Asset Purchase Agreement - SD Acquisition Inc. and Transgenomic Inc.
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into on May 16, 2000 by and
between SD ACQUISITION INC., a Nebraska corporation (the "Buyer"), and
TRANSGENOMIC, INC., a Delaware corporation (the "Seller"). The Buyer and the
Seller are referred to herein individually as a Party and collectively as the
Parties.
WHEREAS, the Buyer desires to purchase the assets, and assume certain
liabilities, of the Seller that are used by Seller in, or otherwise relate to,
the manufacture and sale of certain non-life science scientific instruments that
are marketed by the Seller under the CETAC Technologies brand (the "CETAC
Products"), and Seller desires to sell and convey such assets, subject to such
liabilities, all pursuant to the terms and conditions hereof;
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACQUIRED ASSETS" means all of:
(a) the leaseholds in real property, including all amounts delivered
to the lessor by Seller, representing a security deposit with respect to
the leaseholds, and the improvements, fixtures, and fittings thereon
described in Schedule 1.1 (the "Leases");
(b) all raw materials, supplies, manufactured and purchased parts,
goods in process and finished goods described in Schedule 1.2 (the
"Inventory");
(c) machinery, equipment, furniture, fixtures, vehicles, trailers,
leasehold improvements and tools described in Schedule 1.3 (the "Fixed
Assets");
(d) the patents, patent applications, and patent disclosures
(including all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof), trademarks, service
marks, trade dress, logos, trade names, (including all translations,
adaptations, derivations, and combinations thereof, all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith), copyrights (including applications, registrations, and renewals
in connection therewith) that are described in Schedule 1.4 hereof plus any
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals relating directly and
exclusively to the manufacture and marketing of the CETAC Products and all
tangible embodiments thereof (in whatever form or medium) (the
"Intellectual Property");
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(e) the agreements, contracts, instruments, security interests,
guaranties, warranties and other intangible property rights described in
Schedule 1.5 (the "Intangible Property");
(f) the accounts, notes and other receivables relating to sales of the
CETAC Products occurring after March 31, 2000 (the "Accounts Receivable");
(g) the permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies relating to the manufacture and sale of the CETAC Products
described in Schedule 1.6 (the "Permits");
(h) the books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, studies, reports, and
other printed or written materials relating to the CETAC Products (the
"Documents"); and
(i) all funds held in the Section 125 Employee Reimbursement Accounts
for Healthcare and Dependent Care relating to the employees set forth in
Schedule 3(n) and all related reports from the administrator relating to
participants and their balances.
Acquired Assets shall not include any other asset other that those described
above and, specifically, shall not include (i) the corporate charter,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance, and
existence of the Seller as a corporation or (ii) any of the rights of the Seller
under this Agreement.
"ASSUMED LIABILITIES" means only those Liabilities and obligations of
the Seller set forth in Schedule 1.7, including, specifically, all trade
liabilities incurred in connection with the manufacture of the CETAC Products
after March 31, 2000. Assumed Liabilities do not include (i) any Liability of
the Seller for unpaid Taxes for periods prior to the Closing Date, (ii) any
Liability of the Seller for income, transfer, sales, use, and other Taxes
arising in connection with the consummation of the transactions contemplated
hereby (including any income Taxes arising because the Seller is transferring
the Acquired Assets, (iii) any Liability of the Seller for the unpaid Taxes of
any Person other than the Seller under Treas. Reg. sec 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract or otherwise, (iv) any obligation of the Seller to indemnify any Person
by reason of the fact that such Person was a director, officer, employee, or
agent of the Seller or was serving at the request of the Seller as a partner,
trustee, director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or otherwise),
(v) any Liability of the Seller for costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, or (vi) any
Liability or obligation of the Seller under this Agreement.
"BUYER" has the meaning set forth in the preface above.
"BUYER NOTE" has the meaning set forth in Section 2(d) below.
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"BUYER'S PLAN" has the meaning set forth in Section 4(f) below.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CETAC PRODUCTS" has the meaning set forth in the preface above.
"CLOSING" has the meaning set forth in Section 2(f) below.
"CLOSING DATE" has the meaning set forth in Section 2(f) hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the Acquired
Assets or otherwise relating to the CETAC Products that is not already generally
available to the public.
"DISCLOSURE SCHEDULES" has the meaning set forth in Section 3 hereof.
"DWYER GUARANTEE" has the meaning set forth in Section 2(d) hereof.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means CERCLA, RCRA, and the
Occupational Safety and Health Act of 1970, as amended, together with all other
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes.
"FACILITY" has the meaning set forth in Section 2(b) below.
"IPO" means the initial pubic offering of the Seller's common stock
pursuant to a registration statement declared effective under the Securities Act
of 1933, as amended.
"KNOWLEDGE" means, with respect to any Party, the actual knowledge of the
officers or employees of such Party with responsibility for the matter in
question after reasonable investigation.
"LENDERS" has the meaning set forth in Section 2(h).
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
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"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PURCHASE PRICE" has the meaning set forth in Section 2(d) below.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended.
"SECURITIES ACT" MEANS the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens which secure the performance of Assumed
Liabilities.
"SELLER" has the meaning set forth in the preface above.
"SELLER'S PLAN" has the meaning set forth in Section 3(n) below.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"401(k) ASSETS" has the meaning set forth in Section 4(f) below.
2. THE TRANSACTION.
(a) PURCHASE AND SALE OF ACQUIRED ASSETS. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to purchase from the
Seller, and the Seller agrees to sell, transfer, convey, and deliver to the
Buyer, all of the Acquired Assets at the Closing for the consideration
specified below in this Section 2.
(b) CERTAIN PERSONAL PROPERTY. The office supplies and certain other
personal property on the premises of the Seller located generally at 5600
South 42nd Street, Omaha, Nebraska (such premises referred to herein as the
"Facility"), including, without limitation, paper products, spare computer
parts and other accessories, including additional memory, printer
cartridges and such other personal property of Seller, shall be apportioned
among the Parties in a mutually agreeable manner.
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(c) ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Liabilities as of March 31, 2000.
(d) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the
Closing a purchase price (the "Purchase Price") equal to Six Million and
00/100 Dollars ($6,000,000) adjusted:
(i) upward in an amount equal to any net increase or downward
in an amount equal to any net decrease in the book value of the
Inventories as reflected on the Seller's balance sheet as of March 31,
2000 from book value of the Inventories reflected on the Seller's
balance sheet as of December 31, 1999 (which the parties stipulate
shall equal $2,833,354); provided that no adjustment to the Purchase
Price shall be made pursuant to this clause (i) unless any such net
increase or decrease in the book value of the Inventories is equal to
One Hundred Thousand Dollars ($100,000) or more;
(ii) upward in an amount equal to any net decrease or
downward in an amount equal to any net increase in the aggregate
amount of accrued employee vacation liability as reflected on the
Seller's balance sheet as of March 31, 2000 from amount of such
liability reflected on the Seller's balance sheet as of December
31, 1999; provided that no adjustment to the Purchase Price shall
be made pursuant to this clause (ii) unless any such net increase
or decrease in such liability is equal to Ten Thousand Dollars
($10,000) or more;
(iii) upward in an amount equal to all payroll, payroll taxes
and other employee benefits costs incurred by the Seller with respect
to the employees listed on Schedule 3(n) between April 1, 2000 and the
Closing Date; and
(iv) upward in an amount equal to all other expenses set forth
in Schedule 2.4 that are paid or incurred by Seller on behalf of Buyer
between April 1, 2000 and the Closing Date ("Paid and Incurred
Expenses").
Payment of the Purchase Price shall be made by delivery to Seller at
the Closing of (i) a promissory note in the form attached as Exhibit A
hereto in the principal amount of Two Million and 00/100 Dollars
($2,000,000) (the "Buyer Note"), which shall be accompanied by a personal
guarantee of Stephen F. Dwyer in the form attached as Exhibit B hereto (the
"Dwyer Guarantee") and (ii) cash for the balance of the Purchase Price
payable by wire transfer or delivery to Seller's designated account of
other immediately available funds.
(e) ALLOCATION. The Parties agree to allocate the Purchase Price
among the Acquired Assets for all purposes (including financial accounting
and tax purposes) in accordance with the allocation schedule attached
hereto as Exhibit C.
(f) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices Dwyer,
Smith, Gardner, Lazer, Pohren, Rogers & Forrest, 8712 West Dodge Road,
Suite 400, Omaha, Nebraska 68114
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commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the Closing
itself) or such other date as the Parties may mutually determine (the
"Closing Date"); PROVIDED, HOWEVER, that the Closing Date shall be no later
than May 31, 2000.
(g) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments and documents
referred to in Section 8(a) below; (ii) the Buyer will deliver to the
Seller the various certificates, instruments and documents referred to in
Section 8(b) below; (iii) the Seller will execute, acknowledge (if
appropriate) and deliver to the Buyer all documents necessary for the
effective sale, transfer, conveyance and assignment to the Buyer of the
Acquired Assets; (iv) the Buyer will execute, acknowledge (if appropriate)
and deliver to the Seller all documents necessary for the effective
assumption of the Assumed Liabilities and (v) the Buyer and Stephen Dwyer
will deliver to the Seller the consideration specified in Section 2(d)
above.
(h) FINANCING AFTER SELLER'S INITIAL PUBLIC OFFERING.
(A) Seller acknowledges that Buyer is paying the cash portion
of the Purchase Price at the Closing as an accommodation to the Seller
and that the Buyer has entered into a loan agreement with one or more
lenders (the "Lenders") under which the Buyer has borrowed the funds
necessary to pay the cash portion of the Purchase Price along with
loan fees and to provide additional working capital to Buyer (the
"Buyer Loans"). The Seller agrees that within three days following
closing of the IPO, the Seller will pay to the Lenders the full amount
of principal and accrued and unpaid interest on the Buyer Loans and
will acquire and assume the Buyer Loans as if it were the original
lender thereunder.
(B) In connection with the acquisition of the Buyer Loans by
the Seller, the Seller shall be entitled to all security interests in
the assets of the Buyer (including, specifically, the Acquired Assets)
and any other security interest held by the Lenders in connection with
the Buyer Loans and to the personal guarantees of Stephen F. and Nancy
Dwyer delivered with respect thereto, each of which shall be assigned
and delivered to the Seller in such documents, in a form and substance
satisfactory to Seller, as are necessary to provide Seller with the
same collateral rights as the Lenders; provided, however, that Seller
shall not be entitled to receive the personal guarantees delivered by
any person other than Stephen F. and Nancy Dwyer in connection with
the Buyer Loans.
(C) In the event the Seller acquires the Buyer Loans under this
Section 2(h), the maturity date of the Buyer Note shall be adjusted so
that all principal and accrued interest on the Buyer Note is due and
payable in full on the same date the Buyer Loan is due and payable and
the Buyer Note shall
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also become secured by each of the security interests described in
paragraph B above on a pari passu basis with the Buyer Loans.
(D) As a condition to Seller's obligation to acquire the Buyer
Loans, Stephen F. Dwyer shall deliver certificates for 1,200,000
shares of Seller's common stock owned by him, along with signed and
undated stock powers relating thereto in a form and substance
acceptable to Seller, to an escrow agent designated by Seller and
grant to such escrow agent the right to sell any and all of such
shares to the extent necessary to pay principal and interest on the
Buyer Loans and the Buyer Note as and when due, including the
acceleration thereof in the event of default. In connection with the
foregoing, the Seller agrees to (i) register 1,200,000 shares of the
Seller's common stock owned by Stephen F. Dwyer for resale with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Securities Act") and (ii) list such shares with
the Nasdaq Stock Market for quotation on the Nasdaq National Market or
such other market or exchange on which the Seller's common stock is
then listed. Registration under the Securities Act shall be made at
the same time as the registration of the shares of common stock to be
sold by Seller in connection with the IPO.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as set forth in the disclosure schedules
accompanying this Agreement (the Disclosure Schedules).
(a) ORGANIZATION OF THE SELLER. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by the Seller
and (assuming due authorization and delivery by the Buyer) is a valid and
binding agreement of the Seller, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Seller is subject or
any provision of the charter or bylaws of the Seller or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any agreement, contract, lease, license, instrument or
other arrangement to which the Seller is
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a party or by which it is bound or to which any of its assets is subject
(or result in the imposition of any Security Interest upon any of the
Acquired Assets). Other than set forth in Schedule 4(c), the Seller is not
required to give any notice to, make any filing with or obtain any
authorization, consent or approval of any governmental or regulatory agency
or any other third party in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) BROKERS' FEES. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(e) TITLE TO ACQUIRED ASSETS. The Seller has good and marketable title
to, or a valid leasehold interest in, each of the Acquired Assets free and
clear of all Security Interests other than those that will be released at
or prior to the Closing.
(f) LEGAL COMPLIANCE. The Seller and its predecessors have complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof)
relating to the manufacture and marketing of the CETAC Products, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced against the Seller alleging
any failure so to comply.
(g) LEASES. The Seller has delivered to the Buyer correct and complete
copies of the Leases listed in Schedule 1.1. Each Lease is legal, valid,
binding, enforceable, and in full force and effect and will continue to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transaction contemplated
hereby. The Seller is not in breach or default under any Lease and no event
has occurred which, with notice or lapse of time, would constitute a breach
or default of the Lease by the Seller or permit termination, modification
or acceleration thereof by the respective lessor and no party to any Lease
has repudiated any provision thereof. There are no disputes, oral
agreements, or forbearance programs in effect as to any Lease. All
facilities leased thereunder are supplied with utilities and other services
necessary for the operation of said facilities.
(h) INTELLECTUAL PROPERTY. The Seller has delivered to the Buyer
correct and complete copies of each item of Intellectual Property listed in
Schedule 1.4. The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission each item of the Intellectual Property
free and clear of any restriction and has taken all necessary action to
maintain and protect each item of Intellectual Property. No item of
Intellectual Property is subject to any outstanding injunction, judgment,
order, decree, ruling or charge limiting its use by the Seller or Seller's
ability to convey such Intellectual Property to the Buyer hereunder. No
action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand is pending or, to the Seller's Knowledge, is threatened which
challenges the legality, validity, enforceability, use, or ownership of any
item of the Intellectual Property; and Seller has never received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement,
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misappropriation or violation (including any claim that it license or
refrain from using any intellectual property rights of any third party). To
the Seller's Knowledge, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any item of the
Intellectual Property and no item of the Intellectual Property interferes
with, infringes upon, misappropriates or otherwise comes into conflict with
any intellectual property rights of third parties.
(i) INVENTORIES. The items included in the Inventory are merchantable
and fit for the purpose for which they were procured or manufactured, and
are not obsolete, damaged or defective.
(j) INTANGIBLE PROPERTY. The Seller has delivered to the Buyer correct
and complete copies of each item of Intangible Property listed in Schedule
1.5. Each item of Intangible Property is legal, valid, binding, enforceable
and in full force and effect and will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transaction contemplated hereby. The Seller is not in
breach or default under any item of Intangible Property and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default of an item of Intangible Property by the Seller or permit
termination, modification or acceleration thereof by the respective
counterparty and no party to any item of Intangible Property has repudiated
any provision thereof. There are no disputes, oral agreements or
forbearance programs in effect as to any item of Intangible Property.
(k) PERMITS. The Seller has delivered to the Buyer correct and
complete copies of each Permit listed in Schedule 1.6. Each Permit is in
full force and effect and will continue to be in full force and effect on
identical terms following the consummation of the transaction contemplated
hereby. The Seller is not in breach or default under any Permit and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default by the Seller of any Permit or result in the revocation
thereof. There are no disputes, oral agreements or forbearance programs in
effect as to any Permit.
(l) DOCUMENTS. The Documents to be delivered at the Closing include
all of the books, records (including all relevant employee records or
copies thereof), ledgers, files, documents, correspondence, lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, studies, reports and other printed
or written materials relating to the CETAC Products.
(m) PRODUCT LIABILITY AND WARRANTIES. There are no actions, suits,
proceedings, hearings, investigations, charges, complaints, claims or
demands pending or, to the Seller's Knowledge, threatened arising out of
any injury to individuals or property as a result of the ownership,
possession or use of any CETAC Product. The Seller has delivered to the
Buyer correct and complete copies of each warranty relating to the CETAC
products that are included in the Assumed Liabilities (the "Product
Warranties"). There are no other express guaranties, warranties or other
indemnities beyond the terms and conditions of the Product Warranties.
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(n) EMPLOYEES AND CERTAIN EMPLOYEE BENEFITS. To the Seller's
Knowledge, each of its employees listed on Schedule 3(n) hereof plans to
become an employee of the Buyer upon consummation of the transaction
contemplated by this Agreement. The Seller is not a party to or bound by
any collective bargaining agreement, nor has experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. Seller has committed no unfair labor practice. Seller has no
Knowledge of any organizational effort presently being made or threatened
by or on behalf of any labor union with respect to the employees listed in
Schedule 3(n). The 401(k) Plan maintained by the Seller with respect to
employees listed in Schedule 3(n) (the "Seller's Plan") complies in all
material respects with the applicable provisions of the Code.
(o) SALES AND COST INFORMATION. The information relating to the sales
of CETAC products and costs of materials associated therewith set forth in
Schedule 3(o) and all financial data and other information provided for or
used in connection with determining any purchase price adjustment pursuant
to Section 2(d)(i)-(iv) of this Agreement is accurate and complete.
(p) ENVIRONMENT, HEALTH, AND SAFETY.
(i) The Seller has complied with all Environmental, Health, and
Safety Laws at each of the subject premises under the Leases, and no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or commenced against any of
them alleging any failure so to comply. Without limiting the
generality of the preceding sentence, the Seller has obtained and been
in compliance with all of the terms and conditions of all permits,
licenses and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) Other than as described in Schedule 3(p), neither the Seller
nor its predecessors have used or disposed of any substance at any
property which is the subject premises under the Leases or exposed any
employee or other individual at such locations to any substance or
condition in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Buyer for damage to any site,
location or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
(q) DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
(r) INVESTMENT. The Seller (i) understands that the Buyer Note has not
been, and will not be, registered under the Securities Act or under any
state securities laws, and is being offered and sold in reliance upon
federal and state exemptions for transactions
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not involving any public offering, (ii) is acquiring the Buyer Note solely
for its own account, and not with a view to the distribution thereof, (iii)
is a sophisticated investor with knowledge and experience in business and
financial matters and (iv) is able to bear the economic risk and lack of
liquidity inherent in holding the Buyer Note.
(s) ASSUMED LIABILITIES. The information relating to the Assumed
Liabilities set forth in Schedule 1.7 is accurate and complete.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the Disclosure Schedule.
(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nebraska.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by the Buyer and
(assuming due authorization and delivery by the Seller) is a valid and
binding agreement of the Buyer, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Buyer is subject or
any provision of the charter or bylaws of the Buyer or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any agreement, contract, lease, license, instrument or
other arrangement to which the Buyer is a party or by which it is bound or
to which any of its assets is subject. The Buyer is not required to give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of any governmental or regulatory agency or any other third
party in order for the Parties to consummate the transaction contemplated
by this Agreement.
(d) AVAILABILITY OF FUNDS. The Buyer has obtained a firm commitment
from Lenders to lend the Buyer the funds necessary to allow the Buyer to
consummate the transaction contemplated by this Agreement at the Closing.
(e) INVESTIGATION BY BUYER. The Buyer has conducted, to its
satisfaction, an independent investigation and analysis of the projected
operation of its business upon the consummation of the transaction
contemplated by this Agreement and has relied exclusively on the results
thereof in making any determination as the future operations,
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financial viability and prospects of its business operations. Buyer has
relied on the representations and warranties of the Seller contained herein
only with respect to the matters specifically discussed therein.
(f) EMPLOYEES AND CERTAIN EMPLOYEE BENEFITS. Buyer intends to retain
the services of each of employees of the Seller identified on Schedule 3(n)
for a period of at least six months after the Closing Date, it being
understood by the Seller that the Buyer shall retain all power to discharge
individual employees who are not performing on a satisfactory basis. Buyer
intends to establish a 401(k) Plan for its employees (including those
listed on Schedule 3(n) (the "Buyer's Plan") that will comply in all
material respects with the applicable provisions of the Code. Buyer and
Buyer's Plan will maintain all accrued benefits and optional forms of
benefits with respect to the assets in the Seller's Plan attributable to
the accounts of the current employees of Seller who are identified on
Schedule 3(n) and who become employees of Buyer as of the Closing Date (the
"401(k) Assets"), within the meaning of Section 411(d)(6) of the Code.
(g) BROKERS' FEES. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
5. DISCLAIMER OF WARRANTY. THE BUYER ACKNOWLEDGES AND AGREES THAT ALL
ACQUIRED ASSETS ARE BEING ASSIGNED, TRANSFERRED AND CONVEYED TO BUYER ON AN "AS
IS, WHERE IS" BASIS, AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3
HEREOF, SELLER IS MAKING NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESSED OR
IMPLIED, RESPECTING THE ACQUIRED ASSETS AS TO MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER MATTER.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) GENERAL. Each of the Parties will use its best efforts to take all
action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in
Section 8 hereof).
(b) NOTICES AND CONSENTS. Each of the Parties will provide such
notices to, make such filings, and use its best efforts to obtain any
authorizations, consents and approvals of any governmental or regulatory
agency or third parties necessary to the consummation of the transaction
contemplated by this Agreement.
(c) OPERATION OF BUSINESS. The Seller will not engage in any practice,
take any action or enter into any transaction with respect to the
manufacture or marketing of the CETAC Products which are outside the
Ordinary Course of Business with respect thereto.
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(d) PRESERVATION OF ACQUIRED ASSETS. The Seller will keep the Acquired
Assets substantially intact, including its physical facilities and
relationships with lessors, licensors, suppliers, customers and employees.
(e) ACCOUNTS PAYABLE. On or before the Closing Date the Seller will
remit payment to each of its suppliers or venders who have provided goods
or services to the Seller relating directly to the manufacture of the CETAC
Products so that all supplier or vender accounts are paid as of a date no
later than 45 days after relevant invoice date. Buyer agrees that such
payments may be made, in whole or in part, from the cash portion of the
Purchase Price paid at Closing.
(f) FULL ACCESS. The Seller will permit representatives of the Buyer
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Seller to all Acquired
Assets.
(g) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other Party of any material adverse development causing, or which
could cause, a breach of any of its own representations and warranties
contained herein. No disclosure by any Party pursuant to this Section 6(g),
however, shall be deemed to amend or supplement any Disclosure Schedule or
to prevent or cure any misrepresentation, breach of warranty or breach of
covenant.
(h) EXCLUSIVITY. The Seller will not (i) solicit, initiate or
encourage the submission of any proposal or offer from any Person relating
to the acquisition of any of the Acquired Assets (other than sales of
Inventories made in the Ordinary Course of Business), including any
acquisition structured as a merger, consolidation or share exchange or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will notify the Buyer immediately if any Person makes
any proposal, offer, inquiry or contact with respect to any of the
foregoing.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as the other Party
reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor
under Section 9 hereof).
(b) LITIGATION SUPPORT. In the event, and for so long as, any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or
prior
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to the Closing Date involving any of the Acquired Assets, the other Party
will cooperate with the contesting or defending Party and its counsel in
the contest or defense thereof, make available its personnel and provide
such testimony and access to its books and records as shall be reasonably
necessary in connection with the contest or defense thereof, all at the
sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 9 hereof).
(c) TRANSITION. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate from maintaining the same
business relationships with the Buyer after the Closing as such party
maintained with the Seller prior to the Closing. The Seller will refer all
customer inquiries relating to the CETAC Products to the Buyer from and
after the Closing. Buyer and Seller shall each use their best efforts to
cooperate with the other, and to cause their respective employees to act
accordingly, in order to fulfill the intent and purpose of this Agreement.
(d) CONFIDENTIALITY. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement and deliver promptly
to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which
are in its possession. In the event that the Seller is requested or
required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information, the Seller will
notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the
provisions of this Section 7(d). If, in the absence of a protective order
or the receipt of a waiver hereunder, the Seller is, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, the Seller may disclose the Confidential
Information to the tribunal; PROVIDED, HOWEVER, that the Seller shall use
its best efforts to obtain, at the request of the Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Buyer shall
designate.
(e) COVENANT NOT TO COMPETE. Seller and Collin J. D'Silva, in his
individual capacity, respectively, agree that, for a period of five (5)
years following the Closing Date, in any geographic area in which Seller
conducts business as of the Closing Date, neither shall, directly or
indirectly, alone or in association with others, in the capacity as
partner, shareholder or any other legal or beneficial capacity, or
otherwise, or through or in connection with any Person:
(i) Manufacture or sell any product that directly or indirectly
competes with any CETAC Product being sold (or contemplated to
be sold) by the Seller as of the Closing Date;
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(ii) Solicit, or attempt to solicit, any supplier, vendor,
customer or employee of the Buyer;
(iii) Divert or attempt to divert, for its direct or indirect benefit
or for the benefit of any other person, any supplier, vendor,
customer, employee or other relevant party from the Buyer;
(iv) Influence or attempt to influence any supplier, vendors,
customer, employee, or other relevant party to change or
transfer its business, patronage, employment or other
relationship from the Buyer, directly or indirectly, to Seller
or to any other Person;
(v) Assist, be or become involved in or associated with, in any
capacity, any Person that manufactures or sells any product
that directly or indirectly competes with any CETAC Product
being sold (or contemplated to be sold) by the Seller as of
the Closing Date; provided, however, that in this provision
shall not apply to Seller's ownership of less than 1% of the
outstanding securities any publicly-traded corporation which
is engaged in any such business;
(vii) In any other manner interfere with, disrupt or attempt to
disrupt the relationship of the Buyer with any customer,
supplier, vendor, employee or other relevant party of the
Buyer, including the solicitation of any of the foregoing; or
In the event of a breach or threatened breach under this Section 7(e),
each of the Seller and Collin J. D'Silva hereby acknowledges and stipulates
that Buyer shall not have an adequate remedy at law, shall suffer
irreparable harm, and, therefore, it is mutually agreed and stipulated by
the Seller and Collin J. D'Silva that, in addition to any other remedies at
law or in equity which the Buyer may have, the Buyer shall be entitled to
obtain in a court of law and/or equity a temporary and/or permanent
injunction restraining the Buyer or Collin J. D'Silva, as the case may be,
from any further violation or breach of the covenants set forth in this
Section 7(e). In the event that any one or more of the provisions contained
herein shall, for any reason, be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed as limiting and reducing it as determined by a court of competent
jurisdiction and shall be enforceable to the extent compatible with
applicable law.
(f) USE OF PREMISES AND SHARE SYSTEMS. The Buyer agrees to allow the
Seller and its personnel to continue to occupy the Facility and to conduct
its business operations thereat for a period of not less than 120 days
after the Closing Date. Buyer will allow Seller full and unimpeded access
to computers and other shared systems during the term of co-occupancy. The
Buyer and Seller agree to enter into a sublease of such premises on
commercially reasonable terms reflecting their co-occupancy thereof during
such period and to share systems and services, including but not limited to
utilities, and cost thereof on an equitable basis. The Seller agrees to use
its best efforts to locate another suitable
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location for its Omaha, Nebraska operations as soon as practicable after
the Closing Date consistent with limiting disruption to its business
operations.
(g) ACCOUNTS RECEIVABLE. The Buyer will use its reasonable best
efforts (which includes providing prompt customer support) to assist the
Seller in collecting accounts receivable from the sale of the CETAC
Products by the Seller prior to April 1, 2000 and in the event that the
Buyer receives payment with respect to such accounts receivable, it shall
hold such payments in trust for the benefit of the Seller and promptly
remit such payments to Seller. Likewise, the Seller will use its reasonable
best efforts to assist the Buyer in collecting Accounts Receivable and in
the event that the Seller receives payment with respect to such Accounts
Receivable, it shall hold such payments in trust for the benefit of the
Buyer and promptly remit such payments to Buyer.
(h) 401(k) ASSETS. Within 30 days following the Closing Date, Seller
and Buyer shall enter into a transfer agreement and shall cause the 401(k)
Assets in the Seller's Plan to be transferred to the Buyer's Plan.
(i) COMPLETION OF M6000 ELECTRONIC DOCUMENTATION. The Seller will
undertake to complete the M6000 Electronic Documentation according to the
specifications in Schedule 7(i).
8. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of the Seller set forth
in Section 3 hereof shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) the Seller shall have procured all of the third party
consents specified in Schedule 3(c);
(iv) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before
any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling,or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Acquired Assets or to utilize them in its business operations;
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(v) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in Section
8(a)(i)-(iv) has been satisfied in all respects;
(vi) the Buyer shall have received from counsel to the Seller
an opinion in form and substance as set forth in Exhibit D attached
hereto, addressed to the Buyer and dated as of the Closing Date;
(vii) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and fund the working
capital requirements of its business after the Closing;
(viii) the Seller shall have entered into an agreement with the
Lenders under which Seller has agreed to acquire the Buyer Loans as
described in Section 2(h) hereof; and
(ix) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 8(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of the Buyer set forth
in Section 4 above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation;
(iv) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in Section
8(b)(i)-(iii) has been satisfied in all respects;
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(v) the Seller shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to the Seller and dated as of the Closing Date; and
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Seller.
The Seller may waive any condition specified in this Section 8(b) if it
executes a writing so stating at or prior to the Closing.
9. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE SELLER.
(i) from and after the Closing Date, the Seller shall defend,
indemnify and hold harmless the Buyer and its directors, officers,
employees and agents from, and reimburse the aforesaid parties for,
any and all Buyer's Damages (defined below) in the manner and to the
extent set forth in this Section 9(a).
(ii) the term "Buyer's Damages" shall include all losses,
costs, expenses (including reasonable attorneys' fees and expenses
and other costs and expenses incident to any suit, action,
investigation, claim or proceeding), fees, liabilities and damages
sustained by the party entitled to indemnity prior to any
reimbursement therefor:
(A) arising from any breach of a representation or
warranty of the Seller contained in or made pursuant to this
Agreement (except in each case to the extent corrected or
disclosed in writing to the Buyer prior to the Closing);
(B) resulting from a default in the performance of any
of the covenants or obligations that the Seller is required to
perform under this Agreement (except to the extent corrected or
performed by the Seller prior to the Closing);
(C) resulting from any claim made with respect to any
Product Warranties relating to CETAC Products sold by Seller prior
to the Closing Date;
(D) resulting from or arising in connection with the
operation of the Seller's business, including the management,
control, ownership or operation of the Acquired Assets prior to
March 31, 2000;
(E) resulting from any Taxes payable with respect to
Seller's business for the period ending on the Closing Date;
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(F) which arise from any activities of Seller or Seller's
employees or agents on Buyer's premises after Closing; and
(G) resulting from any environmental claim made against
the Buyer, or their respective parent corporations, subsidiaries,
officers, directors, shareholders and other affiliates by any
person or entity (including, but not limited to, claims under
CERCLA, RCRA, or other federal, state, local, or foreign
environmental laws) arising from events, circumstances, or
conditions occurring, or existing on or prior to March 31, 2000
relating to the business of Seller at the Facility, whether
disclosed or undisclosed
provided however, that Seller shall not be required to pay any Buyer's Damages
unless the aggregate amount of such Buyer's Damages exceeds $25,000 (but then to
the full extent of such Buyer's Damages). Notwithstanding the foregoing
provisions hereof to the contrary, it is understood and agreed that the amount
of Buyer's Damages payable by Seller to Buyer hereunder shall in no event exceed
the Purchase Price, except, however the amount of any Buyer's Damages pursuant
to Section 9(a)(ii)(D) shall not be limited in amount.
(b) INDEMNIFICATION BY THE BUYER.
(i) from and after the Closing Date, the Buyer shall indemnify
and hold harmless the Seller and its directors, officers, employees
and agents from, and reimburse the aforesaid parties for, any and all
Seller's Damages (as defined below) in the manner and to the extent
set forth in this Section 9(b).
(ii) the term "Seller's Damages" shall include all losses, costs,
expenses (including reasonable attorneys' fees and expenses and other
costs and expenses incident to any suit, action, investigation, claim
or proceeding), fees, liabilities and damages sustained by the party
entitled to indemnity prior to any reimbursement therefor:
(A) arising from any breach of a representation or warranty
of the Buyer contained in or made pursuant to this Agreement
(except in each case to the extent corrected or disclosed in
writing to the Seller prior the Closing);
(B) resulting from a default in the performance of any of
the covenants or obligations that the Buyer is required to
perform under this Agreement (except to the extent corrected or
performed by the Buyer prior to the Closing);
(C) resulting from or arising in connection with any Assumed
Liability as contemplated by this Agreement;
(D) resulting from or arising in connection with the
operation of the Buyer's business, including the management,
control, ownership or operation of the Acquired Assets after
March 31, 2000;
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(E) resulting from any Taxes payable with respect to Buyer's
business;
(F) resulting from any claim which alleges that activities
of the Buyer or any sublicensees of Buyer infringe or violate a
third party's intellectual property rights.
provided however, that Buyer shall not be required to pay any Seller's Damages
unless the aggregate amount of such Seller's Damages exceeds $250,000 (but then
to the full extent of such Seller's Damages). Notwithstanding the foregoing
provisions hereof to the contrary, it is understood and agreed that the amount
of Seller's Damages payable by Buyer to Seller hereunder shall in no event
exceed $500,000.
(c) LEGAL PROCEEDINGS.
(i) If any legal proceeding shall be instituted, or any claim or
demand made, against any indemnified party in respect of which an
indemnifying party may be liable hereunder, the indemnified party
shall give prompt written notice thereof to the indemnifying party. No
indemnification provided for in this Section 9 shall be available to
any party who shall fail so to give notice if the party to whom such
notice was not given was unaware of the action, suit, investigation,
inquiry or proceeding to which the notice would have related and was
prejudiced by the failure to give the notice, but the omission so to
notify such indemnifying party or parties of any such service or
notification shall not relieve such indemnifying party or parties from
any liability which it or they may have to the indemnified party
otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate
in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying
party shall be entitled, if it so elects within a reasonable time
after receipt of the notice by giving written notice to the
indemnified party, to assume the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense
shall be conducted, at the expense of the indemnifying party or
parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; PROVIDED,
HOWEVER, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties
in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such
indemnified party or parties different from or in addition to those
available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense
to the extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties and (ii) in
any event, the indemnified party or parties shall be entitled to have
counsel chosen by such indemnified party or parties participate in,
but not conduct, the defense. If an indemnifying party gives a notice
that it intends to assume the defense of any action, suit,
investigation, inquiry or proceeding and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will
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not be liable under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation,
inquiry or proceeding, except that (A) the indemnifying party or
parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the
proviso to the preceding sentence (provided, however, that the
indemnifying party shall not be liable for the fees and expenses of
more than one separate firm for all such indemnified parties) and (B)
the indemnifying party or parties shall bear such other expenses as it
or they have authorized to be incurred by the indemnified party or
parties. If the indemnifying party or parties fail to provide such
notice within a reasonable period of time, it shall be responsible for
any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit,
investigation, inquiry or proceeding
(ii) An indemnifying party will not, without the prior written
consent of each indemnified party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought
hereunder unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability
arising out of such claim, action, suit or proceeding.
10. TERMINATION OF AGREEMENT.
(a) TERMINATION. This Agreement may be terminated as follows:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event
the Seller has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, the
Buyer has notified the Seller of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or before May
31, 2000, by reason of the failure of any condition precedent under
Section 8(a) hereof (unless the failure results primarily from the
Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach and the breach has
continued without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or before May
31, 2000, by reason of the failure of any condition precedent under
Section 8(b) hereof (unless the failure results primarily from the
Seller itself breaching any representation, warranty or covenant
contained in this Agreement).
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(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to this Section 10, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to the
other Party (except for any Liability of any Party then in breach).
11. MISCELLANEOUS.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Buyer and the Seller contained
in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of the other Party and shall
survive for a period of 36 months after the Closing Date.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the
prior written approval of the other Party; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is
required by applicable law in which case the disclosing Party will use
its reasonable best efforts to advise the other Party prior to making
the disclosure.
(c) NO THIRD-PARRY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, whether written or oral, to
the extent they have related in any way to the subject matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other Party.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
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If to the Seller: Transgenomic, Inc.
5600 South 42nd Street
Omaha, Nebraska 68107
Attention: Mr. Collin
J. D'Silva
Copy to: Steven P. Amen
Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
If to the Buyer: SD ACQUISITION, INC.
5600 South 42nd Street
Omaha, Nebraska 68107
Attention: Mr. Stephen
F. Dwyer
Copy to: Michael L. Lazer
Dwyer, Smith, Gardner,
Lazer, Pohren, Rogers
& Forrest
8712 West Dodge Road,
Suite 400
Omaha, Nebraska 68114
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic
mail), but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein
set forth.
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Nebraska.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
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(l) EXPENSES. Buyer and Seller will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation. Nothing in the Disclosure Schedules shall be deemed
adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing
(or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence
of the document or other item itself). The Parties intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter, in addition to
any other remedy to which it may be entitled, at law or in equity.
(p) TAX MATTERS.
(i) The Seller will be responsible for the preparation and filing
of all Tax Returns of the Seller for all periods as to which Tax
Returns are due before and after the Closing Date. The Seller will
make all payments required with respect to any such Tax Return.
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(ii) The Buyer will be responsible for the preparation and filing
of all Tax Returns of the Buyer for all periods as to which Tax
Returns are due before and after the Closing Date. The Buyer will make
all payments required with respect to any such Tax Return.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
SD ACQUISITION INC.
By: /S/ Stephen F. Dwyer
--------------------
Stephen F. Dwyer, President and
Chief Executive Officer
TRANSGENOMIC, INC.
By: /S/ Collin J. D'Silva
---------------------
Collin J. D'Silva, Chief
Executive Officer
/S/ Collin J. D'Silva
-----------------
Collin J. D'Silva, in his individual
capacity solely for purposes of the
covenant contained in Section 7(e)
hereof
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