party and at least twenty-five percent
(25%) of the consideration received by Buyer's stockholders
consists of cash, then the Buyer shall pay to Seller, either
by a wire transfer of immediately available funds or by
cashiers check delivered by a recognized overnight carrier to
Seller, the sum of One Hundred Fifty Thousand Dollars
($150,000) (the "Deferred Payment"); provided, however, that
if Buyer does not sell Lots 24(c) and 25 within eighteen (18)
months after the Effective Date, then within (30) days after
the end of such eighteen (18) month period, Buyer shall pay to
Seller, either by a wire transfer of immediately available
funds or by cashiers check delivered by a recognized overnight
carrier to Seller, the Deferred Payment.
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2.5 Allocation of Purchase Price. The Purchase Price shall be allocated
based upon the fair market values of the Purchased Assets conforming with the
requirements of Section 1060 of the Code as specified in Schedule 2.5. Neither
the Selling Parties nor the Buyer will take a position on any income tax return,
before any governmental agency charged with the collection of any income tax or
in any judicial proceeding that is in any way inconsistent with the terms of
this Section 2.5.
2.6 Assumption of Liabilities. Upon the Closing, Buyer acquires the
Purchased Assets subject only to the Permitted Encumbrances, and shall
undertake, assume, perform and otherwise pay, satisfy and discharge, and hold
Seller harmless from, the following Liabilities, excluding any Liabilities to a
Selling Party or any Affiliate of a Selling Party (collectively, the "Assumed
Liabilities"):
2.6.1 Any Contract of Seller included in the Purchased Assets
for which the rights thereunder have been duly and effectively assigned
to Buyer as of the Closing.
2.7 Limitation on Assumption of Liabilities. Except as provided in
Section 2.6, upon the Closing Seller transfers the Purchased Assets to Buyer
free and clear of all Encumbrances, and without any assumption of Liabilities,
and Buyer shall not, by virtue of its purchase of the Purchased Assets, assume
or become responsible for under this Agreement, as of the Closing or at any
time, any Liabilities of any Selling Party or any other Person, including,
without limitation, the following: (i) any long-term debt (including any current
portion) of any Selling Party or of any other Person guaranteed by any Selling
Party or any other Person or secured by any of the Purchased Assets prior to the
Closing; (ii) Liabilities arising out of any breach by a Selling Party of any
provision of any Contract; (iii) any product liability or similar claim for
injury to any Person or property, regardless of when made or asserted, that
arises out of or is based upon any express or implied representation, warranty,
agreement or guarantee made by a Selling Party, or alleged to have been made by
a Selling Party, or which is imposed or asserted to be imposed by operation of
law, in connection with any service performed or product sold or leased by or on
behalf of a Selling Party on or prior to the Closing; (iv) any warranty
obligations of any Selling Party to replace defective Products sold by any
Selling Party under the terms of any Contract, order or transaction entered into
by any Selling Party prior to the Effective Date or any incidental or
consequential damages or any personal injury or property damages related
thereto; (vi) any federal, state or local income or other Tax payable with
respect to the Business, the Purchased Assets, or other properties or operations
of a Selling Party for any period prior to the Effective Date (vii) any
Liabilities arising prior to the Effective Date or with respect to any
employees, agents or independent contractors of the Selling Parties and any
Liabilities arising under any Benefit Plan or other benefit arrangement of any
kind whatsoever of any Selling Party (including, without limitation, any entity
described in Section 4.16.1), including, without limitation, any severance
payments or obligations; (ix) all claims for workers' compensation by any
Employee or former employee of a Selling party arising out of events occurring
prior to the Closing, whether reported or unreported as of the Closing and
whether insured or uninsured (including, without limitation, workers'
compensation, life insurance, medical and disability programs) in accordance
with the terms and conditions of such programs or applicable workers'
compensation statutes; (ix) any Liabilities of the Selling Parties arising or
incurred in connection with the
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negotiation, execution and performance of this Agreement, the other Transaction
Documents and the Transactions except as otherwise provided herein or therein;
or (x) any Environmental Losses arising from or related to circumstances
existing on or before the Effective Date.
2.8 Trademark License.
2.8.1 The Parties acknowledge that the Seller's name and
associated marks, including, but not limited to "Atlantic Antibodies, Inc." and
"Atlantic Antibodies" constitute Excluded Common Intellectual Property as set
forth in Schedule 2.3.7. Notwithstanding the foregoing, in connection with the
transition of the Business from Seller to Buyer, the Selling Parties hereby
grant Buyer a limited, worldwide, royalty-free license and right to use the
trademarks "Atlantic Antibodies, Inc." and "Atlantic Antibodies" solely for the
following uses:
2.8.1.1 in press releases and advertisements related
to the transaction that is the subject of this Agreement, and which press
releases and advertisements have been approved in advance by Seller, such
approval not to be unreasonably withheld;
2.8.1.2 on Inventory that has been labeled prior to
the Effective Date; and
2.8.1.3 for a reasonable period of time, not to
exceed 120 days after the Effective Date, in order to facilitate the transition
of the Business, to answer incoming telephone calls in a manner that identifies
the Business as being formerly operated by Seller.
3. Employee Matters.
3.1 Offers of Employment. Buyer acknowledges and confirms that it has
offered, on a conditional basis subject to the closing of the transaction
contemplated by this Agreement, regular employment to certain individuals who
are listed on Schedule 3.1 (the "Employees").
3.2 Employees.
3.2.1 Seller acknowledges and confirms that Schedule 3.1
contains a complete and accurate list of the names of the Employees as of the
Effective Date, together with the length of hire, title or classification of
each such person, the rate of salary or hourly pay at Seller, any commission or
bonus entitlements and any other remuneration payable by Seller to each such
person as of such date.
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3.2.2 Seller shall continue to employ each of the Employees
until the Effective Date, except for any such employee who, at any time prior to
the Effective Date (i) is terminated for cause, (ii) voluntarily resigns, (iii)
retires, or (iv) dies.
3.2.3 Buyer's offer of employment to the Employees shall be on
such terms and be subject to such conditions as Buyer shall determine; provided,
however, Buyer shall offer each Employee a base salary greater than or equal to
such Employee's base salary immediately preceding the Effective Date.
3.2.4 Subject to the consummation of the transaction
contemplated by this Agreement, Buyer shall employ all Employees who accept (and
who do not later revoke their acceptance of) Buyer's offers of employment (the
"Transferred Employees") in accordance with the terms of such offers and this
Agreement.
3.3 Transferred Employees.
3.3.1 Each of the Transferred Employees shall cease to accrue
benefits under the Seller Employee Benefit Plans as of the Effective Date.
Notwithstanding the foregoing, each Transferred Employee shall be treated as
vested in his or her account in the American-Standard Employee Stock Ownership
Plan.
3.3.2 Each of the Transferred Employees shall be eligible to
participate in, and benefits shall accrue under, the Buyer Employee Benefit
Plans from the Effective Date in accordance with the terms of such Buyer
Employee Benefit Plans.
3.3.3 For the purpose of determining the participation and
vesting of a Transferred Employee under the Buyer Employee Benefit Plans, his or
her period of employment shall be as set forth on Schedule 3.3.3.
3.3.4 Buyer will allow the Transferred Employees to use during
1999 after the Effective Date the amount of vacation time set forth in column F
of Schedule 3.3.4 next to such Transferred Employee's name at Buyer's expense on
the terms and conditions as are provided for in Buyer's employee benefits plan
relating to vacation time. Seller or Seller's relevant Benefit Plan shall pay or
provide all benefits or rights earned or accrued prior to the Effective Date by
any Transferred Employee, including payment for the amount of paid time off set
forth in column E of Schedule 3.3.4 next to such Transferred Employee's name.
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3.3.5 Buyer shall not terminate or relocate operation of the
Farm during the twelve-month period immediately after the Effective Date.
3.3.6 During the twelve-month period immediately after the
Effective Date, Buyer agrees to provide any Transferred Employee severance
benefits in accordance with Schedule 3.3.6 attached hereto in the event that (i)
Buyer terminates any of the Transferred Employees, other than for cause or (ii)
Buyer terminates or relocates operation of the Farm and any Transferred Employee
ceases to be an employee of Buyer for any reason other than (A) termination by
Buyer for cause or (B) death.
3.3.7 Any Transferred Employee who is on vacation or on leave
of absence on the Effective Date shall be deemed for the purpose of
participation in the Seller Employee Benefit Plans and the Buyer Employee
Benefit Plans to have actively reported for work with Buyer at 12:01 a.m. on the
Effective Date if such Transferred Employee returns to work immediately
following completion of such vacation or leave. Buyer shall count the remaining
period of such vacation or leave of absence toward any waiting period or other
service-based eligibility requirement under any Buyer Employee Benefit Plan.
3.4 Certain Employee Benefits. The Selling Parties
shall, jointly and severally, indemnify the Buyer against any Liabilities
incurred by a Buyer Indemnified Party (including reasonable attorney's fees) in
connection with, and at their expense, honor or cause their insurance carriers
to honor, all claims for workers' compensation by any Employee of a Selling
Party arising out of events occurring prior to the Effective Date, and all
Liabilities with respect to Benefit Plans or other benefit arrangements of any
kind whatsoever of a Selling Party (including, without limitation, any entity
described in Section 4.16.1), whether reported or unreported as of the Effective
Date and whether insured or uninsured (including, without limitation, workers'
compensation, life insurance, medical and disability programs) in accordance
with the terms and conditions of such programs or applicable workers'
compensation statutes. Without limiting the scope of the preceding sentence, the
Selling Parties shall, jointly and severally, be responsible for any and all
Liabilities arising out of or relating to (i) employment of the Employees of the
Selling Parties, (ii) the termination by a Selling Party of the employment of
any such Employee or former employee and (iii) the provision of any employee
benefits to any such Employee (and their beneficiaries and eligible dependents),
attributable to their employment with, or their participation in any Benefit
Plans or any other benefit arrangement of any kind whatsoever maintained or
contributed to by, a Selling Party (including, without limitation, any entity
described in Section 4.16.1) or any of their Affiliates.
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3.5 WARN Act. The Selling Parties, jointly and severally, shall
indemnify the Buyer against any Liabilities incurred by a Buyer Indemnified
Party (including reasonable attorneys' fees) in connection with the application
of the Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss.ss. 2101
et seq. (the "Warn Act"), as a result of any discharges of Employees by a
Selling Party in connection with the Transactions. Notwithstanding the
foregoing, Buyer shall indemnify the Selling Parties against any Liabilities
incurred by a Seller Indemnified Party (including reasonable attorneys' fees) in
connection with the application of the Warn Act and any applicable state plant
closure laws, as a result of Buyer's failure to comply with its obligations
under this Section 3.
4. Representations and Warranties of the Seller and DSI.
The Selling Parties hereby, jointly and severally, represent and
warrant to the Buyer as follows:
4.1 Corporate Status. Each of Seller and DSI is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Seller is qualified to do business as a
foreign corporation in any jurisdiction where it is required to be so qualified
except where the failure so to qualify would not have a Material Adverse Effect.
The Charter Documents and bylaws of Seller that have been delivered to the Buyer
as of the date hereof are effective under applicable Laws and are current,
correct and complete.
4.2 Authorization. Each of Seller and DSI has the requisite power and
authority to own its property and to carry on its business as now being
conducted. Each of Seller and DSI has the requisite power and authority to
execute and deliver the Transaction Documents to which it is a party and to
perform the Transactions performed or to be performed by it. Such execution,
delivery and performance by Seller and DSI has been duly authorized by all
necessary corporate action. Each Transaction Document executed and delivered by
Seller or DSI has been duly executed and delivered by such Party and constitutes
a valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms.
4.3 Consents and Approvals. Except for any consents specified in
Schedule 4.3 (the "Required Consents") neither the execution and delivery by
Seller or DSI of the Transaction Documents to which it is a party, nor the
performance of the Transactions performed or to be performed by a Selling Party
(i) require any filing, consent or approval, conflict with, constitute a Default
or cause any payment obligation to arise under (a) any Law or Court Order to
which DSI, Seller or any of the Purchased Assets is subject, (b) the Charter
Documents or bylaws of DSI or of Seller or (c) any Contract, Governmental Permit
or other document to which DSI or Seller is a party or by which any of the
Purchased Assets is bound, or (ii) result in the creation or imposition of any
Encumbrance upon the Purchased Assets.
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4.4 Financial Data. The Financial Data contains (i) true, complete and
accurate statements of sales relating to the Business for the 12-month periods
ending December 31, 1997 and 1998; (ii) expenses for the 12-month periods ending
December 31, 1997 and 1998 that consists of both expenses which are distinct and
separately identifiable to the Business as well as management's best estimate of
other expenses that are allocable to the Business, all of which have been
determined and allocated on a reasonable basis; (iii) inventory valued at cost;
and (iv) fixed assets valued at the net book value of the Seller.
4.5 Inventory. The Inventory, except for immaterial quantities of
Inventory that have become obsolete in the ordinary course, was acquired and has
been maintained in accordance with the regular business practices of Seller and
is of good and merchantable quality.
4.6 Absence of Certain Changes or Events. Except as set forth in
Schedule 4.6, since December 31, 1998, Seller has conducted the Business in the
ordinary course, and neither Seller nor DSI, as the case may be, has:
4.6.1 Amended in any material respect or terminated any
Contract to which Seller is a party or for the benefit of Seller
relating to the Business or the Purchased Assets;
4.6.2 Closed any office or facility or made plans to close any
office or facility used, in whole or in part, by Seller in the conduct
of the Business as of the Balance Sheet Date;
4.6.3 Suffered the occurrence of any events that, individually
or in the aggregate, have had, or could reasonably be expected to have,
a Material Adverse Effect;
4.6.4 Incurred any damage or destruction having a Material
Adverse Effect by fire, storm, or similar casualty, whether or not
covered by insurance;
4.6.5 Sold, transferred, replaced or leased any of the
Purchased Assets or sold any Inventory at a discount, except for
transactions in the ordinary course of the business;
4.6.6 Waived or released any material rights with respect to
the Business or the Purchased Assets;
4.6.7 Transferred or granted any rights to any Intellectual
Property;
4.6.8 Entered into any transaction or made any commitments
(for capital expenditures or otherwise) relating to the Business or the
Purchased Assets other than in the ordinary course of the business;
4.6.9 Changed its methods of accounting;
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4.6.10 Increased or made any commitments to increase the
compensation of Employees or other service providers, except following
normal review procedures or as reasonably deemed necessary in the
ordinary course of the business and as disclosed to the Buyer prior to
the Effective Date; or
4.6.11 Materially altered the conduct of its relations with
customers or suppliers or the Business.
4.7 Personal Property. Seller owns and is transferring to Buyer good
title to all personal property included in the Purchased Assets or, with respect
to leased assets included in the Purchased Assets, a valid leasehold interest
in, including, without limitation, the material properties and assets reflected
on the Balance Sheet, free and clear of all Encumbrances.
4.8 Real Property.
4.8.1 Seller owns and is transferring to Buyer good and
marketable title in fee simple to the Real Property, insurable as such
by any reputable title insurance company licensed to do business in
Maine at regular standard rates, free and clear of all Encumbrances.
4.8.2 To the knowledge of the Selling Parties, the
improvements located on the Real Property and material to the conduct
of the Business are in good condition and are structurally sound, and
all mechanical and other systems located therein are in good operating
condition, reasonable wear and tear excepted, and, to the knowledge of
the Selling Parties, no condition exists requiring material repairs,
alterations or corrections.
4.8.3 Except as set forth on Schedule 4.8, all of the Real
Property is usable in the ordinary course of business and conforms in
all material respects with any applicable Laws relating to its
construction, ownership, use, occupancy and operation, except where
failure to comply would not have a Material Adverse Effect, and Seller
has obtained all Governmental Permits required thereunder. The Real
Property complies with applicable zoning Laws, except where failure to
comply would not have a Material Adverse Effect. No Selling Party has
received any written notice of any violation of Law with respect to the
Real Property, and to the knowledge of the Selling Parties, no such
notice is threatened. No Selling Party has received any written notice
that any governmental or regulatory body or authority having
jurisdiction over the Real Property intends to exercise the power of
eminent domain, condemnation, annexation or moratorium or similar power
with respect to all or any part of the Real Property, and to the
Knowledge of the Selling Parties, no such action is threatened. To the
Knowledge of any Selling Party, the Real Property has been assessed and
real estate Taxes have been paid on the basis of the value of all
improvements as completed, and to the Knowledge of any Selling Party,
there are no proposed reassessments of any of the Real Property by any
taxing authority and, to the
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Knowledge of any Selling Party, there are no threatened or pending
special assessments or other actions or proceedings that could
reasonably be expected to give rise to a material increase in real
property taxes or assessments against any of the Real Property. Neither
Selling Party has received written notice of and, to the Knowledge of
any Selling Party, there does not exist any violation or Default of a
condition or agreement contained in any easement, restrictive covenant
or any similar instrument or agreement affecting the Real Property or
any portion thereof.
4.9 Intellectual Property, Software and Confidential Information.
4.9.1 Schedule 4.9 sets forth a correct and complete list and
description of all Intellectual Property, Common Intellectual Property
and all Software, and indicates whether such Intellectual Property,
Common Intellectual Property and Software is owned by or licensed to a
Selling Party.
4.9.2 Except as disclosed in Schedule 4.9: (a) to the
Knowledge of any Selling Party, Seller owns or possesses adequate
licenses or other valid rights to use (without the making of any
payment to others or the obligation to grant rights to others in
exchange) all of the Intellectual Property, Common Intellectual
Property and Software; (b) the Intellectual Property, Common
Intellectual Property and Software constitute all such rights and
property of the Selling Parties necessary to conduct the Business in
accordance with past practice; (c) no Selling Party is in Default under
any Contract with respect to any of the Intellectual Property or
Software; (d) the validity of the Intellectual Property and the Common
Intellectual Property and the rights of Seller therein and to the
Software have not been questioned in any Litigation to which Seller is
a party or in any written notice to Seller, nor, to the Knowledge of
any Selling Party, is any such Litigation threatened; and (e) to the
Knowledge of any Selling Party, the conduct of the Business does not
infringe the valid intellectual property rights of others.
4.9.3 Except as disclosed in Schedule 4.9, the Selling Parties
have no Knowledge of any infringement of any Intellectual Property,
Common Intellectual Property or Software. No present or former
director, officer, employee or consultant of Seller or any Affiliate of
Seller has any interest, direct or indirect, in any of the Intellectual
Property, Common Intellectual Property or Software.
4.9.4 To the Knowledge of any Selling Party, no employee or
consultant of Seller is, or is currently expected to be, in Default
under any term of any employment Contract, agreement or arrangement
relating to the Intellectual Property or Common Intellectual Property
or any confidentiality agreement or any other Contract or any
restrictive covenant relating to the Intellectual Property or Common
Intellectual Property or the development or exploitation thereof.
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4.10 Contracts. Except as listed and described in Schedule 2.1.4 or
Schedule 2.3.5, Seller is not with respect to the Purchased Assets or the
Business a party to any written or oral:
4.10.1 Contracts with any present or former shareholder,
director, officer, employee, partner or consultant of any Selling Party
or Affiliate thereof;
4.10.2 Contracts for the future purchase of, or payment for,
supplies, inventory or products, or for the lease of any Purchased
Asset from or the performance of services by a third party, in excess
of $10,000 in any individual case, or any Contracts to perform services
or to sell Inventory or Products that involve any amount in excess of
$25,000 in any individual case;
4.10.3 Contracts continuing over a period of more than six
months from the date hereof and that involve an amount in excess of
$25,000 in any individual case;
4.10.4 Representative, sales agency, dealer or distributor
Contracts;
4.10.5 Leases under which Seller is either lessor or lessee;
4.10.6 Contracts made by or on behalf of Seller, or by which
Seller is bound, with respect to the limitation, operation, management,
maintenance, utility and construction of the Real Property;
4.10.7 Contracts limiting or restraining Seller or any
successor or assign from engaging or competing in any lines of business
with any Person;
4.10.8 Contracts under which any Encumbrances exist with
respect to any Purchased Assets;
4.10.9 Contracts, licenses or distributorships that relate in
whole or in part to any Intellectual Property, Common Intellectual
Property or Software; or
4.10.10 Any other material Contracts not made in the ordinary
course of business.
Except as disclosed in Schedule 2.1.4, (i) each of the Contracts listed
in Schedule 2.1.4 is valid and enforceable in accordance with its terms, the
Selling Parties are, and to the Knowledge of the Selling Parties each other
party is, in compliance with the provisions thereof, the Selling Parties are
not, and to the Knowledge of the Selling Parties no other party is, in Default
in the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein, and no event has occurred that would
constitute a Default thereunder; (ii) no advance payments have been received by
Seller by or on behalf of any party to any of the Contracts listed in Schedule
2.1.4 for services to be rendered or products to be delivered to such party
after the Effective Date; and (iii)
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except as set forth in Schedule 4.3, no consent or approval of any party to any
Contract listed in Schedule 2.1.4 is required for the execution and delivery of
the Transaction Documents by any Selling Party or the consummation of the
Transactions.
4.11 Governmental Permits. Except as set forth on Schedule 2.1.6,
Seller has all Governmental Permits of federal, state or local government or
regulatory bodies that are required to operate the Business (including, without
limitation, those required under any Environmental Law) and Seller is in
compliance with the terms and conditions of the Governmental Permits, except
where the failure so to comply would not, individually or in the aggregate, have
a Material Adverse Effect. Schedule 2.1.6 sets forth a correct and complete list
of all Governmental Permits along with their expiration dates, and the
understanding of the Selling Parties with respect to notifications that may be
necessary to transfer any Governmental Permits. Each Governmental Permit is
currently in full force. Seller has filed such timely and complete renewal
applications as may be required with respect to its Governmental Permits. To the
Knowledge of any Selling Party, no suspension, revocation, cancellation or
withdrawal of any of the Governmental Permits is threatened and no cause exists
for such suspension, revocation, cancellation or withdrawal.
4.12 Legal Proceedings and Compliance with Laws; Environmental Matters.
4.12.1 Except as set forth in Schedule 4.12, there is no
Litigation that is pending or, to the Knowledge of any Selling Party,
threatened against a Selling Party relating to the Business or any of
the Purchased Assets, or relating to the Transactions. There has been
no Default by a Selling Party under any Laws or Court Orders applicable
to the conduct or operation of the Business or the ownership or use of
the Purchased Assets, including Environmental Laws, except for any
Defaults that would not, individually or in the aggregate, have a
Material Adverse Effect, and Seller has not received any notices from
any governmental entity regarding any alleged Defaults under any Laws.
Except as set forth in Schedule 4.12, during the five (5) years
immediately preceding the Closing Seller has not received any notice
relating to the Business or the Real Property alleging any violation of
any Environmental Law or any written request for information from any
governmental agency or other Person pursuant to any Environmental Law.
Except as set forth in Schedule 4.12, Seller is not a party to, and the
Business and the Purchased Assets are not subject to the provisions of,
any Court Order, nor is there any Court Order that might affect the
Transactions.
4.12.2 Without limiting the generality of Section 4.12.1, to
the Knowledge of any Selling Party there is not any Environmental
Condition at the Real Property. "Environmental Condition" means any
condition or circumstance, including the presence of Hazardous
Substances, whether created by Seller or any other Person, at or
relating to the Real Property that (i) requires abatement or correction
under an Environmental Law, (ii) gives rise to any civil or criminal
liability on the part of Seller under an Environmental Law. To the
Knowledge of any Selling Party, except as set forth on Schedule 4.12
the Real Property does not contain any: (A) underground storage tanks,
(B) underground injection wells; (C) septic
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tanks in which process wastewater or any Hazardous Substances have been
disposed; (D) asbestos; (E) polychlorinated biphenyls or equipment
using polychlorinated biphenyls; or (F) drums buried in the ground.
4.12.3 Schedule 4.12 identifies all environmental reports,
studies, assessments, or analyses received any time, or any other
related documents received by any Selling Party within three (3) years
from the Effective Date, and that are in the possession or custody or
under the control of any Selling Party relating to any Environmental
Condition, the Business, the Real Property or the other Purchased
Assets, true and complete copies of which have been delivered to the
Buyer.
4.13 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.13, Seller has no Liabilities relating to Contracts included in the
Purchased Assets except for such Liabilities that are expressly stated in such
Contracts or are set forth in the Financial Data.
4.14 Books and Records. All material books of account and other
financial records of Seller directly relating to the Business (the "Books and
Records") are complete and correct in all respects and have been made available
to the Buyer.
4.15 Employees and Employee Relations; Independent Contractors. Seller
is not a party to any collective bargaining agreement or currently negotiating
any collective bargaining agreement. There is no labor strike, slowdown or
stoppage pending or, to the Knowledge of any Selling Party, threatened against
or affecting Seller. There are no discrimination complaints nor any other kind
of employment or labor related disputes or unfair labor practice charges or
complaints against Seller in connection with the Business pending before or, to
the Knowledge of any Selling Party, threatened before any federal, state or
local court or agency, and, to the Knowledge of any Selling Party, no dispute
respecting minimum wage or overtime claims or other conditions or terms of
employment in connection with the Business exists.
4.16 Employee Benefit Plans.
4.16.1 Schedule 4.16 contains a current, correct and complete
list of each Benefit Plan maintained by or under which a Selling Party
has any Liability, whether actual or contingent, to Employees or their
respective beneficiaries. For purposes of this Section 4.16 and Section
4.15 and the definition of "Benefit Plan" as used in this Agreement,
the term "Selling Parties" shall include any corporation that is a
member of any controlled group of corporations (as defined in Section
414(b) of the Code) that includes a Selling Party, any trade or
business (whether or not incorporated) that is under common control (as
defined in Section 414(c) of the Code) with a Selling Party, any
organization (whether or not incorporated) that is a member of an
affiliated service group (as defined in Section 414(m) of the Code)
that includes a Selling Party and any other entity required to be
aggregated with a Selling Party pursuant to the regulations issued
under Section 414(o) of the Code.
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4.16.2 All such Benefit Plans conform in all material respects
to, and are being administered and operated in material compliance
with, the requirements of ERISA, the Code and all other applicable
Laws. Except as set forth in Schedule 4.16, to the Knowledge of the
Selling Parties all returns, reports and disclosure statements required
to be made under ERISA and the Code with respect to all such Benefit
Plans have been timely filed or delivered. There have not been any
"prohibited transactions," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving any of the Benefit Plans,
that could subject the Business to any material penalty or tax imposed
under the Code or ERISA.
4.16.3 Except as set forth in Schedule 4.16, any such Benefit
Plan that is intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified or an
application for such determination is pending. Any such determination
that has been obtained remains in effect and has not been revoked, and
with respect to any application that is pending, the Selling Parties
have no reason to suspect that such application for determination will
be denied. To the Knowledge of the Selling Parties, nothing has
occurred since the date of any such determination that is reasonably
likely to affect adversely such qualification or exemption, or result
in the imposition of excise taxes or income taxes on unrelated business
income under the Code or ERISA with respect to any such Benefit Plan.
4.16.4 The Selling Parties do not sponsor or contribute to,
and have no Liability with respect to, any defined benefit plan subject
to Title IV of ERISA or any multiemployer plan (as defined in Section
3(37) of ERISA), nor do they have a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of
ERISA). The Selling Parties do not have any Liability to Transferred
Employees with respect to any employee benefit plan or arrangement
other than with respect to Benefit Plans listed in Schedule 4.16.
4.16.5 There are no pending or, to the Knowledge of any
Selling Party, threatened claims by or on behalf of any such Benefit
Plans, or by or on behalf of any individual participants or
beneficiaries of any such Benefit Plans, alleging any breach of
fiduciary duty on the part of a Selling Party or any of its officers,
directors or employees under ERISA or any other applicable regulations,
nor is there, to the Knowledge of any Selling Party, any basis for such
claim. Such Benefit Plans are not the subject of any pending (or to the
Knowledge of any Selling Party, any threatened) investigation or audit
by the Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation ("PBGC").
4.16.6 The Selling Parties have timely made all required
contributions under such Benefit Plans including the payment of any
insurance premiums. There have been no accumulated funding deficiencies
(as defined in Section 412 of the Code or Section 302 of ERISA) with
respect to any Benefit Plan and no request for a waiver from the
Internal Revenue Service with respect to any minimum funding
requirement under Section 412 of the Code. Within the three-year period
immediately preceding the
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Effective Date, the Selling Parties have not incurred any Liability for
any Tax, excise Tax, penalty or fee with respect to any Benefit Plan,
and to the Knowledge of any Selling Party, no event has occurred and no
circumstance exists or has existed that could give rise to any such
Liability. 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) result in any
payment, acceleration, vesting or increase in benefits with respect to
any Employee or former employee of a Selling Party that would be an
"excess parachute payment" under Section 280G of the Code.
4.16.7 To the Knowledge of any Selling Party, with respect to
any such Benefit Plan that is an employee welfare benefit plan (within
the meaning of Section 3(1) of ERISA) (a "Welfare Plan"), (a) each
Welfare Plan for which contributions are claimed by Seller as
deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (b) with
respect to any welfare benefit fund (within the meaning of Section 419
of the Code) related to a Welfare Plan, there is no disqualified
benefit (within the meaning of Section 4976(b) of the Code) that would
result in the imposition of a tax under Section 4976(a) of the Code in
connection with the Business, and (c) any Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies and has been administered in material respects in accordance
with all of the applicable requirements of Section 4980B of the Code,
ERISA, Title XXII of the Public Health Service Act, the Social Security
Act and other applicable Laws.
4.16.8 Except as disclosed in Schedule 4.16, Selling Parties
have not taken any action that may result in Buyer being a party to, or
bound by, any such Benefit Plan, and the Buyer shall have no liability
under, or be subject to any liability on account of, any such Benefit
Plan following the consummation of the Transactions. Subject to Buyer's
obligations under Section 3, no Benefit Plan has provided or provides
for the payment of health, life or other welfare coverage or retirement
or severance benefits by Buyer.
4.17 Finder's Fee. No Person retained by a Selling Party is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.
4.18 Interest in Business. The Selling Parties have not granted, and
there is not outstanding, any option, right, agreement or other obligation
pursuant to which any Person could claim a right to acquire in any way all or
any part of, or interest in, the Business.
4.19 Condition of Assets. Seller has cared for the animals consistent
with animal husbandry practices currently employed in the industry. All Real
Property and tangible personal property (other than Inventory) included in the
Purchased Assets are suitable for the purposes for which they are used, are in
good operating condition and repair, reasonable wear and tear excepted, are
usable in the ordinary course of business, are free from any known defects,
except such minor defects that would not have a Material
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Adverse Effect, individually or in the aggregate, and conform in all material
respects to all applicable Laws relating to their construction, use and
operation. Any Software included in the Purchased Assets functions as intended
and is in machine-readable form.
4.20 Insurance. Schedule 4.20 lists all policies or binders of
insurance held by or on behalf of Seller or relating to the Business or any of
the Purchased Assets, specifying with respect to each policy the insurer, the
amount of the coverage, the type of insurance, the risks insured, the expiration
date, the policy number and any pending claims thereunder related to the
Business, including all insurance policies known by any Selling Party to have
been maintained by any other Person that may provide any coverage with respect
to any Environmental Losses. To the Knowledge of any Selling Party, there is no
Default with respect to any such policy or binder, nor has there been any
failure to give any notice or present any claim under any such policy or binder
in a timely fashion or in the manner or detail required by the policy or binder,
except for any of the foregoing that would not, individually or in the
aggregate, have a Material Adverse Effect. There is no notice of nonrenewal or
cancellation with respect to, or disallowance of any claim related to the
Business under, any such policy or binder that has been received by any Selling
Party, except for any of the foregoing that would not, individually or in the
aggregate, have a Material Adverse Effect.
4.21 Previous Sales; Warranties. All Products previously sold or
distributed by Seller were of merchantable quality, and Seller has not breached
any express or implied warranties in connection with the sale or distribution of
such Products or in connection with the performance of any services, except for
breaches that would not, individually or in the aggregate, have a Material
Adverse Effect. Except as disclosed on Schedule 4.21, Seller has provided the
Buyer with true and correct copies of all warranties (i) made by all Persons
from whom Seller has obtained any goods that have been resold or distributed by
Seller, including any goods that constituted parts included in Products sold or
distributed by Seller, and (ii) made by Seller with respect to any Products that
have been sold or distributed by Seller or services performed by Seller;
provided, however, that any exceptions identified on Schedule 4.21 do not apply
to any warranties made in connection with the Contracts listed on Schedule
2.1.4, all of which warranties have been provided by Seller to the Buyer.
4.22 Customers and Suppliers. Seller has used its reasonable business
efforts to maintain and currently maintains, good working relationships with all
of its customers. Schedule 4.22 contains a list of the names of each of the ten
customers that, in the aggregate, for the two years ended December 31, 1997 and
1998, were the largest dollar volume customers of services or Products, or both,
sold by Seller. Except as specified in Schedule 4.22, none of such customers has
given Seller notice terminating, canceling or threatening to terminate or cancel
any Contract or relationship with Seller. Schedule 4.22 also contains a list of
the names of each of the ten suppliers that, in the aggregate, for the two years
ended December 31, 1997 and 1998, were the largest dollar volume suppliers of
services or products, or both, purchased by Seller and relating to the Business.
Except as specified in Schedule 4.22, none of such suppliers has given Seller
notice terminating, canceling or threatening to terminate or cancel any Contract
or relationship with Seller. Except as specified in Schedule 4.22, to the
Knowledge of any Selling Party, no major customer or supplier
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intends to cease doing business with Seller or, after the Closing, with Buyer,
or to alter materially the amount of business done with Seller or Buyer due to
the consummation of the Transactions or any other reason. To the Knowledge of
any Selling Party, the Customer Records are accurate in all material respects.
4.23 Completeness and Accuracy of Information. Except for the
information contained in (i) the Financial Data as described in Sections
4.4(ii), (iii) and (iv) regarding expenses, inventory and fixed assets, and (ii)
Schedule 2.5, all information set forth on any Schedule hereto is true, correct
and complete in all material respects. No representation or warranty by any of
the Selling Parties in any Transaction Document contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained herein or therein not misleading. All Contracts,
permits and other documents and instruments furnished or made available to the
Buyer by any of the Selling Parties, when referenced in this Section 4 or any
schedule delivered pursuant to this Section 4 which have been furnished or made
available are or will be true, complete and accurate originals or copies of
originals and include all amendments, supplements, waivers and modifications
thereto.
5. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Selling Parties as
follows:
5.1 Corporate Status. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
5.2 Authorization. Buyer has the requisite power and authority to
execute and deliver the Transaction Documents to which it is a party and to
perform the Transactions performed or to be performed by it. Such execution,
delivery and performance by Buyer has been duly authorized by all necessary
corporate action. Each Transaction Document executed and delivered by Buyer has
been duly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable against such Party in accordance with its
terms.
5.3 Consents and Approvals. Neither the execution and delivery by Buyer
of the Transaction Documents, nor the performance of the Transactions performed
or to be performed by Buyer, require any filing, consent or approval or
constitute a Default under (i) any Law or Court Order to which Buyer is subject,
(ii) the Charter Documents or bylaws of Buyer or (iii) any Contract,
Governmental Permit or other document to which Buyer is a party.
5.4 Finder's Fees. No Person retained by Buyer is or will be entitled
to any commission or finder's or similar fee in connection with the
Transactions.
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6. Deliverables of Selling Parties. At the Closing, the Selling Parties, as
applicable, are delivering the following documents to the Buyer:
6.1 Transaction Documents and Instruments of Transfer.
6.1.1 The Supply Agreement;
6.1.2 Duly executed quitclaim deeds with covenants, in
recordable form, transferring to Buyer good and marketable title in fee
simple to the Real Property, and such affidavits as the title insurance
company retained by the Buyer may reasonably request;
6.1.3 A general bill of sale, assignment and assumption,
transferring to Buyer good and indefeasible title to all of the
tangible personal property included in the Purchased Assets, and
assigning to Buyer the applicable Selling Party's right, title and
interest in each of the Contracts included in the Purchased Assets;
6.1.4 The License Agreement;
6.1.5 The Custom Immunization Agreement; and
6.1.6 Certificates of title to all vehicles included in the
Purchased Assets with assignments to Buyer.
6.2 Certificates of Selling Parties. A certificate from a duly
authorized officer of each Selling Party, dated as of the Effective Date,
certifying that the representations and warranties of the such Selling Party
contained in this Agreement and in the other Transaction Documents are true on
and as of the Effective Date. The matters set forth in such certificates shall
constitute representations and warranties hereunder.
6.3 Secretary's Certificates. Certificates, dated as of the Effective
Date, of the Secretary of each Selling Party certifying (i) the incumbency and
specimen signature of each officer or representative of such Selling Party
executing this Agreement, the certificate referred to in Section 6.2 and the
other Transaction Documents to which such Selling Party is a party, (ii) that
attached to the certificate is a true and complete copy of the Charter Documents
and bylaws of such Selling Party, as in full force and effect at the time of the
Effective Date, and (iii) that attached to the certificate are copies of
resolutions duly adopted by the Board of Directors and shareholders, as
appropriate, of such Selling Party evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this Agreement
and the other Transaction Documents and the consummation of the Transactions.
6.4 Good Standing Certificates. A certificate issued by the Secretary
of State of the States of Delaware and Maine with respect to Seller and of each
state in which Seller is qualified to do business as a foreign corporation as of
a recent date before the Effective Date showing the Seller to
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be validly existing or qualified as a foreign corporation in its states of
existence and qualification, as the case may be, and in good standing and that
all franchise taxes required to be paid and all reports required to be filed
have been duly paid and filed.
6.5 Consents. The written consent to assignment from Oriental Yeast Co.
Ltd. and governmental consents, approvals or authorizations, if any, necessary
for the conveyance of the Purchased Assets or valid consummation of the
Transactions. The Parties acknowledge that Buyer may have to apply independently
after the Closing for certain of the Governmental Permits set forth on Schedule
2.1.6 and that the Selling Parties make no representations concerning the
outcome of such applications
6.6 Legal Opinion. A legal opinion of Faegre & Benson LLP, counsel for
the Selling Parties.
7. Deliverables of Buyer. At the Closing, the Buyer is delivering the following
documents to the Selling Parties:
7.1 Transactional Documents and Instruments of Transfer.
7.1.1 The Supply Agreement;
7.1.2 A general bill of sale, assignment and assumption
accepting transfer of good title to all of the tangible personal
property included in the Purchased Assets, and assuming the applicable
Selling Party's right, title and interest in each of the Contracts
included in the Purchased Assets;
7.1.3 The License Agreement; and
7.1.4 The Custom Immunization Agreement.
7.2 Certificate of Buyer. A certificate from a duly authorized officer
of Buyer, dated as of the Effective Date, certifying that the representations
and warranties of the Buyer contained in this Agreement and in the other
Transaction Documents are true on and as of the Effective Date. The matters set
forth in such certificates shall constitute representations and warranties
hereunder.
7.3 Secretary's Certificates. Certificates, dated as of the Effective
Date, of the Secretary of Buyer certifying (i) the
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incumbency and specimen signature of each officer or representative of Buyer
executing this Agreement, the certificate referred to in Section 7.2 and the
other Transaction Documents to which Buyer is a party. (ii) that attached to the
certificate is a true and complete copy of the Charter Documents and bylaws of
Buyer, as in full force and effect at the time of the Effective Date, and (iii)
that attached to the certificate are copies of resolutions duly adopted by the
Board of Directors and shareholders, as appropriate, of Buyer evidencing the
taking of all corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the other Transaction Documents and the
consummation of the Transactions.
7.4 Good Standing Certificates. A certificate issued by the Secretary
of State of the State of Delaware with respect to Buyer and of each state in
which Buyer is qualified to do business as a foreign corporation as of a recent
date before the Effective Date showing the Buyer to be validly existing or
qualified as a foreign corporation and in good standing and that all franchise
taxes required to be paid and all reports required to be filed have been duly
paid and filed.
7.5 Title Insurance and Surveys. A title insurance policy or policies
issued by reputable title insurance companies insuring Buyer's title to the Real
Property as good and marketable, in fee simple and free of all Encumbrances and
a complete set of as-built surveys of the Real Property.
7.6 Legal Opinion. A legal opinion of Pepper Hamilton LLP, counsel
for the Buyer.
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8. Competition and Confidentiality.
8.1 Noncompetition.
8.1.1 Except as specifically set forth below, from the
Effective Date and to the end of the fifth year following the Effective Date,
each Selling Party will not, unless acting in accordance with the written
consent of Buyer, directly or indirectly engage in a business that is
competitive to the Business anywhere in the world (a "Selling Party Competing
Business"). The provisions of this Section 8.1.1 shall not apply if solely as
the result of an acquisition, disposition or merger involving a third party, a
Selling Party or such party's successor engages in a Competing Business, so long
as such party can demonstrate that the procedures and technologies used in such
Competing Business were in place in the operation of the third party before the
consummation of the acquisition, disposition or merger.
8.1.2 Except as specifically set forth below, from the
Effective Date and to the end of the fifth year following the Effective Date,
the Buyer will not, unless acting in accordance with the written consent of any
Selling Party, directly or indirectly engage in a business that sells to medical
laboratories anywhere in the world medical diagnostic kits that are designed to
detect the following proteins: IgG, IgA, CRP, Prealbumin, Microalbumin,
Lipoprotein(a), Apo A-1, Apo B or Transferrin (a "Buyer Competing Business").
The provisions of this Section 8.1.2 shall not apply if solely as the result of
an acquisition, disposition or merger involving a third party, Buyer or Buyer's
successor engages in a Competing Business, so long as such party can demonstrate
that the procedures and technologies used in such Competing Business were in
place in the operation of the third party before the consummation of the
acquisition, disposition or merger. The provisions of this Section 8.1.2 shall
not prevent Buyer from continuing to engage in a Competing Business in which it
was engaged prior to the Effective Date, so long as Buyer can demonstrate that
all procedures and technology used in such Competing Business were in place
before the Effective Date.
8.2 Confidentiality. Prior to the Effective Date and indefinitely
thereafter, unless this Agreement is terminated, no Party shall, except as may
be required by Law or Court Order, at any time reveal, divulge, communicate or
make known to any Person (other than a Party to this Agreement or their agents
or Affiliates) or, after the Effective Date, use in any way any confidential
information of another Party (whether now possessed or furnished after the
Effective Date), including, without limitation, all Trade Secrets, customer
lists or other customer information, supplier information, marketing plans or
proposals, financial information, personnel information or any data, written
material, records or documents that are of a confidential nature (collectively,
the "Confidential Information").
8.3 Injunctive Relief. Each Party acknowledges that the provisions of
this Section 8
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are reasonable and necessary to protect the interests of the applicable Party,
that any violation of this Section will result in an irreparable injury and that
damages at law would not be reasonable or adequate compensation for violation of
this Section. In the event of any breach or threatened breach by any Party of
any provision of this Section 8, the non-breaching Party shall be entitled to
injunctive or other equitable relief, restraining the breaching party from using
or disclosing any Confidential Information in whole or in part, or from engaging
in conduct that would constitute a breach of the obligations of such party under
this Section 8. Such relief shall be in addition to and not in lieu of any other
remedies that may be available, including an action for the recovery of damages.
In addition to any other available remedies, each Party shall be entitled to
have the provisions of this Section 8 specifically enforced by preliminary and
permanent injunctive relief without the necessity of proving actual damages or
posting a bond or other security and to an equitable accounting of all earnings,
profits and other benefits arising out of any violation of this Section 8. In
the event that the provisions of this Section 8 shall ever be deemed to exceed
the time, geographic, product or other limitations permitted by applicable Law,
then the provisions shall be deemed reformed to the maximum extent permitted by
applicable Law. Each Party acknowledges, however, that this Section 8 has been
negotiated by the Parties and that the time, geographic and product limitations,
as well as the limitation on activities, are reasonable in light of the
circumstances pertaining to the Business.
9. Additional Covenants.
9.1 Approvals. The Selling Parties will use their best efforts to
obtain approvals or authorizations necessary for the conveyance of the Purchased
Assets or consummation of the Transactions. The Buyer will cooperate with the
Selling Parties in such efforts.
9.2 Use of Proceeds. Within thirty business days after the Effective
Date, Seller shall, and DSI shall cause Seller to, immediately pay in full all
then outstanding debts and other obligations of Seller in connection with the
Business.
9.3 Post-Effective Date Receipts. DSI, on behalf of the Selling
Parties, and Buyer each will hold and will promptly transfer and deliver to the
other Party, from time to time as and when received by them and, in the case of
DSI, by Seller, any cash, checks with appropriate endorsements or other property
that they may receive on or after the Effective Date that properly belongs to
the other Party under the terms of this Agreement, and will account to the other
for all such receipts.
9.4 Transfer Taxes. Seller and Buyer shall each pay on the Effective
Date one-half of all state and local sales, documentary and other transfer
Taxes, other than real estate transfer Taxes, if any, due as a result of the
purchase, sale or transfer of the Purchased Assets hereunder. Seller and Buyer
each shall pay on the Effective Date one-half of all state and local real estate
transfer Taxes, if any, due as a result of the purchase, sale or transfer of the
Real Property hereunder.
9.5 Liquidation. To the extent that Seller shall effect any partial or
total liquidation after
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the Effective Date, Seller shall first have complied with the requirements of
Section 9.2. Thereafter, Seller shall require as part of the plan of any such
liquidation that the direct and indirect recipient of any assets distributed in
such liquidation shall be responsible for any obligations of Seller under this
Agreement to the extent of any assets so distributed. DSI shall take such
actions as are necessary to cause Seller to impose such obligation on any
recipient of any such distributed assets of Seller, including itself if it is a
recipient, and shall give the Buyer prompt notice of any such distribution.
9.6 Administrative and Technical Assistance by the Selling Parties.
Except as otherwise agreed, the Selling Parties shall provide support services,
including accounting and data processing services to Buyer as are reasonably
required in connection with the transfer of the Business to Buyer without cost
to the Buyer for a period of not more than 60 days following the Effective Date
and thereafter for an additional period of up to 120 days at a reasonable cost
to be negotiated; provided, however, that Buyer shall reimburse the Selling
Parties for the reasonable out of pocket expenses incurred by the Selling
Parties in connection with the provision of support services by the Selling
Parties after the Effective Date. The Selling Parties shall cooperate with the
auditors of the Buyer in connection with the preparation of any report or filing
required in connection with the Transactions, such cooperation to be provided by
the Selling Parties at no cost to the Buyer. Notwithstanding anything to the
contrary set forth above, the Selling Parties shall, during the first 120 days
following the Effective Date, make reasonably available to Buyer the services of
appropriate personnel for technical advice and consultation. Through July 31,
1999, the Selling Parties shall not charge Buyer for the cost of labor in
connection with such assistance; thereafter, Buyer shall reimburse the Selling
Parties, upon receipt of their invoices, for the Selling Parties' labor costs in
making such individuals available to Buyer. Buyer shall reimburse the Selling
Parties for all travel expenses incurred in connection with such assistance,
provided that the Selling Parties' incurring of such expenses is approved in
advance by Buyer.
9.7 Processing Services. For a period of 90 days following the
Effective Date, the Selling Parties shall provide such services to Buyer as are
necessary to process Products for shipment to customers. Buyer shall reimburse
the Selling Parties for all labor costs and reasonable out of pocket direct
expenses incurred in connection with such services.
9.8 Sale of Real Property. From and after the Effective Date, the Buyer
shall use commercially reasonable efforts to sell Lots 24(c) and 25 in order to
deliver the Deferred Payment to the Seller in accordance with Section 2.4.2.2.
9.9 Further Assurances of the Selling Parties. From and after the
Effective Date, each of the Selling Parties shall, at the request of Buyer,
execute, acknowledge and deliver to Buyer, without further consideration, all
such further assignments, conveyances, endorsements, deeds, special powers of
attorney, consents and other documents, and take such other action, as Buyer may
reasonably request (i) to transfer to and vest in Buyer, and protect is rights,
title and interest in, all the Purchased Assets and (ii) otherwise to consummate
the Transactions. In addition, from and after the Effective Date, each of the
Selling Parties shall afford the Buyer and their counsel, accountants and other
representatives access, during normal business hours, to any books and records
relating to the Business that such Selling Party may retain as may reasonably be
required in connection with
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the preparation of financial information or tax returns of Buyer.
9.10 Further Assurances of the Buyer. From and after the Effective
Date, the Buyer shall afford to Seller and its attorneys, accountants and other
representatives access, during normal business hours, to such books and records
relating to the Business as may reasonably be required in connection with the
preparation of financial information for periods concluding on or prior to the
Effective Date. The Buyer shall cooperate in all reasonable respects with Seller
with respect to its former interest in the Business and in connection with
financial account closing and reporting, including, without limitation, making
employees of Buyer available to assist with, or provide information in
connection with financial account closing and reporting, provided, that DSI
reimburses the Buyer for their reasonable out-of-pocket expenses (including
costs of employees so assisting) in connection therewith.
10. Survival of Representations and Warranties; Indemnification.
10.1 Survival of Representations and Warranties. Except as otherwise
set forth in Section 9.6 and as set forth in the following sentence, all
representations and warranties of the Parties shall survive for one year after
the Effective Date; provided that there shall be no termination of any such
representation or warranty as to which a claim has been asserted prior to the
termination of such survival period. All representations and warranties of the
Selling Parties set forth in Sections 4.7 and 4.8.1 shall survive indefinitely.
All representations, warranties and covenants contained herein shall not be
deemed to be waived or otherwise affected by any investigation at any time made
by or on behalf of any Party hereto. Except as otherwise expressly provided in
this Agreement, all covenants, agreements, undertakings and indemnities set
forth in this Agreement shall survive indefinitely.
10.2 Indemnification by the Selling Parties. "Sellers' General
Liabilities" shall mean all Losses (other than Environmental Losses subject to
Section 10.6) resulting from, arising out of, or incurred by Buyer or its
respective directors, officers and employees (each a "Buyer Indemnified Party")
after the Effective Date in connection with (i) any breach of any of the
representations or warranties made by the Selling Parties in this Agreement,
(ii) any default by any Selling Party in respect of any of the covenants or
agreements made by such Selling Party in this Agreement, (iii) any injuries to
Persons, property or business by reason of defectiveness, improper design or
manufacture or malfunction, or otherwise, of any product sold or services
provided by any Selling Party, whether known or unknown, currently asserted or
arising hereafter, if such claims are based upon or arise out of products sold
or services performed on or prior to the Effective Date, or (iv) any attempt
(whether or not successful) by any Person to cause or require a Buyer
Indemnified Party to pay any Liability of, or claim against, any Selling Party
of any kind in respect of the operation of the Business prior to the Effective
Date, to the extent not otherwise specified in this Section 10.2, specifically
assumed under this Agreement or subject to an indemnity by the Buyer under the
terms of this Agreement. Subject to the provisions of Section 10.3 and to the
further provisions of this Section 10, the Selling Parties shall, jointly and
severally, indemnify all Buyer Indemnified Parties, and hold them harmless from,
against and in respect of, any and all Sellers' General Liabilities.
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10.3 Limitations on Obligation of Selling Parties to Indemnify.
10.3.1 Except as otherwise provided in this Agreement, the
Selling Parties shall have no obligation to indemnify any Buyer
Indemnified Party based upon any breach by a Selling Party of any
representation or warranty as to which a Selling Party has not received
notice of a claim for indemnification within one year after the
Effective Date.
10.3.2 Nothing herein shall be deemed to limit or restrict in
any manner any rights or remedies available at law, in equity or
otherwise against a Selling Party based on a willful misrepresentation
or willful breach of warranty by a Selling Party hereunder.
10.4 Indemnification by the Buyer. "Buyers' General Liabilities" shall
mean all Losses resulting from, arising out of, or incurred by any Selling Party
or any of its respective directors, officers and employees (each a "Seller
Indemnified Party") after the Effective Date in connection with (i) any breach
of any of the representations or warranties made by the Buyer in this Agreement,
(ii) any default by Buyer in respect of any of the covenants or agreements made
by Buyer in this Agreement, or (iii) any attempt (whether or not successful) by
any Person to cause or require a Seller Indemnified Party to pay or discharge
any Assumed Liability or any Liability of, or claim against, Buyer of any kind
in respect of the operation of the Business on or after the Effective Date to
the extent not specifically subject to an indemnity by the Selling Parties under
the terms of this Agreement. Subject to the provisions of Section 10.5 and to
the further provisions of this Section 10, the Buyer shall, jointly and
severally, indemnify all Seller Indemnified Parties, and hold them harmless
from, against and in respect of, any and all Buyers' General Liabilities.
10.5 Limitations on Obligation of Buyer to Indemnify.
10.5.1 The Buyer shall have no obligation to indemnify any
Seller Indemnified Party based upon any breach by the Buyer of any
representation or warranty as to which the Buyer has not received notice of a
claim for indemnification within one year after the Effective Date.
10.5.2 Nothing herein shall be deemed to limit or restrict in
any manner any rights or remedies available at law, in equity or otherwise
against Buyer based on a willful misrepresentation or willful breach of warranty
by Buyer hereunder.
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10.6 Environmental Losses.
10.6.1 The following (whether or not they involve or result
from breaches of any representation or warranty in this Agreement)
shall constitute "Environmental Losses": (a) all Losses imposed or
incurred under Environmental Law resulting from the treatment, storage
or disposal or the emission, discharge, release or threatened release
into the environment, by any Person of any Hazardous Substance at the
Real Property or arising from or related to any Default under any
Environmental Law at any time prior to the Effective Date, (b) all
Losses resulting from the presence of any Hazardous Substance at any
location other than the Real Property which Hazardous Substance
originated at or from the Real Property at any time prior to the
Effective Date, (c) all Losses resulting from the migration, leaking,
leaching, flowing, emitting or other movement of Hazardous Substances
from the Real Property or any such location at any time prior to the
Effective Date, in each case requiring investigation, removal or
remediation under Environmental Law, and (d) any and all other Losses
arising from or related to an Environmental Condition existing on or
before the Effective Date.
10.6.2 Subject to the other provisions of this Section 10.6,
the Selling Parties shall, jointly and severally, indemnify all Buyer
Indemnified Parties, and hold them harmless from, against and in
respect of, any and all Environmental Losses; provided, however, that
(a) the Selling Parties' remediation obligations shall not extend
beyond those actions required by applicable regulatory authorities
under any Environmental Law; (b) the Selling Parties' indemnification
obligations shall not apply to the extent (i) Environmental Losses are
caused by Buyer's action subsequent to the Closing and (ii) of any
increased cost of any remediation attributable to activities of Buyer
on or after the Effective Date, which increased costs shall be borne by
the Buyer; and (c) the Selling Parties shall have no obligation to
indemnify any Buyer Indemnified Party for any Environmental Losses as
to which a Selling Party has not received notice of a claim for
indemnification within three (3) years after the Effective Date.
10.6.3 For so long as the Selling Parties' indemnification
with respect to Environmental Losses shall be in effect, Buyer shall
provide to the Selling Parties a copy of all information or reports
that are provided by Buyer to any federal, state or local agency with
regard to any matter related to Hazardous Substances that may
constitute or result in an indemnification Liability for the Selling
Parties. Buyer shall promptly provide to the Selling Parties copies of
all reports or other information (including photographs), prepared,
produced or obtained by Buyer relating to any such matter; provided,
however, that the Selling Parties shall keep such information
confidential and shall not disclose such information in any form to any
third parties, including any governmental agency; provided, however,
that the Selling Parties may disclose such information to consultants
on an need-to-know basis or as required by court order after giving
notice to Buyer and allowing Buyer a reasonable time to respond.
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10.6.4 As soon as practicable after giving notice to the
Selling Parties of any Environmental Losses requiring investigation
and/or remediation for which the Selling Parties allegedly have
indemnification responsibility, Buyer shall present the Selling Parties
a proposal describing in reasonable detail the actions to be taken and
an estimate of the costs associated with such actions (the "Initial
Proposal"). Upon receipt of the Initial Proposal, the Selling Parties
shall either (a) notify Buyer that they dispute any indemnification
responsibility for such matter with a reasonably detailed explanation
of the reasons for such dispute, (b) perform any required investigation
and remediation itself in a manner reasonably acceptable to Buyer, or
(c) propose changes (the "Proposed Changes") to the Initial Proposal
with respect to specific actions or costs described therein that the
Selling Parties can establish are not commercially reasonable under the
circumstances. Buyer shall review any Proposed Changes, incorporate any
such Proposed Changes required under the applicable Environmental Laws
into the final proposal for action (the "Final Proposal") and notify
the Selling Parties of which Proposed Changes will be so incorporated.
For so long as the Selling Parties' indemnification with respect to
Environmental Losses shall be in effect, Buyer shall afford the Selling
Parties, their employees, agents and contractors, reasonable access to
and rights to investigate the Real Property and inspect and copy all
relevant documents and records relating to any Environmental Losses for
which the Selling Parties have, or are alleged to have, responsibility.
However, except to the extent prohibited by applicable Law or Court
Order, the following conditions and agreements shall apply with respect
to the foregoing: (a) no entry or investigation upon such Real Property
shall be made except during normal business hours and then only upon at
least five business days' notice to Buyer; (b) Buyer shall be entitled
to require that any persons entering upon such Real Property shall be
accompanied by a representative of Buyer at all times; (c) intrusive
investigations, such as well-drilling or soil boring or testing of any
substances, shall be conducted to the extent feasible under the
circumstances in a manner that does not unduly interfere with the
operations of the Business, upon demonstrated reasonable cause and to
such extent as is consented to by Buyer, such consent not to be
unreasonably withheld; (d) any samples taken shall be split between
Buyer's and the Selling Parties' representatives if so requested by
Buyer and at Buyer's expense; (e) the Selling Parties shall provide to
Buyer within five days after receipt thereof a copy of any report or
other written information delivered to a Selling Party by any
representative thereof or governmental representative with regard to
any investigations or other activities of such representative upon the
Real Property; and (f) to the extent the condition of the Real Property
is disturbed in any material respect as a result of any activities
thereon by the Selling Parties or their representatives, the Selling
Parties, jointly and
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severally, shall be responsible for all costs and expenses associated
with restoring the Real Property to substantially its condition prior
to the occurrence of such activities.
10.6.5 The Parties acknowledge that sampling activities
conducted at the Real Property by Northeast Test Consultants on
February 25, 1999 in the area where an Underground Storage Tank was
used to store gasoline until it was removed in approximately
1984 revealed a level of gasoline range organics in the soil sample
taken there (the "Findings"), and that DSI promptly notified the Maine
Department of Environmental Protection (the "Maine DEP") of the
Findings. A copy of the Maine Department of Environmental Protection
Oil & Hazardous Materials Report Form completed by the Maine DEP with
respect to the Findings has been provided to Buyer. The Parties
acknowledge that the Buyer may cause further testing activities to be
conducted with regard to the Findings, and that the results of such
activities shall be included in the definition of "Findings" for the
purposes hereof. The parties agree that the provisions of Section 10
shall govern the indemnification obligations of the Selling Parties
with respect to the Findings, provided that (i) the Selling Parties'
obligations to indemnify the Buyer Indemnified Parties for any work of
any kind that may be required by the Maine DEP or other applicable
regulatory authorities with respect to the Findings shall apply whether
or not the aggregate cost of such work exceeds the Basket Amount as
defined in Section 10.10 hereof, and (ii) any work of any kind that may
be required by the Maine DEP or other applicable regulatory authorities
with respect to the Findings will be conducted by consultants chosen by
the Selling Parties.
10.7 Indemnification Procedure. If any Indemnified Party intends to
assert a claim for indemnification against an Indemnifying Party under any of
the indemnification provisions of this Agreement (a "Claim"), the following
procedures will apply:
10.7.1 The Indemnified Party shall notify the Indemnifying
Party in writing within a reasonable period of time after the
Indemnified Party receives notice of or otherwise has actual knowledge
of an event giving rise to a Claim, and shall provide to the
Indemnifying Party as soon as practicable thereafter all information
and documentation necessary to support and verify the Claim being
asserted, and the Indemnifying Party shall be given access to all books
and records in the possession or control of the Indemnified Party which
the Indemnifying Party reasonably determines to be related to such
Claim.
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10.7.2 Promptly after receipt by the Indemnified Party of
notice of the commencement by any third party of any litigation or
proceeding or other event which might result in the Indemnifying Party
becoming obligated to indemnify or make any other payment under any
indemnification provisions of this Agreement, the Indemnified Party
shall, if a Claim in respect thereof is to be made thereunder, notify
the Indemnifying Party forthwith in writing of the commencement or
occurrence thereof. Failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party from any liability
which it may have on account of this indemnification or otherwise,
except to the extent that the Indemnifying Party is materially
prejudiced thereby.
10.7.3 The Indemnifying Party shall have the right, within 30
days after being notified in accordance with subparagraph 10.7.2
hereof, to assume the defense of, or otherwise contest, any such
litigation, proceeding or other action with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that unless
and until the Indemnifying Party shall assume such defense or contest
pursuant to this subparagraph 10.7.3, the Indemnified Party shall have
the right, if necessary or appropriate, to conduct or control the
defense or contest thereof after reasonable notice to the Indemnifying
Party, under the circumstances, but without the Indemnifying Party's
consent. Upon the election by the Indemnifying Party to assume the
defense of, or otherwise contest, such litigation, proceeding or other
action, the Indemnifying Party shall not be liable for any legal or
other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof unless the Indemnifying Party fails
to take reasonable steps necessary to diligently defend or otherwise
contest such claim within 20 days after receiving notice from the
Indemnified Party stating that the Indemnified Party believes the
Indemnifying Party has failed to take such steps, in which case the
Indemnified Party may assume its own defense and the Indemnifying Party
shall be liable for any expenses therefor.
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10.7.4 Anything in this paragraph 10.7 to the contrary
notwithstanding, the Indemnifying Party shall not, without prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise any Claim, consent to the
entry of any judgment in respect of such Claim or the implementation of
any plan of remediation; provided, however, that such consent shall not
be required for any settlement, compromise, judgment or plan involving
only the payment of money by the Indemnifying Party and imposing no
other costs or burdens on the assets or operation of the business of
the Indemnified Party;
10.7.5 With respect to any event or condition which might
result in the Indemnifying Party becoming obligated to indemnify or
make any other payment under any indemnification provisions of this
Agreement, other than litigation, proceedings or actions which are
governed by subparagraphs 10.7.2, 10.7.3 and 10.7.4 hereof, the
Indemnified Party shall deliver to the Indemnifying Party, as soon as
practicable after giving notice to the Indemnifying Party of such event
or condition, a proposal describing in reasonable detail the actions to
be taken in connection with such event or condition and an estimate of
the costs associated with such actions (the "Initial Proposal"). The
Indemnifying Party shall have the right to propose changes (the
"Proposed Changes") to the Initial Proposal with respect to specific
actions or costs described therein which the Indemnifying Party can
establish are not commercially reasonable. The Indemnified Party shall
review the Proposed Changes, incorporate any such Proposed Changes
required under the applicable standard into the final proposal for
action (the "Final Proposal") and notify the Indemnifying Party of
which, if any, Proposed Changes will be so incorporated. Thereafter,
the Indemnifying Party shall be liable for all expenses for the Final
Proposal in accordance with the other terms of this Agreement
10.7.6 In the event of payment by an Indemnifying Party
pursuant to the terms of this Agreement, such Indemnifying Party shall
be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnified Party, which Indemnified Party shall do
everything that may be reasonably required to secure such rights. The
Indemnifying Party shall have the right to pursue any remedy of the
Indemnified Party against any predecessor in title or ownership of any
of the Purchased Assets; and
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10.7.7 Any disputes regarding indemnification under this
Agreement shall be settled in accordance with Section 11 herein.
10.8 Payment of Indemnification Obligations. Each Party shall pay
promptly to any Indemnified Party the amount of all Losses to which the
foregoing indemnity relates.
10.9 Interest on Unpaid Obligations. If all or part of any
indemnification obligation under this Agreement is not paid when due, the
indemnifying Party shall pay the Indemnified Party interest on the unpaid amount
of such obligation for each day from the date the amount became due until it is
paid in full, payable on demand, at the rate equal to the lower of (i) the
maximum rate permitted by Law or (ii) two percent (2%) per annum plus the Prime
Rate.
10.10 Monetary Limitation on Indemnification. No claim for
indemnification under this Agreement shall be made by any Indemnified Party
unless and until the aggregate amount of such claims by a Buyer Indemnified
Party or the Seller Indemnified Parties shall exceed Thirty-Five Thousand
Dollars ($35,000) (the "Basket Amount") and then the indemnifying Party shall be
liable only for claims in excess of the Basket Amount. Notwithstanding anything
to the contrary in this Agreement, in no event shall the aggregate liability of
the Selling Parties to the Buyer Indemnified Parties for amounts payable
hereunder exceed the Purchase Price or shall the aggregate liability of Buyer to
the Seller Indemnified Parties for amounts payable hereunder exceed the Purchase
Price.
10.11 Exclusive Remedy. Each of Buyer and the Selling Parties
acknowledges and agrees that, except as provided in Section 8.3, its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions set
forth in this Agreement.
11. Dispute Resolution
11.1 Mediation; Arbitration. If a dispute arises between the Parties
relating to or arising out of this Agreement, including, but not limited to, any
dispute regarding the respective indemnification obligations of the Parties,
either Party hereto shall so notify the other Party in writing of the dispute
and the parties shall confer in good faith and use all reasonable efforts to
resolve the dispute.
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If the Parties do not resolve the dispute within ten business days after the
initial written notification of the dispute, the parties shall endeavor to
settle the dispute by mediation, such mediation to be conducted under the CPR
Model Mediation Procedure for Business Disputes. If the parties resolve the
disagreement through mediation, such resolution shall be reduced to writing and,
once it is signed by their duly authorized representatives, shall be binding on
the Parties. Failing resolution pursuant to the mediation, the Parties shall
submit the dispute to arbitration as set forth below.
11.2 Arbitrators. A panel of three arbitrators (the "Panel") will be
formed no later than ten days after the matter is submitted for arbitration.
Each party will select an arbitrator not affiliated with such party. The two
arbitrators then will choose a third arbitrator who shall not be affiliated in
any manner with the parties.
11.3 Procedure. Except as otherwise provided herein, the arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association. The Panel shall allow such discovery, submissions and hearings as
it determines to be appropriate, giving consideration to the parties desire for
an efficient resolution of the dispute. After conducting such hearings and
reviewing the submissions of the parties, the Panel shall make its decision with
respect to the dispute. Such decision shall be made within ten days of the
formation of the Panel or as soon as practicable thereafter, but in no event
later than twenty days after the formation of the Panel. The Panel shall have
the authority to award relief under legal or equitable principles and to
allocate responsibility for the costs of the arbitration and to award recovery
of reasonable attorney's fees and expenses in such manner as is determined to be
appropriate. A full and complete record and transcript of the arbitration
proceeding shall be maintained. The decision of the Panel shall be accompanied
concurrently by a written summary of its conclusions as well as the reasons for
such conclusions.
11.4 Objections; Binding Nature. Each party shall have five business
days to object to the Panel's decision, or any part thereof, by written
submission made to the Panel and, if deemed appropriate by the Panel, in a
hearing. After such objection, the Panel shall have three business days to
reconsider and modify the decision, which modification, if any, shall be
explained in
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writing. Thereafter, the decision of the Panel shall be final, binding and
nonappealable with respect to the parties and all other persons or entities,
including persons or entities which have failed or refused to participate in the
arbitration process and shall be reviewable only to the extent provided by law.
11.5 Continued Performance. The initiation of the dispute resolution
procedures in this Section 11 shall not excuse either party from performing its
obligations hereunder. While the dispute procedure is pending, the parties shall
continue to perform in good faith their respective obligations hereunder,
subject to any rights to terminate this Agreement that may be available to the
parties. All applicable statutes of limitations and defenses based upon the
passage of time shall be tolled while the dispute resolution procedures are
pending and the parties will take such action, if any, required to effectuate
such tolling. All negotiations pursuant to the dispute resolution procedures in
this Section 11 are confidential and shall be treated as such.
12. General.
12.1 Expenses. Except as otherwise provided in this Agreement, and
whether or not the Transactions shall be consummated, the Buyer and the Selling
Parties shall each pay their own fees, expenses and disbursements, including the
fees and expenses of their respective counsel, accountants and other experts, in
connection with the subject matter of this Agreement and all other costs and
expenses incurred in performing and complying with all conditions to be
performed under this Agreement.
12.2 Publicity. The Parties hereto will consult with each other before
issuing any press release or making any public statement with respect to the
financial terms of this Agreement and the Transactions and, except as may be
required by applicable Law or any stock exchange regulations, no Party shall
issue any such press release or make any such public statement regarding the
financial terms of this Agreement without the consent of the other Party hereto.
12.3 Amendment, Severability, Parties in Interest, Assignment, Etc.
This Agreement may be amended, modified or supplemented only by a written
instrument duly executed by each of the Parties hereto. If any provision of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Parties hereto. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties hereto, or
their respective
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successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement. No Party hereto shall assign or otherwise
transfer this Agreement or any right, benefit or obligation hereunder (whether
by operation of Law or otherwise) to any other Person without the prior written
consent of the other Party, except to a Person which is an Affiliate of such
Party. The parties hereto shall execute and deliver any and all documents and
take any and all other actions that may be deemed reasonably necessary by their
respective counsel to complete the Transactions.
12.4 Waivers. Any term or provision of this Agreement may be waived at
any time by the Party entitled to the benefit thereof by a written instrument
duly executed by such Party. The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any provision of this
Agreement in one or more instances shall operate or be construed as a waiver of
any other condition or subsequent breach.
12.5 Notices. All notices that are required or permitted hereunder
shall be in writing and shall be sufficient if personally delivered or sent by
mail, facsimile message or Federal Express or other delivery service. Any
notices shall be deemed given upon the earlier of the date when received at, or
the third day after the date when sent by registered or certified mail or the
day after the date when sent by Federal Express to, the address or fax number
set forth below, unless such address or fax number is changed by notice to the
other Party hereto:
12.5.1 If to a Selling Party, to:
DiaSorin Inc.
1990 Industrial Boulevard
P.O. Box 285
Stillwater, Minnesota 55082
FAX: (651) 351-5772
Attention: George Wellock
With a copy to:
American Standard Inc.
One Centennial Avenue
Piscataway, New Jersey 05855-6820
FAX: (732) 980-6117
Attention: William H. Murray
and:
Faegre & Benson LLP
2200 Norwest Center
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90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Attention: Keyna P. Skeffington
12.5.2 If to Buyer, to:
Strategic Diagnostics Inc.
111 Pencader Drive
Newark, Delaware 19702
FAX: (704) 948-9575
Attention: Mr. Richard C. Birkmeyer
With a copy to:
Pepper Hamilton LLP
1235 Westlakes Drive, Suite 400
Berwyn, Pennsylvania 19312
FAX: (610) 640-7835
Attention: William A. Scari, Jr., Esquire
12.6 Entire Agreement. This Agreement (including the Schedules hereto),
together with the other Transaction Documents, sets forth the entire agreement
and understanding of the Parties hereto with respect to the Transactions and the
other matters set forth herein and supersedes all prior agreements or
understandings, oral and written, among the Parties hereto or otherwise with
respect to the subject matter hereof.
12.7 Interpretation. Unless the context of this Agreement clearly
requires otherwise, (i) references to the plural include the singular, the
singular the plural, the part the whole, (ii) references to any gender include
all genders, (iii) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (iv) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to" and (v) references to
"hereunder" or "herein" relate to this Agreement. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, and Schedule references are to this
Agreement unless otherwise specified. Each accounting term used herein that is
not specifically defined herein shall have the meaning given to it under GAAP.
12.8 Governing Law. This Agreement shall be construed and interpreted
in accordance with the Laws of the State of Delaware without regard to its
provisions concerning conflict of Laws.
12.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
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[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Agreement has been executed by the Parties
hereto as of the day and year first above written.
STRATEGIC DIAGNOSTICS INC.
By: /s/ Arthur A. Koch, Jr.
-------------------------------
Name: Arthur A. Koch, Jr.
Title: Vice President
DIASORIN INC.
By: /s/ George Wellock
-------------------------------
Name:
Title:
ATLANTIC ANTIBODIES, INC.
By: /s/ George Wellock
-------------------------------
Name:
Title:
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PROMISSORY NOTE
---------------
$3,000,000.00 May 11, 1999
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND
HEREBY, Strategic Diagnostics, Inc., a Delaware corporation with its chief
executive office at 111 Pencader Drive, Newark, Delaware 19702 ("SDI"), TSD
BioServices, Inc., a Delaware corporation with its chief executive office at 128
Sandy Drive, Newark, Delaware 19713 ("TSD") and HTI Bio-Products, Inc., a
California corporation with its chief executive office at 26578 Old Julian
Highway, Santa Ysabel, California 92070 ("HTI") (SDI, TSD and HTI are
hereinafter sometimes referred to and are jointly and severally obligated as
"Borrower"), promise to pay to the order of First Union National Bank ("Bank"),
a national bank with an office at 3 Beaver Valley Road, Wilmington, Delaware
19803-1115, at such address or at such other address as Bank shall designate to
Borrower, the principal sum of Three Million ($3,000,000.00) Dollars, together
with interest as set forth below, until the date on which the principal amount
is paid in full, payable in lawful money of the United States of America in
accordance with the terms of this Promissory Note (this "Note"). All outstanding
principal and any accrued and unpaid interest thereon shall be due and payable
on the fifth (5th) anniversary of the date hereof (the "Maturity Date"), unless
sooner accelerated in accordance with this Note or the Loan Agreement (as
hereinafter defined).
Reference is made to that certain Loan and Security Agreement
dated February 26, 1999 between Borrower and Bank (the "Loan Agreement"), the
terms, covenants and conditions of which are incorporated herein by this
reference. Capitalized terms appearing herein and not otherwise defined shall
have the respective meanings given to such terms in the Loan Agreement. This
Note is the ATAB Note referred to in the Loan Agreement.
1. Interest.
(a) Except as otherwise provided herein, interest
shall be charged on the outstanding principal balance from the date hereof until
the full amount of principal due hereunder has been paid at a rate equal to
LIBOR (as hereinafter defined), as determined by Bank prior to the commencement
of each consecutive LIBOR Interest Period during the term of this Note plus
three (3.0%) percent. "LIBOR," for any day, is the rate for one month U.S.
dollar deposits of that many months maturity as reported on Telerate page 3750
as of 11:00 a.m., London time, on the second London business day before the
relevant LIBOR Interest Period (or if not so reported, then as determined by
Bank from another recognized source or interbank quotation). Each LIBOR Interest
Period will begin on and include the date the next interest payment is due, with
the first LIBOR Interest Period commencing as of the date hereof. Upon
determination by Bank of the Rate for any LIBOR Interest Period, such Rate shall
remain in effect for the entire LIBOR Interest Period until redetermined for the
next successive LIBOR Interest Period.
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(b) Borrower indemnifies Bank against Bank's loss or
expense in employing deposits as a consequence (a) of Borrower's failure to make
any payment when due under this Note, or (b) any payment or prepayment of the
principal on a date other than the last day of the LIBOR Interest Period (the
"Indemnified Loss or Expense"). The amount of the Indemnified Loss or Expense
shall be determined by Bank based upon the assumption that Bank funded one
hundred (100%) percent of that portion of the principal in the London interbank
market.
(c) Interest shall be calculated daily on the basis
of the actual number of days elapsed over a three hundred sixty (360) day year.
(d) After the occurrence and during the continuance
of an Event of Default, all amounts remaining unpaid or thereafter accruing
under this Note shall, at Bank's option, bear interest at a default rate of
three (3%) percent per annum above the interest rate then in effect as set forth
in this Note (the "Default Rate"), or the highest permissible rate under
applicable usury law, whichever is less. Such interest shall be payable upon
demand, but in no event later than when the next scheduled interest payment is
due, and shall also be charged on the amounts owed by the undersigned to Bank
pursuant to any judgments entered in favor of Bank with respect to this Note.
Notwithstanding the entry of judgment, demand by Bank or acceleration of the
Obligations, the unpaid principal of the Obligations evidenced hereby shall
continue to accrue interest at the Default Rate until such Obligations are paid
in full.
(e) If, at any time, any of the interest rates that
are or may be charged under this Note (collectively, the "Rates") shall be
finally determined by any court of competent jurisdiction, governmental agency
or tribunal to exceed the maximum rate of interest permitted by any applicable
Laws, then, for such time as such Rate(s) would be deemed excessive, application
thereof shall be suspended and there shall be charged in lieu thereof the
maximum rate of interest permissible under such Laws.
2. Payment. Borrower shall make payments on account of the
ATAB Loan as follows:
(a) Commencing on July 1, 1999 and continuing on the
first day of each month thereafter until the Maturity Date, Borrower shall make
consecutive equal monthly payments of principal each in the amount of Fifty
Thousand ($50,000.00) Dollars plus accrued and unpaid interest;
(b) On the Maturity Date, Borrower shall make a
payment of all outstanding principal, accrued and unpaid interest and all other
charges then due and owing under this Note and the Loan Agreement.
3. Prepayments. This Note may be prepaid in whole or in part
at any time and from time to time without payment of a penalty or premium
provided that each such prepayment is accompanied by a payment of interest on
the amount of such prepayment calculated at the applicable
2
<PAGE>
Rate to the date of such prepayment, and any partial prepayments shall be
applied to installments in the inverse order of their maturity (last
installment(s) credited first).
4. Late Payments. If any payment of principal and/or interest
is not received in full by Bank before the tenth (10th) day after the due date
thereof, there shall be immediately added to the Obligations, a late charge
equal to five ($.05) cents for each one ($1.00) dollar or part thereof so
overdue. All late charges are immediately due and payable without notice or
demand.
5. Bank's Rights Upon Default. Upon the occurrence of any
Event of Default and without the necessity of giving any prior written notice to
Borrower, Bank shall have all of the rights and remedies described in the Loan
Agreement and available to the Bank at law, in equity or otherwise and shall
also have the right, pursuant to the Warrant of Attorney contained herein, to
confess judgment against Borrower.
6. Application of Funds. All sums realized by Bank on account
of this Note, from whatever source received, shall be applied first to any fees,
costs and expenses (including reasonable attorney's fees) incurred by Bank,
second to accrued and unpaid interest, and then to principal. Borrower waives
and releases any right to require Bank to collect any of the Obligations from
any other collateral under any theory of marshalling of assets or otherwise, and
specifically authorizes Bank to apply any collateral in which Borrower has any
right, title or interest against any of the Obligations in any manner that Bank
may determine.
7. Warrant of Attorney. BORROWER HEREBY IRREVOCABLY AUTHORIZES
AND EMPOWERS ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD UPON OR AFTER THE
OCCURRENCE OF ANY EVENT OF DEFAULT TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWER, (A) FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE ON THE BORROWER'S
OBLIGATIONS, AND/OR (B) IN ANY ACTION OF REPLEVIN INSTITUTED BY BANK TO OBTAIN
POSSESSION OF ANY COLLATERAL OR OTHER COLLATERAL SECURITY FOR THE OBLIGATIONS OF
BORROWER TO BANK, IN EITHER CASE WITH OR WITHOUT DECLARATION, WITH COSTS OF
SUIT, WITHOUT STAY OF EXECUTION AND WITH FIVE (5%) PERCENT OF THE PRINCIPAL
AMOUNT THEREOF, BUT NOT LESS THAN FIVE THOUSAND ($5,000.00) DOLLARS, ADDED FOR
LIEN PRIORITY PURPOSES, WITH ACTUAL ATTORNEYS' FEES GOVERNED BY PARAGRAPH 8
HEREOF. BORROWER UNCONDITIONALLY AND IRREVOCABLY: (A) WAIVES THE RIGHT OF
INQUISITION ON ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMNS THE SAME,
AUTHORIZES THE PROTHONOTARY OR CLERK TO ENTER UPON THE WRIT OF EXECUTION SAID
VOLUNTARY CONDEMNATION AND AGREES THAT SAID REAL ESTATE MAY BE SOLD ON A WRIT OF
EXECUTION; (B) WAIVES AND RELEASES ALL RELIEF FROM ALL REDEMPTION, APPRAISEMENT,
STAY, EXEMPTION OR APPEAL LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED;
AND (C) RELEASES ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS NOTE,
VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF BANK SHALL HAVE
3
<PAGE>
BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF
THIS NOTE AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE
THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME, AS OFTEN AS BANK
SHALL DEEM NECESSARY AND DESIRABLE, AND THIS NOTE SHALL BE A SUFFICIENT WARRANT
THEREFORE. BANK MAY ENTER ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT
COUNTIES FOR ALL OR PART OF THE BORROWER'S OBLIGATIONS, WITHOUT REGARD TO
WHETHER JUDGMENT HAS BEEN ENTERED ON MORE THAN ONE OCCASION FOR THE SAME
BORROWER'S OBLIGATIONS. IN THE EVENT ANY JUDGMENT ENTERED AGAINST BORROWER
HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON BORROWER'S BEHALF FOR
ANY REASON WHATSOEVER, BANK IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR
FOR AND CONFESS JUDGMENT AGAINST BORROWER; SUBJECT, HOWEVER, TO THE LIMITATION
THAT SUCH SUBSEQUENT ENTRY OR ENTRIES OF JUDGMENT BY BANK MAY ONLY BE DONE TO
CURE ANY ERRORS IN PRIOR PROCEEDINGS, ONLY AND TO THE EXTENT THAT SUCH ERRORS
ARE SUBJECT TO CURE IN THE LATER PROCEEDINGS.
8. Attorney's Fees and Costs. In the event that Bank engages
an attorney to represent it in connection with (a) any alleged default by
Borrower under this Note, the HTI Note, the Loan Agreement or any of the
Collateral Documents (collectively, the "Loan Documents"), (b) the enforcement
of any of Bank's rights and remedies under any of the Loan Documents, or the
negotiation and preparation of any amendment to any of the Loan Documents (c)
any potential and/or actual bankruptcy or other insolvency proceedings commenced
by or against Borrower and/or (d) any potential and/or actual litigation arising
out of or related to any of the foregoing, the Loan Documents or any of the
Obligations, then Borrower shall be liable to and shall reimburse Bank on demand
for all reasonable attorneys' fees, costs and expenses incurred by the Bank in
connection with any of the foregoing. Borrower shall also be liable and shall
also reimburse Bank on demand for all other costs and expenses (including
attorney's fees) incurred by Bank in connection with the collection,
preservation and/or liquidation of any collateral security for any of the
Obligations and/or in the enforcement of the Obligations.
9. Waiver of Jury Trial. IN ANY LITIGATION ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS OR ANY OF THE OTHER OBLIGATIONS IN WHICH BORROWER
AND BANK ARE ADVERSE PARTIES, BORROWER AND BANK
HEREBY WAIVE TRIAL BY JURY.
10. Jurisdiction. In any litigation arising out of or relating
to the Loan Documents or any of the other Obligations, Borrower hereby consent
to the personal jurisdiction of the State and Federal courts of the State of
Delaware.
4
<PAGE>
11. Applicable Law. The substantive Laws of the State of
Delaware shall govern the construction of this Note and the rights and remedies
of the parties hereto.
12. Miscellaneous.
(a) Borrower hereby waives protest, notice of
protest, presentment, dishonor, notice of dishonor and demand. To the extent
permitted by law, Borrower hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by Bank under the terms of this
Note.
(b) The rights and privileges of Bank under this Note
shall inure to the benefit of its successors and assigns. All representations,
warranties and agreements of Borrower made in connection with this Note shall
bind Borrower's successors and assigns.
(c) If any provision of this Note shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Note
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
(d) The waiver of any Event of Default or the failure
of Bank to exercise any right or remedy to which it may be entitled shall not be
deemed to be a waiver of any subsequent Event of Default or of Bank's right to
exercise that or any other right or remedy to which Bank is entitled.
(e) The rights and remedies of Bank under this Note
and the Loan Documents shall be in addition to any other rights and remedies
available to Bank at law or in equity, all of which may be exercised singly or
concurrently.
5
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Promissory Note
to be executed under seal by its duly authorized officer the day and year first
above written.
STRATEGIC DIAGNOSTICS INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
-------------------------- ---------------------------
Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
TSD BIOSERVICES, INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
------------------------- ---------------------------
Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
HTI BIO-PRODUCTS, INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
------------------------ ---------------------------
Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
6
<PAGE>
Company Contact:
Arthur A. Koch, Jr.
Chief Operating Officer
(302) 456-6789
http://www.sdix.com
-------------------
Investor Relations:
Lippert/Heilshorn Associates, Inc.
John Nesbett/Vince Daniels
(212) 838-3777
[email protected]
STRATEGIC DIAGNOSTICS INC. ANNOUNCES ACQUISITION OF ASSETS
OF
SECOND ANTIBODY BUSINESS
Forms Strategic BioSolutions, one of the Largest Independent Suppliers of
Antibodies in the United States
NEWARK, DELAWARE, May 12, 1999 - Strategic Diagnostics Inc. (NASDAQ: SDIX) today
announced the completion of the acquisition of the operating assets of the OEM
business of Atlantic Antibodies of Windham, ME, one of the first suppliers of
custom and high-volume, bulk polyclonal antibodies for use in diagnostic test
kits and research. This business, which was formed in 1973, has established a
reputation in the industry for high quality products. This acquisition enables
SDI to broaden the product offerings of monoclonal and polyclonal antibodies to
include a wider range of high-volume, high value added commercial products.
This unit serves a wide range of customers including pharmaceutical,
biotechnology, diagnostic companies and major research centers in the United
States and the Pacific Rim and had 1998 sales of approximately $2 million, and
is expected to be accretive to SDIOs earnings in 1999. The customer
relationships are typically long-term and result in repeat sales. Under the
terms of the purchase, SDI acquired the operating assets of the business,
including a 120-acre animal care facility and attendant equipment, customer
lists and other intangible assets including proprietary processes and know-how.
SDI paid $3 million in cash and has agreed to a deferred payment $150 thousand
payable, generally, upon the earlier of the sale of certain real estate or
November 11, 2000. The accounting for this asset purchase is not expected to
result in any significant one-time charges arising from the transaction. The
Company's commercial bank provided $3 million of long-term, acquisition
financing.
SDI plans to centralize these operations within its existing business to form
Strategic BioSolutions, a new operating division of SDI. This acquisition
follows the February 1999 acquisition of HTI Bio-Products and together with the
original TSD business now comprise what the Company believes is one of the
largest, independent custom antibody operations in the United States.
<PAGE>
SDI believes customers will benefit from the combination of these resources in
many ways. Customers will be able to purchase a wider variety of products and
services from a single source. This convenience has numerous advantages since
many customers purchase these critical components from a variety of sources
today. Additionally, the ability to single source these products will enable
customers to streamline their vendor relationships, including the ability to
validate a single source for ISO 9001 audit purposes. This additional
convenience is an important advantage in operation for many customers whose
protocols require supplier audits.
The combined operation will benefit from (i) a large, complementary customer
base that has significant potential for cross-selling, (ii) a single, highly
efficient sales network that can now offer a comprehensive set of products and
services to meet broader needs of this significant customer base, (iii) a
substantial research and development organization experienced at developing new
products and the technology necessary to maintain market leadership, and (iv)
lower operating costs resulting from the complete integration of three formerly
stand-alone businesses. SDI believes these lower costs, both of production
through centralized bioprocessing and administration with combined support
functions, will enable the business to produce and market its high-value,
high-margin products with the competitive advantage of lower costs of
operations.
Strategic BioSolutions (SBS) will employ 92 people (compared to 148 previously
on a stand-alone basis) and will be lead by Mr. Michael Dale as President of
SBS. Mr. Dale has over nine years of direct operating experience in growing
businesses, including his most recent position as President and CEO of the
former HTI Bio-Products, Inc. Joining Mr. Dale on the senior management team of
SBS is Dr. Larry Motyka, who will be responsible for monoclonal antibody
development, and Dr. Vladimir Cherepakhin, who will lead the same efforts in
polyclonal antibody development. Also on this senior management team is Dr. Eric
Bean, who will serve as Vice President of Sales and Marketing and will be
responsible for maintaining the business as a leader in its markets from a
technology and product development perspective. In this capacity, Dr. Bean will
also be responsible for developing customer relations from routine antibody
development programs into full assay development assignments, and accordingly,
has full access to the entire resources of SDI to facilitate the development of
these relationships.
Throughout SDI's history, many significant product development and commercial
supply agreements have followed from initial projects to develop and supply
antibodies. This new and comprehensive customer base has the potential to
provide an even greater number of these meaningful opportunities.
The Company has utilized this commercial strategy to obtain new customers with
its excellent reputation for high-quality antibody development programs. The
success with these programs has enabled SDI to propose and obtain further assay
development projects by capitalizing on its familiarity with the project from
its inception. SDI's business model in these development projects generally
includes joint or shared technology ownership at the completion of the project
and a long-term manufacturing agreement to supply the commercial products once
the products are launched.
A number of SDI's products in its emerging agriculture and water quality markets
have reached commercial success in this manner. In this way, it is anticipated
that SBS's market-leading position will allow SDI to leverage product
development capabilities into significant product sales opportunities. These
strategies, as well as the opportunity to grow SDI's overall market position
<PAGE>
with expanded, predictable and profitable products and services, are the primary
motivations behind the Company's decision to acquire these growing businesses
and form Strategic BioSolutions.
Commenting on the transaction, Mr. Richard Birkmeyer, President and CEO of SDI
said, "We are pleased to have assembled one of the largest independent antibody
businesses in such a short number of months. Even more importantly, we have
assembled people who share SDI's passion for quality and customer service and we
begin Strategic BioSolutions with an established reputation for high quality. We
are now working to inform our large, combined customer base of the substantial
advantages available to them as a result of these actions."
Remarking on the management team, Mr. Birkmeyer added, "We begin this new
endeavor with probably the most significant competitive advantage of all, an
experienced, energetic and highly motivated management team responsible for
developing world-wide customer relationships and fully leveraging the entire set
of SDI's capabilities. This vital human resource has been brought together with
a common vision of growth in market position and customer relationships and we
are confident we will be successful in these efforts."
Noting the capabilities of SBS, Mr. Michael Dale commented, "We are launching
SBS with one of the largest arrays of products and services in the marketplace
today. We are also fortunate to offer these high-value products and services to
an established customer base already familiar with our commitment to quality,
service and new product development. At the same time, we are doing this with a
highly efficient operation and one of the lowest cost structures in the
industry. We are well positioned to grow profitably and I am pleased to have the
opportunity to lead this organization toward these objectives."
SBS will share its corporate headquarters in Newark, Delaware with SDI; all
bioprocessing for bulk OEM sales will also be done in Newark. Sales and customer
service and certain animal care facilities will be located in California and an
animal care facility for large animals will be located in Maine.
Strategic Diagnostics is a leading provider of biotechnology-based diagnostic
tests for a broad range of commercial applications. Through its antibody
business, Strategic Diagnostics also provides antibody and immunoreagent
research and development services. Strategic Diagnostics' test kits are produced
in a variety of formats suitable for field and laboratory use, offering
advantages of accuracy, cost-effectiveness, portability, and rapid response.
This news release contains forward-looking statements reflecting SDI's current
expectations. When used in this press release, the words "anticipate," "enable,"
"believe," "expect" and similar expressions as they relate to SDI are intended
to identify said forward-looking statements. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, which may cause
actual results to differ from those anticipated by SDI at this time. Such risks
and uncertainties include, without limitation, SDI's ability to manage growth,
the integration of acquired systems, unknown Year 2000 issues arising from
acquired systems, changes related to acquisitions such as the amortization of
significant goodwill and other intangible assets, changes in demand for
products, delays in product development, inability to obtain required government
approvals, modifications to development and sales relationships, the ability to
achieve anticipated growth, competition, seasonality, and other factors more
fully described in SDI's public filings with the U.S. Securities and Exchange
Commission.
