EXHIBIT 2.1
CONFIDENTIAL TREATMENT REQUESTED BY QLT INC.
ASSET PURCHASE AGREEMENT
AMONG
QLT USA, INC.,
AND
TOLMAR, INC.
AND
DILLFORD COMPANY S.A.
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.......................................................... 1
Section 1.01 Definitions...................................................... 1
ARTICLE II SALE AND PURCHASE OF ASSETS.......................................... 12
Section 2.01 Sale and Purchase................................................ 12
Section 2.02 Excluded Assets.................................................. 13
Section 2.03 Assumed Liabilities.............................................. 13
Section 2.04 Purchase Price................................................... 14
Section 2.05 Adjustments to Purchase Price.................................... 15
Section 2.06 Determination of Adjustments..................................... 16
Section 2.07 Transfer Taxes; Prorations....................................... 17
Section 2.08 Allocation of Purchase Price..................................... 17
Section 2.09 Assignment and Assumption........................................ 17
ARTICLE III THE CLOSING.......................................................... 18
Section 3.01 Time and Place of Closing........................................ 18
Section 3.02 Deliveries by Seller............................................. 18
Section 3.03 Deliveries by Buyer.............................................. 20
Section 3.04 Deliveries by the Parties........................................ 20
Section 3.05 Further Assurances............................................... 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER............................. 21
Section 4.01 Organization and Qualification................................... 21
Section 4.02 Authority........................................................ 21
Section 4.03 No Conflicts; Required Consents.................................. 22
Section 4.04 Financial Statements............................................. 22
Section 4.05 Absence of Changes............................................... 22
Section 4.06 Seller Contracts................................................. 23
Section 4.07 Title; Sufficiency; Condition of Assets.......................... 24
Section 4.08 Real Property.................................................... 24
Section 4.09 Intellectual Property............................................ 25
Section 4.10 Regulatory Compliance............................................ 28
Section 4.11 Suppliers........................................................ 29
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TABLE OF CONTENTS
(continued)
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Section 4.12 Employees........................................................ 30
Section 4.13 Employee Benefit Plans........................................... 30
Section 4.14 Compliance with Legal Requirements; Governmental Approvals....... 30
Section 4.15 Litigation....................................................... 31
Section 4.16 Environmental Matters............................................ 31
Section 4.17 Taxes............................................................ 32
Section 4.18 Brokers.......................................................... 32
Section 4.19 Transactions with Affiliates..................................... 32
Section 4.20 Solvency......................................................... 33
Section 4.21 Inventory........................................................ 33
Section 4.22 Seller's Marketing Efforts....................................... 33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 34
Section 5.01 Organization and Good Standing................................... 34
Section 5.02 Authority........................................................ 34
Section 5.03 No Conflicts; Required Consents.................................. 34
Section 5.04 Financial Capacity............................................... 35
Section 5.05 Brokers.......................................................... 35
Section 5.06 Debarment........................................................ 35
Section 5.07 Title Commitments................................................ 35
Section 5.08 Purchase in Good Faith........................................... 35
ARTICLE VI ADDITIONAL COVENANTS................................................. 36
Section 6.01 Transactions and Conduct of Business Pending the Closing......... 36
Section 6.02 Employee Matters................................................. 37
Section 6.03 401(k) Plan...................................................... 38
Section 6.04 Access to Information............................................ 39
Section 6.05 Notice of Certain Events......................................... 39
ARTICLE VII ADDITIONAL AGREEMENTS................................................ 40
Section 7.01 Confidentiality.................................................. 40
Section 7.02 Use of Proceeds.................................................. 41
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TABLE OF CONTENTS
(continued)
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Section 7.03 No Shop and Non-Solicitation..................................... 41
Section 7.04 COBRA............................................................ 41
ARTICLE VIII TERMINATION OF AGREEMENT............................................. 42
Section 8.01 Grounds for Termination.......................................... 42
Section 8.02 Effect of Termination............................................ 42
ARTICLE IX INDEMNIFICATION...................................................... 42
Section 9.01 Survival of Representations and Warranties....................... 42
Section 9.02 Indemnification by Seller........................................ 42
Section 9.03 Indemnification by Buyer......................................... 43
Section 9.04 Environmental Indemnification.................................... 43
Section 9.05 Procedures for Indemnification; Buyer's Security Interest in
Escrow Amount.................................................... 44
Section 9.06 Limitations on Indemnification................................... 46
Section 9.07 Damages Limitations.............................................. 47
Section 9.08 Specific Performance............................................. 47
Section 9.09 Exclusive Remedy................................................. 47
Section 9.10 Characterization of Indemnification Payment...................... 48
Section 9.11 No Other Representation.......................................... 48
ARTICLE X MISCELLANEOUS........................................................ 48
Section 10.01 Amendments and Waivers........................................... 48
Section 10.02 Notices.......................................................... 48
Section 10.03 Applicable Law................................................... 49
Section 10.04 Exhibits and Schedules........................................... 50
Section 10.05 Assignments; Successors and Assigns.............................. 50
Section 10.06 No Third-Party Beneficiaries..................................... 50
Section 10.07 Counterparts..................................................... 50
Section 10.08 Severability..................................................... 50
Section 10.09 Entire Agreement................................................. 50
Section 10.10 Interpretation................................................... 50
Section 10.11 Construction..................................................... 51
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TABLE OF CONTENTS
(continued)
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Section 10.12 Expenses of the Parties.......................................... 51
Section 10.13 Jurisdiction; Service of Process................................. 51
Section 10.14 Waiver of Jury Trial............................................. 51
Section 10.15 Recovery of Fees by Prevailing Party............................. 52
Section 10.16 Seller Disclosure Schedule....................................... 52
Section 10.17 Time of the Essence.............................................. 52
Exhibits
Form of Aczone(R) Manufacturing and Supply Agreement............................. Exhibit A
Form of Assignment and Assumption Agreement...................................... Exhibit B
Form of Atrigel(R) Manufacturing and Supply Agreement............................ Exhibit C
Form of Eligard(R) Manufacturing and Supply Agreement............................ Exhibit D
Form of Escrow Agreement......................................................... Exhibit E
Form of Governmental Approval Assignments........................................ Exhibit F
Form of Guarantee Agreement...................................................... Exhibit G
Form of Deed of Trust and Fixture Filing......................................... Exhibit H
Form of Non-Competition Agreement................................................ Exhibit I
Form of Pledge Agreement......................................................... Exhibit J
Form of Promissory Note.......................................................... Exhibit K
Form of Security Agreement....................................................... Exhibit L
Form of Transition Service Agreement............................................. Exhibit M
Form of Pre-Closing Certificate.................................................. Exhibit 2.06(a)
Form of General Assignment and Bill of Sale...................................... Exhibit 3.02(a)
Form of Patent Assignment........................................................ Exhibit 3.02(b)-1
Form of Trademark Assignment..................................................... Exhibit 3.02(b)-2
Form of Special Warranty Deed.................................................... Exhibit 3.02(c)
Form of FIRPTA Affidavit......................................................... Exhibit 3.02(h)
Form of Opinion.................................................................. Exhibit 3.02(k)
Form of Press Release............................................................ Exhibit 7.01(c)
Seller Disclosure Schedules
Dental Products.................................................................. Schedule 2.01(b)
Deposits and Advances............................................................ Schedule 2.01(c)
Generic Dermatology Products..................................................... Schedule 2.01(d)
Governmental Approvals........................................................... Schedule 2.01(e)
Transferred Inventory............................................................ Schedule 2.01(g)
Owned and leased Vehicles........................................................ Schedule 2.01(h)
Personal Property (including all Tools, Machinery and Equipment)................. Schedule 2.01(i)
Personal Property Leases......................................................... Schedule 2.01(j)
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TABLE OF CONTENTS
(continued)
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Real Property.................................................................... Schedule 2.01(k)
Seller Contracts/Key Contracts................................................... Schedule 2.01(l)
Seller Intellectual Property..................................................... Schedule 2.01(m)
Excluded Assets.................................................................. Schedule 2.02(e)
Excluded Liabilities............................................................. Schedule 2.03
Allocation of Purchase Price..................................................... Schedule 2.08
Seller's Required Consents....................................................... Schedule 4.03
Pro Forma Income Statement....................................................... Schedule 4.04
Absence of Changes............................................................... Schedule 4.05
Additional Assets to be Purchased by Buyer....................................... Schedule 4.07
Regulatory Compliance............................................................ Schedule 4.10
Suppliers........................................................................ Schedule 4.11
List of Current Employees........................................................ Schedule 4.12(a)
Employee Legal Issues............................................................ Schedule 4.12(b)
Claims by Employees.............................................................. Schedule 4.12(c)
Employee Benefit Plans........................................................... Schedule 4.13
Environmental Matters............................................................ Schedule 4.16
Transactions with Affiliates..................................................... Schedule 4.19
Seller's Transactions and Conduct of Business.................................... Schedule 6.01
List of Key Employees............................................................ Schedule 6.02(a)
Employee Benefit Plans for Transferred Employees................................. Schedule 6.02(c)
401(k) Plan Participation for Transferred Employees.............................. Schedule 6.03(a)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of December 20, 2006 (the
"Effective Date"), by and among Tolmar, Inc., a Delaware corporation ("Buyer")
and a newly formed wholly-owned subsidiary of Dillford Company S.A., a Uruguayan
sociedad anonima ("Parent"), Parent and QLT USA, Inc., a Delaware corporation
("Seller"). Buyer, Parent and Seller are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Seller is engaged in the business of, among other things,
developing and manufacturing topical generic dermatology products pursuant to
the Sandoz Agreement and dental products for distribution in the United States,
Canada and certain other countries; and
WHEREAS, Seller owns and operates an approximately 60,000 square foot
manufacturing facility located in Fort Collins, Colorado, at which Seller
manufactures the topical generic dermatology products and dental products, as
well as other pharmaceutical products; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer; substantially all of the assets, properties, rights and claims related
to the topical generic dermatology business, the Dental Business and the
Manufacturing Facility on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
representations, warranties, covenants and promises contained herein, the
adequacy and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
AGREEMENT
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS.
(a) The following terms shall have the following meanings for the
purposes of this Agreement:
"Aczone(R) Manufacturing and Supply Agreement" means that certain
manufacturing and supply agreement between Seller and Buyer in the form attached
hereto as Exhibit A, which the Parties intend to be an entirely independent,
separate and severable agreement from this Agreement.
"Affiliate" means, with respect to any specified Person, (a) any other
Person that, directly or indirectly, owns or controls, is under common ownership
or control with, or is owned or controlled by, such specified Person, (b) any
other Person that is a director, officer or partner or
is, directly or indirectly, the beneficial owner of ten percent (10%) or more of
any class of equity securities of the specified Person or a Person described in
clause (a) of this paragraph, or (c) another Person of which the specified
Person is a director, officer or partner or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity securities.
"Agreement" means this Asset Purchase Agreement (including the Seller
Disclosure Schedule and all other schedules and exhibits attached hereto), as
amended from time to time.
"Assignment and Assumption Agreement" means the assignment and assumption
agreement covering all of the Assumed Liabilities in the form attached hereto as
Exhibit B.
"Atrigel(R) Manufacturing and Supply Agreement" means that certain
manufacturing and supply agreement between Seller and Buyer in the form attached
hereto as Exhibit C, which the Parties intend to be an entirely independent,
separate and severable agreement from this Agreement.
"Books and Records" means all books, files, papers, agreements,
correspondence, databases, information systems, programs, software, documents
and records relating to the Purchased Assets or the Assumed Liabilities,
primarily used in the Business, on whatever medium; but excluding batch records
and similar manufacturing records that Seller is required to maintain under
applicable Legal Requirements and those relating to the Excluded Assets.
"Business" means the Generic Dermatology Business, the Dental Business and
the Manufacturing Business, but excluding the Excluded Assets.
"Business Day" means any day other than (a) a Saturday or a Sunday or (b) a
day on which commercial banks located in Denver, Colorado are generally closed
for business.
"Closing" means the consummation of the Transaction.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Consent" means any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Approval).
"Contract" means any agreement, contract, consensual obligation, promise,
understanding, arrangement, commitment or undertaking of any nature (whether
written or oral and whether express or implied).
"Conveyance Document" means any and all deeds, bills of sale, assignments
and other good and sufficient instruments of transfer, conveyance and assignment
to effect or evidence the sale, conveyance, assignment, transfer, and delivery
of the Purchased Assets to Buyer and to vest in Buyer title to the Purchased
Assets in accordance with the terms of this Agreement.
"Copyrights" means all registered and unregistered copyrights, including
such rights in and to all works of authorship and all other rights of a similar
nature corresponding thereto throughout the world, whether published or
unpublished, including associated rights to prepare,
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reproduce, perform, make derivative works of, display and distribute copyrighted
works and copies, compilations and derivative works thereof.
"Damages" means and includes any loss, damage, injury, Liability, claim,
demand, settlement, judgment, award, fine, penalty, Tax, fee (including all
reasonable legal fees, accounting fees, expert fees or advisory fees), charge,
cost (including any cost of investigation) or expense of any nature.
"Dental Business" means all of Seller's right, title, interest and
obligations to develop, manufacture and sell the Dental Products, together with
all Contracts and Governmental Approvals for or relating primarily to such
Dental Products.
"Dental Products" means those products as listed on Schedule 2.01(b).
"Deposits and Advances" means performance and other bonds, security and
other deposits, advance payments, prepaid credits and deferred charges primarily
used in or primarily related to the Business, all of which are listed on
Schedule 2.01(c).
"Earn-Out Event" means the receipt by Buyer of a firm purchase order from
Seller or Seller's licensee or sublicensee to manufacture the Aczone product in
a quantity equal to [**] or more of the sales forecasted (by Seller or Seller's
licensee) for the twelve month period immediately following the commercial
launch of the Aczone product in the United States of America, pursuant to and in
accordance with the terms of the Aczone(R) Manufacturing and Supply Agreement at
any time after the Effective Date and prior to [**].
"Eligard(R) Manufacturing and Supply Agreement" means that certain
manufacturing and supply agreement between Seller and Buyer in the form attached
hereto as Exhibit D, which the Parties intend to be an entirely independent,
separate and severable agreement from this Agreement.
"Encumbrance" means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, trust, claim, preference, right of possession,
lease, tenancy, license, encroachment, covenant, Order, option, right of first
refusal, preemptive right, exception, reservation, limitation or impairment.
"Entity" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust or company (including any limited liability company or
joint stock company).
"Environmental Laws" means all federal, state and local statutes,
regulations, orders, and applicable rules of common law relating to pollution or
protection of the environment, including, without limitation, those relating to
Releases or threatened Releases of Hazardous Materials or otherwise relating to
the presence, production, generation, manufacture, processing, disposal,
distribution, labeling, testing, control, cleanup, use, treatment, storage,
transport or handling of Hazardous Materials.
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** Confidential Treatment Requested.
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"Environmental Permits" means any permit, approval, identification, number,
license and other authorization required under any applicable Environmental
Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement" means the escrow and security agreement between Buyer,
Seller and the Escrow Agent in the form attached hereto as Exhibit E.
"Excluded Transferred Inventory" means (a) all raw materials, work in
process and finished goods related to the Excluded Assets, wherever located and
whether held by Seller or third parties, which inventory shall remain the
property of Seller, but, to the extent located at the Manufacturing Facility,
shall remain located at the Manufacturing Facility for the benefit of Seller as
more specifically described in the Manufacturing and Supply Agreements, (b) all
inventory for Calcipotriene, and (c) all inventory for Fluticasone with a Net
Book Value in excess of [**].
"GAAP" means United States generally accepted accounting principles in
effect on the date on which they are to be applied pursuant to this Agreement,
applied consistently throughout the relevant periods.
"Generic Dermatology Business" means all of Seller's right, title, interest
and obligations to develop and manufacture the Generic Dermatology Products
pursuant to, and as more specifically set forth in, the Sandoz Agreement,
together with all Contracts and Governmental Approvals for or relating primarily
to the Generic Dermatology Products.
"Generic Dermatology Products" means those products listed on Schedule
2.01(d).
"Governmental Approval" means any: (a) permit, license, certificate,
concession, approval, consent, ratification, permission, clearance,
confirmation, exemption, waiver or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Authority
or pursuant to any Legal Requirement; or (b) right under any Contract with any
Governmental Authority.
"Governmental Approval Assignments" means those assignments necessary to
transfer the Governmental Approvals in the form attached hereto as Exhibit F.
"Governmental Authority" means the: (a) government of the United States or
any state, commonwealth, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal or other
government; (c) governmental or quasi governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal); or (d) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial, administrative, regulatory,
police, military or taxing or arbitral authority or power of any nature.
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** Confidential Treatment Requested.
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"Guarantee Agreement" means that certain guarantee agreement in the form
attached hereto as Exhibit G between Parent and Seller under which Parent shall
irrevocably and unconditionally guarantee Buyer's obligations under the
Promissory Note and Security Agreement.
"Hazardous Materials" means all substances defined as Hazardous Substances,
Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. Section 300.5, any petroleum,
hydrocarbons, petroleum products and any components, fractions, or derivatives
thereof, and any other substance, chemical, waste or material that is otherwise
regulated under any Environmental Law, including any that were used or generated
in the Manufacturing Business during the Pre-Closing Period.
"Independent Accounting Firm" means any big "four" accounting firm that
does not currently represent a Party or another independent accounting firm of
international reputation mutually acceptable to Buyer and Seller.
"Intellectual Property Rights" means any or all rights in and to
intellectual property and analogous intangible property rights, including,
without limitation, (a) Patents, Trade Secrets, Copyrights, and Trademarks, (b)
any rights similar, corresponding or equivalent to any of the foregoing anywhere
in the world, and (c) all rights thereunder (including the right to enforcement
for past infringements thereof), remedies related there to (including remedies
relating to past infringements thereof), and rights to protection of interests
therein under the laws of all jurisdictions.
"IRS" means the Internal Revenue Service.
"Key Contract" means those Seller Contracts designated as key contracts on
Schedule 2.01(l).
"Knowledge" or a similar statement qualifying a statement by the Seller's
knowledge means, when capitalized, actual knowledge of Michael R. Duncan, David
R. Speights, Sean F. Moriarty, Joe Winslow, Judy Goldberg or James Munro, after
reasonable investigation in the Ordinary Course of their respective duties.
"Legal Requirement" means any federal, state, local, municipal or other
law, statute, constitution, ordinance, code, Order, edict, decree, proclamation,
treaty, convention, rule, regulation, permit, ruling, directive, pronouncement,
requirement (licensing or otherwise), specification, determination or decision
that is, has been enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Authority.
"Liability" means any debt, obligation, duty or liability of any nature,
including without limitation, a contingent debt or liability, regardless of
whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
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"Manufacturing and Supply Agreements" means the Eligard(R) Manufacturing
and Supply Agreement, the Atrigel(R) Manufacturing and Supply Agreement and the
Aczone(R) Manufacturing and Supply Agreement.
"Manufacturing Business" means Seller's manufacture of the products
comprising the Generic Dermatology Business, the Dental Business and other
pharmaceutical products at the Manufacturing Facility.
"Manufacturing Facility" means the manufacturing facility located in Fort
Collins, Colorado comprised of approximately 60,000 sq. ft situated on
approximately eight (8) acres of land owned by Seller.
"Material Adverse Effect" means any circumstance, change, development or
event that has had, or is reasonably likely to have, a material adverse effect
on the business, assets, condition (financial or otherwise), operations or
results of operations of the Business taken as a whole, other than with respect
to any matters which, directly or indirectly, relate to or result from (a)
public or industry knowledge relating to the Transaction, (b) changes in GAAP or
regulatory accounting requirements, (c) changes generally adversely affecting
the United States economy or the generic pharmaceutical industry, or (d) war,
acts of terrorism or the outbreak of hostilities.
"Mortgage" means that certain deed of trust and fixture filing in the form
attached hereto as Exhibit H.
"Net Book Value" means the net book value of an asset calculated in
accordance with GAAP.
"No Shop Period" means that period of time commencing on the Effective Date
and ending on the Closing Date.
"Non-Competition Agreement" means that certain non-competition agreement
between Seller and Buyer in the form attached hereto as Exhibit I.
"Order" means any temporary, preliminary or permanent order, judgment,
injunction, edict, decree, ruling, pronouncement, determination, decision,
verdict, stipulation, subpoena, writ or award that is or has been issued, made,
entered, rendered or otherwise put into effect by or under the authority of any
Governmental Authority.
"Ordinary Course of Business" or "Ordinary Course" means occurrences in the
ordinary course of the Business, consistent with past practices (other than as a
result of a violation of Law or breach of contract).
"Owned and Leased Vehicles" means all vehicles owned by Seller and all
rights in vehicle leases to which Seller is a party, in either case that are
primarily used in the Business, all of which are listed on Schedule 2.01(h).
"Patents" means all United States and foreign patents and utility models
and applications therefor (including all reissues, divisions, re-examinations,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof), and all equivalent or similar rights anywhere in
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the world in inventions and discoveries, including, without limitation,
invention disclosures related to the Business or any Purchased Assets or Assumed
Liabilities and generated in connection with the Business, all as set forth on
Schedule 2.01(m).
"Permitted Encumbrance" means each of the following Encumbrances: (a) liens
for taxes, assessments and governmental charges that are not due and payable as
of the Closing Date or are being contested in good faith; (b) pledges or
deposits made in the Ordinary Course of Business, for which an adjustment is set
forth on Exhibit 2.06(a); (c) liens of mechanics, materialmen, warehousemen or
other like liens securing obligations incurred in the Ordinary Course of
Business that are not due and payable as of the Closing Date or are being
contested in good faith; (d) similar liens and encumbrances which are incurred
in the Ordinary Course of Business and which do not in the aggregate materially
detract from the value of any Purchased Asset or materially impair the use
thereof in the operation of the Business; (e) zoning laws and ordinances and
similar Legal Requirements regulating the use or occupancy of any parcel of Real
Property or the activities conducted thereon that are imposed by any
Governmental Authority having jurisdiction over such Real Property; (f) rights
reserved to any Governmental Authority to regulate the affected property; and
(g) as to any parcel of Real Property, any easements, rights-of-way, servitudes,
permits, restrictions and minor imperfections or irregularities in title which
are reflected in the public records and which do not individually or in the
aggregate interfere with the right or ability to own, use, occupy or operate the
Real Property or to convey good, marketable and indefeasible title to such Real
Property.
"Person" means any individual, Entity or Governmental Authority.
"Personal Property" means personal property, office furnishings, supplies,
tools, machinery, equipment and other tangible personal property primarily used
in the Business and located at the Manufacturing Facility, including the
Personal Property listed on Schedule 2.01(i).
"Personal Property Leases" means rights in leases of Personal Property to
which Seller is a party or by which any of the Personal Property is bound, all
of which are listed on Schedule 2.01(j).
"Pledge Agreement" means that stock pledge agreement between Parent and
Seller in the form attached hereto as Exhibit J.
"Post-Closing Period" means any taxable period beginning after the close of
business on the Closing Date or, in the case of any tax period which includes
any time before and after the close of business on the Closing Date, the portion
of such period beginning after the close of business on the Closing Date.
"Pre-Closing Period" means any taxable period ending at or before the close
of business on the Closing Date or, in the case of any taxable period which
includes any time before and after the close of business on the Closing Date,
the portion of such period at or before the close of business on the Closing
Date.
"Proceeding" means any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation that is or has been commenced,
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brought, conducted or heard at law or in equity or before any Governmental
Authority or any arbitrator or arbitration panel.
"Promissory Note" means that certain secured promissory note, in the form
attached hereto as Exhibit K, in the aggregate principal amount of Eight Million
Four Hundred Thousand Dollars ($8,400,000).
"QLT USA Products" means the products to be manufactured by Buyer for
Seller under the Manufacturing and Supply Agreements, including all know-how,
Patents, regulatory approvals and other assets related thereto.
"Real Property" means that certain parcel of land located in Fort Collins,
Colorado, in the County of Larimer, State of Colorado, consisting of
approximately eight (8) acres as more particularly described on Schedule
2.01(k), together with all easements and interests appurtenant thereto
including, but not limited to, any streets or other public ways adjacent to the
Real Property and any appurtenant development rights or water or mineral rights.
"Real Property Improvements" means all improvements located on the Real
Property, including the Manufacturing Facility.
"Real Property Lease" means rights in real estate leases primarily used in
the Business to which Seller is a party.
"Receivables" means all accounts and notes receivable, checks and
negotiable instruments payable to Seller arising out of or relating to the
Business.
"Release" means any release, spill, emission, discharge, leaking, pumping,
pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration
of Hazardous Materials.
"Representatives" means officers, directors, employees, attorneys,
accountants, advisors and agents of a Party.
"Sandoz Agreement" means, collectively, that certain Collaboration, License
and Supply Agreement between Seller, and Sandoz Inc. (formerly know as Geneva
Pharmaceuticals, Inc.) dated August 28, 2000, as subsequently amended by
Amendment No. 1 to Collaboration, License and Supply Agreement dated July 17,
2003, as subsequently amended by Amendment No. 2 to Collaboration, License and
Supply Agreement dated November 11, 2004, including QLT USA's rights under that
certain Common Interest Agreement, dated June 27, 2006, between QLT USA and
Sandoz Inc.
"Security Agreement" means that certain security agreement between Buyer
and Seller in the form attached hereto as Exhibit L.
"Security Documents" means the Promissory Note, the Security Agreement, the
Pledge Agreement, the Guarantee and the Mortgage.
"Seller Assigned Intellectual Property" means all Seller Intellectual
Property owned by Seller and exclusively related to the Business, the Purchased
Assets, or the Assumed Liabilities.
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"Seller Assigned Intellectual Property Contracts" means all Seller
Intellectual Property Contracts under which Seller has acquired or been granted,
or granted or conveyed, any license, permission or other right to utilize any
Seller Intellectual Property exclusively related to the Business, the Purchased
Assets, or the Assumed Liabilities.
"Seller Contracts" means collectively all Contracts and rights under any
and all Contracts to which Seller is a party or is subject or by which Seller is
bound solely in connection with the Business or to which the Business is
subject, all of which are listed on Schedule 2.01(l).
"Seller Intellectual Property" means all Intellectual Property Rights
necessary for the Business as presently conducted, including, without
limitation, as applicable, the manufacture, use, sale and other enjoyment of the
Seller Products and the use of the Purchased Assets as currently utilized in the
Business, but excluding software licenses for generally available software used
in the Business that either requires consent, license or payment of a fee to
assign.
"Seller Intellectual Property Contract" means any Contract under which
Seller has acquired or been granted, or is granted or conveyed, any license,
permission or other right to utilize any Seller Intellectual Property.
"Seller Licensed Intellectual Property" means all Seller Intellectual
Property not exclusively related to the Business, the Purchased Assets, or the
Assumed Liabilities.
"Seller Products" means the Generic Dermatology Products and the Dental
Products.
"Tax" or "Taxes" means (a) any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalty,
addition-to-tax or additional amount imposed by any Governmental Authority
(domestic or foreign) responsible for the imposition of any such tax, (b) any
Liability of Seller for the payment of any amount of the type described in
clause (a) above as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (c) any Liability of Seller for the payment of
any amount as a result of being party to any tax sharing agreement or with
respect to the payment of any amounts of the type described in clauses (a) or
(b) above as a result of any express or implied obligation to indemnify any
other Person.
"Tax Authority" means Governmental Authority responsible for the
imposition, assessment or collection of any Tax.
"Tax Return" means any return, statement, declaration, notice, certificate
or other document that is or has been filed with or submitted to, or required to
be filed with or submitted to, any Governmental Authority in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement related to any Tax.
"Trade Secrets" means all trade secrets and other rights in know-how and
confidential or proprietary information under applicable law throughout the
world, including, without limitation
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(financial, business, processing, manufacturing or marketing information, new
developments, inventions, processes, and ideas), and all other proprietary
information, in all such cases, that provide Seller with advantages over
competitors who do not know or use it, as well as any and all documentation
thereof (including all related lists, papers, blueprints, drawings or
descriptions or identities of compositions, formulae, diaries, notebooks,
specifications, designs, methods of manufacture and methods of processing,
software, technical information, and compilations) and all associated claims and
rights related thereto (excluding, for the avoidance of doubt, rights subject to
issued or published Patents, Copyrights in published works, and Trademarks).
"Trademarks" means any and all registered and unregistered trademarks,
service marks, and general intangibles of a similar nature (including, without
limitation, all logos, trade names, corporate names, trade dress, slogans, and
product names), as well as all Internet domain names and addresses and
general-use e-mail addresses, and all goodwill associated therewith throughout
the world.
"Transaction" or "Transactions" means, collectively, the transactions
contemplated by this Agreement.
"Transaction Documents" means this Agreement, all Exhibits and attachments
thereto, and all other agreements, certificates, instruments, documents and
writings delivered by Parent, Buyer and/or Seller in connection with the
Transaction.
"Transfer Taxes" means all federal, state, local or foreign sales, use,
transfer, real property transfer, mortgage recording, stamp duty, value-added or
similar Taxes that may be imposed in connection with the transfer of Purchased
Assets or assumption of Assumed Liabilities, together with any interest,
additions to Tax or penalties with respect thereto and any interest in respect
of such additions to Tax or penalties.
"Transferred Inventory" means all inventory of Seller Products and all raw
materials, work in process and finished goods primarily used in the Business
(other than the Excluded Transferred Inventory), wherever located and whether
held by Seller or third parties, all of which is listed on Schedule 2.01(g)
(which Schedule 2.01(g) describes such Transferred Inventory in reasonable
detail and includes the following information with respect to each item of
Transferred Inventory: inventory date, book value, item number and description,
type, unit of measure, unit cost, stock room location, total quantity, total
cost, manufacturing date, and expiration date), but excluding the Excluded
Transferred Inventory.
"Transition Services Agreement" means that certain transition services
agreement between Buyer and Seller in the form attached hereto as Exhibit M.
(b) Each of the following terms is defined in the section set forth
opposite such term below:
Assumed Liabilities Section 2.03
Bankruptcy Code Section 5.07(e)
Biologic Section 4.10(a)
Burrill Section 4.18
Buyer Preamble
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Buyer Damages Section 9.02
Buyer Defined Contribution Plan Section 6.03(a)
Buyer Welfare Benefit Plans Section 6.02(d)
Buyer's Basket Section 9.06(b)(i)
Buyer's Indemnification Cap Section 9.06(b)(ii)
Claim Notice Section 9.05(a)(i)(A)
Closing Date Section 3.01
COBRA Qualified Beneficiaries Section 7.04
Drug Section 4.10(a)
Effective Date Preamble
Employees Section 4.12(a)
Escrow Section 2.04(b)
Escrow Agent Section 2.04(b)
Escrow Amount Section 2.04(b)
Escrow Payment Section 2.04(b)
Escrow Percentage Section 2.04(b)
Excluded Assets Section 2.02
Excluded Liabilities Section 2.03
FDA Section 4.14
FDCA Section 4.14
General Assignment and Bill of Sale Section 3.02(a)
Indemnitee Section 9.05(a)(i)
Indemnitor Section 9.05(a)(i)
Initial Payment Section 2.04(a)(i)
Notice Period Section 9.05(a)(i)(B)
Parent Preamble
Parties Preamble
Party Preamble
Permits Section 4.14
Post-Closing Certificate Section 2.06(b)
Pre-Closing Certificate Section 2.06(a)
Pro Forma Income Statement Section 4.04
Purchase Price Section 2.04(a)
Purchased Assets Section 2.01
Required Consents Section 4.03
Restricted Asset Section 2.09(a)
Seller Preamble
Seller Damages Section 9.03
Seller Disclosure Schedule ARTICLE IV
Seller Plans Section 4.13
Seller Registered Intellectual Property Rights Section 4.09(a)
Seller's Basket Section 9.06(a)(i)
Seller's Indemnification Cap Section 9.06(a)(ii)
Survival Date Section 9.01
Third Party Acquisition Section 6.03
Title Commitments Section 5.07
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Title Company Section 5.07
Title Policies Section 3.02(l)
Transferred Employee Section 6.02(a)
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section 2.01 SALE AND PURCHASE. Subject to the terms and conditions set
forth in this Agreement, at the Closing, Seller shall sell, transfer, convey,
assign and deliver to Buyer, and Buyer shall purchase from Seller, all of
Seller's right, title and interest in the assets, properties, goodwill and
rights of Seller primarily used in the Business, other than the Excluded Assets
(collectively, the "Purchased Assets"), including the following:
(a) the Books and Records;
(b) the Dental Products;
(c) the Deposits and Advances;
(d) the Generic Dermatology Products;
(e) the Governmental Approvals (and pending applications therefor)
necessary to conduct the Business, all of which are listed on Schedule
2.01(e);
(f) the Real Property Improvements;
(g) the Transferred Inventory;
(h) the Owned and Leased Vehicles;
(i) the Personal Property;
(j) the Personal Property Leases;
(k) the Real Property;
(l) the Seller Contracts and Seller Assigned Intellectual Property
Contracts;
(m) the Seller Assigned Intellectual Property;
(n) all goodwill generated by or associated with the Business; and
(o) all other assets, properties, rights and claims (excluding
Intellectual Property Rights not otherwise included in subsections (a)
through (n) above) primarily used in the Business, including, without
limitation, all pending claims under any insurance policy of Seller to the
extent such claims relate to damage to any Purchased Asset, to any Assumed
Liability, or to the Business.
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Section 2.02 EXCLUDED ASSETS. Notwithstanding the provisions of Section
2.01, the Purchased Assets shall not include the following (collectively, the
"Excluded Assets"):
(a) cash, cash equivalents, marketable securities and Receivables;
(b) any intercompany or intracompany receivable cash balances between
Seller and any of its Affiliates or between any of its Affiliates;
(c) corporate seals, certificates of incorporation, minute books,
stock transfer records, or other records related to the corporate
organization of Seller;
(d) the Seller Plans and contracts of insurance for employee group
medical, dental and life insurance plans and all insurance policies and
rights and claims thereunder;
(e) the assets listed on Schedule 2.02(e);
(f) subject to Section 2.01(o), all insurance policies and rights and
claims thereunder;
(g) all personnel records (but at the Closing Seller shall deliver to
Buyer copies of all such excluded records relating to the Transferred
Employees, other than any employee medical or other records that Seller is
prohibited from disclosing to Seller under applicable Legal Requirements)
and other records, including batch records and similar manufacturing
records that Seller is required to maintain in its possession under
applicable Legal Requirements (but at the Closing Seller shall deliver to
Buyer copies of all such batch records and similar manufacturing records
relating to the Purchased Assets or the Assumed Liabilities, primarily used
in the Business, other than any such records that Seller is prohibited from
disclosing to Seller under applicable Legal Requirements);
(h) all rights of Seller under the Transaction Documents;
(i) the Excluded Transferred Inventory; and
(j) all assets, of whatever nature, not primarily used in the
Business, including, without limitation, the QLT USA Products and all
polymer manufacturing equipment, contracts to purchase raw materials,
license, distribution and contract manufacturing agreements for or related
to the QLT USA Products. For the avoidance of doubt, all assets not
specifically set forth on the Schedules referenced in Section 2.01 of this
Agreement shall be deemed Excluded Assets.
Section 2.03 ASSUMED LIABILITIES. Subject to the terms and conditions of
this Agreement, at the Closing, Seller shall assign, and Buyer shall assume, the
Assumed Liabilities. For the purposes of this Agreement, the "Assumed
Liabilities" shall mean only the following Liabilities of Seller, and in any
event shall not include any Excluded Liabilities: (a) all accrued Liabilities of
the Business for which Buyer receives a credit under Section 2.05, (b) those
obligations and Liabilities attributable to periods after Closing under the
Seller Contracts and Governmental Approvals (and pending applications therefor)
that are included in the Purchased
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Assets, (c) other obligations and Liabilities of Seller only to the extent that
there shall be an adjustment in favor of Buyer with respect thereto pursuant to
Section 2.05, (d) all obligations and liabilities arising out of Buyer's
ownership of the Purchased Assets or operation of the Business after Closing,
and (e) all Liabilities arising after the Closing attributable to the
Transferred Employees. Except only for Assumed Liabilities, Buyer does not
assume, and shall not have any responsibility for, any liabilities or
obligations of Seller, including but not limited to Liabilities or obligations
associated with Excluded Assets (collectively, the "Excluded Liabilities").
Without limiting the generality of the foregoing, Buyer does not assume, and
shall not have any responsibility for, any Liabilities or obligations of Seller
arising from or relating to any of the Excluded Liabilities set forth on
Schedule 2.03.
Section 2.04 PURCHASE PRICE.
(a) Subject to the terms of this Agreement, as full consideration for
the sale, transfer, conveyance, assignment and delivery of the Purchased
Assets and the execution and delivery of the Transaction Documents by
Seller to Buyer, Buyer shall pay to Seller Twenty-Two Million Dollars
($22,000,000), as such sum may be adjusted pursuant to the provisions of
this Agreement (the "Purchase Price"). The Purchase Price, plus or minus
prorations and other adjustments pursuant to this Agreement, shall be paid
to Seller as follows:
(i) on the Effective Date, Buyer shall deposit with the Escrow
Agent a sum equal to Twelve Million Six Hundred Thousand Dollars
($12,600,000) (the "Initial Payment"), in immediately available U.S.
funds. On the Closing Date the Initial Payment, less the Escrow
Percentage (which shall be remain deposited with the Escrow Agent as
described in Section 2.04(b)) shall be delivered to Seller and
credited against the Purchase Price, and all interest accrued on the
Initial Payment while deposited with the Escrow Agent shall be
delivered to Buyer;
(ii) no later than February 28, 2007, Buyer shall pay to Seller
Four Million Two Hundred Thousand Dollars ($4,200,000), less the
Escrow Percentage (which shall be deposited with the Escrow Agent as
described in Section 2.04(b)), by wire transfer of immediately
available U.S. funds, provided that Buyer may elect to prepay such
amount at any time, in whole or in part, without premium or penalty;
(iii) no later than March 31, 2007, Buyer shall pay to Seller
Four Million Two Hundred Thousand Dollars ($4,200,000), less the
Escrow Percentage (which shall be deposited with the Escrow Agent as
described in Section 2.04(b)), by wire transfer of immediately
available U.S. funds, provided that Buyer may elect to prepay such
amount at any time, in whole or in part, without premium or penalty;
and
(iv) within ten (10) Business Days following the occurrence of
the Earn-Out Event, Buyer shall pay to Seller One Million Dollars
($1,000,000) by wire transfer of immediately available U.S. funds;
provided, however, that if the
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Earn-Out Event does not occur, then Buyer shall have no obligation to
make such payment to Seller and the Purchase Price shall be reduced
accordingly.
(b) Without limiting the generality of Sections 2.04(a)(i) through
(iii), as security for the indemnification obligations of Seller under this
Agreement, concurrently with any payment made pursuant to Sections
2.04(a)(i) through (iii) Buyer shall deliver by wire transfer of
immediately available U.S. funds to SunTrust Bank, a Georgia banking
corporation, as escrow agent (the "Escrow Agent"), and Escrow Agent shall
retain, ten percent (10%) (the "Escrow Percentage") of each such payment of
Purchase Price payable by Buyer under Sections 2.04(a)(i) through (iii)
(each an "Escrow Payment"). The Escrow Payments shall be held in escrow
(the "Escrow") in accordance with the terms of the Escrow Agreement. For
the avoidance of doubt, at any time on or after the Closing Date the
aggregate Escrow Payments (collectively, the "Escrow Amount") held in
escrow shall not exceed ten percent (10%) of the aggregate Purchase Price
that would have been paid to Seller, absent the Escrow Payments.
(c) SECURITY FOR SUBSEQUENT PAYMENTS. As security for Buyer's
obligations to make the payments set forth in Sections 2.04(a)(ii) through
(iii), at the Closing Buyer shall execute and deliver the Promissory Note,
the Security Agreement, the Mortgage, the Pledge Agreement and the
Guarantee Agreement. Upon Seller's receipt of the payment set forth in
Section 2.04(a)(iii), Seller shall promptly (and in any event within three
(3) Business Days) take all necessary and appropriate action to cause the
Promissory Note, the Security Agreement, the Mortgage, the Pledge Agreement
and the Guarantee Agreement to be terminated and any collateral secured
thereby to be released. If Buyer provides Seller with at least five (5)
Business Days notice before such payment is to be made, Seller shall
cooperate with Buyer to provide that such terminations and releases shall
occur substantially simultaneously with Seller's receipt of such payment.
Section 2.05 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be
subject to adjustment as follows:
(a) The Purchase Price shall be adjusted on a pro rata basis as of the
Closing Date for all prepaid expenses (to the extent such prepayments may
accrue to Buyer's benefit), accrued expenses and Liabilities (including but
not limited to real and personal property Taxes), and prepaid income and
deposits, all as determined in accordance with Seller's past accounting
treatment thereof, consistently applied, and to reflect the principle that
all expenses and income attributable to the Business for the Pre-Closing
Period are for the account of Seller, and all expenses and income
attributable to the Business for the Post-Closing Period are for the
account of Buyer.
(b) There shall be credited to the account of Seller and become the
property of Buyer (but only to the extent that Buyer is entitled to the
benefit or value thereof after Closing), deposits relating to the Business
that are held by third parties as of the Closing Date for the account of
Seller or as security for Seller's performance of its obligations (other
than with respect to Excluded Assets and any other deposits the full
benefit of which will not be available to Buyer following the Closing),
including deposits on leases and deposits for utilities.
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(c) The Purchase Price shall be adjusted, upward or downward, to
reflect the amount by which the Net Book Value of the Transferred Inventory
delivered to Buyer on the Closing Date is greater or less than [**].
(d) There shall be credited to the account of Buyer, [**] of the
Transfer Taxes paid by Buyer on behalf of Seller in accordance with Section
2.07(a).
Section 2.06 DETERMINATION OF ADJUSTMENTS. Preliminary and final
adjustments to the Purchase Price shall be determined as follows:
(a) On the Effective Date, Seller shall deliver to Buyer a report
substantially in the form attached hereto as Exhibit 2.06(a) (the
"Pre-Closing Certificate"), certified as to completeness and accuracy by
Seller, showing in detail the preliminary determination of the adjustments
referred to in Section 2.05, if any, calculated as of the Closing Date, and
any documents substantiating the adjustments proposed in the Pre-Closing
Certificate.
(b) Within thirty (30) days after Closing, Seller shall deliver to
Buyer a report (the "Post-Closing Certificate"), certified by Seller in the
same manner as the Pre-Closing Certificate, showing in detail the final
determination of all adjustments which were not calculated as of the
Closing Date and containing any corrections to the Pre-Closing Certificate,
together with any documents substantiating the adjustments proposed in the
Post-Closing Certificate. Buyer shall provide Seller with reasonable access
to all records which Buyer has in its possession and which are necessary
for Seller to prepare the Post-Closing Certificate.
(c) Within thirty (30) days after receipt of the Post-Closing
Certificate, Buyer shall give Seller written notice of Buyer's objections,
if any, to the Post-Closing Certificate. If Buyer makes any such objection,
the Parties shall endeavor to resolve Buyer's objections within thirty (30)
days after Seller's receipt thereof. If Buyer and Seller are unable to
resolve such objections within such thirty (30)-day period, Seller and
Buyer shall cause the Independent Accounting Firm to resolve any remaining
disputed amounts within one hundred twenty (120) days after the Closing
Date. The determination of the Independent Accounting Firm shall be
conclusive and binding upon Seller and Buyer, and Seller and Buyer shall
bear equally the fees and expenses payable to the Independent Accounting
Firm in connection with such determination. Within (i) ninety (90) days
after the Closing Date, if Buyer does not timely object to the Post-Closing
Certificate, or if it does so but its objections are resolved within the
thirty (30)-day period provided above, or (ii) otherwise, within ten (10)
Business Days after Buyer's objections are resolved as provided above;
Buyer shall pay to Seller, or Seller shall pay to Buyer, as applicable, the
amount by which the Purchase Price as finally determined is more or less,
respectively, than the amount of the Purchase Price as estimated in the
Pre-Closing Certificate.
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** Confidential Treatment Requested.
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Section 2.07 TRANSFER TAXES; PRORATIONS.
(a) Notwithstanding any Legal Requirements to the contrary, each of
Buyer and Seller shall be responsible for [**] of any and all Transfer
Taxes when due, and Buyer shall, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Transfer Taxes.
Buyer shall pay the full amount of such Transfer Taxes and the Purchase
Price shall be adjusted to reflect Buyer's payment of Seller's portion of
such Transfer Tax.
(b) Seller shall be responsible for and shall pay any Taxes arising or
resulting from or in connection with the conduct of the Business or the
ownership of the Purchased Assets attributable to the Pre-Closing Period.
Buyer shall be responsible for and shall pay any Taxes arising or resulting
from or in connection with the conduct of the Business or the ownership of
the Purchased Assets attributable to the Post-Closing Period.
(c) All real property, personal property, ad valorem or other similar
Taxes (not including income Taxes) levied with respect to the Purchased
Assets or the Business for a taxable period which includes (but does not
end on) the Closing Date shall be apportioned between Buyer and Seller
based on the number of days included in such period through but excluding
the Closing Date and the number of days included in such period on and
after the Closing Date.
Section 2.08 ALLOCATION OF PURCHASE PRICE. The Parties agree to allocate
the Purchase Price among the Purchased Assets as specified on Schedule 2.08. The
allocation of the Purchase Price set forth on Schedule 2.08 is intended to
comply with the requirements of Section 1060 of the Code. The Parties agree
that:
(a) such allocation was determined in an arm's length negotiation and
that none of the Parties shall take a position on any Tax Return (including
IRS Form 8594), before any Tax Authority or in any Proceeding that is in
any way inconsistent with such allocation without the written consent of
the other Party or unless specifically required pursuant to a determination
by an applicable Tax Authority;
(b) they shall cooperate with each other in connection with the
preparation, execution and filing of all Tax Returns related to such
allocation; and
(c) they shall promptly advise each other regarding the existence of
any tax audit, controversy or litigation related to such allocation.
Section 2.09 ASSIGNMENT AND ASSUMPTION.
(a) Notwithstanding anything herein to the contrary, if an attempted
sale, assignment, transfer or delivery of any Purchased Asset would be
ineffective without the Consent of any third party, or if such an act would
violate the rights of any third party in such Purchased Asset or otherwise
affect adversely the rights of Buyer in such Purchased Asset, and the
applicable Consent has not been obtained on or prior to the Closing Date,
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** Confidential Treatment Requested.
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this Agreement shall not constitute an actual or attempted sale,
assignment, transfer or delivery of such Purchased Asset (each, a
"Restricted Asset"). Unless and until any such Consent is obtained, such
Restricted Asset shall not constitute a Purchased Asset and any associated
Liability shall not constitute an Assumed Liability for any purpose
hereunder except to the extent provided in Section 2.09(c).
(b) In any such case, Seller shall use commercially reasonable efforts
to obtain, as soon as practicable, such Consent. Buyer shall cooperate
reasonably with Seller in obtaining such Consents, provided, that Buyer
shall not be required to pay any cash consideration therefor or give or
allow to remain in effect any guaranty, letter of credit, performance bond
or other financial assurance. As soon as such Consent is obtained, Seller
shall sell, transfer, convey, assign and deliver to Buyer, for no
additional consideration, all of Seller's right, title and interest in such
Restricted Asset, and such Restricted Asset shall constitute a Purchased
Asset and all associated Liabilities shall constitute Assumed Liabilities
for all purposes hereunder.
(c) Until such Consent shall have been obtained, Seller shall at its
expense effect an alternate arrangement, in the form of a license,
sublease, operating agreement or other arrangement, in any case reasonably
satisfactory to Buyer, which results in Buyer receiving all the benefits
and bearing all the ordinary course costs, Liabilities and other
obligations with respect to each Restricted Asset, from the Closing Date
until such time as such Consent is obtained, that Buyer would have received
and borne, respectively, if such Restricted Asset had constituted a
Purchased Asset as of the Closing.
ARTICLE III
THE CLOSING
Section 3.01 TIME AND PLACE OF CLOSING. The Closing shall occur at the
offices of Morrison & Foerster LLP, 370 Seventeenth Street, Suite 5200, Denver,
Colorado 80202, at 10:00 a.m., local time, on December 22, 2006 or such other
date and time as is mutually agreed to by the Parties (the "Closing Date").
Section 3.02 DELIVERIES BY SELLER. On the Effective Date, Seller shall
deliver the following items (duly executed by Seller and notarized as
appropriate) to the Escrow Agent for delivery to Buyer at the Closing, all of
which shall be in form and substance reasonably acceptable to Buyer:
(a) General Assignment and Bill of Sale covering all of the applicable
Purchased Assets, substantially in the form attached hereto as Exhibit
3.02(a) (the "General Assignment and Bill of Sale");
(b) any and all documents necessary to properly assign, and to
properly record the assignment, to Buyer of all of Seller's right, title
and interest in and to the Seller Assigned Intellectual Property in the
United States in the forms attached hereto as Exhibit 3.02(b)-1 and
3.02(b)-2;
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(c) a special warranty deed conveying the Real Property free and clear
of all Encumbrances other than the Permitted Encumbrances in the form
attached hereto as Exhibit 3.02(c);
(d) the Governmental Approval Assignments;
(e) such other specific instruments of sale, transfer, conveyance and
assignment as Buyer may request;
(f) assignments of all Personal Property Leases;
(g) vehicle titles and assignments sufficient to transfer title to the
Owned and Leased Vehicles;
(h) an affidavit of Seller, under penalty of perjury, that Seller is
not a "foreign person" (as defined in the Foreign Investment in Real
Property Tax Act and applicable regulations) and that Buyer is not required
to withhold any portion of the consideration payable under this Agreement
under the provisions of such Act, in the form attached as Exhibit 3.02(h);
(i) the Required Consents for the Key Contracts and such other Seller
Contracts that have been obtained by Seller, duly executed by the
applicable third party, in form and substance reasonably satisfactory to
Buyer;
(j) with respect to any financing statements filed against any of the
Purchased Assets, UCC-3 termination statements;
(k) an opinion, dated as of the Closing Date, from Morrison & Foerster
LLP, Seller's legal counsel, substantially in the form attached hereto as
Exhibit 3.02(k);
(l) the irrevocable written commitment of the Title Company to deliver
to Buyer an ALTA 1992 standard form owner's policies of title insurance,
insuring a fee or leasehold interest, as applicable, in each parcel of the
Real Property, all premiums and charges for which shall have been paid by
Seller (the "Title Policies"), the premiums for additional endorsements or
extended coverage, to the extent requested by Buyer shall be paid by Buyer;
(m) a certificate of Seller's Secretary certifying as to: (i) the
certificate of incorporation and bylaws of Seller as in effect as of the
Effective Date, (ii) resolutions of Seller's stockholders and its board of
directors authorizing the execution, delivery and performance of this
Agreement and of all other Transaction Documents, and (iii) the incumbency
of Seller's officers executing this Agreement and all other Transaction
Documents; and
(n) a certificate from the Secretary of State of Colorado and Delaware
as to Seller's good standing.
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Section 3.03 DELIVERIES BY BUYER. On the Effective Date, Buyer shall
deliver the following items (duly executed by Buyer and notarized as
appropriate) to the Escrow Agent for delivery to Seller at the Closing, all of
which shall be in a form and substance reasonably acceptable to Seller:
(a) the Initial Payment;
(b) a certificate of Buyer's Secretary certifying as to, as
applicable: (i) the certificate of incorporation and bylaws of Buyer as in
effect as of the Effective Date, (ii) resolutions of Buyer's and Parent's
stockholders, if applicable, and board of directors authorizing the
execution, delivery and performance of this Agreement and of all other
Transaction Documents, and (iii) the incumbency of Buyer's and Parent's
officers executing this Agreement and all other Transaction Documents;
(c) the Non-Competition Agreement; and
(d) the Promissory Note and the Mortgage.
Section 3.04 DELIVERIES BY THE PARTIES. On the Effective Date, Parent,
Buyer and Seller, as applicable, shall deliver the following items (duly
executed by the applicable Party and notarized, as appropriate) to the Escrow
Agent for delivery to the applicable Party at Closing:
(a) the Assignment and Assumption Agreement;
(b) each of the Manufacturing and Supply Agreements;
(c) the Transition Services Agreement;
(d) the Escrow Agreement;
(e) the Security Agreement, the Pledge Agreement and the Guarantee
Agreement; and
(f) such other certificates, instruments or documents required
pursuant to the provisions of this Agreement or otherwise necessary or
appropriate to transfer the Purchased Assets or assume the Assumed
Liabilities in accordance with the terms hereof and consummate the
Transaction.
Section 3.05 FURTHER ASSURANCES. Subject to the terms and conditions
hereof, each Party hereto shall use its reasonable best efforts to take all
action required of it to fulfill its obligations under the terms of this
Agreement and to facilitate the consummation of the Transaction. In furtherance
thereof, Seller agrees to deliver or provide to Buyer on or immediately
following the Closing Date:
(a) all files relating to FDA drug or device applications, including
all approvals and pending approvals, and all FDA site approvals, in each
case relating to any Purchased Asset;
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(b) the Books and Records, as mutually agreed to by Buyer and Seller,
including, without limitation, as described in the definition of "Books and
Records";
(c) copies of all personnel records and other records that Seller is
retaining in its possession as required by applicable Legal Requirements
relating to the Transferred Employees, other than any medical or other
records of the Transferred Employees that Seller is prohibited from
disclosing to Buyer pursuant to applicable Legal Requirements; and
(d) such assistance to Buyer as is reasonably necessary to record the
Seller Assigned Intellectual Property and Seller Assigned Intellectual
Property Contracts, whether inside or outside the United States.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the corresponding schedule of the disclosure
schedule of Seller delivered to Buyer concurrently with the execution and
delivery of this Agreement (the "Seller Disclosure Schedule") (provided, that if
any fact or item disclosed in any schedule of the Seller Disclosure Schedule
shall be relevant to any other section of this Agreement, then such fact or item
shall be deemed to be disclosed with respect to such other section of this
Agreement, but only to the extent to which it is readily apparent on its face
that such fact or item is so relevant), Seller hereby represents and warrants to
Buyer that, as of the Effective Date and as of the Closing Date:
Section 4.01 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
conducted. Seller is duly qualified or licensed as a foreign corporation to
conduct business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing, individually
or in the aggregate, would not have a Material Adverse Effect.
Section 4.02 AUTHORITY. Seller has all corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
Seller is a party, to perform its obligations hereunder and thereunder, and to
consummate the Transaction. The execution and delivery of this Agreement and the
other Transaction Documents to which Seller is a party and the consummation by
Seller of the Transaction have been duly and validly authorized by all corporate
action and no other corporate proceeding on the part of Seller is necessary to
authorize this Agreement and the other Transaction Documents or to consummate
the Transaction. This Agreement has been, and at Closing the other Transaction
Documents to which Seller is a party will be duly and validly executed and
delivered by Seller and assuming the due authorization, execution and delivery
by Buyer, this Agreement constitutes, and at Closing the other Transaction
Documents to which Seller is a party will constitute, the legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with
their
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respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
related to or limiting creditors' rights generally and by the availability of
equitable remedies and defenses.
Section 4.03 NO CONFLICTS; REQUIRED CONSENTS. No Consents other than those
set forth in Schedule 4.03 (the "Required Consents") are required with respect
to Seller's execution and delivery of this Agreement, the other Transaction
Documents, and the consummation of the Transaction. The execution, delivery and
performance of this Agreement and the other Transaction Documents by Seller do
not and will not, with or without notice or lapse of time (a) conflict with or
violate Seller's Certificate of Incorporation or bylaws; (b) conflict with or
violate any Legal Requirement applicable to Seller or by which any property or
asset of Seller is bound or affected, except where the existence of such
conflict or violation would not, individually or in the aggregate, have a
Material Adverse Effect; (c) assuming the Consents listed in Schedule 4.03 are
obtained, result in any breach of or constitute a default under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of any Encumbrance on, any Purchased Asset; (d) violate
or conflict with any other material restriction of any kind or character to
which Seller is subject, except where the existence of violation or conflict
would not, individually or in the aggregate, have a Material Adverse Effect; or
(e) require Seller to obtain any Consent of, or make or deliver any filing or
notice to, a Governmental Authority.
Section 4.04 FINANCIAL STATEMENTS. Seller has delivered to Buyer an
unaudited pro forma income statement of the Business for the nine (9) months
ended September 30, 2006 (the "Pro Forma Income Statement"), a copy of which is
set forth on Schedule 4.04. The Pro Forma Income Statement was prepared in good
faith, upon reasonable estimates and reflects the best currently available
judgments of Seller's management, after giving effect to the terms of the
Transaction, as to those historical revenues and operating expenses directly
attributable to the Business, based on Seller's accounting books and records and
internal accounting practices, as more specifically described in the notes
accompanying the Pro Forma Income Statement (including the adjustments,
assumptions and qualifications set forth therein).
Section 4.05 ABSENCE OF CHANGES. Other than as disclosed on Schedule 4.05,
since September 30, 2006:
(a) Seller has conducted the Business in the Ordinary Course of
Business;
(b) no event or circumstance has occurred that has had or is
reasonably likely to have a Material Adverse Effect;
(c) Seller has not taken any action, agreed to take any action, or
omitted to take any action that would constitute a breach of Section 6.01
if such action or omission were taken between the Effective Date and the
Closing Date;
(d) Seller has not made any capital expenditure (or series of related
capital expenditures) with respect to the Business other than in the
Ordinary Course of Business;
(e) Seller has not transferred, assigned, or granted any license or
sublicense of any rights under or with respect to any Seller Intellectual
Property;
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(f) Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to the Business;
(g) Seller has not adopted, amended, modified, or terminated any
Seller Plan;
(h) Seller has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement, in each case that would apply to any
of the Transferred Employees;
(i) Seller has not granted any increase in the base compensation of
any of the Transferred Employees outside the Ordinary Course of Business;
(j) Seller has not made any other change in employment terms for any
of the Transferred Employees outside the Ordinary Course of Business; and
(k) Seller has not committed to do any of the foregoing.
Section 4.06 SELLER CONTRACTS.
(a) Schedule 2.01(l) provides a true and complete list of each Seller
Contract. Seller has provided Buyer with true and accurate copies of all
Seller Contracts. The rights acquired under each Seller Contract will be
exercisable and enforceable by Buyer on and after the Closing to the same
extent as by Seller prior to the Closing.
(b) Each Seller Contract is valid and binding on Seller subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforceability is considered in a Proceeding at law or in equity) and, to
the Knowledge of Seller, each other party thereto, and is in full force and
effect, except with respect to those Seller Contracts, other than Key
Contracts, as would not be reasonably likely to have a Material Adverse
Effect. Seller has not received any written notice from any other party to
any Seller Contract, and otherwise has no Knowledge, that such third party
intends to terminate, not renew, or challenge the validity or
enforceability of any Seller Contract, except for such terminations,
non-renewals or challenges related to Seller Contracts, other than Key
Contracts, as would not be reasonably likely to have a Material Adverse
Effect. Seller is not and, to the Knowledge of Seller, no other party
thereto, is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both
would cause such a violation of or default under) any Seller Contract to
which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults to Seller Contracts, other than
Key Contracts, that individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect. True and complete copies of each
written Seller Contract and true and complete written summaries of each
oral Seller Contract (including all amendments, supplements, modifications
and waivers thereof) have been made available or provided to Buyer by
Seller.
(c) The Seller Contracts, taken as a whole, constitute all of the
Contracts necessary to enable Seller to conduct the Business as presently
conducted.
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(d) Seller has not granted a written power of attorney to any Person,
which power of attorney authorizes such Person to take any action on behalf
of Seller that would result in a valid and binding obligation on Seller
with respect to the Purchased Assets or the Business, except for the
implicit authority of officers of a Delaware corporation to act on behalf
of a corporation and as set forth in Seller's organizational documents or
resolutions of its board of directors.
Section 4.07 TITLE; SUFFICIENCY; CONDITION OF ASSETS.
(a) Except as set forth in Schedule 4.07, Seller has good and valid
title to all of the Purchased Assets, free and clear of any Encumbrances
except the Permitted Encumbrances or the licenses and grants to other
Persons included in a Seller Intellectual Property Contract. None of the
Permitted Encumbrances could reasonably be expected to materially impair
the continued use and operation of the Purchased Assets with respect to the
Business as presently conducted. No Purchased Asset is subject to any
preemptive right, right of first refusal or other right or restriction.
(b) Except as set forth in Schedule 4.07, the sale, transfer and
assignment of the Purchased Assets as contemplated by this Agreement will
give Buyer possession of all the assets, taken as a whole, required to
operate the Business as presently conducted. To the Knowledge of Seller,
there are no facts or conditions affecting the Purchased Assets, which
could, individually or in the aggregate, interfere in any material respect
with Buyer's ability to use, own, occupy or operate the Purchased Assets
after the Closing as presently used, owned, occupied or operated by Seller.
(c) The Purchased Assets are free from defects, ordinary wear and tear
excepted, have been maintained in accordance with normal industry practice,
are in good operating condition and repair, ordinary wear and tear
excepted, and are suitable and adequate for the purposes for which such
assets are currently used or being held for use.
Section 4.08 REAL PROPERTY. Seller hereby makes the following
representations and warranties to Buyer with respect to the Real Property and
Personal Property contained therein, each of which shall be deemed to be
independently material and relied upon by Buyer:
(a) Seller has delivered to Buyer true and complete copies of all
existing title insurance policies, title reports, surveys, environmental
reports, in Seller's possession or control, if any, with respect to the
Real Property. The Seller is not a party to any Real Property Lease with
respect to the Business.
(b) Seller has no Knowledge of: (i) any violation of any applicable
Legal Requirement requiring any work, repairs, construction, alteration or
installation on or in connection with the Real Property; (ii) any commenced
public improvement affecting the Real Property which may result in special
assessments or otherwise affect the Real Property; (iii) any structural,
mechanical, electrical, heating, cooling or plumbing defect of material
significance in any of the Real Property; (iv) any uncured notice of any
unsatisfactory condition concerning any of the Real Property from any
insurance company or mortgagee; or (v) any planned, pending or contemplated
condemnation,
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eminent domain, or similar action or proceeding with respect to the Real
Property or any part thereof.
(c) There are no material actions, suits, proceedings, litigation,
arbitration, administrative hearings, attachments or executions, pending
or, to the Knowledge of Seller, threatened against Seller relating to the
Real Property.
(d) To the Knowledge of Seller, the Real Property is in material
compliance with the Americans with Disabilities Act of 1990, as amended.
(e) There have been no bankruptcy or dissolution proceedings involving
Seller during the time Seller has had any interest in the Real Property.
Section 4.09 INTELLECTUAL PROPERTY.
(a) Schedule 2.01(m) sets forth a true and complete list of all Seller
Intellectual Property either owned by Seller or subject to a registration
or application for registration in Seller's name (the "Seller Registered
Intellectual Property Rights"), specifying as to each, as applicable:
(i) the nature of such Seller Intellectual Property;
(ii) the owner of such Seller Intellectual Property and the
nature of the rights held by Seller in and to the Seller Intellectual
Property;
(iii) in the case of Seller Registered Intellectual Property
Rights, the jurisdictions by or in which such Intellectual Property
Rights have been issued or registered or in which an application for
such issuance or registration has been filed, including the respective
registration or application numbers and dates of issuance,
registration or filing; and
(iv) in the case of Seller Registered Intellectual Property
Rights, a description of each filing, payment, and action that must be
made or taken on or before the date that is one hundred twenty (120)
days after the Effective Date in order to maintain any applications
and registrations for any such Seller Intellectual Property Rights.
Seller has provided Buyer with true and complete copies of all
applications, registrations, correspondence and other material documents filed,
or existing and to be filed, with the applicable Governmental Authority with
respect to the Seller Registered Intellectual Property Rights.
(b) Schedule 2.01(l) sets forth a true and complete list of all Seller
Intellectual Property Contracts, including, without limitation, all Seller
Assigned Intellectual Property Contracts, specifying as to each, (i) the
parties to the Seller Intellectual Property Contract, and (ii) whether the
Seller Intellectual Property Contract is a Seller Assigned Intellectual
Property Contract, other than (A) agreements commonly generated in the
Ordinary Course of Business (including, except as otherwise required by
this Section 4.09,
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software licenses for generally available software, employee assignment
agreements, nondisclosure agreements, consulting agreements, material
transfer agreements, service agreements, clinical trial agreements and
evaluation agreements) and except as set forth in Schedule 4.07, and (B)
Seller Intellectual Property Contracts that are not material to the
Business taken as a whole. Schedule 2.01(l) sets forth, as of the date
hereof, all Seller Intellectual Property Contracts (excluding those
Contracts excluded from the previous sentence in (A) and (B) above) under
which Seller is obligated to make any payments of amounts in excess of [**]
(in any form, including royalties, milestones and other contingent
payments) to third parties for use of any Seller Intellectual Property with
respect to the commercialization of any of Seller Products. The Seller
Intellectual Property Contracts provide Seller with all licenses,
permissions and other rights to utilize any Intellectual Property Rights
owned by any Person other than Seller necessary for the conduct of the
Business as currently conducted (including, without limitation, as
applicable, all Intellectual Property Rights necessary for the manufacture,
use, sale and other enjoyment of the Seller Products and the use or
enjoyment of the Purchased Assets as presently utilized in the Business),
except for those licenses, permission and other rights provided for under
subsections (A) and (B) of the first sentence of this paragraph (b). The
Seller Assigned Intellectual Property Contracts provide Seller with all
licenses, permissions and other rights to utilize any Intellectual Property
Rights owned by any Person other than Seller necessary for and used
exclusively by Seller in the conduct the Business as currently conducted
(including, without limitation, as applicable, all Intellectual Property
Rights necessary for the manufacture, use, sale and other enjoyment of the
Seller Products and the use or enjoyment of the Purchased Assets as
presently utilized in the Business), except for those licenses, permission
and other rights provided for under subsections (A) and (B) of the first
sentence of this paragraph (b). All Seller Assigned Intellectual Property
Contracts will be enforceable by Buyer on and after the Closing to the same
extent as by Seller prior to the Closing.
(c) The Seller Assigned Intellectual Property, the Seller Licensed
Intellectual Property and the Intellectual Property Rights acquired by or
granted to Seller under the Seller Assigned Intellectual Property Contracts
constitute all Seller Intellectual Property. The rights granted to Buyer
under the Atrigel(R) Manufacturing and Supply Agreement together with the
Purchased Assets convey to Buyer all Seller Licensed Intellectual Property
necessary to use, make and sell Seller Products. The Seller Intellectual
Property constitutes all Intellectual Property Rights necessary to conduct
the Business as presently conducted (including, without limitation, as
applicable, all Intellectual Property Rights necessary for the manufacture,
use, sale, and other enjoyment of the Seller Products and the Purchased
Assets as presently utilized in the Business), other than software licenses
for generally available software and except as set forth in Schedule 4.07.
Except for the Seller Intellectual Property acquired by or granted to
Seller under the Seller Intellectual Property Contracts disclosed in
Schedule 2.01(l), and other than the Contracts described under subsections
(A) and (B) of the first sentence of Section 4.09(b) above, Seller is the
sole and exclusive owner of all right, title and interest in and to the
Seller Intellectual Property free and clear of all Encumbrances other than
Permitted Encumbrances and other than any rights granted by Seller to any
third party described below. Following the
- ----------
** Confidential Treatment Requested.
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Closing, all Seller Intellectual Property will be either (i) owned by Buyer
as Seller Assigned Intellectual Property free and clear of all Encumbrances
other than Permitted Encumbrances and without the need to seek the approval
or consent (except for the Required Consents) of any Person or the need to
make payments to any Person other than as set forth in this Agreement, or
(ii) licensed or conveyed to Buyer pursuant to a Seller Assigned
Intellectual Property Contract or the Atrigel(R) Manufacturing and Supply
Agreement free and clear of all Encumbrances, other than Permitted
Encumbrances and without the need to seek the approval or consent (other
than the Required Consents) of any Person or the need to make payments to
any Person other than as set forth in this Agreement, subject in the case
of both (i) and (ii) to any rights granted or conveyed by Seller to any
third party under the Seller Assigned Intellectual Property Contract
disclosed in Schedule 2.01(l), the Atrigel(R) Manufacturing and Supply
Agreement, or under a license to use such information for evaluation
purposes provided pursuant to confidentiality and nondisclosure agreements
or material transfer agreements entered into in the Ordinary Course of
Business.
(d) All of the Seller Intellectual Property owned or registered in
Seller's name and, to the Seller's Knowledge, all other Seller Intellectual
Property, is valid, subsisting and enforceable. Seller and, to Seller's
Knowledge, no other Person, has received any notice, claim or allegation
(in all such cases in writing) that the Seller Intellectual Property owned
by Seller is invalid or unenforceable. There are no actions, suits,
proceedings or claims pending or, to the Knowledge of Seller, threatened in
writing with regard to the ownership, licensing or infringement of any
Seller Intellectual Property.
(e) To the Seller's Knowledge, the Seller Intellectual Property owned
by Seller (i) has not been infringed or misappropriated by any Person, and
(ii) is not being infringed or misappropriated by any Person. Seller has
not threatened in writing or initiated any claim, action or Proceeding
against any Person alleging that any action of the Person infringes or
misappropriates any Seller Intellectual Property.
(f) To Seller's Knowledge, the Seller Products, Purchased Assets, and
the operation of the Business of Seller as presently conducted (including
the manufacture, use or sale of Seller Products and the Purchased Assets as
presently utilized in the Business) are not currently infringing on any
Intellectual Property Rights of any Person. Except as set forth on Schedule
2.03, there are no actions, suits, proceedings or claims pending or, to the
Knowledge of Seller, threatened in writing, claiming that Seller has
infringed or misappropriated, or is infringing or misappropriating, any
Intellectual Property Rights of any Person in connection with the Business.
Other than pursuant to a license to use such information for evaluation
purposes provided pursuant to nondisclosure agreements or material transfer
agreements entered into in the Ordinary Course of Business, and other than
as set forth in the agreements identified in Schedule 2.01(l) and the
Atrigel(R) Manufacturing and Supply Agreement, there is no contractual
restriction on the use of any Seller Intellectual Property owned by Seller
and, to Seller's Knowledge any other Seller Intellectual Property.
(g) Except as disclosed on Schedule 2.01(m), the Patents included in
the Seller Registered Intellectual Property Rights are pending or issued
and have not been
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abandoned, and have been prosecuted in the ordinary course. All Patents and
Trademarks listed in Schedule 2.01(m), owned by Seller that are material to
the conduct of the Business have been duly registered and/or applied for
with each appropriate Governmental Authority in the jurisdiction(s)
indicated in Schedule 2.01(m), all necessary affidavits of continuing use
have been timely filed, and all necessary maintenance fees have been timely
paid to continue all such rights in effect except with respect to abandoned
applications, Patents or Trademarks in the ordinary course of prosecution
and maintenance. None of the Patents listed in Schedule 2.01(m) included in
the Seller Registered Intellectual Property Rights has been declared
invalid, in whole or in part, by any Governmental Authority. There are no
ongoing or, to the Knowledge of Seller, threatened in writing,
interferences, oppositions, reissues, reexaminations or other similar
proceedings involving any of the Patents or Trademarks listed in Schedule
2.01(m) and owned by Seller in the United States Patent and Trademark
Office or in any foreign patent office or similar administrative agency.
Section 4.10 REGULATORY COMPLIANCE.
(a) As to each Seller Product subject to the FDCA and the FDA
regulations promulgated thereunder or similar Legal Requirements in any
foreign jurisdiction that are developed, manufactured, tested, distributed,
labeled, stored and/or marketed by Seller (each such Seller Product, a
"Biologic" or a "Drug", as the case may be), each such Biologic or Drug is
being developed, manufactured, tested, distributed, labeled, stored and/or
marketed by Seller and, to the Knowledge of Seller, marketed, by each other
Person developing, manufacturing, testing, distributing, labeling, storing
and/or marketing such Drug on behalf of Seller, in material compliance with
all applicable FDA, state and foreign Legal Requirements, including
investigational device exemptions, new drug applications, biological
license applications or abbreviated new drug applications to test,
manufacture or market a new Biologic or a new Drug, good manufacturing and
quality systems requirements, labeling, advertising, record keeping, filing
of reports and security. As of the date hereof, Seller has not received
and, to the Knowledge of Seller, none of its licensees have received, any
notice or other communication from the FDA or any other Governmental
Authority (i) contesting the investigational or premarket clearance or
approval of, the manufacturing or testing of, the uses of or the labeling,
storage, or promotion of any Seller Products or (ii) otherwise alleging any
violation applicable to any Biologic or Drug by Seller of any Legal
Requirement.
(b) No Biologic or Drug is under consideration for or has been
recalled, withdrawn, suspended, or discontinued (other than for commercial
or other business reasons) or required a field notification, field alert,
or field correction by Seller in the United States or outside the United
States (whether voluntarily or otherwise). Except as set forth in Schedule
4.10, no proceedings in the United States or outside of the United States
(whether completed or pending) seeking the recall, withdrawal, suspension,
seizure or discontinuance of any Biologic or Drug are pending or, to the
Knowledge of Seller, threatened against Seller with respect to any of the
Seller Products or any of the QLT USA Products, or to the Knowledge of
Seller, any licensee of any Biologic or Drug, nor have any such proceedings
been pending at any time in the five (5) year period prior to the date
hereof. Except as set forth in Schedule 4.10, to the Knowledge of Seller,
there
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are no facts, circumstances or conditions that would reasonably be expected
to form the basis for any audit, investigation, suit, claim, action (legal
or regulatory) or Proceeding (legal or regulatory) with respect to a
recall, withdrawal, suspension, seizure or discontinuance, or a change in
the marketing classification or labeling of any Drug or Biologic or with
respect to any of the Seller Products or any of the QLT USA Products. True
and complete copies of all material data of Seller with respect to the
safety or efficacy of the Seller Products have been provided to or made
available in the data room to Buyer.
(c) All reports, documents, claims, notices, or approvals required to
be filed, obtained, maintained, or furnished to any Governmental Authority
for each Seller Product have been so filed, obtained, maintained or
furnished, and all such reports, documents, claims and notices were true
and complete in all material respects on the date filed (or were corrected
in or supplemented by a subsequent filing). As to each Biologic or Drug for
which a premarket approval application, biological license application, new
drug application, premarket clearance or approval, investigational new drug
application, abbreviated new drug application, investigational device
exemption other state or foreign regulatory application has been submitted,
approved or cleared, Seller is in material compliance with all Legal
Requirements including 21 U.S.C. Sections 360c and 355 or 21 C.F.R. Parts
800, 312, 314, 600 or 601 et seq., respectively, and other applicable Legal
Requirements and all terms and conditions of such applications.
(d) No article of any Biologic or Drug manufactured and/or distributed
by Seller is (i) adulterated within the meaning of 21 U.S.C. Section 351
(or similar Legal Requirements); (ii) misbranded within the meaning of 21
U.S.C. Section 352 (or similar Legal Requirements); or (iii) a product that
is in violation of 21 U.S.C. Section 355, Section 360c or 42 U.S.C. Section
262 (or similar Legal Requirements).
(e) Except as set forth in Schedule 4.10, Seller has not received any
notice that the FDA or any other Governmental Authority has (i) commenced
or, to the Knowledge of Seller, threatened to initiate, any action to
withdraw its approval or request the recall of any Seller Product or any
QLT USA Product; (ii) commenced, or, to the Knowledge of Seller, threatened
to initiate, any action to enjoin production of any Seller Product or any
QLT USA Product; or (iii) commenced or, to the Knowledge of Seller,
threatened to initiate, any action to enjoin the production of any Seller
Product or any QLT USA Product produced at any facility, including the
Manufacturing Facility, where any Biologic or Drug is manufactured, tested
or packaged.
Section 4.11 SUPPLIERS. Except as set forth in Schedule 4.11, during the
past twelve (12) months, there has not been any material adverse change in the
business relationship of Seller with any supplier of active pharmaceutical
ingredients to Seller or with any clinical research organization providing
services to Seller. Schedule 2.01(l) sets forth a true and complete list of all
sole source suppliers of goods or services to the Business with respect to which
practical alternative sources of supply are not available on comparable terms
and conditions.
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Section 4.12 EMPLOYEES.
(a) Schedule 4.12(a) contains a true and complete list of all current
officers and employees engaged in the Business (the "Employees") and all
contracts or commitments pertaining to terms of employment, compensation,
bonuses, profit sharing, commissions, incentives, loans or loan guarantees,
severance pay or benefits, which are currently in effect, with any current
Employee or consultant engaged in the Business, and true and complete
copies of all such contracts, agreements, plans, arrangements and
understandings have been delivered or made available to Buyer.
(b) Except to the extent provided in Schedule 4.12(b), Seller is in
compliance in all material respects with the Legal Requirements respecting
employment and employment practices, terms and conditions of employment,
wages and hours and occupational safety for Employees, and has not received
notice of, and is not engaged in, any unfair labor practice.
(c) Except to the extent provided in Schedule 4.12(c), there are no
claims, grievances or arbitration proceedings, workers' compensation
proceedings, labor disputes, governmental investigations or administrative
proceedings of any kind pending or, to the Knowledge of Seller, threatened
against or relating to the Employees or employment practices, or operations
as they pertain to conditions of employment for Employees, nor is Seller
subject to any Order arising from any such matter.
(d) No labor, collective bargaining, union or similar agreement is
currently in existence or is being negotiated by Seller, and no union or
labor organization has been certified or recognized as the representative
of any employees of Seller or, to the Knowledge of Seller, is seeking such
certification or recognition or is attempting to organize any of the
employees of Seller.
Section 4.13 EMPLOYEE BENEFIT PLANS. Schedule 4.13 lists, as of the
Effective Date, all employment, consulting and severance agreements, pension,
profit sharing and retirement plans and all bonus and other employee benefit or
fringe benefit plans, including, without limitation, "employee benefit plans" as
such term is defined under Section 3(3) of ERISA, maintained or with respect to
which contributions are made by Seller or with respect to which Seller has any
Liability with respect to the Employees (the "Seller Plans").
Section 4.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL APPROVALS.
Without limiting the provisions of Section 4.10, Seller is in compliance with
all Legal Requirements and rules and regulations of any Governmental Authority
applicable to the Purchased Assets and the Business except for failures to be in
compliance that, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect. Without limiting the
provisions of Section 4.10, Seller has in full force and effect all approvals,
authorizations, certificates, filings, consents, clearances, franchises,
licenses, notices and permits of or with all Governmental Authorities
(collectively, "Permits"), including all Permits under the Federal Food, Drug
and Cosmetic Act of 1938, as amended (the "FDCA"), and the regulations of the
Federal Food and Drug Administration (the "FDA") promulgated thereunder,
necessary for it to own, lease or operate the Purchased Assets and the Business
and
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to carry on the Business and operations as presently conducted, except where the
failure to have such Permits individually or in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect. There has
occurred no default under, or violation of, any such Permit, except for any such
default or violation that individually or in the aggregate has not had and would
not reasonably be expected to have a Material Adverse Effect.
Section 4.15 LITIGATION. Except for the litigation described in Schedule
2.03, there is no Proceeding pending or, to the Knowledge of Seller, threatened,
or any judgment outstanding, involving or affecting all or any part of the
Business or the Purchased Assets.
Section 4.16 ENVIRONMENTAL MATTERS.
(a) Seller (i) is in compliance with all, and is not subject to any
Liability, in each case with respect to any, applicable Environmental Laws;
(ii) holds or has applied for all Environmental Permits necessary to
conduct its current operations with respect to the Business, and in the
case of each such Environmental Permit that Seller has applied for, (A)
such Environmental Permit is listed on Schedule 4.16, (B) Seller reasonably
expects that such Environmental Permit will be issued in a timely manner
either to Buyer, or to Seller and promptly thereafter will be assigned by
Seller to Buyer, and (C) pending Seller's receipt of such Environmental
Permit, Seller's failure to hold such Environmental Permit will not have an
adverse effect on the Business or any of the Purchased Assets, (iii) is in
material compliance with its Environmental Permits, and (iv) no event has
occurred and no condition exists, that would constitute or result in a
violation by Seller of, or a failure on the part of Seller to comply with
the terms of, any Environmental Law or any Environmental Permit in any
material respect.
(b) Since January 1, 2001, Seller has not received any written
allegation, notice, demand, letter, claim or request for information from
any Governmental Authority or any other Person alleging that Seller has
been, is or may be in violation of, or liable under, any Environmental Law
or any Environmental Permit.
(c) Since January 1, 2001, Seller (i) has not entered into or agreed
to any consent decree, agreement, Contract or order, nor is Seller subject
to any judgment, decree or judicial or administrative order relating to
compliance with Environmental Laws, Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup of Hazardous Materials and no investigation, litigation or other
claim, action, suit or proceeding is pending or, to the Knowledge of
Seller, threatened with respect thereto; and (ii) is not an indemnifying
party in connection with any investigation, litigation or other claim,
action, suit or proceeding threatened or asserted by any third-party
indemnified party for any Liability under any Environmental Law or relating
to any Hazardous Materials.
(d) None of the Real Property owned or leased by the Business is
listed or, to the Knowledge of Seller, proposed for listing on the
"National Priorities List" under CERCLA, nor has there has been any Release
or threatened Release of Hazardous Materials on, under or from such Real
Property.
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(e) There have been no Hazardous Materials generated by the Business
that have been disposed of by Seller, or to its Knowledge, any third party,
or come to rest at any site that has been listed or, to the Knowledge of
Seller, proposed for listing on the "National Priorities List" under
CERCLA, as updated through the date hereof, or any similar state or foreign
list of sites requiring investigation or cleanup.
(f) Seller has made available or provided the Buyer with copies of all
reports and related documentation regarding any actual or alleged violation
of Environmental Laws or Environmental Permits in connection with, or
Releases of Hazardous Materials at, under or from, the Real Property or the
Manufacturing Facility, and all such reports are listed on Schedule 4.16.
Section 4.17 TAXES.
(a) Seller has timely filed all Tax Returns that it was required to
file, and when filed such Tax Returns were true, correct and complete in
all material respects. All Taxes owed by Seller have been paid in full on a
timely basis, and no other Taxes relating to the Business are payable by
Seller with respect to any period ending prior to the date of this
Agreement. There are no liens for Taxes on any Purchased Asset, other than
liens for Taxes not yet due and payable.
(b) No audit of any Tax Return relating to the Business is currently
pending or, to the Knowledge of Seller, threatened. Seller is not currently
is the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by any Governmental Authority in a
jurisdiction where Seller does not file Tax Returns relating to the
Business that it is or may be subject to taxation by that jurisdiction.
(c) Seller is a "United States person" within the meaning of Section
7701(a)(30) of the Code.
(d) Seller has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency within the last three (3) years.
Section 4.18 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transaction based upon arrangements made by or on behalf of Seller, except for
the fee arrangement between Burrill & Company ("Burrill") and Seller. Seller
shall be responsible for, and shall indemnify Buyer in connection with, such fee
arrangement.
Section 4.19 TRANSACTIONS WITH AFFILIATES. Except as disclosed in Schedule
4.19, there are no existing contracts, transactions, indebtedness or other
arrangements, or any related series thereof, between Seller, on the one hand,
and any of the directors, officers or other Affiliates of Seller, on the other
hand, related to the Business.
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Section 4.20 SOLVENCY.
(a) The Purchase Price represents reasonably equivalent value for the
Purchased Assets;
(b) Seller is acting in good faith and has no reason to believe that
Buyer is purchasing the Purchased Assets other than in good faith;
(c) Seller is not entering into the Transaction with the intent to
hinder, delay or defraud any Person to which it is or may become indebted;
(d) Seller (i) is not currently a debtor or alleged debtor in a case
filed under the United States Bankruptcy Code, Title 11 U.S.C., (ii) is not
the subject of a receivership proceeding under any state law, (iii) is not
a party in any case providing for a collective remedy among Seller's
creditors generally, (iv) is not the subject of a present threat by another
person or entity to commence any of the foregoing proceedings against
Seller, and (v) has no present intention to commence any such proceeding on
its own behalf;
(e) As of the Effective Date, Seller is, and as of the Closing Date
and immediately after the Closing Seller will be, not "insolvent," as that
term is defined in the text and interpretive case law of the United States
Bankruptcy Code, Title 11 U.S.C., as amended (the "Bankruptcy Code"),
subject to certain material assumptions by Seller regarding the reasonable
amount or validity of any contingent Liabilities; and
(f) As of the Closing Date, Seller is, and immediately after the
Closing Seller will be, able to pay its Liabilities as they mature, subject
to certain material assumptions by Seller regarding the reasonable amount
or validity of any contingent Liabilities.
Section 4.21 INVENTORY. Schedule 2.01(g) is correct and complete in all
material respects as of the Effective Date.
Section 4.22 SELLER'S MARKETING EFFORTS. The Transaction and this Agreement
constitute the culmination of Seller's commercially reasonable efforts to expose
the Business and the Purchased Assets to the applicable market and promote a
sale of the Business and the Purchased Assets on terms that represent reasonably
equivalent value for the Purchased Assets. In order to sell the Business and the
Purchased Assets, Seller retained Burrill, a life science merchant bank with
experience in the marketing and selling of businesses and assets similar or
reasonably comparable to the Business and the Purchased Assets, respectively, as
an independent consultant to identify and approach parties that might
potentially be interested in purchasing the Business and the Purchased Assets.
Burrill prepared and distributed a memorandum to certain of such parties
concerning the Business and the Purchased Assets and otherwise marketed the
Business and the Purchased Assets in a manner Seller believes was reasonably
sufficient to expose the Purchased Assets to potential purchasers. During the
marketing period, several entities other than Buyer expressed to Seller and
Burrill such entities' interest in potentially purchasing the Business and the
Purchased Assets, and several entities other than Buyer toured the Manufacturing
Facility and investigated the Business and the Purchased Assets as prospective
purchasers. Ultimately, Seller, in consultation with Burrill, determined that
the
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terms of purchase offered by Buyer and set forth in this Agreement represented,
based on all the facts and circumstances, the terms most economically favorable
to Seller for the purchase of the Business and the Purchased Assets resulting
from Seller's marketing efforts.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that, as of the date of this
Agreement and as of the Closing Date:
Section 5.01 ORGANIZATION AND GOOD STANDING. Buyer is a corporation and
Parent is a sociedad anonima, each duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as presently conducted. Buyer is duly qualified or
licensed as a foreign corporation to conduct business and is in good standing in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect.
Section 5.02 AUTHORITY. Each of Buyer and Parent has all necessary power
and authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party, to perform its obligations hereunder and
thereunder, and to consummate the Transaction. The execution and delivery of
this Agreement and the other Transaction Documents and the consummation by Buyer
and Parent of the Transaction have been duly and validly authorized by all
requisite action and no other corporate proceeding on the part of Buyer or
Parent is necessary to authorize this Agreement and the other Transaction
Documents or to consummate the Transaction. This Agreement has been, and at
Closing the other Transaction Documents to which Buyer or Parent is a party will
be, duly and validly executed and delivered by Buyer and Parent, as applicable.
This Agreement constitutes, and at Closing the other Transaction Documents will
constitute, the legal, valid and binding obligation of Buyer and Parent, as
applicable, enforceable against each of them in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles related to or
limiting creditors' rights generally and by the availability of equitable
remedies and defenses.
Section 5.03 NO CONFLICTS; REQUIRED CONSENTS. No Consents are required with
respect to Buyer's and Parent's execution and delivery of this Agreement, the
other Transaction Documents, and the consummation of the Transaction. The
execution, delivery and performance of this Agreement and the other Transaction
Documents by Buyer and Parent do not and will not, with or without notice or
lapse of time,
(a) conflict with or violate such Party's certificate of incorporation
or bylaws or equivalent organizational documents;
(b) conflict with or violate any Legal Requirement applicable to Buyer
or Parent or by which any property or asset of Buyer or Parent is bound or
affected, except
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where the existence of such conflict or violation would not, individually
or in the aggregate, have a Material Adverse Effect;
(c) result in any breach of or constitute a default under, or give to
others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of any Encumbrance on any property or asset
of Buyer or Parent pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation, except where the existence of such breach, default or right
or the creation of such Encumbrance would not, individually or in the
aggregate, have a Material Adverse Effect;
(d) violate or conflict with any other material restriction of any
kind or character to which Buyer or Parent is subject, except where the
existence of violation or conflict would not, individually or in the
aggregate, have a Material Adverse Effect; or
(e) require Buyer or Parent to obtain any Consent of, or make or
deliver any filing or notice to, a Governmental Authority.
Section 5.04 FINANCIAL CAPACITY. At the Closing, Buyer shall have
sufficient funds, or shall have procured adequate financing, upon terms
satisfactory to Seller, to enable Buyer to pay the Purchase Price, to perform
all of its obligations hereunder and to otherwise operate the Business following
the Closing Date.
Section 5.05 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transaction based upon arrangements made by or on behalf of Buyer or Parent.
Section 5.06 DEBARMENT. None of the entities, laboratories or clinical
sites of Buyer, Parent or their Affiliates and no employee, representative,
agent, assistant or associate of Buyer, Parent or their Affiliates, have been
debarred pursuant to the Federal Food Drug and Cosmetic Act.
Section 5.07 TITLE COMMITMENTS. Seller has provided to Buyer, at Seller's
cost, commitments of title insurance (the "Title Commitments") issued by a
nationally-recognized title insurance company (the "Title Company"), and
photocopies of all recorded items described as exceptions therein, committing to
insure fee title or leasehold title, respectively, in each parcel of the Real
Property owned or leased by Seller, in Buyer by ALTA Form 1992 owner's policies
of title insurance. Buyer has reviewed such Title Commitments and has noted no
Encumbrance to any parcel of Real Property which, in the determination of Buyer,
is not a Permitted Encumbrance.
Section 5.08 PURCHASE IN GOOD FAITH. Buyer is purchasing the Purchased
Assets in good faith and is not entering into the Transaction with the intent to
hinder, delay or defraud any Person to which the Business is or may become
indebted.
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ARTICLE VI
ADDITIONAL COVENANTS
Section 6.01 TRANSACTIONS AND CONDUCT OF BUSINESS PENDING THE CLOSING. From
the Effective Date until the Closing Date, Seller represents, warrants and
covenants that Seller shall conduct the Business in the Ordinary Course and will
use its commercially reasonable efforts to preserve intact the Business
organization and relationships with third parties and to keep available the
services of the Employees. Without limiting the generality of the foregoing,
from the Effective Date until the Closing Date, and except as disclosed in
Schedule 6.01, Seller will not do or propose to do any of the following with
respect to, or which could reasonably be expected to have a Material Adverse
Effect on, the Business or the Purchased Assets, without the prior written
consent of Buyer:
(a) enter into any Contract, commitment or transaction related to the
Business not in the Ordinary Course;
(b) terminate any Employees, other than in the Ordinary Course;
(c) amend, accelerate, terminate, cancel, or otherwise modify the
terms of any Seller Contract or Governmental Approval;
(d) transfer to any Person or Entity any rights to the Seller
Intellectual Property;
(e) sell, lease, license, transfer, assign, or otherwise dispose of
any of, or cancel, compromise, waive, or release any right or claim (or
series of related rights and claims) included in, the Purchased Assets;
(f) commence a Proceeding related to the Business other than for the
routine collection of bills;
(g) increase the salaries or wage rates of any Transferred Employees
or amend any health care benefit plans, programs or policies relating to
the Transferred Employees or enter into any employment contract or
collective bargaining agreement, written or oral, or modify the terms of
any such contract or agreement with respect to the Transferred Employees;
(h) revalue any of the Purchased Assets, including writing down the
value of the Transferred Inventory other than in the Ordinary Course of
Business and consistent with past practice;
(i) make or change any material tax election or adopt or change any
material tax accounting method related to the Business, other than in the
Ordinary Course of Business;
(j) fail to pay or otherwise satisfy its monetary obligations as they
become due, except such as are being contested in good faith;
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(k) take any action or fail to take any action that would cause a
Material Adverse Effect;
(l) impose or permit to exist any Encumbrance other than a Permitted
Encumbrance upon any of the Purchased Assets; or
(m) enter into any contract or agree, in writing or otherwise, to take
any of the actions described above in this Section 6.01, or any action that
would make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect or prevent it from
performing or cause it not to perform its covenants hereunder.
Section 6.02 EMPLOYEE MATTERS.
(a) Buyer shall assume the employment agreements, in the form provided
to Buyer, of Michael R. Duncan and [**], and each of such employees shall
receive credit for the years of service at Seller (and its predecessor
Atrix Laboratories, Inc.) for purposes of determining any severance
benefits payable to such employees in the event of any subsequent
termination of employment. On the Effective Date, Buyer shall offer
employment to all employees employed by Seller as of December 31, 2006
whose employment and responsibilities relate primarily to the Business,
with such offers remaining open until January 1, 2007 (except with respect
to any employees that cease to be employed between the making of such offer
and January 1, 2007) and being conditioned upon the actual occurrence of
the Closing (each a "Transferred Employee"). A current list of such
employees is set forth on Schedule 4.12(a). The terms of Buyer's offer
letter shall provide that upon commencement of employment with Buyer upon
the date indicated in their respective offer letters, such employee shall
be deemed to have resigned as an employee of Seller. Buyer shall use its
commercially reasonable efforts to offer to each such employee a position
similar to his or her position immediately prior to the Closing Date at
either the same or higher base pay and at the same location at which such
employee was employed immediately prior to the Closing Date. Employees who
are on short-term disability leave, authorized leave of absence or military
service as of the Closing Date shall be offered employment to the same
extent, if any, as Seller would be required to offer employment in
accordance with applicable Legal Requirements.
Notwithstanding the provisions of Section 6.02(a), as of the
Effective Date Buyer has offered employment to those Transferred Employees
set forth on Schedule 6.02(a), and such Transferred Employees have accepted
Buyer's offer of employment (which offer, other than the date thereof,
shall otherwise conform with the provisions of Section 6.02(a)), with such
exceptions as Buyer considers, in its reasonable discretion, shall not
impair or interfere with the operation of the Business after the Closing.
(b) Transferred Employees shall be employees at will and nothing
expressed or implied in this Agreement (except as set forth in this Section
6.02(b)) will obligate the Buyer to provide continued employment to any
Transferred Employee for any specified
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** Confidential Treatment Requested.
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period of time following the Closing Date; provided, however, that so long
as the Promissory Note remains outstanding Buyer shall not terminate any
Transferred Employee other than "for cause." For purposes of this
subsection (b), "for cause" shall mean any Transferred Employee's gross
negligence, willful misconduct, material non-performance of such employee's
duties or conviction of a felony or crime of moral turpitude. Buyer will be
the sole judge of the number, identity and qualifications of employees
necessary for the conduct of its business operations and reserves the right
to take any personnel action it deems necessary or appropriate with respect
to Transferred Employees.
(c) For the period from January 1, 2007 to the first anniversary of
the Closing Date, or such earlier date on which any Transferred Employee's
employment is terminated (except with respect to any benefits payable upon
or after termination of employment), Buyer shall provide salary, healthcare
and 401(k) plan benefits (all of which are set forth on Schedule 6.02(c))
that are substantially similar to, and no less favorable in the aggregate
than those provided to such Transferred Employees immediately prior to the
Closing Date.
(d) With respect to the welfare benefit plans, programs and
arrangements maintained, sponsored or contributed to by Buyer ("Buyer
Welfare Benefit Plans") in which a Transferred Employee may be eligible to
participate on or after January 1, 2007, Buyer shall, to the extent
permitted by applicable Legal Requirements (i) permit Transferred Employees
to participate in the Buyer Welfare Benefit Plans commencing January 1,
2007, or such later date as such Transferred Employee commences employment
with Buyer, and shall use its commercially reasonable efforts to cause its
insurance carrier to waive all waiting periods and all limitations as to
preexisting and at-work conditions, if any, with respect to participation
and coverage requirements applicable to each Transferred Employee under any
Buyer Welfare Benefit Plan to the same extent waived under a comparable
plan in which such Transferred Employees participated immediately prior to
the Closing Date; and (ii) make commercially reasonable efforts to cause
any eligible expenses incurred by any Transferred Employee and his or her
covered dependents to be taken into account under the Buyer Welfare Benefit
Plans for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such Transferred Employee and his
or her dependents as if such amounts had been paid in accordance with the
Buyer Welfare Benefit Plans.
(e) Nothing in this Section 6.02, expressed or implied, shall be
construed (i) to prevent Buyer from terminating or modifying to any extent
or in any respect any benefit plan that Buyer may establish or maintain;
provided that appropriate provision is made to comply with the provisions
of this Section 6.02 or (ii) except as set forth in Section 6.03(c), to
create any third-party beneficiary rights in any Transferred Employee or
otherwise give such employees any rights whatsoever under this Agreement.
Section 6.03 401(K) PLAN.
(a) Except as set forth in Schedule 6.03(a), as of 5:00 p.m., Mountain
Standard Time on December 31, 2006, each Transferred Employee who is a
participant in
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the Seller 401(k) Savings and Retirement Plan shall become fully vested in
his account balance in the Seller 401(k) Savings and Retirement Plan. Buyer
agrees to establish a defined contribution employee pension benefit plan
that is qualified under Section 401(a) of the Code (the "Buyer Defined
Contribution Plan"), effective no later than January 1, 2007. Transferred
Employees shall receive credit for years of service at Seller for purposes
of determining the right to receive matching contributions under the Buyer
Defined Contribution Plan on terms substantially similar to those provided
in the Seller 401(k) Savings and Retirement Plan. Upon receipt of a letter
from the administrator of the Seller 401(k) Savings and Retirement Plan
that complies with Treas. Regs. Section 1.401(a)(31)-1, Q&A 14(c), Example
2, the Buyer Defined Contribution Plan will accept rollovers of balances in
the Seller 401(k) Savings and Retirement Plan, including the rollover of
any outstanding participant loan balances held in the Seller 401(k) Savings
and Retirement Plan.
(b) Before the expiration of the remedial amendment period that
applies under Code Section 401(b) to the Buyer Defined Contribution Plan
for determination of its initial qualification under Code Section 401(a),
Buyer shall apply for a determination by the IRS to the effect that the
Buyer Defined Contribution Plan satisfies the requirements for
qualification under Section 401(a) of the Code, and Buyer shall take all
reasonable actions to ensure continued qualification of the Buyer Defined
Contribution Plan under Section 401(a) of the Code.
(c) Notwithstanding any other provision of this Agreement, the
provisions of this Section 6.03 may be enforced by the Seller or by any
Transferred Employee as a third-party beneficiary of this Agreement.
Section 6.04 ACCESS TO INFORMATION. Seller will (a) upon reasonable notice
give Buyer and its Representatives reasonable access, during normal business
hours and in a manner so as not to interfere with the normal business operations
of Seller, to the offices, properties, books and records of Seller related to
the Business, including without limitation all records and documents of Seller
regarding the title, physical condition, development, and operation of the Real
Property; and (b) furnish to Buyer and its Representatives such financial and
operating data and other information relating to the Business as such Persons
may reasonably request, including without limitation copies of all soil,
geological, hydrological and other engineering reports, inspections,
environmental reports, and site plans and zoning and platting documents that
Seller has in its possession concerning the Real Property; provided, however,
that, prior to the expiration or termination of any waiting period required by
any Governmental Authority or other similar Legal Requirement applicable to the
Transaction, Buyer and its Representatives shall only be permitted such
reasonable access which, in Seller's reasonable discretion, after consultation
with its outside counsel, is appropriate during such review process and
provided, further, that in no event shall Seller be obligated to provide any
access or information if Seller determines in good faith after consultation with
its outside counsel that providing such access or information may violate any
applicable Legal Requirement or cause Seller to breach a confidentiality
obligation to which it is bound or jeopardize any recognized privilege available
to Seller. No information or knowledge obtained in any investigation pursuant to
this Section 6.04 shall affect or be deemed to modify any representation or
warranty contained in this Agreement.
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Section 6.05 NOTICE OF CERTAIN EVENTS. During the period between the
Effective Date and the Closing, Seller shall give prompt notice to Buyer, and
Buyer shall give prompt notice to Seller, of any failure of Seller or Buyer, as
the case may be, to comply with or satisfy any covenant or agreement to be
complied with or satisfied by it under this Agreement (provided that the
delivery of any such notice shall not limit or otherwise affect any remedies
available to the Party receiving such notice).
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 CONFIDENTIALITY.
(a) Any non-public information that Buyer or Parent may obtain from
Seller in connection with this Agreement with respect to the Business,
Seller or any of its Affiliates shall be deemed confidential and, unless
and until Closing shall occur, neither Buyer nor Parent shall disclose any
such information to any third party (other than its Representatives whose
knowledge thereof is necessary or advisable in order to facilitate the
consummation of the Transaction) or use such information to the detriment
of Seller; provided that (i) Buyer and Parent may use and disclose any such
information once it has been publicly disclosed (other than by Buyer or
Parent or any of their respective Representatives in breach of its
obligations under this Section 7.01(a)) or which rightfully has come into
the possession of Buyer or Parent (other than from Seller or any of its
Representatives); and (ii) to the extent that Buyer or Parent may become
compelled by any Legal Requirement to disclose any of such information,
Buyer or Parent may disclose such information if it shall have used all
reasonable efforts, and shall have afforded Seller the opportunity, to
obtain an appropriate protective order, or other satisfactory assurance of
confidential treatment, for the information compelled to be disclosed. In
the event of termination of this Agreement, Buyer and Parent shall use all
reasonable efforts to cause to be delivered to Seller, and retain no copies
of, any documents, work papers and other materials obtained by Buyer or
Parent or on its behalf from Seller or any of its Affiliates or
Representatives, whether so obtained before or after the execution hereof.
(b) Any non-public information that Seller shall obtain from Buyer or
Parent in connection with this Agreement with respect to Buyer or any of
its Affiliates, or with respect to any of the Purchased Assets, any of the
Assumed Liabilities, or the Business, shall be deemed confidential, and
Seller shall not disclose such information to any third party or use such
information to the detriment of Buyer or Parent or the Business; provided,
that (i) Seller may use and disclose any such information once it has been
publicly disclosed (other than by Seller or any of its Representatives in
breach of its obligations under this Section 7.01(b)) or which rightfully
has come into the possession of Seller (other than from Buyer or Parent or
any of their respective Representatives); and (ii) to the extent that
Seller may become compelled by any Legal Requirement to disclose any of
such information, Seller may disclose such information if it shall have
used all reasonable efforts, and shall have afforded Buyer and Parent the
opportunity, to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment, for the information
compelled to be disclosed. In the event of termination of this Agreement,
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Seller shall use all reasonable efforts to cause to be delivered to Buyer
or its Affiliates, and retain no copies of, any documents, work papers, and
other materials obtained by Seller or on its behalf from Buyer or Parent or
any of their respective Affiliates or Representatives, whether so obtained
before or after the execution hereof.
(c) Except as otherwise set forth herein, the Parties acknowledge that
the Transaction is of a confidential nature and shall not be disclosed
prior to the Closing except to Representatives whose knowledge thereof is
necessary or advisable in order to facilitate the consummation of the
Transaction, or as required by any Legal Requirement. Buyer and Parent
acknowledge that Seller intends to issue a press release upon the execution
of this Agreement, and Seller agrees to provide a copy of such press
release, in the form attached hereto as Exhibit 7.01(c), to Buyer. Seller
and Buyer shall consult with and cooperate with the other with respect to
any oral or written statements to the Employees concerning this Agreement
and the Transaction. Buyer shall make only those press releases or other
public disclosures as are required by applicable Legal Requirements.
Section 7.02 USE OF PROCEEDS. Seller covenants and agrees (a) to retain
[**] of the Purchase Price it receives from Buyer, and (b) not to declare or pay
any dividend or make any other distribution of any of the Purchase Price to QLT
Inc. or any of its Affiliates, until such time as the litigation specifically
identified in Schedule 2.03 is finally resolved without further possibility of
appeal.
Section 7.03 NO SHOP AND NON-SOLICITATION. Seller agrees that it will not
during the No Shop Period directly or indirectly, through any Affiliate or
Representative, seek or solicit, initiate, entertain or encourage any proposals
or offers from any Person relating to the acquisition, in one or a series of
related transactions, of the Business (a "Third Party Acquisition"); nor will
Seller participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, or otherwise cooperate with,
facilitate or encourage any effort or attempt by any Person to do or seek any
Third Party Acquisition (it being understood that an acknowledgement only of an
unsolicited inquiry by Seller to an inquiring Person advising such Person of
Seller's obligations hereunder shall not be deemed a discussion or negotiation
in violation of the provisions of this Section 7.03), and if Seller receives any
such unsolicited inquiry it shall promptly, and in no event later than the next
Business Day, inform Buyer thereof, but Seller shall not otherwise be required
to identify such third party or disclose the terms or conditions of such
inquiry. Upon commencement of the No Shop Period, Seller shall immediately cease
and cause to be terminated all such contacts or negotiations with any Person as
to any Third Party Acquisition.
Section 7.04 COBRA. Seller covenants and agrees that Seller shall provide
COBRA for all employees who do not become Transferred Employees and who are
COBRA Qualified Beneficiaries existing as of the Closing. For purposes of this
Section 7.04, "COBRA Qualified Beneficiaries" shall mean any person entitled to
benefits under Code Section 4980B or ERISA Section 601 et al.
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** Confidential Treatment Requested.
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ARTICLE VIII
TERMINATION OF AGREEMENT.
Section 8.01 GROUNDS FOR TERMINATION. At any time prior to the Closing,
this Agreement may be terminated (a) upon the mutual written consent of Buyer
and Seller and (b) Buyer may terminate this Agreement if any Required Consent
that has been obtained with respect to any Key Contract is rescinded or
withdrawn prior to the Closing.
Section 8.02 EFFECT OF TERMINATION. If this Agreement is terminated in
accordance with Section 8.01, all obligations of the Parties hereunder shall
terminate, except for the obligations set forth in this Article VIII and the
provisions of Sections 7.01, 10.02, 10.03, 10.06 and 10.08 through 10.15;
provided, that such termination shall not release either Party from any
Liability that has already accrued as of the effective date of such termination,
and shall not constitute a waiver or release of, or otherwise be deemed to
prejudice or adversely affect, any rights, remedies or claims, whether for
damages or otherwise, which a Party may have hereunder, at law, equity or
otherwise or which may arise out of or in connection with such termination.
ARTICLE IX
INDEMNIFICATION
Section 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller or Buyer in this Agreement or any
Conveyance Document shall survive the Closing until February 28, 2008 (the
"Survival Date"); provided, that any claim for indemnification based upon a
breach of any such representation or warranty and asserted prior to the Survival
Date by written notice in accordance with Section 9.05 shall survive until final
resolution of such claim; and provided further, that the representations and
warranties set forth in Section 4.17 shall survive until the expiration of the
applicable statute of limitations period with respect to such matters.
Section 9.02 INDEMNIFICATION BY SELLER. Subject to the limitations set
forth in this Article IX, Seller shall indemnify, defend and hold harmless Buyer
and its Representatives from and against any and all Damages, whether or not
involving a third party claim, including reasonable attorneys' fees
(collectively, "Buyer Damages"), arising out of, relating to or resulting from:
(a) any breach of a representation or warranty of Seller contained in
this Agreement or any Conveyance Document;
(b) any breach of a covenant of Seller contained in this Agreement or
in any Conveyance Document;
(c) any claim made by a Transferred Employee against Buyer solely
relating to Seller's use or possession of such Transferred Employee's
personnel records or similar information retained by Seller, but not to the
extent such claim relates to the delivery of
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copies of any such records by Seller to Buyer pursuant to this Agreement or
the use by Buyer of such records; or
(d) any Excluded Asset or Excluded Liability.
Section 9.03 INDEMNIFICATION BY BUYER. Subject to the limitations set forth
in this Article IX, Buyer shall indemnify, defend and hold harmless Seller and
its Representatives from and against any and all Damages, whether or not
involving a third party claim, including reasonable attorneys' fees
(collectively, "Seller Damages"), arising out of, relating to or resulting from:
(a) any breach of a representation or warranty of Buyer contained in
this Agreement or in any Security Document or the Non-Competition
Agreement;
(b) any breach of a covenant of Buyer or Parent contained in this
Agreement or in any Security Document or the Non-Competition Agreement;
(c) any claim made by a Transferred Employee relating to Buyer's or
Parent's use or possession of such Transferred Employee's personnel records
or similar information obtained from Seller at the request of Buyer or
Parent; or
(d) any Assumed Liability.
Section 9.04 ENVIRONMENTAL INDEMNIFICATION. In addition to the other
indemnification provisions in this Article IX:
(a) Seller shall indemnify, defend and hold harmless Buyer from and
against any and all Damages arising out of, relating to or resulting from
the actual or alleged presence, Release or threatened Release of Hazardous
Materials, and the actual or alleged violation of any Environmental Law or
Environmental Permit (including costs of cleanup, containment or other
remediation) with respect or relating to the Real Property or the
Manufacturing Facility, but only to the extent such violation, Release,
threatened Release or presence is shown by Buyer, by a preponderance of
evidence, to have originated during the Pre-Closing Period. A Release
during the Pre-Closing Period, that continues or that continued during the
Post-Closing Period, shall be deemed to have originated during the
Pre-Closing Period, but only to the extent such Release is shown by Buyer,
by a preponderance of evidence, to have originated during the Pre-Closing
Period.
(b) Subject to the last sentence of Section 9.04(a), Buyer shall
indemnify, defend and hold harmless Seller from and against any and all
Damages arising out of, relating to or resulting from the actual or alleged
presence, Release or threatened Release of Hazardous Materials, and the
actual or alleged violation of any Environmental Law or Environmental
Permit (including costs of cleanup, containment or other remediation) with
respect or relating to the Real Property or the Manufacturing Facility, but
only to the extent such violation, release or presence is not shown by
Buyer, by a preponderance of evidence, to have originated during the
Pre-Closing Period.
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Section 9.05 PROCEDURES FOR INDEMNIFICATION; BUYER'S SECURITY INTEREST IN
ESCROW AMOUNT.
(a) Claims for Indemnification. All claims for indemnification under
this Article IX shall be asserted and resolved as follows:
(i) In the event that any claim or demand for which any Party
(the "Indemnitor") would be liable under this Article IX to any other
Party (the "Indemnitee") hereunder is asserted against or sought to be
collected by a third party:
(A) the Indemnitee shall promptly notify the Indemnitor of
such claim or demand specifying the nature of such claim or
demand and the amount or the estimated amount thereof to the
extent then reasonably practicable (which estimate shall not be
conclusive of the final amount of such claim or demand) (the
"Claim Notice"); provided, however, that the failure of the
Indemnitee to give notice as provided herein shall not relieve an
Indemnitor of its obligations under this Article IX, except to
the extent the Indemnitor is actually prejudiced thereby;
(B) the Indemnitor shall have thirty (30) days from its
receipt of the Claim Notice (the "Notice Period") to notify the
Indemnitee (x) whether the Indemnitor disputes its liability to
the Indemnitee hereunder with respect to such claim or demand,
and (y) if it does not dispute such liability, whether it
desires, at its sole cost and expense, to defend the Indemnitee
against such claim or demand; provided, however, that the
Indemnitee is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading which it
reasonably deems necessary or appropriate to protect its
interests;
(C) if the Indemnitor notifies the Indemnitee within the
Notice Period that the Indemnitor does not dispute such liability
and desires to defend against such claim or demand, then except
as hereinafter provided, the Indemnitor shall have the right to
defend by appropriate proceedings, provided that the Indemnitor
shall not settle any such claim without the prior written consent
of the Indemnitee, unless any such settlement involves only the
payment of money and provides for the delivery of a full release
of any liability to the Indemnitee. The Indemnitee shall make
available to the Indemnitor, at the Indemnitor's expense, any
documents and materials in its possession or control that may be
necessary or useful to such defense;
(D) if the Indemnitor notifies the Indemnitee within the
Notice Period and if the Indemnitee desires to participate in,
but not control, any such defense or settlement it may do so at
its sole cost and expense. Notwithstanding the foregoing, the
Indemnitor shall not be entitled to assume the defense of any
third party claim (and shall be liable for the fees
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and expenses of counsel incurred by the Indemnitee in defending
such third party claim) if (i) the third party claim seeks an
order, injunction or other equitable relief or relief for other
than money damages against the Indemnitee which the Indemnitee
reasonably determines, after conferring with its outside counsel,
cannot be separated from any related claim for money damages or
(ii) if (A) the Indemnitor has failed after a reasonable period
of time to assume such defense and to employ counsel, or (B) as
evidenced by the opinion of counsel, different defenses would be
available to the Indemnitee in such action such that a conflict
of interest exists that makes control by the Indemnitor not
advisable. In such an event, the Indemnitee shall be entitled to,
with respect to clause (i), assume the defense of the portion
relating to claims involving an injunction or other equitable
relief or for relief other than money damages and, with respect
to clause (ii), assume the defense of the entire proceeding; and
(E) if the Indemnitor disputes the Indemnitor's liability
with respect to such claim or demand within the Notice Period,
then the amount of any such claim or demand, or, if the same be
contested by the Indemnitor or by the Indemnitee, then that
portion thereof as to which such defense is unsuccessful, as well
as any associated obligations and expenses, shall be conclusively
deemed to be a liability of the Indemnitor (subject, if the
Indemnitor has timely disputed liability, to a determination that
the disputed liability is covered by these indemnification
provisions).
(b) In the event the Indemnitee has a claim against the Indemnitor
under this Article IX that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnitee shall promptly send a Claim Notice with respect to such claim to
the Indemnitor. If the Indemnitor does not notify the Indemnitee within the
Notice Period that it disputes such claim, the amount of such claim shall
be conclusively deemed a liability of the Indemnitor hereunder.
(c) Buyer shall submit any claim for indemnification under this
Article IX in accordance with the provisions of the Escrow Agreement;
provided, however, that in the event Buyer Damages are in excess of the
Escrow Amount, but less than Seller's Indemnification Cap, upon notice to
Seller specifying in reasonable detail the basis therefore, Buyer may set
off any amount to which it may be entitled under this Article IX against
amounts otherwise payable under the Promissory Note; provided that Buyer
must give notice of such a claim for such amount under and in accordance
with the terms of the Escrow Agreement. To secure Buyer's right to recover
upon Seller's indemnification obligations under this Agreement, pursuant to
and as more fully set forth in the Escrow Agreement, Seller shall grant to
Buyer a first-priority lien and security interest upon the Escrow Amount.
Seller and the Escrow Agent shall authorize, cooperate and assist with and
otherwise take all actions reasonably necessary to perfect Buyer's liens
and security interests in the Escrow Amount, including the filing of any
financing statements deemed necessary by Buyer under any provisions of the
Uniform Commercial Code applicable to Buyer, Seller or the Escrow, all as
deemed necessary by Buyer and acceptable to Buyer in Buyer's reasonable
discretion.
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Section 9.06 LIMITATIONS ON INDEMNIFICATION.
(a) Limitations on Seller's Obligation to Indemnify Buyer.
Notwithstanding anything herein to the contrary, Seller shall not be
obligated to indemnify Buyer under this Article IX:
(i) unless the aggregate of all Buyer Damages exceeds [**]
("Seller's Basket"), in which case the Buyer shall be entitled to
recover all Buyer Damages in excess of Seller's Basket; or
(ii) to the extent that the aggregate of all Buyer Damages
exceeds [**] ("Seller's Indemnification Cap");
provided, that Seller's Indemnification Cap and Seller's Basket shall not
apply to any Seller indemnification obligation arising out of, relating to
or resulting from (x) fraud, intentional misrepresentation or willful
misconduct by Seller; (y) from a breach of Sections 4.01, 4.02, 4.17 or
4.18, or (z) arising out of, relating to or resulting under Sections
9.02(b) and 9.02(d).
(b) Limitations on Buyer's Obligation to Indemnify Seller.
Notwithstanding anything herein to the contrary, Buyer shall not be
obligated to indemnify Seller under this Article IX:
(i) unless the aggregate of all Seller Damages exceeds [**]
("Buyer's Basket"), in which case the Seller shall be entitled to
recover all Seller Damages in excess of Buyer's Basket; or
(ii) to the extent that the aggregate of all Seller Damages
exceeds [**] ("Buyer's Indemnification Cap");
provided, that the Buyer's Indemnification Cap and Buyer's Basket shall not
apply to any Buyer indemnification obligation arising out of, relating to
or resulting from (x) fraud, intentional misrepresentation or willful
misconduct by Buyer; (y) from a breach of Sections 5.01, 5.02 or 5.05, or
(z) arising out of, relating to or resulting under Sections 9.03(b) and
9.03(d).
(c) Indemnification Payment Net of Insurance. Any payment made by
Seller pursuant to Section 9.02, on the one hand, or by Buyer pursuant to
Section 9.03, on the other hand, pursuant to this Article IX in respect of
any claim (i) shall be net of any insurance proceeds realized by and paid
to the indemnified party in respect of such claim; and (ii) shall be (A)
reduced by an amount equal to any Tax benefits attributable to such claim;
and (B) increased by an amount equal to any Taxes attributable to the
receipt of such payment, but only to the extent that such Tax benefits are
actually realized, or such Taxes are actually paid, as the case may be, by
Seller or by Buyer or by any consolidated, combined or unitary group of
which such Party is a member. The indemnified party shall use its
reasonable efforts to make insurance claims relating to any claim for which
it is
- ----------
** Confidential Treatment Requested.
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seeking indemnification pursuant to this Article IX, provided that the
indemnified party shall not be obligated to make such an insurance claim if
the indemnified party in its reasonable judgment believes that the cost of
pursuing such an insurance claim together with any corresponding increase
in insurance premiums or other chargebacks to the indemnified party, as the
case may be, would exceed the value of the claim for which the indemnified
party is seeking indemnification.
Section 9.07 DAMAGES LIMITATIONS. Notwithstanding any other provision
hereof, in no event shall Seller be liable or obligated to indemnify Buyer from
and against any consequential, indirect or special damages, including, without
limitation, lost profits, business interruption and loss of business
opportunities or goodwill. This exclusion of any such consequential, indirect or
special damages shall apply whether the action in which recovery of damages is
sought is based on contract, tort, (including sole, concurrent or other
negligence or strict liability), statute or otherwise. To the extent permitted
by applicable Legal Requirements, any statutory remedies that are inconsistent
with this Section 9.07 are waived.
Section 9.08 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that
the Business is unique and recognizes and affirms that in the event that the
Transaction does not close (other than due to the termination of this Agreement
pursuant to and in accordance with the provisions of Section 8.01), or in the
event that any provision of Article VII is not performed in accordance with its
specific terms or otherwise is breached, that the non-breaching Party would be
damaged irreparably, that money damages would be inadequate and that the
non-breaching Party would have no adequate remedy at law, so that the
non-breaching Party shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and the other Parties'
obligations hereunder not only by action for damages but also by action for
specific performance, injunctive, and/or other equitable relief to cause the
Transaction to close as contemplated by and in accordance with the terms of this
Agreement and to enforce specifically the terms and provisions of Article VII.
Section 9.09 EXCLUSIVE REMEDY. Except for claims involving fraud or willful
misconduct, for equitable relief or a breach of this Article IX, the
indemnification remedies provided in this Article IX shall be the exclusive
remedies available to the Parties and their respective Affiliates following the
Closing with respect to (a) any claims for any inaccuracy or breach of any
representation or warranty made by the Parties contained in this Agreement or in
any of the certificates or Conveyance Documents furnished by any Party pursuant
to this Agreement; or (b) any non-compliance with or breach of or default in the
performance of any of the covenants or agreements contained in this Agreement,
and the Parties shall not be entitled to a rescission of this Agreement or to
any further indemnification or other rights or claims of any nature whatsoever
in respect thereof, all of which the Parties hereto hereby waive; provided,
however, that the remedies provided in this Article IX with respect to the
Security Documents, the Non-Competition Agreement and the Manufacturing and
Supply Agreements, if any, shall be cumulative and shall not preclude any Party
from asserting any other right, or seeking any other remedies, against any other
Party which it may have under such documents.
Section 9.10 CHARACTERIZATION OF INDEMNIFICATION PAYMENT. Any payment made
after the Closing pursuant to indemnification obligations arising under this
Agreement shall be treated
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as an adjustment to the Purchase Price for all purposes, including federal,
state and local Tax and financial accounting purposes.
Section 9.11 NO OTHER REPRESENTATION. Each of Buyer and Parent acknowledges
and agrees (a) that, except for the representations and warranties contained in
Article IV or Section 6.01, none of Seller or its Affiliates nor any of their
respective directors, officers, employees, subsidiaries, controlling persons,
agents or Representatives, makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any information
relating to Seller provided or otherwise made available prior to the Closing
(including in management presentations and including any projections, forecast
or forward-looking information) to Buyer or Parent, each of its shareholders,
Affiliates, lenders, holders of its indebtedness or any of their respective
directors, officers, employees, Affiliates, controlling persons, agents or
Representatives; and (b) that, to the fullest extent permitted by any Legal
Requirement, Seller and its Affiliates and their respective directors, officers,
employees, subsidiaries, controlling persons, agents or Representatives shall
not have any Liability to Buyer or Parent, each of its shareholders, Affiliates,
lenders, holders of its indebtedness or any of their respective directors,
officers, employees, Affiliates, controlling persons, agents or Representatives
based upon any information provided or made available prior to the Closing to
Buyer or Parent or such shareholder, Affiliate, lender, holder of its
indebtedness, director, officer, employee, Affiliate, controlling person, agent
or representative thereof on any basis (including in contract or tort), except
(i) with respect to the representations and warranties set forth in Article IV
or Section 6.01 and subject to the limitations and restrictions contained in
this Agreement; and (ii) with respect to claims for or in the nature of fraud.
ARTICLE X
MISCELLANEOUS
Section 10.01 AMENDMENTS AND WAIVERS. This Agreement may not be amended,
supplemented or modified, except by an agreement in writing signed by each of
the Parties. Either Party may waive compliance by the other Parties with any
term or provision of this Agreement; provided, that such waiver shall not
operate as a waiver of, or estoppel with respect to, any other or subsequent
failure. No waiver shall be effective unless it is in writing and is signed by
the Party asserted to have granted such waiver.
Section 10.02 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received (a) when
delivered personally or by telecopy; (b) one (1) Business Day, if in the United
States and three (3) Business Days if outside the United States following the
day when deposited with a reputable, established overnight courier service for
delivery to the intended addressee; or (c) three (3) Business Days following the
day when deposited with the United States Postal Service as first class,
registered or certified mail, postage prepaid and addressed as set forth below:
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If to Buyer or Parent: Tolmar, Inc.
701 Centre Avenue
Fort Collins, Colorado 80526
Attention: Chief Executive Officer
Telephone No.: (970) 212-4990
Facsimile No.: (970) 494-0241
With a copy, which shall not Tolmar, Inc.
constitute notice, given in the manner Av. Cabildo 86
prescribed above, to: 5 floor (1426)
Capital Federal
Buenos Aires, Argentina
Attention: Secretary
Telephone No.: +(54)-11-4776-7197
Facsimile No.: +(54)-11-4899-2828
With a copy, which shall not Holme Roberts & Owen LLP
constitute notice, given in the manner 1700 Lincoln Street, Suite 4100
prescribed above, to: Denver, Colorado 80203
Attention: Troy R. Braegger, Esq.
Telephone No.: (303) 866-0454
Facsimile No.: (303) 866-0200
If to Seller: QLT USA, Inc.
2579 Midpoint Drive
Fort Collins, Colorado 80525
Attention: President
Telephone No.: (970) 482-5868
Facsimile No.: (970) 482-9735
With a copy, which shall not Morrison & Foerster LLP
constitute notice, given in the manner 5200 Republic Plaza
prescribed above, to: 370 Seventeenth Street
Denver, CO 80202
Attention: Warren L. Troupe, Esq.
Telephone No.: (303) 592-1500
Facsimile No.: (303) 592-1510
Either Party may alter its notice address by notifying the other Parties of
such change of address in conformity with the provisions of this Section 10.02.
Section 10.03 APPLICABLE LAW. This Agreement is to be construed in
accordance with and governed by the internal laws of the State of Colorado,
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Colorado to the rights and duties of the Parties.
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Section 10.04 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
Section 10.05 ASSIGNMENTS; SUCCESSORS AND ASSIGNS. Neither this Agreement
nor any rights or obligations hereunder may be assigned or otherwise transferred
by any Party without the prior written consent of the other Parties. Any
purported assignment or other disposition by a Party, except as permitted
herein, shall be null and void. For purposes of this Section 10.05, the terms
"assign" and "assignment" shall be deemed to include (a) a merger in which a
Party is not the surviving entity; (b) a consolidation or division of a Party;
(c) a sale of all or substantially all of the assets of a Party; or (d) a change
of control resulting from a sale or repurchase of shares or similar transaction
involving a Party. Subject to the foregoing, this Agreement shall be binding
upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns.
Section 10.06 NO THIRD-PARTY BENEFICIARIES. Except as provided in Section
6.03(c) of this Agreement, the terms and provisions of this Agreement are
intended solely for the benefit of each Party and their respective successors
and permitted assigns, and the Parties do not intend to confer third-party
beneficiary rights upon any other Person.
Section 10.07 COUNTERPARTS. This Agreement may be executed (including,
without limitation, by facsimile signature) in one or more counterparts, with
the same effect as if the Parties had signed the same document. Each counterpart
so executed shall be deemed to be an original, and all such counterparts shall
be construed together and shall constitute one agreement.
Section 10.08 SEVERABILITY. If any provision of this Agreement, or the
application of any such provision to any Person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
Section 10.09 ENTIRE AGREEMENT. This Agreement, together with the
Transaction Documents referred to herein, contains the entire understanding
between the Parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, between the Parties. The
Parties intend that this Agreement, together with the Transaction Documents
referred to above, be the several, complete and exclusive embodiment of their
agreement, and that any evidence, oral or written, of a prior or contemporaneous
agreement that alters or modifies this Agreement shall not be admissible in any
Proceeding concerning this Agreement. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.
Section 10.10 INTERPRETATION. Unless otherwise indicated herein, with
respect to any reference made in this Agreement to a Section (or Article,
Subsection, Paragraph, Subparagraph or Clause), Exhibit or Schedule, such
reference shall be to a section (or article, subsection, paragraph, subparagraph
or clause) of, or an exhibit or schedule to, this Agreement. The table of
contents and any article, section, subsection, paragraph or subparagraph
headings contained in
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this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed, as
the context indicates, to be followed by the words "but (is/are) not limited
to." Words used herein, regardless of the number and gender specifically used,
shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context indicates is
appropriate. Where specific language is used to clarify or illustrate by example
a general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict the construction of the general statement which is
being clarified or illustrated.
Section 10.11 CONSTRUCTION. The construction of this Agreement shall not
take into consideration the Party who drafted or whose representative drafted
any portion of this Agreement, and no canon of construction shall be applied
that resolves ambiguities against the drafter of a document. Each Party
acknowledges that: (a) it has read this Agreement; (b) it has been represented
in the preparation, negotiation and execution of this Agreement by legal counsel
of its own choice or has voluntarily declined to seek such counsel; and (c) it
understands the terms and consequences of this Agreement and is fully aware of
the legal and binding effect of this Agreement.
Section 10.12 EXPENSES OF THE PARTIES. Subject to provisions contained
herein relating to recovery of fees in connection with legal actions or
proceedings, each Party shall bear the expenses incurred by such Party in
connection with the negotiation and execution of this Agreement and the
consummation of the Transaction, including, but not limited to, all legal,
accounting, financial, advisory, consulting and all other fees and expenses of
third parties incurred by a Party in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the Transaction
contemplated hereby, shall be the obligation of the respective Party incurring
such fees and expenses.
Section 10.13 JURISDICTION; SERVICE OF PROCESS. Any Proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the Parties only in the courts of the State of
Colorado, City and County of Denver, or, if it has or can acquire the necessary
jurisdiction, in the United States District Court for the District of Colorado.
Each of the Parties hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of this
Agreement, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement may not be enforced
in or by such courts and the Parties hereto irrevocably agree that all shall be
heard and determined in such a Colorado State or federal court. Process in any
Proceeding referred to in the preceding sentence may be served on either Party
anywhere in the world.
Section 10.14 WAIVER OF JURY TRIAL. THE PARTIES HEREBY EXPRESSLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST
EITHER OF THEM RELATING TO THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS
AGREEMENT INVOLVES COMPLEX TRANSACTIONS AND THAT DISPUTES HEREUNDER WILL BE MORE
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT DECISION MAKER.
ACCORDINGLY, THE PARTIES AGREE, BASED ON THE ADVICE OF THEIR
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COUNSEL, THAT ANY DISPUTE HEREUNDER BE RESOLVED BY A JUDGE APPLYING APPLICABLE
LAW.
Section 10.15 RECOVERY OF FEES BY PREVAILING PARTY. If any legal action,
including, without limitation, an action for arbitration or injunctive relief,
is brought relating to this Agreement or the breach or alleged breach hereof,
the prevailing Party in any final judgment or arbitration award, or the
non-dismissing Party in the event of a voluntary dismissal by the Party
instituting the action, shall be entitled to the full amount of all reasonable
expenses, including all court costs, arbitration fees and actual attorneys' fees
paid or incurred in good faith.
Section 10.16 SELLER DISCLOSURE SCHEDULE. The Seller Disclosure Schedule is
hereby incorporated into this Agreement to the same extent as though fully set
forth herein.
Section 10.17 TIME OF THE ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
[SIGNATURES FOLLOW ON A SEPARATE PAGE]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed and delivered on its behalf by their respective officers thereunto duly
authorized all as of the Effective Date.
"Buyer"
Tolmar, Inc.
By: /s/ Patricio Martin Rodriguez
------------------------------------
Name: Patricio Martin Rodriguez
Title: Vice President
"Seller"
QLT USA, INC.
By: /s/ Sean F. Moriarty
------------------------------------
Name: Sean F. Moriarty
Title: President
"Parent"
DILLFORD COMPANY S.A.
By: /s/ Jorge Ramos Manso
------------------------------------
Name: Jorge Ramos Manso
Title: Attorney-in-Fact