EXHIBIT 10.54
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
ANIP ACQUISITION COMPANY
ADVANCED NUTRACEUTICALS, INC.,
BACTOLAC PHARMACEUTICAL, INC.
and
ANI PHARMACEUTICALS, INC.
Dated March 23, 2004
TABLE OF CONTENTS
ARTICLE I Definitions and Usage..............................................8
Section 1.1. Definitions..........................................8
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Section 1.2. Usage...............................................22
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ARTICLE II Sale and Transfer of Assets; Closing.............................22
Section 2.1. Assets to be Sold...................................22
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Section 2.2. Excluded Assets.....................................24
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Section 2.3. Collection of Receivables...........................25
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Section 2.4. Consideration.......................................25
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Section 2.5. Liabilities.........................................25
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Section 2.6. Allocation of the Purchase Price....................28
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Section 2.7. Closing.............................................28
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Section 2.8. Adjustment Amount and Payment.......................28
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Section 2.9. Adjustment Procedure................................29
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Section 2.10. Consents............................................31
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ARTICLE III Representations and Warranties of Seller........................32
Section 3.1. Organization and Good Standing......................32
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Section 3.2. Enforceability, Authority, No Conflict..............32
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Section 3.3. Financial Statements................................32
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Section 3.4. Books and Records...................................33
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Section 3.5. Sufficiency of Assets; Use..........................33
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Section 3.6. Description of Real Property........................34
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Section 3.7. Title to Assets; Encumbrances.......................34
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Section 3.8. Condition of Facilities.............................34
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Section 3.9. Accounts Receivable.................................35
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Section 3.10. Inventories.........................................36
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Section 3.11. No Undisclosed Liabilities..........................36
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Section 3.12. Taxes...............................................36
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Section 3.13. No Material Adverse Change..........................37
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Section 3.14. Compliance with Legal Requirements;
Governmental Authorizations.........................37
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Section 3.15. Legal Proceedings; Orders...........................38
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Section 3.16. Absence of Certain Changes and Events...............38
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Section 3.17. Contracts; No Defaults..............................39
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Section 3.18. Insurance...........................................41
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Section 3.19. Environmental Matters...............................42
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Section 3.20. Employees...........................................43
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Section 3.21. Employee Benefits...................................44
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Section 3.22. Intellectual Property...............................46
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Section 3.23. Relationships with Related Persons..................47
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Section 3.24. FDA Compliance; Regulatory Filings..................48
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Section 3.25. Brokers or Finders..................................48
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Section 3.26. Solvency............................................48
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Section 3.27. Indebtedness........................................49
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Section 3.28. Business............................................49
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Section 3.29. Compliance with the Foreign Corrupt
Practices Act and Export Control and
AntiBoycott Laws....................................49
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Section 3.30. Disclosure..........................................50
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Section 3.31. Importing and Exporting Activities..................50
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ANI............................51
Section 4.1. Organization and Good Standing......................51
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Section 4.2. Enforceability, Authority, No Conflict..............51
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Section 4.3. Assets..............................................51
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Section 4.4. Financial Statements................................51
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Section 4.5. Solvency............................................52
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Section 4.6. Certain Proceedings.................................52
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Section 4.7. Brokers and Finders.................................52
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Section 4.8. Disclosure..........................................53
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BACTOLAC........................53
Section 5.1. Organization and Good Standing......................53
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Section 5.2. Enforceability, Authority, No Conflict..............53
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Section 5.3. Use of Assets.......................................54
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Section 5.4. Description of Owned Real Property..................54
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Section 5.5. Title to Assets; Encumbrances.......................54
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Section 5.6. Condition of Facilities.............................54
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Section 5.7. Taxes...............................................55
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Section 5.8. Compliance with Legal Requirements;
Governmental Authorizations.........................55
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Section 5.9. Legal Proceedings; Orders...........................56
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Section 5.10. Contracts; No Defaults..............................56
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Section 5.11. Insurance...........................................58
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Section 5.12. Environmental Matters...............................58
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Section 5.13. Certain Proceedings.................................60
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Section 5.14. Brokers and Finders.................................60
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Section 5.15. Disclosure..........................................60
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Section 5.16. Indebtedness........................................60
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Section 5.17. Solvency............................................60
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Section 5.18. Bactolac Assets.....................................61
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..........................61
Section 6.1. Organization and Good Standing......................61
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Section 6.2. Authority; No Conflict..............................61
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Section 6.3. Consents............................................62
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Section 6.4. Certain Proceedings.................................62
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Section 6.5. Brokers and Finders.................................62
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ARTICLE VII PRE-CLOSING COVENANTS OF SELLER AND AFFILIATES..................62
Section 7.1. Access and Investigation............................62
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Section 7.2. Operation of the Business of Seller
and Bactolac........................................63
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Section 7.3. Physical Inventory..................................64
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Section 7.4. Negative Covenant...................................64
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Section 7.5. Required Approvals..................................64
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Section 7.6. Notification........................................64
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Section 7.7. No Negotiation......................................66
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Section 7.8. Best Efforts........................................66
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Section 7.9. Interim Financial Statements........................66
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Section 7.10. Change of Name......................................66
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Section 7.11. Payment of Liabilities..............................67
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Section 7.12. Lease...............................................67
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ARTICLE VIII PRE-CLOSING COVENANTS OF BUYER.................................67
Section 8.1. Required Approvals..................................67
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Section 8.2. Best Efforts........................................67
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ARTICLE IX Conditions Precedent to Buyer's Obligation to Close..............67
Section 9.1. Accuracy of Representations.........................67
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Section 9.2. Seller's and Affiliates' Performance................67
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Section 9.3. Documents...........................................68
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Section 9.4. No Proceedings......................................70
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Section 9.5. No Conflict.........................................70
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Section 9.6. Title Insurance.....................................71
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Section 9.7. Governmental Authorizations.........................71
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Section 9.8. Environmental Report................................71
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Section 9.9. Due Diligence.......................................71
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Section 9.10. Material Adverse Change.............................71
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Section 9.11. Use of Purchase Price Proceeds......................71
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ARTICLE X Conditions Precedent to Seller's Obligation to Close..............71
Section 10.1. Accuracy of Representations.........................71
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Section 10.2. Buyer's Performance.................................72
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Section 10.3. Documents and Other Deliveries......................72
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Section 10.4. No Injunction.......................................73
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ARTICLE XI Termination......................................................73
Section 11.1. Termination Events..................................73
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Section 11.2. Effect of Termination...............................74
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ARTICLE XII Additional Covenants............................................74
Section 12.1. Employees and Employee Benefits.....................74
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Section 12.2. Payment of all Taxes Resulting from
Sale of Assets by Seller............................77
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Section 12.3. Payment of Other Liabilities........................77
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Section 12.4. Reports and Returns.................................77
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Section 12.5. Noncompetition; Nonsolicitation.....................77
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Section 12.6. Customer and Other Business Relationships...........78
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Section 12.7. Retention of and Access to Records..................78
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Section 12.8. Use of Name and Marks...............................79
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Section 12.9. Confidentiality.....................................79
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Section 12.10. Cooperation with Respect to Assets
and Business........................................79
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Section 12.11. Website.............................................80
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Section 12.12. Sirkin Vehicle......................................80
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Section 12.13. Further Assurances..................................80
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ARTICLE XIII Indemnification; Remedies......................................80
Section 13.1. Survival............................................80
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Section 13.2. Indemnification and Reimbursement by
Seller and Affiliates...............................81
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Section 13.3. Indemnification and Reimbursement by Seller -
Environmental Matters...............................82
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Section 13.4. Indemnification and Reimbursement by Buyer..........82
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Section 13.5. Limitations on Amount -- Seller and Affiliates......83
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Section 13.6. Limitations on Amount -- Buyer......................83
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Section 13.7. Time Limitations....................................84
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Section 13.8. Escrow..............................................84
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Section 13.9. Third-Party Claims..................................84
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Section 13.10. Other Claims........................................86
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Section 13.11. Indemnification in Case of Strict Liability
or Indemnittee Negligence...........................86
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ARTICLE XIV General Provisions..............................................86
Section 14.1. Expenses............................................86
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Section 14.2. Public Announcements................................87
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Section 14.3. Notices.............................................87
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Section 14.4. Jurisdiction; Service of Process....................88
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Section 14.5. Waiver of Trial by Jury.............................89
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Section 14.6. Enforcement of Agreement............................89
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Section 14.7. Waiver; Remedies Cumulative.........................89
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Section 14.8. Entire Agreement; Modification......................90
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Section 14.9. Disclosure Schedule.................................90
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Section 14.10. Assignments; Successors; No Third-Party Rights......90
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Section 14.11. Severability........................................90
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Section 14.12. Construction........................................91
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Section 14.13. Governing Law.......................................91
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Section 14.14. Execution of Agreement..............................91
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Section 14.15. Affiliate Obligations...............................91
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EXHIBITS
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Exhibit A Opinion of Patton Boggs LLP
Exhibit B Bill of Sale
Exhibit C Assignment and Assumption Agreement
Exhibit D Assignment of Intellectual Property
Exhibit E Noncompetition Agreements
Exhibit F Escrow Agreement
SCHEDULES
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Schedule 2.1(b) Tangible Personal Property
Schedule 2.1(h) Records
Schedule 2.1(k) Claims Against Third Parties
Schedule 2.2(g) Excluded Assets
Schedule 2.5(a) Assumed Liabilities
Schedule 2.6 Purchase Price Allocation
Schedule 2.8(b) Approved Capital Expenditures
Schedule 7.11 Payment of Liabilities
DISCLOSURE SCHEDULES
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Section 3.1(c) Seller-Owned Securities
Section 3.5(a) Assets
Section 3.6 Description of Real Property
Section 3.7 Title to Assets
Section 3.8(c) Tangible Personal Property Not in Possession of Seller
Section 3.8(d) Improvements
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Section 3.8(e) Improvements Violations of Legal Requirements
Section 3.9 Accounts Receivable
Section 3.11 Undisclosed Liabilities
Section 3.12 Taxes
Section 3.13 Material Adverse Change
Section 3.14(a) Compliance with Legal Requirements
Section 3.14(b) Governmental Authorizations
Section 3.15 Legal Proceedings
Section 3.16(a) Ordinary Course of Business Equipment Sales
Section 3.16(b) Ordinary Course of Business Accounting Changes
Section 3.17(a) Seller Contracts
Section 3.17(b) Affiliate Contracts
Section 3.17(c) Assigned Seller Contracts
Section 3.17(d) Compliance with Seller Contracts
Section 3.18 Insurance
Section 3.19 Environmental Matters
Section 3.20(b) Current Employees
Section 3.21(a) Employee Plans
Section 3.22(a) Intellectual Property
Section 3.23 Relationships with Related Persons
Section 3.25 Seller Broker/Finder Fees
Section 3.27 Seller Indebtedness
Section 3.28 Related Person Ownership of Assets
Section 4.7 ANI Broker/Finder Fees
Section 5.3 Bactolac Tangible Personal Property
Section 5.4 Bactolac Real Property
Section 5.5 Title to Bactolac Assets
Section 5.6(a) Use of Real Property
Section 5.6(c) Bactolac Tangible Personal Property Not in Possession of Seller
Section 5.6(d) Working Order of Bactolac Assets
Section 5.6(e) Bactolac Assets Violations of Legal Requirements
Section 5.8(a) Bactolac Legal Compliance
Section 5.8(b) Bactolac Assets Governmental Authorizations
Section 5.11 Bactolac Assets Insurance
Section 5.12 Bactolac Environmental Matters
Section 5.14 Bactolac Broker/Finder Fees
Section 5.16 Bactolac Indebtedness
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is dated March 23, 2004, by and
among ANIP Acquisition Company, a Delaware corporation ("Buyer"), ANI
Pharmaceuticals, Inc., a Mississippi corporation ("Seller"), Advanced
Nutraceuticals, Inc., a Texas corporation ("ANI"), and Bactolac Pharmaceutical,
Inc., a Delaware corporation ("Bactolac" and together with ANI, the
"Affiliates").
RECITALS
WHEREAS, Bactolac is an affiliate of Seller and the owner of a portion of
the Assets used in the Business to be conveyed hereunder described in Section
2.1(m) hereof (the "Bactolac Assets");
WHEREAS, ANI owns one hundred percent (100%) of the issued and outstanding
capital stock of Seller;
WHEREAS, Seller is, or has been, engaged in the business of manufacturing,
marketing and distributing over-the-counter liquid, powder and semi-solid
(creams and ointments) products and Paas tablets (the "Business");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Business, including the Assets owned by Seller, and Bactolac desires to sell,
and Buyer desires to purchase, the Bactolac Assets, for the consideration and on
the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Section 1.1. Definitions.
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For purposes of this Agreement, the following terms and variations thereof
have the meanings specified or referred to in this Section 1.1:
"AAA" shall have the meaning set forth in Section 2.9(d).
"Accounts Receivable" shall mean (a) all trade accounts receivable and
other rights to payment from customers of Seller and the full benefit of all
security for such accounts or rights to payment, including all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of Seller, (b) all other
accounts or notes receivable of Seller and the full benefit of all security for
such accounts or notes and (c) any claim, remedy or other right related to any
of the foregoing.
"Acquisition Transaction" shall have the meaning set forth in Section 7.7.
"Adjusted Cash Portion" shall have the meaning set forth in Section 2.8.
"Adjustment Amount" shall have the meaning set forth in Section 2.8.
"Affiliates" shall have the meaning set forth in the preamble to this
Agreement.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"ANI" shall have the meaning set forth in the preamble to this Agreement.
"ANIP Websites" shall have the meaning set forth in Section 9.3(n).
"Approved Capital Expenditures" shall have the meaning set forth in Section
2.8(b).
"Appurtenances" shall mean all privileges, rights, easements, hereditaments
and appurtenances belonging to, or for the benefit of, lands in which Seller or
Bactolac has an ownership or leasehold interest that are used or held for use in
the Business, including all easements appurtenant to, and for the benefit of
such lands (a "Dominant Parcel") for, and as the primary means of access
between, the Dominant Parcel and a public way, or for any other use upon which
lawful use of the Dominant Parcel for the purposes for which it is presently
being used is dependent, and all rights existing in and to any streets, alleys,
passages and other rights-of-way included thereon or adjacent thereto (before or
after vacation thereof) and vaults beneath any such streets.
"Assets" shall have the meaning set forth in Section 2.1.
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 9.3(d).
"Assignment of Intellectual Property" shall have the meaning set forth in
Section 9.3(f).
"Assumed Liabilities" shall have the meaning set forth in Section 2.5(a).
"Bactolac" shall have the meaning set forth in the preamble to this
Agreement.
"Bactolac Assets" shall have the meaning set forth in the recitals of this
Agreement.
"Bactolac Contract" shall mean any Contract (a) under which Bactolac has,
or may acquire, any rights or benefits relating to the Bactolac Assets; (b)
under which Bactolac has, or any become subject to , any obligation or liability
with respect to the Bactolac Assets; or (c) by which Bactolac or any of the
Bactolac Assets may become bound.
"Bactolac Lease" shall have the meaning set forth in Section 7.12.
"Balance Sheet" shall have the meaning set forth in Section 3.3.
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"Bill of Sale" shall have the meaning set forth in Section 9.3(c).
"Breach" shall mean any breach of, or any inaccuracy in, any representation
or warranty or any breach of, or failure to perform or comply with, any covenant
or obligation, in or of this Agreement or any other Contract, or any event that
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"Bulk Sales Laws" shall have the meaning set forth in Section 7.11.
"Business" shall have the meaning set forth in the recitals of this
Agreement.
"Business Day" shall mean any day other than (a) Saturday or Sunday or (b)
any other day on which banks in New York are permitted or required to be closed.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
"Buyer Group" shall have the meaning set forth in Section 7.1.
"Buyer Indemnified Persons" shall have the meaning set forth in Section
13.2.
"Buyer's Closing Documents" shall have the meaning set forth in Section
6.2(a).
"Buyer's Confidential Information" shall include, but shall not be limited
to the following items with respect to Buyer, its Related Persons, the Business
and the Assets: (i) all customer and prospective customer information, including
details of agreements with customers; (ii) acquisition, expansion, financial and
other business information and plans, whether in respect of the transactions
contemplated by this Agreement or otherwise; (iii) market research and analyses,
projections, forecasts and forecast assumptions; (iv) research and development;
(v) formulas for the development or enhancement of products, filling processes
and other manufacturing processes; (vi) business practices, operations and
procedures; (vii) marketing and merchandising information; (viii) consulting,
distribution and sales methods and techniques; (ix) computer programs; (x)
sources of supply; (xi) employee information (including, but not limited to,
personnel, payroll, compensation and benefit data and plans); and (xii) other
business information, processes and strategies, including records, designs,
patents, trade secrets, business plans, financial statements, manuals,
memoranda, minutes, drawings, formula books, specifications and computer
programs. Buyer's Confidential Information shall not include (i) information
once it has become publicly disclosed (other than by breach of an obligation
under Section 12.9) or that rightfully has come into the possession of a third
party (other than by breach of obligation under Section 12.10 or any other
obligation of confidentiality owed to Buyer), or (ii) information that may be
compelled to be disclosed by law, legal process or regulatory proceeding,
provided, to the extent feasible, that the party proposing to disclose first
notifies Buyer of the confidential information concerning the proposed
disclosure.
"Cash Portion" shall have the meaning set forth in Section 2.4.
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"Cash Portion Increase Amount" shall have the meaning set forth in Section
2.8.
"Cash Portion Decrease Amount" shall have the meaning set forth in Section
2.8.
"Cleanup" shall have the meaning set forth in paragraph (c) of the
definition of "Environmental, Health and Safety Liabilities".
"Closing" shall have the meaning set forth in Section 2.7.
"Closing Date" shall mean the date on which the Closing actually takes
place.
"COBRA" shall have the meaning set forth in Section 3.21(e).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Competing Business" shall have the meaning set forth in Section 3.23.
"Consent" shall mean any approval, consent, ratification, waiver or other
authorization required to assign or transfer any of the Assets to Buyer, whether
arising under any Contract to which Seller or Bactolac is a party or under any
Legal Requirement binding on Seller or Bactolac.
"Contemplated Transactions" shall mean all of the transactions contemplated
by this Agreement.
"Contract" shall mean any agreement, contract, Lease, consensual
obligation, promise or undertaking (whether written or oral and whether express
or implied), whether or not legally binding.
"Current Assets" shall mean the current assets of Seller included in the
Assets, including cash and cash equivalents, prepaid expenses relating to the
operation of the Business, Inventories (net of reserves for damaged, obsolete or
slow moving inventory), Accounts Receivable relating to the Business and notes
receivable (in each case net of reserves for uncollectibility or disputed
items), bonds, refunds due (including refunds for Taxes relating to the Assets
and not based on income), deposits, and proceeds due from any policies of
insurance, in each case determined in accordance with GAAP and to the extent
reflected on the Balance Sheet.
"Current Liabilities" shall mean the current liabilities of Seller,
including accrued trade accounts payable (but excluding any accounts payable to
a Related Person of Seller), accounts payable clearing, accrued utilities,
accrued promotional allowances, accrued volume rebates, accrued liabilities,
accrued expenses (including accrued payables for capital expenditures as
provided in Section 2.8(b), but excluding accrued employee or consultant
compensation, severance or other benefits, other than accrued vacation), prepaid
income, customer deposits and prepayments, and Taxes (relating to ownership of
the Assets and not based on income and excluding any deferred Taxes), in each
case determined in accordance with GAAP and to the extent reflected on the
Interim Balance Sheet.
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"Damages" shall have the meaning set forth in Section 13.2.
"Designated Accountant" shall have the meaning set forth in Section 2.9(c).
"Disclosure Schedule" shall mean the disclosure schedule delivered by
Seller and Affiliates to Buyer concurrently with the execution and delivery of
this Agreement.
"Dispute Escrow Portion" shall have the meaning set forth in Section
2.9(a).
"Dominant Parcel" shall have the meaning set forth in the definition of
"Appurtenances".
"Effective Time" shall mean the time at which the Closing is consummated.
"Employee" shall have the meaning set forth in Section 3.21(a).
"Employee Agreement" shall have the meaning set forth in 3.21(a).
"Employee Plan" shall have the meaning set forth in Section 3.21(a).
"Employment Loss" shall have the meaning set forth in Section 13.2(g).
"Encumbrance" shall mean any charge, claim, community or other marital
property interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, deed of trust or deed to secure debt, right of way,
easement, encroachment, lease, license or other right to use or occupy,
servitude, right of first option, right of first refusal or similar restriction,
including any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income or exercise of any other attribute of
ownership.
"Environment" shall mean soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters, drinking
water supply, stream sediments, ambient air (including indoor air), plant and
animal life and any other environmental medium or natural resource.
"Environmental, Health and Safety Liabilities" shall mean any cost,
damages, expense, liability, obligation or other responsibility arising from, or
under, any Environmental Law or Occupational Safety and Health Law, including
those consisting of or relating to:
(a) any environmental, health or safety matter or condition (including
on-site or off-site contamination, occupational safety and health and regulation
of any chemical substance or product) which adversely or negatively affects the
Business, the Real Property or the Assets;
(b) any fine, penalty, judgment, award, settlement, legal or administrative
proceeding, damages, loss, claim, demand or response, remedial or inspection
cost or expense arising under any Environmental Law or Occupational Safety and
Health Law;
(c) financial responsibility under any Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
cleanup, removal, containment or other remediation or response actions
("Cleanup") required by any Environmental Law or Occupational Safety and Health
Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective or remedial measure required under any
Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA).
"Environmental Law" shall mean all federal, state and local laws, statutes,
ordinances, rules, regulations, orders, policies, permits, licenses and
determinations of any governmental authority, pertaining to health, safety,
protection of the environment, natural resources, conservation, wildlife, waste
management, regulation of activities involving Hazardous Materials, particulate
and other air emissions and pollution, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("Superfund" or "CERCLA"), 42 U.S.C.ss. 9601 et seq., the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C.ss. 6901 et seq., the Federal
Water Pollution Control Act, as amended by the Clean Water Act (the "Clean Water
Act"), 33 U.S.C.ss.1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C.ss.7401 et
seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C.ss.2601 et seq., as
amended, Hazardous Materials Transportation Uniform Safety Act of 1990, 49
U.S.C. App. Sec. 1801, et. seq., Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C.ss.136 et seq., and any state or local counterpart of each such
statute or regulation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"Escrow" shall have the meaning set forth in Section 2.4.
"Escrow Agreement" shall have the meaning set forth in Section 9.3(l).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
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"Facilities" shall mean (i) any real property or leasehold or other
interest in real property and the Improvements located thereon currently owned,
held or operated by Seller or included in the Bactolac Assets and (ii) Tangible
Personal Property used or operated by Seller or included in the Bactolac Assets
at the location of the Real Property specified in Sections 3.6 and 5.4 of the
Disclosure Schedule. Notwithstanding the foregoing, for purposes of the
definitions of "Hazardous Activity" and "Remedial Action" and Sections 3.19 and
13.3, "Facilities" shall mean (x) any real property or leasehold or other
interest in real property and the Improvements located thereon currently or
formerly owned or operated by Seller or Bactolac or included in the Bactolac
Assets and (y) the Tangible Personal Property used or operated by Seller or
Bactolac at the respective locations of the Real Property specified in Sections
3.6 and 5.4 of the Disclosure Schedule or included in the Bactolac Assets.
"Form 8594" shall have the meaning set forth in Section 2.6(c).
"GAAP" shall mean generally accepted accounting principles for financial
reporting in the United States, consistently applied.
"Governing Documents" shall mean, with respect to any particular entity,
(a) if a corporation, the articles or certificate of incorporation and the
bylaws; (b) if a general partnership, the partnership agreement and any
statement of partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a limited liability
company, the articles of organization or certificate of formation and operating
agreement or limited liability company agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders'
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
"Governmental Authorization" shall mean any Consent, license, certificate
(including any certificate of occupancy) registration or permit issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, borough, village, district or
other jurisdiction;
(b) federal, state, local, municipal, foreign or other government;
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(c) governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental
powers, including an arbitration tribunal or arbitrator);
(d) multinational organization or body;
(e) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; or
(f) official of any of the foregoing.
"Hazardous Activity" shall mean the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Material in, on, under,
about or from any of the Facilities or any part thereof into the Environment and
any other act, business, operation or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm, to persons or property on or
off the Facilities.
"Hazardous Material" shall mean any substance, material or waste that is or
will foreseeably be regulated by any Governmental Body, including any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "contaminant," "pollutant," "toxic waste" or "toxic substance"
under any provision of Environmental Law, and including petroleum, petroleum
products, asbestos, presumed asbestos-containing material or asbestos-containing
material, urea formaldehyde and polychlorinated biphenyls, and indoor air
contaminants, mold, fungi, irritants and other allergens.
"Hired Employees" shall have the meaning set forth in Section 12.1(a)(i).
"Improvements" shall mean all buildings, structures, fixtures and
improvements located on any land in which Seller has an ownership, leasehold or
other interest or included in the Assets, including those under construction.
"Indebtedness" means indebtedness for borrowed money or for the deferred
purchase price of property or services or evidenced by notes, bonds or other
similar instruments, lease obligations that would normally be capitalized under
GAAP, or obligations under direct or indirect guarantees of (including
obligations (contingent or otherwise) to assure a creditor against loss in
respect of) Indebtedness of others; provided, however, that the capital lease
for the Seller's telephone system and other immaterial leases (provided such
leases are identified as such in Section 3.27 of the Disclosure Schedule) shall
not be included in this definition.
"Indemnified Person" shall have the meaning set forth in Section 13.9(a).
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"Indemnifying Person" shall have the meaning set forth in Section 13.9(a).
"Intellectual Property" shall mean all intellectual property used, owned or
licensed (as licensor or licensee) by Seller or in which Seller has a
proprietary interest, including (a) Seller's name, the name "ANI
Pharmaceuticals" and marks "ANI" and "ANIP" and all assumed fictional business
names, trade names, registered and unregistered trademarks, service marks and
all applications and registrations therefor, (b) all patents and patent
applications and all inventories, improvements, ideas and discoveries, whether
or not patentable, (c) all registered and unregistered copyrights in both
published works and unpublished works, (d) all rights in mask works, (d) all
Know-how, trade secrets, confidential or proprietary information, customer
lists, software, technical information, data, process technology, plans,
drawings and blue prints, and (e) all rights in internet web sites and internet
domain names.
"Interim Balance Sheet" shall have the meaning set forth in Section 3.3.
"Inventories" shall mean all inventories of Seller, wherever located,
including all finished goods, work in process, raw materials, spare parts and
all other materials and supplies to be used or consumed by Seller in the
production of finished goods.
"IRS" shall mean the United States Internal Revenue Service and, to the
extent relevant, the United States Department of the Treasury.
"Know-how" shall mean trade secrets, know-how (including, without
limitation, product know-how and use and application know-how), formulas,
processes, product designs, specifications, quality control procedures,
manufacturing, engineering and other drawings, computer databases and software,
telephone numbers, facsimile numbers, email addresses, web sites, technology and
all other information and intangibles, including, without limitation, technical
information, safety information, engineering data and design and engineering
specifications, research records, market surveys and all promotional literature,
customer and supplier lists and similar data.
"Knowledge" shall mean an individual will be deemed to have Knowledge of a
particular fact or other matter if:
(a) that individual is actually aware of that fact or matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of that fact or matter after due inquiry.
A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving as of the date
hereof as a director, officer, partner, executor or trustee of that Person (or
in any similar capacity) has, or at any time had, Knowledge of that fact or
other matter (as set forth in (a) and (b) above).
"Lease" shall mean any lease or rental agreement, license, right to use or
installment and conditional sale agreement to which Seller is a party or that is
included in the Bactolac Assets and any other Seller Contract or Bactolac
Contract pertaining to the leasing or use of any Tangible Personal Property.
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"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational or other constitution, law, ordinance,
principle of common law, code, regulation, statute or treaty, including, without
limitation, Environmental Laws.
"Liability" shall mean with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required to be accrued on the
financial statements of such Person.
"Lockboxes" shall have the meaning set forth in Section 2.1(p).
"Marks" shall mean Seller's name, all assumed fictional business names,
trade names, registered and unregistered trademarks, service marks and
applications.
"Material Adverse Change" shall mean any material adverse change in the
Business or the Assets including such a change in financial or other condition,
prospects, receivables, book value, assets or operations or any material
increase in the Assumed Liabilities.
"Net Working Capital" shall mean the amount by which Current Assets exceed
Current Liabilities as of the Closing Date.
"Noncompetition Agreements" shall have the meaning set forth in Section
9.3(k).
"Occupational Safety and Health Law" shall mean any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, including the Occupational Safety and
Health Act and state and local analogues, and any program, whether governmental
or private (such as those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order" shall mean any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Body.
"Ordinary Course of Business" shall mean an action taken by a Person only
if that action:
(a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
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(b) does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons
exercising similar authority) and does not require any other separate or
special authorization of any nature; and
(c) is not extraordinary in nature, scope and magnitude in relation to
actions customarily taken, without any separate or special authorization,
in the ordinary course of the normal, day-to-day operations of other
Persons that are in the same line of business as such Person.
"Permitted Encumbrances" shall mean: (i) liens, claims or encumbrances
imposed by Legal Requirement, such as carriers', warehousemen's, materialmen's
and mechanics' liens, not material in amount and that will not interfere with
the operation of the Business or Seller's or Bactolac's right to use the
property subject thereto and will be discharged by Seller prior to the Closing
Date; (ii) liens for real property taxes not yet due and payable; (iii) as to
Real Property, all matters of survey, easements or reservations of, or rights of
others for, rights of way, highway and railroad crossings, sewers, electric
lines, telegraph and telephone lines (all of which to be satisfactory to Buyer)
and all exceptions listed in Section 3.7 of the Disclosure Schedule; and (iv)
liens, liabilities or encumbrances that will be discharged and satisfied in full
by Seller or the Affiliates at the Closing.
"Person" shall mean an individual, partnership, corporation, business
trust, limited liability company, limited liability partnership, limited
partnership, joint stock company, trust, unincorporated association, joint
venture or other entity or a Governmental Body.
"Post-Closing Adjustment Certificate" shall have the meaning set forth in
Section 2.9(b)(iv).
"Potential Acquiror" shall have the meaning set forth in Section 7.7.
"Pre-Closing Adjustment Certificate" shall have the meaning set forth in
Section 2.9(a).
"Proceeding" shall mean any action, arbitration, audit, claim, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
judicial or investigative, whether formal or informal, whether public or
private) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price" shall have the meaning set forth in Section 2.4.
"Real Property" shall mean the lands or Improvements in which Seller or
Bactolac has an ownership, leasehold or other interest that are used or held for
use in the Business and that are identified on Sections 3.6 and 5.4 of the
Disclosure Schedule and all Improvements and Appurtenances thereto.
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"Record" shall mean information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Related Person" shall mean, as to any Person or entity, any other Person
or entity controlling, controlled by or under common control with such person or
entity. As used in this definition, "controlling" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Release" shall mean any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the Environment or into or out of any property.
"Remedial Action" shall mean all actions, including any capital
expenditures, required or voluntarily undertaken (a) to clean up, remove, treat
or in any other way address any Hazardous Material or other substance; (b) to
prevent the Release or Threat of Release or to minimize the further Release of
any Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the Environment; (c) to perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(d) to bring all Facilities and the operations conducted thereon into compliance
with Environmental Laws and environmental Governmental Authorizations.
"Representative" shall mean with respect to a particular Person, any
representative, partner, member, director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
representative of that Person. In addition, as to Buyer, Representative shall
include Meridian Venture Partners II, LP and its representatives, partners,
members, directors, officers, managers, employees, agents, consultants,
advisors, accountants, financial advisors, legal counsel or other
representative, and other prospective investors in and lenders to Buyer.
"Restricted Contracts" shall have the meaning set forth in Section 2.10.
"Retained Liabilities" shall have the meaning set forth in Section 2.5(b).
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller Contract" shall mean any Contract (a) under which Seller has, or
may acquire, any rights or benefits; (b) under which Seller has, or may become
subject to, any obligation or liability; or (c) by which Seller or any of the
assets owned or used by Seller is or may become bound.
"Seller's Estimated Adjustment" shall have the meaning set forth in Section
2.9(a).
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"Sirkin Contracts" shall have the meaning set forth in Section 2.1(o).
"Sirkin Vehicle" shall have the meaning set forth in Section 2.1(q).
"Subsidiary" shall mean with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
"Survey" shall have the meaning set forth in Section 9.3(h).
"Tangible Personal Property" shall mean all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by Seller or included in the Bactolac Assets (wherever
located and whether or not carried on Seller's books), together with any express
or implied warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all maintenance records and other documents relating
thereto.
"Target Net Working Capital" shall mean one million three hundred thousand
dollars ($1,300,000).
"Tax" shall mean any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, Medicare, unemployment, disability, real property,
personal property, sales, use, transfer, filing, recordation, registration,
value added, alternative, add-on minimum and other tax, fee, assessment, levy,
tariff, charge or duty of any kind whatsoever and any interest, penalty,
addition or additional amount thereon imposed, assessed or collected by or under
the authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract.
"Tax Return" shall mean any return (including any information return),
report, statement, schedule, notice, form, declaration, claim for refund or
other document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
"Third-Party Claim" shall mean any claim against any Indemnified Person by
a Person that is not a party to this Agreement, whether or not involving a
Proceeding.
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"Threat of Release" shall mean a reasonable likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Title Commitment" shall have the meaning set forth in Section 9.3(g).
"Title Insurer" shall mean Fidelity National Title Insurance Company of New
York.
"Title Objection" shall mean:
(a) any Title Commitment or other evidence of title or search of the
appropriate real estate records discloses that any party other than Seller
or Bactolac has title to the estate in the Real Property covered by the
Title Commitment;
(b) any title exception is disclosed in Schedule B to any Title
Commitment that is not one of the Permitted Encumbrances or one that Seller
specifies when delivering the Title Commitment to Buyer as one that Seller
will cause to be deleted from the Title Commitment concurrently with the
Closing, including (A) any exceptions that pertain to Encumbrances securing
any loans that do not constitute an Assumed Liability and (B) any
exceptions that Buyer reasonably believes could materially and adversely
affect Buyer's use and enjoyment of the Real Property described therein; or
(c) any Survey discloses any matter that Buyer reasonably believes
could materially and adversely affect Buyer's use and enjoyment of the Real
Property described therein or that Buyer reasonably believes could render
title to the Real Property unmarketable or that could materially and
adversely affect the value of the Real Property;
"Title Policy" shall have the meaning set forth in Section 9.3(g).
"Transaction Documents" shall mean the Agreement, the Bill of Sale, the
Assignment and Assumption Agreement, the Assignment of Intellectual Property,
the Noncompetition Agreements, the Escrow Agreement and the other documents
delivered pursuant to this Agreement.
"WARN Act" shall have the meaning set forth in Section 12.1(b)(i).
"Wetland Parcel" shall mean that parcel of land situated in the NE 1/4 of
Section 33, Township 7 South, Range 11 West, City of Gulfport, First Judicial
District of Harrison County, Mississippi, containing 7.41 Acres, More or less,
described more particularly as follows: Commencing at the Southeast corner of
the NE 1/4 of Section 33, Township 7 South, Range 11 West, Harrison County,
Mississippi, thence North 00 degrees 26 minutes 27 seconds West 60.00 feet to
the North margin of 34th Street; thence South 89 degrees 33 minutes 59 seconds
West along said North margin 635.00 feet to the Point of Beginning; thence
continue along said North margin South 89 degrees 33 minutes 59 seconds West
646.78 feet; thence North 00 degrees 04 minutes 36 seconds East 499.03 feet;
thence North 89 degrees 11 minutes 19 seconds East 388.11 feet; thence North 89
degrees 02 minutes 27 seconds East 252.26 feet; thence South 00 degrees 39
minutes 35 seconds East 503.89 feet to the Point of Beginning.
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Section 1.2. Usage.
(a) Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP.
(b) Legal Representation of the Parties. This Agreement was negotiated
by the parties with the benefit of legal representation, and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any
construction or interpretation hereof.
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
Section 2.1. Assets to be Sold. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, but effective as of the
Effective Time, Seller and Bactolac (as appropriate) shall sell, convey, assign,
transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller
and Bactolac (as appropriate), free and clear of any Encumbrances other than
Permitted Encumbrances, all of Seller's and Bactolac's (as appropriate) right,
title and interest in and to all of Seller's and, solely with respect to the
Bactolac Assets, Bactolac's (as appropriate) property and assets, real, personal
or mixed, tangible and intangible, of every kind and description, wherever
located, including the following (but excluding the Excluded Assets):
(a) all Real Property (excluding the Wetland Parcel);
(b) all Tangible Personal Property, including those items described in
Schedule 2.1(b) and Section 5.3 of the Disclosure Schedule;
(c) all Inventories;
(d) all Accounts Receivable;
(e) all rights and benefits under the Seller Contracts, including
those listed in Section 3.17(a) of the Disclosure Schedule, and all
outstanding offers or solicitations made by or to Seller to enter into any
Contract;
(f) all rights and benefits under manufacturers' and vendors'
warranties relating to the Business and the Assets;
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(g) all Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent transferable to
Buyer;
(h) all data and Records related to the Business and operations of
Seller, including client and customer lists and Records, referral sources,
research and development reports and Records, production reports and
Records, service and warranty Records, equipment logs, operating guides and
manuals, financial and accounting Records, creative materials, advertising
materials, promotional materials, studies, reports, correspondence and
other similar documents and Records and, subject to Legal Requirements, all
personnel Records;
(i) all of the intangible rights and property of Seller, including
Intellectual Property, going concern value, goodwill, telephone, telecopy
and e-mail addresses and listings, Seller's name and any derivation
thereof, and those items listed in Section 3.22(a) of the Disclosure
Schedule;
(j) all insurance benefits, including rights and proceeds, arising
from or relating to the Assets or the Assumed Liabilities prior to the
Effective Time, unless expended in accordance with this Agreement;
(k) all claims of Seller against third parties relating to the
Business or the Assets, whether choate or inchoate, known or unknown,
contingent or noncontingent, including all such claims listed in Schedule
2.1(k);
(l) all rights of Seller relating to deposits and prepaid expenses,
claims for refunds (other than refunds of income taxes) and rights to
offset in respect thereof;
(m) the Bactolac Assets (excluding the Wetland Parcel), consisting of
the Tangible Personal Property set forth on Section 5.3 of the Disclosure
Schedule and the Real Property set forth on Section 5.4 of the Disclosure
Schedule;
(n) all rights and benefits under the Bactolac Contracts, if any;
(o) all of Seller's rights under, including claims to enforce, that
certain (i) Non-Competition Agreement, by and among Neil Sirkin, Nutrition
For Life International, Inc., and Bactolac, dated November 30, 1999, (ii)
Employment Agreement between Seller and Neil Sirkin, dated November 30,
1999, (iii) Release and Settlement Agreement, by and among ANI, Bactolac,
Allan I. Sirkin and Neil Sirkin, dated June 29, 2001, and (iii) Separation,
Release and Settlement Agreement, by and between Seller and Neil Sirkin,
dated October 31, 2003 (collectively, the "Sirkin Contracts").
(p) the lockbox accounts used by Seller in the collection of Accounts
Receivable ("Lockboxes");
(q) the Ford Explorer, bearing vehicle identification number
1FMDU34X5VZB46312 currently owned by Neil Sirkin but used by Seller in the
Business ("Sirkin Vehicle");
(r) 166 shares of common stock of KMart Corporation.; and
(s) all other properties and assets of every kind, character, and
description, tangible or intangible, owned by Seller and used or held for
use in connection with the Business, whether or not similar to the items
specifically set forth above.
All of the property and assets to be transferred to Buyer hereunder are herein
referred to collectively as the "Assets." Notwithstanding the foregoing, the
transfer of the Assets pursuant to this Agreement shall not include the
assumption of any Liability related to the Assets unless Buyer expressly assumes
that Liability pursuant to Section 2.5(a).
Section 2.2. Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.1 or elsewhere in this Agreement, the following assets of
Seller (collectively, the "Excluded Assets") are not part of the sale and
purchase contemplated hereunder, are excluded from the Assets and shall remain
the property of Seller after the Closing:
(a) all minute books, stock Records and corporate seals;
(b) the shares of capital stock of Seller held in treasury;
(c) all insurance policies and rights thereunder (except to the extent
specified in Section 2.1(j) and (k)), including, but not limited to, the
insurance policy maintained by Seller or Affiliates on the life of Pailla
Reddy;
(d) all personnel Records and other Records that Seller is required by
law to retain in its possession;
(e) all claims for refund of income taxes;
(f) all rights of Seller under this Agreement, the Bill of Sale, the
Assignment and Assumption Agreement, the Assignment of Intellectual
Property and the Escrow Agreement;
(g) the Wetland Parcel;
(h) the escrow funds held by InterBay Funding, LLC for payment of real
estate taxes on the Real Property; and
(i) any assets not included in the Assets set forth in Section 2.1
above.
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Section 2.3. Collection of Receivables. From and after the Closing Date,
Buyer shall have the right to receive and open all mail, packages and other
communications addressed to Seller and relating to the Business or the Assets,
and Seller and the Affiliates agree promptly to deliver to Buyer any such mail,
packages or other communications received directly or indirectly by Seller or
either Affiliate other than those exclusively relating to Excluded Assets. Buyer
shall have the right and authority to collect, for its own account, all of the
receivables included in the Assets, and Seller and the Affiliates shall promptly
transfer or deliver to Buyer any cash or other property received directly or
indirectly by Seller or either Affiliate in respect of such receivables,
including any amounts payable as interest, and such funds will be deemed held in
trust by Seller or the Affiliates for the benefit of the Buyer until so
transferred or delivered by the Seller or the Affiliates to the Buyer.
Section 2.4. Consideration. The consideration for the Assets will be the
aggregate sum of four million dollars ($4,000,000) plus or minus the Adjustment
Amount (the "Purchase Price") and assumption of the Assumed Liabilities, payable
as follows: (a) cash in the amount of four million dollars ($4,000,000) plus or
minus the Adjustment Amount (the "Cash Portion") and (b) delivery of an executed
Assignment and Assumption Agreement for assumption of the Assumed Liabilities.
In accordance with Section 10.3, at the Closing, the Cash Portion, after
adjustment as provided in Section 2.8, shall be delivered by Buyer to Seller as
follows: (1) two hundred fifty thousand dollars ($250,000) ("Escrow") paid to
the escrow agent pursuant to the Escrow Agreement to secure Seller and the
Affiliates' indemnification obligations hereunder, which amount shall be
released to Seller or the Affiliates, as directed by each of them, pursuant to
the terms thereof on the date that is six (6) months from the Closing Date and
(2) the balance by wire transfer to an account or accounts designated by Seller
or the Affiliates, which shall include the accounts of Seller's secured lender
and the current holder of the mortgage on the Real Property, which designation
shall be made at least three (3) days prior to Closing.
Section 2.5. Liabilities.
(a) Assumed Liabilities. On the Closing Date, but effective as of the
Effective Time, Buyer shall assume and agree to discharge only the
following Liabilities of Seller (the "Assumed Liabilities"):
(i) any Current Liability (other than a trade account payable to
either an Affiliate or a Related Person of Seller) that remains unpaid
and is taken into account in computing the Adjustment Amount;
(ii) any Liability to Seller's customers incurred by Seller in
the Ordinary Course of Business for orders outstanding as of the
Effective Time reflected on Seller's books (other than any Liability
arising out of, or relating to, a Breach that occurred prior to the
Effective Time, including Liabilities to Seller's customers associated
with Seller's delinquency in filling orders) and taken into account in
computing the Adjustment Amount;
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(iii) any Liability arising after the Effective Time under the
Seller Contracts described in Section 3.17(a) of the Disclosure
Schedule to the extent they are successfully assigned to Buyer (other
than any Liability arising out of, or relating to, a Breach that
occurred prior to the Effective Time);
(iv) any Liability arising after the Effective Time under any
Seller Contract included in the Assets that is entered into by Seller
after the date hereof in accordance with the provisions of this
Agreement and that is successfully assigned to Buyer (other than any
Liability arising out of, or relating to, a Breach that occurred prior
to the Effective Time); and
(v) any Liability of Seller described in Schedule 2.5(a) of, to
the extent taken into account in computing the Adjustment Amount.
(b) Retained Liabilities. The Retained Liabilities shall remain the
sole responsibility of, and shall be retained, paid, performed and
discharged solely by, Seller or the Affiliates. "Retained Liabilities"
shall mean every Liability of Seller and the Affiliates other than the
Assumed Liabilities and Liabilities that are not taken into account in
computing the Adjustment Amount, including:
(i) any Liability arising out of, or relating to, products of
Seller to the extent manufactured or sold prior to the Effective Time
other than to the extent assumed under Section 2.5(a)(iii), (iv) or
(v);
(ii) any Liability under any Contract assumed by Buyer pursuant
to Section 2.5(a) that arises after the Effective Time but that arises
out of, or relates to, any facts or circumstances that occurred prior
to the Effective Time;
(iii) any Liability for Taxes other than real estate taxes on the
Real Property for periods after the Effective Time (to the extent not
yet due and payable), including (A) any Taxes arising as a result of
Seller's operation of the Business or the ownership of the Assets
prior to the Effective Time, (B) any Taxes that will arise as a result
of the sale of the Assets pursuant to this Agreement and (C) deferred
Taxes of any nature;
(iv) any Liability under any Contract not assumed by Buyer under
Section 2.5(a), including any Liability arising out of, or relating
to, Seller's credit facilities or any security interest related
thereto and any Liability that is secured, in whole or in part, by an
Encumbrance affecting the Real Property;
(v) any Environmental, Health and Safety Liabilities arising out
of, or relating to, the Assets, the operation of the Business or
Seller's or Bactolac's leasing, ownership or operation of the Real
Property;
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(vi) any Liability under the Employee Plans or relating to
payroll, vacation (except to the extent assumed under Section
2.5(a)(i)), sick leave, workers' compensation, unemployment benefits,
pension benefits, employee stock option or profit-sharing plans,
health care plans, COBRA or benefits or any other compensation,
employee plans or benefits of any kind for Seller's Employees provided
for under the terms of such Employee Plans and Seller's related
policies, including any liability for termination of any Employee
Plans;
(vii) any Liability under any employment, severance, retention or
termination agreement with any Employee of Seller or any of its
Related Persons;
(viii) any Liability arising out of, or relating to, any Employee
grievance, whether or not the affected Employees are hired by Buyer;
provided, however, that to the extent Buyer hires an Employee of
Seller, Seller shall not be liable for any employee grievance for any
such Employees to the extent the grievance arises out of facts,
circumstances or conditions existing during any such Employee's employ
with Buyer;
(ix) any Liability of Seller to either Affiliate or any Related
Person of any of them;
(x) any Liability to indemnify, reimburse or advance amounts to
any officer, director, Employee or agent of Seller, either Affiliate
or any Related Person of any of them;
(xi) any Liability to distribute to any of Seller's or either
Affiliate's shareholders or otherwise apply all or any part of the
consideration received hereunder;
(xii) any Liability arising out of any Proceeding pending as of
the Effective Time;
(xiii) any Liability arising out of any Proceeding commenced
after the Effective Time and arising out of, or relating to, any
facts, circumstances or occurrence or event happening prior to the
Effective Time, other than to the extent assumed under Section 2.5(a);
(xiv) any Liability arising out of, or resulting from, Seller's
or either Affiliate's compliance or noncompliance with any Legal
Requirement or Order of any Governmental Body;
(xv) any Liability of Seller or either Affiliate under this
Agreement or any other document executed in connection with the
Contemplated Transactions; and
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(xvi) any Liability of Seller or either Affiliate based upon
Seller's or either Affiliate's acts or omissions occurring after the
Effective Time.
Section 2.6. Allocation of the Purchase Price. The fair market value of the
Assets that constitute Class I, II, III and IV Assets (as such terms are defined
in Treasury Regulation Section 1.1060-1T(d) promulgated under Section 1060 of
the Code) shall be as set forth on Schedule 2.6. The Buyer, Seller and the
Affiliates further agree that :
(a) The Purchase Price shall be allocated among the Assets and other
intangible assets, such as the noncompetition agreement contained in
Section 12.5 hereof, goodwill, etc. in the manner required by Treasury
Regulation Section 1.1060-1T based on the fair market values set forth on
such Schedule.
(b) Such allocation shall be binding on Seller and the Affiliates for
all federal, state and local tax purposes.
(c) Buyer and Seller and the Affiliates shall file with their
respective federal income tax returns consistent IRS Forms 8594: Asset
Acquisition Statement under Section 1060, including any required amendments
or supplements thereto ("Form 8594"), which shall reflect such allocation.
(d) Buyer shall prepare such Forms 8594 and shall deliver Seller's
applicable form to Seller so that Seller or the Affiliates may file such
form or any amendments or supplements thereto with its federal income tax
returns.
Seller shall assist Buyer and provide Buyer with any information necessary
for the completion of such Forms 8594.
Section 2.7. Closing. The purchase and sale provided for in this Agreement
(the "Closing") will take place at the offices of Buyer's counsel, Sonnenschein
Nath & Rosenthal LLP, 1221 Avenue of the Americas, New York, New York,
commencing at 10:00 a.m. (local time) on March 23, 2004 unless Buyer and Seller
otherwise agree. Subject to the provisions of Article X, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.7 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement. In such a situation, the Closing will occur as soon as
practicable, subject to Article X.
Section 2.8. Adjustment Amount and Payment. The "Adjustment Amount" (which
may be a positive or negative number) will equal the amount by which the Cash
Portion is increased or decreased, determined as follows:
(a) The Cash Portion shall be reduced by the dollar amount that the
Net Working Capital at Closing is less than the Target Net Working Capital
or increased by the dollar amount that the Net Working Capital at Closing
is greater than the Target Net Working Capital.
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(b) The Cash Portion shall be increased by the amount of payments made
by Seller from November 1, 2003 to the Closing Date in respect of capital
expenditures and the amount of outstanding accrued payables as of the
Closing Date in respect of capital expenditures committed to be made after
November 1, 2003 and taken into account in computing Net Working Capital;
provided that such capital expenditures were approved by Buyer in writing
prior to incurrence and/or payment thereof ("Approved Capital
Expenditures"). A list of the Approved Capital Expenditures made and
accrued to date is set forth on Schedule 2.8(b) hereto.
The "Cash Portion Increase Amount" shall be the amount of a positive
Adjustment Amount (reflecting an increase in the Cash Portion) and the "Cash
Portion Decrease Amount" shall be the amount of a negative Adjustment Amount
(reflecting a decrease in the Cash Portion). The term "Adjusted Cash Portion" is
the Cash Portion, either increased to the Cash Portion Increase Amount or
decreased to the Cash Portion Decrease Amount.
Section 2.9. Adjustment Procedure.
(a) Seller or the Affiliates shall deliver to Buyer, not less than
three (3) Business Days prior to the Closing Date, a certificate signed by
Seller (the "Pre-Closing Adjustment Certificate"), which shall specify
Seller's good faith estimate of the Adjustment Amount and the resulting
Cash Portion Increase Amount or Cash Portion Decrease Amount ("Seller's
Estimated Adjustment") accompanied by reasonably detailed documentation
supporting the calculations set forth therein. Buyer shall have the right
to challenge the calculations set forth therein if Buyer believes, in good
faith, that they are in error. Buyer and Seller shall, in good faith,
attempt to resolve any dispute with respect to the Pre-Closing Adjustment
Certificate prior to the Closing Date. If such dispute is not resolved at
or prior to the Closing, the Closing shall proceed notwithstanding such
dispute, and payment of the portion of the Cash Portion calculated by
Seller but disputed by Buyer shall be paid by Buyer into the Escrow as
provided in Section 2.4 (the "Dispute Escrow Portion"), and the amount to
be paid to Seller at Closing shall be the undisputed amount of Seller's
Estimated Adjustment. The disposition of the Dispute Escrow Portion shall
be governed by the Escrow Agreement, which shall provide, among other
things, for release of such Dispute Escrow Portion upon resolution of the
dispute as to the Adjustment Amount.
(b) As soon as practicable, but no later than sixty (60) days after
the Closing Date, Buyer shall deliver to Seller:
(i) a calculation of the Net Working Capital;
(ii) a calculation of the amount of the Approved Capital
Expenditures; and
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(iii) a calculation of the Adjustment Amount and related Cash
Portion Increase Amount or Cash Portion Decrease Amount ("Post-Closing
Adjustment Certificate").
(c) Seller shall have full right to review and verify the information
delivered pursuant to Section 2.9(b). If Seller disputes the calculation of
any component of the Post-Closing Adjustment Certificate, it shall so
advise Buyer by written notice delivered within ten (10) days after receipt
by Seller of the Post-Closing Adjustment Certificate. Buyer shall provide
Seller with reasonable access, during regular business hours, to the books
and records and other documents and data relating to the Post-Closing
Adjustment Certificate, such rights of access to be exercised in a manner
that does not interfere with the operations of Buyer. If Seller and Buyer
are unable to resolve such dispute within fifteen (15) days after the date
of such notice of dispute, then at the request of either party, the issues
outstanding in such dispute shall be resolved by Alexander, Van Loon,
Sloan, Levens, & Favre, PLLC (the "Designated Accountant"), and the
determination of the Adjustment Amount and related Cash Portion Increase
Amount or Cash Portion Decrease Amount by the Designated Accountant shall
be conclusive and final and binding on the parties hereto.
(d) If Alexander, Van Loon, Sloan, Levens, & Favre, PLLC declines to
act as the Designated Accountant, and the parties hereto are unable to
agree upon another firm to act as Designated Accountant within twenty (20)
days of Alexander, Van Loon, Sloan, Levens, & Favre, PLLC notifying the
parties that it is unable or unwilling to act in such capacity, then either
Seller or Buyer may request the American Arbitration Association ("AAA") to
designate a firm of certified public accountants to act as the Designated
Accountant. If the AAA is unable to designate a firm of certified public
accountants that will act as the Designated Accountant within sixty (60)
days of being requested to do so, then the Adjustment Amount shall be
determined by a single arbitrator appointed by the AAA upon application of
either party and pursuant to an arbitration proceeding in New York, New
York, held in accordance with the then applicable rules of the AAA. The
cost of retaining the Designated Accountant, such firm of certified public
accountants and such arbitrator, if applicable, shall be borne one-half by
Seller or either Affiliate on the one hand, and one-half by Buyer on the
other hand. The determination by the Designated Accountant or such firm or
arbitrator of the Adjustment Amount and related Cash Portion Increase
Amount or Cash Portion Decrease Amount shall be conclusive and not subject
to dispute or review, and judgment thereon may be entered in any court of
competent jurisdiction.
(e) If the Adjusted Cash Portion, either as agreed to by Seller and
Buyer, or as determined pursuant to Section 2.9(c) or 2.9(d), as the case
may be, shall be less than the estimate of the Adjusted Cash Portion set
forth in the Pre-Closing Adjustment Certificate, then all or a portion of
the Dispute Escrow Portion shall be returned to Buyer (together with
interest accrued thereon) up to the amount of such difference, and any
remaining amount of the Dispute Escrow Portion (together with interest
accrued thereon) shall be paid to Seller. However, if the Dispute Escrow
Portion shall be less than the amount of such difference, then Seller shall
be obligated to pay the amount of such deficiency to Buyer. Any payment
made hereunder shall be made in immediately available funds within three
(3) Business Days after the final Adjusted Cash Portion has been so agreed
or determined.
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(f) If the final Adjusted Cash Portion, either as agreed to by Seller
and Buyer, or as determined pursuant to Section 2.9(c) or 2.9(d), as the
case may be, shall be greater than the amount of the estimated Adjusted
Cash Portion as agreed to by Buyer for purposes of the payments at Closing
to Seller pursuant to Section 2.4, then there shall be paid to Seller, out
of the Dispute Escrow Amount (together with interest accrued therein), such
amount as shall cause the aggregate of the Cash Portion amounts paid to
Seller at Closing plus the amounts payable under this Section 2.9(f) in
respect of the Cash Portion to equal the final Adjusted Cash Portion minus
the Escrow, and any remaining amount of the Dispute Escrow Amount (together
with accrued interest theron) shall be paid to Buyer. However, if the
Dispute Escrow Amount shall be insufficient to result in the required
amount being paid to Seller, then Buyer shall pay to Seller an amount equal
to the remaining amount due to Seller. Any payment made hereunder shall be
made in immediately available funds within three (3) Business Days after
the final Adjusted Cash Portion has been so agreed or determined.
Section 2.10. Consents. If there are any Consents that have not yet been
obtained (or otherwise are not in full force and effect) as of the Closing, in
the case of each Seller Contract or Bactolac Contract as to which such Consents
were not obtained (or otherwise are not in full force and effect) (the
"Restricted Contracts"), Buyer may waive the closing conditions as to any such
Consent and elect to have Seller continue its efforts to obtain the Consents. If
Buyer elects to have Seller continue its efforts to obtain any Consents and the
Closing occurs, notwithstanding Sections 2.1 and 2.5, neither this Agreement nor
the Assignment and Assumption Agreement nor any other document related to the
consummation of the Contemplated Transactions shall constitute a sale,
assignment, assumption, transfer, conveyance or delivery or an attempted sale,
assignment, assumption, transfer, conveyance or delivery of the Restricted
Contracts, and following the Closing, the parties shall use best efforts, and
cooperate with each other, to obtain the Consent relating to each Restricted
Contract as quickly as practicable. Pending the obtaining of such Consents
relating to any Restricted Contract, the parties shall cooperate with each other
in any reasonable and lawful arrangements designed to provide to Buyer the
benefits of use of the Restricted Contract for its term (or any right or benefit
arising thereunder, including the enforcement for the benefit of Buyer of any
and all rights of Seller or Bactolac (as appropriate) against a third party
thereunder). Once a Consent for the sale, assignment, assumption, transfer,
conveyance and delivery of a Restricted Contract is obtained, Seller or Bactolac
(as appropriate) shall notify Buyer, who shall confirm in writing that it
accepts such assignment. Upon such confirmation, such Restricted Contract shall
be deemed to have been assigned, transferred, conveyed and delivered to Buyer,
and Buyer shall be deemed to have assumed the obligations thereunder from and
after the date of such confirmation by Buyer.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows, which
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III), except as set forth in the
Disclosure Schedule. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with particularity and
describes the relevant facts in detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article III.
Section 3.1. Organization and Good Standing. Seller: (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may be; (b) has
all requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged; (c) is duly qualified and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to do so would not have a
Material Adverse Change; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each Transaction Document to
which it is or will be a party. Seller has no Subsidiary and, except as
disclosed in Section 3.1(c) of the Disclosure Schedule, does not own any shares
of capital stock or other securities of any other Person.
Section 3.2. Enforceability, Authority, No Conflict. The execution,
delivery and performance by the Seller of each Transaction Document to which it
is a party and the consummation of the transactions contemplated hereby and
thereby: (a) have been duly authorized by all necessary corporate action; (b) do
not contravene the terms of the Governing Documents of Seller, or any amendment
thereto; and (c) upon receipt of the Consents, will not violate, conflict with
or result in any breach or contravention of, or the creation of any Encumbrance
under, any Seller Contract or any Legal Requirement applicable to Seller.
Section 3.3. Financial Statements. Seller has delivered to Buyer: (a) an
audited consolidated balance sheet of ANI as at September 30, 2003, including
the notes thereto, and the related audited consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal year then ended,
including, in each case, the notes thereto and the work papers documenting the
bases for consolidation, together with the report thereon of Gelfond Hochstadt &
Pangburn, P.C., independent certified public accountants; (b) an unaudited
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balance sheet of Seller as at September 30, 2003 (including the work papers
thereto, the "Balance Sheet"), and the related unaudited statement of operations
for the fiscal year then ended, including the work papers thereto, (c) audited
consolidated balance sheets of ANI as at September 30 in each of the fiscal
years 2002 and 2001, and the related audited consolidated statements of income,
changes in shareholders' equity and cash flows for each of the fiscal years then
ended, including, in each case, the notes thereto and the work papers
documenting the bases for consolidation, together with the report thereon of
Grant Thornton LLP, independent certified public accountants; (d) unaudited
balance sheets of Seller as at September 30 in each of the fiscal years 2002 and
2001, and the related unaudited statements of operations for the fiscal years
then ended, including, in each case, the work papers thereto; (e) an unaudited
balance sheet of ANI as at December 31, 2003, and the related unaudited
consolidated statement(s) of income and cash flows for the three (3) months then
ended, including, in each case, the notes thereto and the work papers
documenting the bases for consolidation; and (f) an unaudited balance sheet of
Seller as at December 31, 2003 (the "Interim Balance Sheet") and the related
unaudited statement of operations for the three (3) months then ended,
including, in each case, the work papers thereto. The financial statements
referred to in clauses (b), (d) and (f) fairly present (and the financial
statements delivered pursuant to Section 6.9 will fairly present) the financial
condition and the results of operations of Seller as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP. The financial statements referred to in clauses (b), (d) and (f) of
this Section 3.3 and delivered pursuant to Section 7.9 reflect and will reflect
the consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. The
financial statements referred to in clauses (b), (d) and (f) have been, and will
be, prepared from, and are in accordance with, the accounting Records of Seller.
Seller has also delivered to Buyer copies of all letters from ANI's auditors to
ANI's board of directors or the audit committee thereof during the thirty-six
(36) months preceding the execution of this Agreement, together with copies of
all responses thereto.
Section 3.4. Books and Records. The books of account and other financial
Records of Seller, all of which have been made available to Buyer, are complete
and correct and represent actual, bona fide transactions and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act (regardless of whether the Seller is
subject to that Section or not), including the maintenance of an adequate system
of internal controls.
Section 3.5. Sufficiency of Assets; Use.
(a) Except as set forth in Section 3.5(a) of the Disclosure Schedule,
the Assets (1) constitute all of the assets, tangible and intangible, of
any nature whatsoever, necessary to operate the Business in the manner
presently operated by Seller and (2) include all of the operating assets of
Seller.
(b) The material items of machinery, equipment and other tangible
assets included in the Assets are in operating condition, reasonable wear
and tear excepted, and conform in all material respects to all applicable
ordinances, rules, regulations and technical standards, and all applicable
building, zoning and other laws.
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Section 3.6. Description of Real Property. Section 3.6 of the Disclosure
Schedule contains a correct legal description, street address and tax parcel
identification number of all tracts, parcels and subdivided lots used or held
for use by Seller in connection with the Business.
Section 3.7. Title to Assets; Encumbrances.
(a) Except as set forth on Section 3.7 of the Disclosure Schedule,
Seller holds interests as lessee or licensee under leases or licenses in
full force and effect in all Real Property referred to on Section 3.6 of
the Disclosure Schedule (such leases to be terminated prior to Closing),
and Seller holds good and transferable title to all personal property used
or held for use in connection with the Business, and Seller enjoys peaceful
and undisturbed possession thereunder, free and clear of all Encumbrances
other than Permitted Encumbrances. There is no condemnation proceeding
pending (or, as to leased Real Property, to which Seller is a party) or, to
the Knowledge of the Seller, threatened, against any material property or
asset of the Seller used, useful or maintained for use in connection with
the Business.
(b) Seller does not own or hold, and is not obligated under or a party
to, any option, right of first refusal or other contractual right to
purchase or acquire any real property or to sell, assign or dispose any
Real Property.
Section 3.8. Condition of Facilities.
(a) Use of the Real Property for the various purposes for which it is
presently being used are permitted as of right under all applicable zoning
and land use legal requirements and is not subject to "permitted
nonconforming" use or structure classifications. No part of any Improvement
encroaches on any real property not included in the Real Property, and
there are no buildings, structures, fixtures or other Improvements situated
on adjoining property that encroach on any part of the Real Property. The
land for each Facility abuts on and has direct vehicular access to a public
road or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such land and comprising a part of the Real
Property, is supplied with public or quasi-public utilities and other
services appropriate for the operation of the Facilities located thereon
and is not located within any flood plain or area subject to wetlands
regulation or any similar restriction. There is no existing, or to Seller's
Knowledge, proposed plan to modify or realign any street or highway or any
existing or proposed eminent domain proceeding that would result in the
taking of all or any part of any Facility or that would prevent or hinder
the continued use of any Facility as heretofore used in the conduct of the
Business.
(b) The Facilities are duly registered with the FDA and all other
appropriate federal and state governmental authorities, and comply in
substantial part with Good Manufacturing Practices requirements set forth
in 21 C.F.R. Part 211.
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(c) Each item of Tangible Personal Property is in operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the
Ordinary Course of Business and is free from material latent and patent
defects. Except as disclosed in Section 3.8(c) of the Disclosure Schedule,
all Tangible Personal Property used in Seller's business is in the
possession of Seller.
(d) To the Knowledge of Seller, except as set forth on Schedule 3.8(d)
of the Disclosure Schedule, all material components of all Improvements,
including the structural elements thereof, the roof and the heating,
ventilation, air conditioning, plumbing, electrical, elevator, mechanical,
sewer, waste water, storm water, paving and parking equipment, systems and
facilities included therein, are in working order and are adequate to
conduct the Business as currently conducted.
(e) Except as set forth on Schedule 3.8(e) of the Disclosure Schedule
to the Knowledge of Seller:
(i) none of the Improvements nor the current use thereof
contravenes, violates or fails to conform in any material respect with
applicable ordinances, regulations, zoning or land use laws or other
Legal Requirements or restrictive covenants; and
(ii) no charges or violations have been received by Seller
against or relating to any Improvement or any of the operations
conducted thereat at any Real Property, as a result of any violation
or alleged violation of any applicable ordinances, requirements,
regulations, zoning or land use laws or other Legal Requirements or
restrictive covenants.
Section 3.9. Accounts Receivable. All Accounts Receivable that are
reflected on the Interim Balance Sheet or on the accounting Records of Seller as
of the Closing Date represent or will represent valid obligations arising from
valid sales and bona fide transactions actually made or services actually
performed by Seller in the Ordinary Course of Business. Except to the extent
paid prior to the Closing Date and except as to uncollectible Accounts
Receivable that are taken into account in calculating Net Working Capital, such
Accounts Receivable are, or will be as of the Closing Date, current and
collectible net of the respective reserves shown on the Interim Balance Sheet or
on the accounting Records of Seller as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserve on the accounting Records of Seller as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable reflected on the
accounting Records of Seller as of the Closing Date than the reserve reflected
on the Balance Sheet and Interim Balance Sheet represented of the Accounts
Receivable reflected thereon and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging). Subject to such
reserves for uncollectible Accounts Receivable that are taken into account in
calculating Net Working Capital, each of such Accounts Receivable either has
been or will be collected in full, without any setoff, within ninety (90) days
after the day on which it first becomes due and payable. Except as set forth on
Section 3.9 of the Disclosure Schedule, there is no contest, dispute, claim,
defense or right of setoff other than for customary payment discounts provided
to customers in the Ordinary Course of Business, under any Contract with any
account debtor of an Account Receivable relating to the amount or validity of
such Account Receivable in excess of reserves recorded therefor on Seller's
financial statements. Section 3.9 of the Disclosure Schedule contains a complete
and accurate list of all Accounts Receivable as of the date of the Interim
Balance Sheet, which list sets forth the aging of each such Account Receivable.
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Section 3.10. Inventories.
(a) All items included in the Inventories consist of a quality and
quantity usable and, with respect to finished goods, saleable, in the
Ordinary Course of Business of Seller except for obsolete items and items
of below-standard quality, all of which have been written off or written
down to net realizable value in the Interim Balance Sheet or on the
accounting Records of Seller as of the Closing Date, as the case may be.
(b) All Inventories are (i) free from defects, (ii) have been produced
in accordance with Good Manufacturing Practices as set forth in 21 C.F.R.,
Part 211, and as approved by the FDA in any approved New Drug or
Abbreviation New Drug Application, or any other approval, (iii) are not
"adulterated" or "misbranded"; (iv) do not contain any "unsafe additives",
and (v) meet all specifications for the particular type of Inventory then
in effect, including all standard operating procedures. As used in this
Section, "adulterated," "misbranded" and "unsafe additives" shall have the
meanings given them by the United States Federal Food, Drug, and Cosmetic
Act and regulations and administrative orders pursuant thereto.
Section 3.11. No Undisclosed Liabilities. Except as set forth in Section
3.11 of the Disclosure Schedule, Seller has no Liability except for Liabilities
reflected or reserved against in the Interim Balance Sheet and current
liabilities incurred in the Ordinary Course of Business of Seller since the date
of the Interim Balance Sheet.
Section 3.12. Taxes.
(a) Seller has filed or caused to be filed, or has properly filed
extensions for, all Tax Returns, and has paid or caused to be paid all
Taxes, except Taxes (other than real estate Taxes) the validity or amount
of which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside. Except as set
forth on Section 3.12 of the Disclosure Schedule, Seller has paid or caused
to be paid, or has established reserves that the Seller reasonably believes
to be adequate in all material respects for, all tax liabilities applicable
to Seller for all fiscal years that have not been examined and reported on
by the taxing authorities (or closed by applicable statutes).
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(b) Seller has obtained and retained from each of its customers, as
applicable, copies of appropriate sales and/or use tax resale certificates,
sales and/or use tax permits/licenses, or other documentation of
registration with the appropriate state and/or local tax authorities or has
retained copies of invoices and/or other appropriate and adequate records
with respects to each of its customers, as applicable, in order to evidence
its exemption from any requirement to collect sales and/or use tax from
each of its applicable customers and to remit such sales and/or use taxes
so collected to the appropriate state and/or local tax authorities or it
has otherwise collected from its applicable customers and remitted to all
appropriate state/or local taxing authorities all amounts for such sales
and use taxes, all as required by Law.
Section 3.13. No Material Adverse Change. Except as set forth in Section
3.13 of the Disclosure Schedule, since the date of the Balance Sheet, there has
not been any Material Adverse Change, and, to Seller's Knowledge, no event has
occurred or circumstance exists that may result in such a Material Adverse
Change.
Section 3.14. Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Section 3.14(a) of the Disclosure Schedule,
Seller and all Real Property are in compliance with all Legal Requirements
applicable to it and no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute, or result in,
a violation by Seller or the Real Property of, or a failure on the part of
Seller or the Real Property to comply with, any Legal Requirement or (B)
may give rise to any obligation on the part of Seller to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature,
except in each case as would not result in a Material Adverse Change; and
(b) Section 3.14(b) of the Disclosure Schedule contains a complete and
accurate list of each Governmental Authorization that is held by Seller or
that otherwise relates to Seller's Business or the Assets. Each
Governmental Authorization listed or required to be listed in Section
3.14(b) of the Disclosure Schedule is valid and in full force and effect.
Except as set forth in Section 3.14(b) of the Disclosure Schedule:
(i) Seller is, and at all times since January 1, 2000, has been,
in full compliance with all of the material terms and requirements of
each Governmental Authorization identified or required to be
identified in Section 3.14(b) of the Disclosure Schedule
(ii) To Seller's Knowledge, no event has occurred, or
circumstance exists, that may (with or without notice or lapse of
time) (A) constitute, or result, directly or indirectly, in, a
violation of, or a failure to comply with, any term or requirement of
any Governmental Authorization listed or required to be listed in
Section 3.14(b) of the Disclosure Schedule or (B) result, directly or
indirectly, in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Section 3.14(b) of the Disclosure
Schedule; and
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(iii) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Section 3.14(b) of the Disclosure Schedule have been duly
filed on a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with
the appropriate Governmental Bodies.
The Governmental Authorizations listed in Section 3.14(b) of the Disclosure
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit Seller to lawfully conduct and operate its business in the
manner in which it currently conducts and operates such business and to permit
Seller to lawfully own, use and occupy its assets in the manner in which it
currently owns, uses and occupies such assets.
Section 3.15. Legal Proceedings; Orders. Except as set forth on Section
3.15 of the Disclosure Schedule, there are no pending Proceedings or threatened
Proceedings against or affecting Seller. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
Governmental Body purporting to enjoin or restrain the execution, delivery or
performance of the Transaction Documents.
Section 3.16. Absence of Certain Changes and Events. Except as set forth in
Section 3.16 of the Disclosure Schedule, since the date of the Balance Sheet,
Seller has conducted its business only in the Ordinary Course of Business and
Seller has not:
(a) sold or transferred any Assets used, held for use, useful or
maintained for use in the Business other than the sale of Inventory in the
ordinary course of business, other than for the sale or other disposition
of excess, obsolete or worn-out inventory or equipment and other than the
sale or disposition of Assets constituting Tangible Personal Property that
have been replaced with other Assets of equal or greater value or utility,
and Seller has not sold any inventory to any customer on approval or on any
other basis that entitles the customer to return or may obligate Seller to
repurchase such Inventory;
(b) made any change in its accounting methods or principles (or the
application of those methods or principles) or introduced any new method of
management, operations or accounting; and
(c) established any new Plan for which Buyer would have any liability,
materially amended any existing Plan, or incurred any obligation or
liability under any Plan materially different in nature or amount from
obligations or liabilities incurred during similar periods in prior years.
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Section 3.17. Contracts; No Defaults.
(a) Section 3.17(a) of the Disclosure Schedule contains an accurate
and complete list, and Seller has delivered to Buyer accurate and complete
copies, of:
(i) each Seller Contract that involves performance of services or
delivery of goods or materials by Seller of an amount or value in
excess of twenty-five thousand dollars ($25,000);
(ii) each Seller Contract that involves performance of services
or delivery of goods or materials to Seller of an amount or value in
excess of twenty-five thousand dollars ($25,000);
(iii) each Seller Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts
of Seller in excess of twenty-five thousand dollars ($25,000);
(iv) each Seller Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any real or
personal property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than twenty-five thousand dollars ($25,000) and with
a term of less than one (1) year);
(v) each Seller Contract with any labor union or other Employee
representative of a group of Employees relating to wages, hours and
other conditions of employment;
(vi) each Seller Contract (however named) involving a sharing of
profits, losses, costs or liabilities by Seller with any other Person;
(vii) each Seller Contract containing covenants that in any way
purport to restrict Seller's business activity or limit the freedom of
Seller to engage in any line of business or to compete with any
Person;
(viii) each Seller Contract providing for payments to, or by, any
Person based on sales, purchases or profits, other than direct
payments for goods;
(ix) each power of attorney of Seller that is currently effective
and outstanding;
(x) each Seller Contract entered into other than in the Ordinary
Course of Business that contains, or provides for, an express
undertaking by Seller to be responsible for consequential damages;
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(xi) each Seller Contract for capital expenditures in excess of
twenty-five thousand dollars ($25,000);
(xii) each Seller Contract not denominated in U.S. dollars;
(xiii) each written warranty, guaranty and/or other similar
undertaking with respect to contractual performance extended by Seller
other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement and modification (whether oral
or written) in respect of any of the foregoing.
Section 3.17(a) of the Disclosure Schedule sets forth reasonably complete
details concerning such Contracts, including the parties to the Contracts
and the amount of the remaining commitment of Seller under the Contracts.
(b) Except as set forth in Section 3.17(b) of the Disclosure Schedule,
neither Affiliate has, or may acquire, any rights under, and neither
Affiliate has, or may become subject to, any obligation or liability under,
any Contract that relates to the Business or any of the Assets.
(c) Except as set forth in Section 3.17(c) of the Disclosure Schedule:
(i) each Contract identified, or required to be identified, in
Section 3.17(a) of the Disclosure Schedule and that is to be assigned
to, or assumed by, Buyer under this Agreement is in full force and
effect and is legal, valid and enforceable in accordance with its
terms;
(ii) each Contract identified, or required to be identified, in
Section 3.17(a) of the Disclosure Schedule and that is being assigned
to, or assumed by, Buyer is assignable by Seller to Buyer without the
consent of any other Person; and
(iii) to the Knowledge of Seller, no Contract identified, or
required to be identified, in Section 3.17(a) of the Disclosure
Schedule and that is to be assigned to, or assumed by, Buyer under
this Agreement will, upon completion or performance thereof, have a
Material Adverse Change.
(d) Except as set forth in Section 3.17(d) of the Disclosure Schedule:
(i) Seller is, and at all times since January 1, 2002, has been,
in compliance with all applicable material terms and requirements of
each Seller Contract that is being assumed by Buyer;
(ii) each other Person that has, or had, any obligation or
liability under any Seller Contract that is being assigned to Buyer
is, and at all times since January 1, 2002, has been, in full
compliance with all applicable terms and requirements of such
Contract;
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(iii) no event has occurred, or circumstance exists, that (with
or without notice or lapse of time) may contravene, conflict with, or
result in a Breach of, or give Seller or other Person the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate
or modify, any Seller Contract that is being assigned to, or assumed
by, Buyer;
(iv) no event has occurred, or circumstance exists, under, or by
virtue of, any Contract that (with or without notice or lapse of time)
would cause the creation of any Encumbrance affecting any of the
Assets;
(v) Seller has not given to, or received from, any other Person,
at any time since January 1, 2002, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or
potential violation or Breach of, or default or intent to exercise any
remedy under, any Contract that is being assigned to, or assumed by,
Buyer; and
(vi) Seller is not materially delinquent in filling any purchase
order.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate, any material amounts paid or payable to
(or other material rights or obligations of) Seller under current or
completed Contracts, and no Person has made written demand for
renegotiation.
(f) Each Contract relating to the sale, design, manufacture or
provision of products or services by Seller has been entered into in the
Ordinary Course of Business of Seller and has been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is, or would be, in
violation of any Legal Requirement.
Section 3.18. Insurance. Section 3.18 of the Disclosure Schedule contains a
true and complete list of all policies of insurance and fidelity or surety bonds
currently in force covering the Business or the Assets. The Assets are insured
by reputable insurance companies against loss or damage by fire and other risks
to the extent and in the manner customary for companies engaged in similar
businesses. Seller is in compliance in all material respects with the terms of
all policies and instruments so listed in Section 3.18 of the Disclosure
Schedule, and, except with respect to termination by Seller of such policies
post-Closing (which termination shall not affect coverage in place prior to
Closing), to Seller's Knowledge, coverage thereunder will not be affected by the
transactions contemplated hereby. Also included on Section 3.18 of the
Disclosure Schedule is a list of all claims, if any, currently pending or that
have been settled during the last twenty four (24) months under any of the
policies set forth on Section 3.18 of the Disclosure Schedule.
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Section 3.19. Environmental Matters. Except as disclosed in Section 3.19 of
the Disclosure Schedule:
(a) Seller is, and at all times has been, in full compliance with, and
has not been and is not in violation of, or liable under, any Environmental
Law. Seller has no basis to expect, nor has it, or any other Person for
whose conduct it is, or may be, held to be responsible, received, any
actual or threatened order, notice or other communication from (i) any
Governmental Body or private citizen acting in the public interest or (ii)
the current or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law, or of
any actual, or threatened, obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any Facility
or other property or asset (whether real, personal or mixed) in which
Seller has, or had, an interest, or with respect to any property or
Facility at, or to, which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, treated, stored or disposed of or
processed by Seller or any other Person for whose conduct it is, or may be,
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
(b) There are no pending or, to the Knowledge of Seller, threatened
claims, Encumbrances, or other restrictions of any nature resulting from
any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law with respect to, or affecting, any
Facility or any other property or asset (whether real, personal or mixed)
in which Seller has, or had, an interest.
(c) Seller has no Knowledge of, nor any basis to expect, nor has it or
any other Person for whose conduct it is, or may be, held responsible,
received, any citation, directive, inquiry, notice, Order, summons, warning
or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to
comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health and
Safety Liabilities with respect to any Facility or property or asset
(whether real, personal or mixed) in which Seller has, or had, an interest,
or with respect to any property or facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used or processed
by Seller or any other Person for whose conduct it is, or may be, held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled or received.
(d) Neither Seller nor any other Person for whose conduct it is, or
may be, held responsible has any Environmental, Health and Safety
Liabilities with respect to any Facility or, to the Knowledge of Seller,
with respect to any other property or asset (whether real, personal or
mixed) in which Seller (or any predecessor) has, or had, an interest or, to
the Knowledge of Seller, at any property geographically or physically
adjoining any Facility or any such other property or asset.
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(e) There are no Hazardous Materials present on, or in, the
Environment at any Facility or, to the Knowledge of Seller, at any
geographically or physically adjoining property, including any Hazardous
Materials contained in barrels, aboveground or underground storage tanks,
landfills, land deposits, dumps, equipment (whether movable or fixed) or
other containers, either temporary or permanent, and deposited or located
in land, water, sumps, or any other part of the Facility or such adjoining
property, or incorporated into any structure therein or thereon. Neither
Seller nor any Person for whose conduct it is, or may be, held responsible,
or to the Knowledge of Seller, any other Person, has permitted or
conducted, or is aware of, any Hazardous Activity conducted with respect to
any Facility or any other property or assets (whether real, personal or
mixed) in which Seller has, or had, an interest except in full compliance
with all applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Seller, Threat
of Release, of any Hazardous Materials at, or from, any Facility or at any
other location where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, processed, treated, stored
or disposed from or by, any Facility, or from any other property or asset
(whether real, personal or mixed) in which Seller has, or had, an interest,
or to the Knowledge of Seller any geographically or physically adjoining
property, whether by Seller or any other Person.
(g) Seller has delivered to Buyer true and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed, or
initiated, by Seller pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance, by
Seller or any other Person for whose conduct it is or may be held
responsible, with Environmental Laws.
(h) The Facilities do not contain any wetlands, as defined in the
Clean Water Act and regulations promulgated thereunder, or similar Legal
Requirements, or other especially sensitive or protected areas or species
of flora or fauna.
Section 3.20. Employees
(a) Seller has complied in all material respects with all Legal
Requirements relating to employment practices, terms and conditions of
employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining and other similar
requirements, the payment of social security and similar Taxes and
occupational safety and health. Seller is not liable for the payment of any
Taxes, fines, penalties, or other amounts, however designated, for failure
to comply with any of the foregoing Legal Requirements.
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(b) Section 3.20(b) of the Disclosure Schedule is a true, correct and
complete list of the current employees of Seller involved in the operation
of the Business together with the positions they hold and their current
rates of compensation.
(c) Seller is not a party to a collective bargaining agreement and is
not currently, nor during the past six months has been, involved in any
discussion with any unit or group seeking to become the bargaining unit for
any employees with respect to the Business, and at no time since January 1,
2002, has any labor union been certified to represent any of such employees
or has Seller experienced a strike or similar material labor difficulty
with respect to such employees.
(d) Seller has not engaged in any unfair labor practice or
discrimination on the basis of race, age, sex or otherwise in its
employment conditions or practices with respect to its employees for which
Buyer will have any liability from and after the Closing Date.
(e) Seller has withheld or will withhold, prior to the Closing Date,
all amounts required to be withheld from the wages of its Employees (if
any), with respect to income tax withholding and taxes due from it's
employees under the Federal Insurance Contributions Act or federal, state
or local unemployment tax laws, for payroll periods ending on or before the
Closing Date, and has timely filed or will timely file all material
foreign, federal, state or local returns and reports required by the
applicable foreign, federal, state or local law to be filed on or before
the day before the Closing Date with respect to such withholding for such
periods.
Section 3.21. Employee Benefits
(a) Generally. Section 3.21(a) of the Disclosure Schedule contains a
true and complete list of each plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or
informal, proposed or final, funded or unfunded and whether or not legally
binding, including, without limitation, each employee benefit plan within
the meaning of Section 3(3) of ERISA (such employee benefit plan, an
"Employee Plan"), which is now, or ever has been, maintained, contributed
to, or required to be contributed to, for the benefit of any current or
former employee, officer, independent contractor, agent or consultant
working for Seller ("Employee"), and each management, employment, severance
or consulting agreement or contract between Seller and any Employee
("Employee Agreement"). Seller will provide to Buyer not less than five (5)
days prior to the Closing Date true and complete copies of all documents,
if any, embodying each Employee Plan and Employee Agreement, including all
amendments thereto and written interpretations thereof; the three most
recent annual reports filed (Form 5500 Series with applicable schedules)
with respect to each Employee Plan required under ERISA; the most recent
summary plan description, if any, with respect to each Employee Plan
required under ERISA; the most recent favorable determination letter from
the IRS, if applicable, with respect to each Employee Plan; and all
material communications, if any, to any Employee relating to each Employee
Plan.
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(b) Qualified Plans. Each Employee Plan that is intended to be
qualified under the Code has received a determination letter from the
Internal Revenue Service to the effect that such Employee Plan and related
trust are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, or is within a "remedial amendment
period"; such determination letter includes any requirements under the Tax
Reform Act of 1986 and subsequent legislation; and no such determination
letter has been revoked, nor to the knowledge of Seller (including
employees with responsibility for employee benefit matters), has revocation
been threatened. To the knowledge of Seller (including employees with
responsibility for employee benefit matters), nothing has occurred or is
expected to occur that would adversely affect the qualified status of such
Employee Plan or any related trust subsequent to the issuance of such
determination letter.
(c) Compliance. Seller has performed in all material respects all
obligations required to be performed under each Employee Plan, and each
Employee Plan has been established and maintained in all material respects
in accordance with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including but not limited to ERISA
or the Code. No Employee Plan is a defined benefit plan within the meaning
of Section 3(35) of ERISA, nor a Multiemployer Plan (as defined in Section
3(37) of ERISA), and Seller does not have any liability with respect to any
defined benefit plan or Multiemployer Plan as a result of having been
treated as part of a "single employer" within the meaning of Section
414(b), (c), (m), (n) and (o) of the Code, nor is there any basis for such
liability being imposed. There are no investigations, claims, suits, or
proceedings pending, or, to the best of Seller's Knowledge, threatened or
anticipated (other than routine claims for benefits) against any Employee
Plan or the assets of any Employee Plan, and to the best of the Seller's
Knowledge, there are no facts that could give rise to any material
Liability in the event of any such investigation, claim, suit or
proceeding. Each Employee Plan can be amended, terminated, or otherwise
discontinued after the Closing in accordance with its terms, without
liability to Seller, Buyer or any of their respective Affiliates. All
premiums required by any Employee Plan have been paid thereunder; all
outstanding indebtedness for services performed or accrued vacation,
holiday pay, earned commissions, accrued bonuses or other benefits owed to
any Employee have been paid when due or accrued in accordance with
generally accepted accounting principles and consistent with past practice
on the books of Seller; all contributions due to and payments from, the
Employee Plans that may have been required to be made have been made. No
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA has occurred with respect to any Employee Plan; no
action or failure to act with respect to any Employee Plan could subject
Seller, Buyer or any of their respective Affiliates or any Employee Plan to
any material tax, penalty or other liability, for breach of fiduciary duty
or otherwise, under ERISA or any other applicable law, whether by way of
indemnity or otherwise.
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(d) No Post-Employment Obligations. Seller does not maintain or
contribute to any Employee Plan which provides, or has any liability to
provide, life insurance, medical or other employee welfare benefits (other
than severance and accrued vacation and holiday pay) to any Employee upon
his or her retirement or termination of employment, except as may be
required by statute, and Seller has never promised, represented to, or
contracted with (orally or in writing) any Employee (individually or as a
group) that life insurance, medical or other employee welfare benefits
(other than severance and accrued vacation and holiday pay) would be
provided upon their retirement or termination of employment, except to the
extent required by statute.
(e) COBRA. Each "group health plan" within the meaning of Section
4980B(g)(2) of the Code maintained by Seller or any entity with which it is
considered a "single employer" within the meaning of Section 414(b), (c),
(m), (n) and (o) of the Code, has been administered in good faith in
compliance with the continuation coverage requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), as set forth at Section 4980B of the Code and any regulations
promulgated.
(f) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone
or when taken together with any additional or subsequent events) constitute
an event under any Employee Plan or Employee Agreement that will or may
result in any payment, upon a change in control or otherwise, whether of
severance, accrued vacation, or otherwise, acceleration, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any Employee. No payment or benefit which will or may be made by
Seller, Buyer or any of their respective Affiliates with respect to any
Employee as a result of the transactions contemplated hereby will be
characterized as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
Section 3.22. Intellectual Property
(a) Seller has not used any Intellectual Property material to the
conduct of the Business other than that listed on Section 3.22(a) of the
Disclosure Schedule. Except for Intellectual Property licensed pursuant to
agreements listed on Section 3.22(a) of the Disclosure Schedule, Seller (1)
validly owns, beneficially and of record, and holds the entire right, title
and interest (in the United States) in and to the Intellectual Property
material to the operation of the Business, free and clear of any lien,
claim or Encumbrance other than Permitted Encumbrances and all trade marks
included therein are valid and enforceable; (2) validly owns, beneficially
and of record, the trade secrets and confidential business information
included in the Know-how, as set forth on Section 3.22(a) of the Disclosure
Schedule, free and clear of any lien, claim or Encumbrance other than
Permitted Encumbrances; (3) has the right to use all of the other Know-how
material to the operation of the Business; and (4) upon the consummation of
the Contemplated Transactions and the assignment and transfer provided for
herein, the Seller will have validly assigned and transferred to Buyer all
right, title and interest in and to such Intellectual Property and
Know-how, whether or not patentable, free and clear of any lien, claim or
encumbrance other than Permitted Encumbrances.
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(b) None of the products, services, processes, systems, materials,
literature, Know-how or software used, manufactured, provided, offered,
distributed or sold by or on behalf of Seller nor any of the Assets
infringes, dilutes, violates or misappropriates any Intellectual Property
or any other rights of any nature whatsoever of others. Seller has not
received any notice of such infringement, dilution, violation or
misappropriation. There is no domain name application pending of any other
person that would potentially interfere with or infringe any of Seller's
rights in internet web sites and internet domain names. No Proceeding or
office action is pending in which Seller is named as a party, or, to
Seller's Knowledge, threatened, nor has any claim been asserted or
threatened (by or against Seller or any third party), that involves any
Intellectual Property or Know-how of or used by Seller nor, to Seller's
Knowledge, does any state of facts exist under which any such action, suit,
arbitration, proceeding or investigation might be based. Seller is not
subject to any judgment, order, writ, injunction or decree of any court or
any federal, state, local or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or any
arbitrator, nor has Seller entered into, nor is it a party to, any
agreement or other instrument.
(c) To Seller's Knowledge, the operation of the Business by Buyer
after the Closing in the manner in which the Business is currently
conducted by the Seller will not infringe, dilute, violate or
misappropriate any Intellectual Property or any other rights of any nature
whatsoever of others.
Section 3.23. Relationships with Related Persons. Except as disclosed in
Section 3.23 of the Disclosure Schedule, neither Seller nor any Related Person
has, or since October 1, 2002, has had, any interest in any property (whether
real, personal or mixed and whether tangible or intangible) used in, or
pertaining to, Seller's Business. Neither Seller nor any Related Person owns, or
since October 1, 2002, has owned, of record or as a beneficial owner, an equity
interest or any other financial or profit interest in any Person that has (a)
had business dealings, or a material financial interest in any transaction, with
Seller other than business dealings or transactions disclosed in Section 3.23 of
the Disclosure Schedule, each of which has been conducted in the Ordinary Course
of Business with Seller at substantially prevailing market prices and on
substantially prevailing market terms or (b) engaged in competition with Seller
with respect to the manufacture, marketing and distribution of over-the-counter
or prescription liquid, powder and semi-solid (creams and ointments) products
and Paas tablets in any market presently served by Seller (a "Competing
Business"), except for ownership of less than one percent (1%) of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
in Section 3.23 of the Disclosure Schedule, neither Seller nor any Related
Person is a party to any Contract with, or has any claim or right against,
Seller.
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Section 3.24. FDA Compliance; Regulatory Filings.
(a) All Assets subject thereto have received the requisite approval
under the federal Food, Drug and Cosmetic Act, or, if such approval is not
required, they are marketed and labeled in accordance with all applicable
FDA rules, including any final or tentative final monographs.
(b) There are no formal or informal proceedings, including recalls, or
to Seller's Knowledge, investigations, or other regulatory matters relating
to the formulation, labeling, production, manufacture, distribution, sale,
or advertising of any Asset by either the FDA, the Federal Trade
Commission, any State Attorney General or State Agency, or any other
Governmental Body having jurisdiction relating thereto.
(c) The Assets and the Business of Seller otherwise comply with all
requirements of the federal Food Drug and Cosmetic Act, and all other
similar federal and state laws and regulations. (d) Seller has filed all
reports, applications, documents, instruments and information required to
be filed by it pursuant to applicable rules and regulations or requests of
every Governmental Body having jurisdiction over the Assets where the
failure to do so would have a Material Adverse Change.
Section 3.25. Brokers or Finders. Except as set forth in Section 3.25 of
the Disclosure Schedule, neither Seller nor any of its Representatives have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payments in connection
with the sale of Seller's business or the Assets or the Contemplated
Transactions.
Section 3.26. Solvency.
(a) Seller is not now insolvent and will not be rendered insolvent by any
of the Contemplated Transactions. As used in this section, "insolvent" means
that the sum of the debts and other probable Liabilities of Seller exceeds the
present fair saleable value of Seller's assets.
(b) Immediately after giving effect to the consummation of the Contemplated
Transactions: (i) Seller will be able to pay its Liabilities as they become due
in the usual course of its business; (ii) Seller will not have unreasonably
small capital with which to conduct its present or proposed business; (iii)
Seller will have assets (calculated at fair market value) that exceed its
Liabilities; and (iv) taking into account all pending and threatened litigation,
final judgments against Seller in actions for money damages are not reasonably
anticipated to be rendered at a time when, or in amounts such that, Seller will
be unable to satisfy any such judgments promptly in accordance with their terms
(taking into account the maximum probable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered) as well as all other obligations of Seller. The cash available to
Seller, after taking into account all other anticipated uses of the cash, will
be sufficient to pay all such debts and judgments promptly in accordance with
their terms.
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Section 3.27. Indebtedness. Section 3.27 of the Disclosure Schedule lists
generally all indentures, mortgages, trust deeds, loan agreements, or other
instruments pursuant to which Seller has incurred or secured Indebtedness or has
guaranteed the Indebtedness of any Person all of which shall be terminated and
released with respect to Seller and the Real Property on or prior to the Closing
Date. Other than as set forth in Section 3.27 of the Disclosure Schedule, Seller
is not indebted to any Related Person, member, director or officer of Seller or
of any Related Person of Seller and no Related Person, member, director or
officer of Seller or of any Related Person of Seller is indebted to Seller.
Section 3.28. Business.
(a) Seller has not conducted any material business other than the
Business.
(b) Except as set forth in Section 3.28 of the Disclosure Schedule, no
Related Person of Seller owns any assets that are needed to operate the
Business as presently conducted.
Section 3.29. Compliance with the Foreign Corrupt Practices Act and Export
Control and AntiBoycott Laws.
(a) Seller and its Representatives have not, to obtain or retain
business, directly or indirectly offered, paid or promised to pay, or
authorized the payment of, any money or other thing of value (including any
fee, gift, sample, travel expense or entertainment with a value in excess
of one hundred dollars ($100.00) in the aggregate to any one individual in
any year) or any commission payment in excess of five percent (5%) of any
amount payable, to:
(i) any person who is an official, officer, agent, employee or
representative of any Governmental Body or of any existing or
prospective customer (whether government owned or nongovernment
owned);
(ii) any political party or official thereof;
(iii) any candidate for political or political party office; or
(iv) any other individual or entity;
while knowing, or having reason to believe, that all, or any portion, of
such money or thing of value would be offered, given, or promised, directly
or indirectly, to any such official, officer, agent, employee,
representative, political party, political party official, candidate,
individual, or any entity affiliated with such customer, political party or
official or political office.
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(b) Seller has made all payments to Third Parties by check mailed to
such Third Parties' principal place of business or by wire transfer to a
bank located in the same jurisdiction as such party's principal place of
business.
(c) Each transaction is properly and accurately recorded on the books
and Records of Seller, and each document upon which entries in Seller's
books and Records are based is complete and accurate in all respects.
Seller maintains a system of internal accounting controls adequate to
insure that Seller maintains no off-the-books accounts and that Seller's
assets are used only in accordance with Seller's management directives.
(d) Seller has at all times been in compliance with all Legal
Requirements relating to export control and trade embargoes. No product
sold or service provided by Seller during the last five (5) years has been,
directly or indirectly, sold to, or performed on behalf of, Cuba, Iraq,
Iran, Libya or North Korea.
Seller has not violated the antiboycott prohibitions contained in 50 U.S.C.
sect. 2401 et seq. or taken any action that can be penalized under Section 999
of the Code. Except as set forth in Section 3.30(d), during the last five (5)
years, Seller has not been a party to, is not a beneficiary under, and has not
performed any service or sold any product under, any Seller Contract under which
a product has been sold to customers in Bahrain, Iraq, Jordan, Kuwait, Lebanon,
Libya, Oman, Quatar, Saudi Arabia, Sudan, Syria, United Arab Emirates or the
Republic of Yemen.
Section 3.30. Disclosure. No representation or warranty or other statement
made by Seller in this Agreement, the Disclosure Schedules, any supplement to
the Disclosure Schedules, the certificates delivered pursuant to Section 9.3 or
otherwise in connection with the Contemplated Transactions contains any untrue
statement or omits to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.
Section 3.31. Importing and Exporting Activities. Seller has paid all
customs duties owing with respect to any and all imported merchandise, and all
customs entry information provided by Seller to a Governmental Body in
connection with the import thereof has been true and correct in all material
respects. No issues have been raised with Seller by any Governmental Body that
are currently pending in connection with any customs entry or any export
transaction or relating to any audit, examination, or investigation of the
import or export activities of Seller. There are no unresolved issues or unpaid
deficiencies, fines or penalties relating to any audit, examination, or
investigation of the customs entries or export transactions of Seller. All
exports of Seller have been made in accordance with export controls laws. Seller
is not subject to any governmental action that would bar it from exporting or
otherwise limit its exporting activities.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ANI
ANI hereby represents and warrants to Buyer as follows, which
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in the
Disclosure Schedule. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with particularity and
describes the relevant facts in detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article IV.
Section 4.1. Organization and Good Standing. ANI is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with full corporate power and authority to
conduct its business as it is now conducted.
Section 4.2. Enforceability, Authority, No Conflict. The execution,
delivery and performance by ANI of each Transaction Document to which it is a
party and the consummation of the transactions contemplated hereby and thereby:
(a) have been duly authorized by all necessary corporate action; (b) do not
contravene the terms of the Governing Documents of ANI, or any amendment
thereto; and (c) will not violate, conflict with or result in any breach or
contravention of any Contract to which ANI may be bound or any Legal Requirement
applicable to ANI.
Section 4.3. Assets. The Assets constitute all of the assets and rights of
Seller used, useful or held for use in connection with the operation of the
Business.
Section 4.4. Financial Statements. The financial statements referred to in
clauses (a), (c) and (e) of Section 3.3 fairly present (and the financial
statements delivered pursuant to Section 7.9 will fairly present) the financial
condition and the results of operations of ANI and Seller, on a consolidated
basis, as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP. The financial statements
referred to in clauses (a), (c) and (e) of Section 3.3 and delivered pursuant to
Section 7.9 reflect and will reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. The financial statements referred to in
clauses (a), (c) and (e) of Section 3.3 have been and will be, prepared from,
and are in accordance with, the accounting Records of ANI.
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Section 4.5. Solvency.
(a) ANI is not now insolvent and will not be rendered insolvent by any
of the Contemplated Transactions. As used in this section, "insolvent"
means that the sum of the debts and other probable Liabilities of ANI
exceeds the present fair saleable value of its assets.
(b) Immediately after giving effect to the consummation of the
Contemplated Transactions: (i) ANI will be able to pay its Liabilities as
they become due in the usual course of its business; (ii) ANI will not have
unreasonably small capital with which to conduct its present or proposed
business; (iii) ANI will have assets (calculated at fair market value) that
exceed its Liabilities; and (iv) taking into account all pending and
threatened litigation, final judgments against ANI in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, ANI will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all
other obligations of ANI. The cash available to ANI, after taking into
account all other anticipated uses of the cash, will be sufficient to pay
all such debts and judgments promptly in accordance with their terms.
(c) The Contemplated Transactions do not constitute a sale of all or
substantially all of the assets of ANI and the consent or approval of ANI
shareholders is not required to consummate the Contemplated Transactions
pursuant to its Governing Documents or otherwise pursuant to Law.
Section 4.6. Certain Proceedings. There is no pending Proceeding that has
been commenced against ANI and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions. To ANI's Knowledge, no such Proceeding has been
threatened.
Section 4.7. Brokers and Finders. Except as set forth in Section 4.7 of the
Disclosure Schedule, neither ANI nor any of its Representatives has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
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Section 4.8. Disclosure. No representation or warranty or other statement
made by ANI in this Agreement, the Disclosure Schedules, any supplement to the
Disclosure Schedules, the certificates delivered pursuant to Section 9.3 or
otherwise in connection with the Contemplated Transactions contains any untrue
statement or omits to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BACTOLAC
Bactolac hereby represents and warrants to Buyer as follows, which
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article V), except as set forth in the Disclosure
Schedule. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with particularity and
describes the relevant facts in detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article V.
Section 5.1. Organization and Good Standing. Bactolac: (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may be; (b) has
all requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged; (c) is duly qualified and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to do so would not have a
Material Adverse Change; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each Transaction Document to
which it is or will be a party.
Section 5.2. Enforceability, Authority, No Conflict. The execution,
delivery and performance by Bactolac of each Transaction Document to which it is
a party and the consummation of the transactions contemplated hereby and
thereby: (a) have been duly authorized by all necessary corporate action; (b) do
not contravene the terms of the Governing Documents of Bactolac, or any
amendment thereto; and (c) upon receipt of the Consents, will not violate,
conflict with or result in any breach or contravention of, or the creation of
any Encumbrance under any Contract to which Bactolac may be bound or any Legal
Requirement applicable to Bactolac.
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Section 5.3. Use of Assets. Section 5.3 of the Disclosure Schedule lists
all items of Tangible Personal Property included in the Bactolac Assets. The
material items of machinery, equipment and other tangible assets included in the
Bactolac Assets are in operating condition, reasonable wear and tear excepted,
and conform in all material respects to all applicable ordinances, rules,
regulations and technical standards, and all applicable building, zoning and
other laws.
Section 5.4. Description of Owned Real Property. Section 5.4 of the
Disclosure Schedule contains a correct legal description, street address and tax
parcel identification number of all tracts, parcels and subdivided lots included
in the Bactolac Assets.
Section 5.5. Title to Assets; Encumbrances.
(a) Except as set forth on Section 5.5 of the Disclosure Schedule,
Bactolac has good record and marketable title in fee simple to all Real
Property, and has good and transferable title to or holds interests as
lessee or licensee under leases or licenses in full force and effect in,
all personal property included in the Bactolac Assets and Seller enjoys
peaceful and undisturbed possession thereunder, free and clear of all
Encumbrances other than Permitted Encumbrances. There is no condemnation
proceeding pending (or, as to leased Real Property, to which Bactolac is a
party) or, to the Knowledge of the Bactolac, threatened, against any
material property or asset of Bactolac included in the Bactolac Assets.
(b) Bactolac does not own or hold, and is not obligated under or a
party to, any option, right of first refusal or other contractual right to
purchase or acquire any real property or to sell, assign or dispose any
Real Property included in the Bactolac Assets.
Section 5.6. Condition of Facilities.
(a) Use of the Real Property for the various purposes for which it is
presently being used are permitted as of right under all applicable zoning
and land use legal requirements and is not subject to "permitted
nonconforming" use or structure classifications. No part of any Improvement
encroaches on any real property not included in the Real Property, and
there are no buildings, structures, fixtures or other Improvements situated
on adjoining property that encroach on any part of the Real Property. The
land for each Facility abuts on and has direct vehicular access to a public
road or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such land and comprising a part of the Real
Property, is supplied with public or quasi-public utilities and other
services appropriate for the operation of the Facilities located thereon
and is not located within any flood plain or area subject to wetlands
regulation or any similar restriction. There is no existing, or to
Bactolac's Knowledge, proposed plan to modify or realign any street or
highway or any existing or proposed eminent domain proceeding that would
result in the taking of all or any part of any Facility or that would
prevent or hinder the continued use of any Facility as heretofore used in
the conduct of the Business.
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(b) The Facilities included in the Bactolac Assets are duly registered
with the FDA and all other appropriate federal and state governmental
authorities, and comply in substantial part with Good Manufacturing
Practices requirements set forth in 21 C.F.R. Part 211.
(c) Each item of Tangible Personal Property included in the Bactolac
Assets is in operating condition, ordinary wear and tear excepted, is
suitable for immediate use in the Ordinary Course of Business and is free
from material latent and patent defects. Except as disclosed in Section
5.6(c) of the Disclosure Schedule, all Tangible Personal Property included
in the Bactolac Assets is in the possession of Seller.
(d) To the Knowledge of Bactolac, except as set forth on Schedule
5.6(d) of the Disclosure Schedule, all material components of all the
Bactolac Assets, including the structural elements thereof, the roof and
the heating, ventilation, air conditioning, plumbing, electrical, elevator,
mechanical, sewer, waste water, storm water, paving and parking equipment,
systems and facilities included therein, are in good working order and are
adequate to conduct the Business as currently conducted.
(e) Except as set forth on Schedule 5.6(e) of the Disclosure Schedule
to the Knowledge of Bactolac:
(i) none of the Bactolac Assets nor the current use thereof
contravenes, violates or fails to conform in any material respect with
applicable ordinances, regulations, zoning or land use laws or other
Legal Requirements or restrictive covenants; and
(ii) no charges or violations have been received by Bactolac
against or relating to any Improvement or any of the operations
conducted thereat at any of the Bactolac Assets, as a result of any
violation or alleged violation of any applicable ordinances,
requirements, regulations, zoning or land use laws or other Legal
Requirements or restrictive covenants.
Section 5.7. Taxes. Bactolac has paid or caused to be paid all Taxes with
respect to the Real Property, except for those not yet due and payable.
Section 5.8. Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Section 5.8(a) of the Disclosure Schedule,
Bactolac and the Bactolac Assets are in compliance with all Legal
Requirements applicable to it and no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) may constitute,
or result in, a violation by Bactolac or the Bactolac Assets of, or a
failure on the part of Bactolac or the Bactolac Assets to comply with, any
Legal Requirement or (B) may give rise to any obligation on the part of
Bactolac or the Bactolac Assets to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature, except in each case as
would not result in a Material Adverse Change; and
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(b) Section 5.8(b) of the Disclosure Schedule contains a complete and
accurate list of each Governmental Authorization that is held by Seller
that relates to the Bactolac Assets. Each Governmental Authorization listed
or required to be listed in Section 5.8(b) of the Disclosure Schedule is
valid and in full force and effect. Except as set forth in Section 5.8(b)
of the Disclosure Schedule:
(i) Bactolac is, and at all times since January 1, 2000, has
been, in full compliance with all of the material terms and
requirements of each Governmental Authorization identified or required
to be identified in Section 5.8(b) of the Disclosure Schedule;
(ii) To Seller's Knowledge, no event has occurred, or
circumstance exists, that may (with or without notice or lapse of
time) (A) constitute, or result, directly or indirectly, in, a
violation of, or a failure to comply with, any term or requirement of
any Governmental Authorization listed or required to be listed in
Section 5.8(b) of the Disclosure Schedule or (B) result, directly or
indirectly, in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Section 5.8(b) of the Disclosure
Schedule; and
(iii) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Section 5.8(b) of the Disclosure Schedule have been duly
filed on a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with
the appropriate Governmental Bodies.
The Governmental Authorizations listed in Section 5.8(b) of the Disclosure
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit Bactolac to lawfully own and Seller to use and occupy the
Bactolac Assets in the manner in which the are currently owned, used and
occupied.
Section 5.9. Legal Proceedings; Orders. There are no pending Proceedings or
threatened Proceedings against or affecting the Bactolac Assets or Bactolac's
ownership or Seller's operation thereof. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
Governmental Body purporting to enjoin or restrain the execution, delivery or
performance of the Transaction Documents.
Section 5.10. Contracts; No Defaults.
(a) Section 5.10(a) of the Disclosure Schedule contains an accurate
and complete list, and Bactolac has delivered to Buyer accurate and
complete copies, of:
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(i) each Bactolac Contract affecting the ownership of, leasing
of, title to, use of, or any leasehold or other interest in, any of
the Bactolac Assets (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate
payments of less than twenty-five thousand dollars ($25,000) and with
a term of less than one (1) year);
(ii) any amendment, supplement and modification (whether oral or
written) in respect of the foregoing.
Section 5.10(a) of the Disclosure Schedule sets forth reasonably
complete details concerning such Contracts, including the parties to
the Contracts and the amount of the remaining commitment of Bactolac
under the Contracts.
(b) Each Contract identified, or required to be identified, in Section
5.10(a) of the Disclosure Schedule and that is to be assigned to, or
assumed by, Buyer under this Agreement:
(i) is in full force and effect and is legal, valid and
enforceable in accordance with its terms;
(ii) is assignable by Bactolac to Buyer without the consent of
any other Person; and
(iii) to the Knowledge of Bactolac, will not, upon completion or
performance thereof, have a Material Adverse Change.
(c) With respect the each Contract identified, or required to be
identified, in Section 5.10(a) of the Disclosure Schedule :
(i) Bactolac is, and at all times since January 1, 2002, has
been, in compliance with all applicable material terms and
requirements of each Bactolac Contract that is being assumed by Buyer;
(ii) each other Person that has, or had, any obligation or
liability under any Bactolac Contract that is being assigned to Buyer
is, and at all times since January 1, 2002, has been, in full
compliance with all applicable terms and requirements of such
Contract;
(iii) no event has occurred, or circumstance exists, that (with
or without notice or lapse of time) may contravene, conflict with, or
result in a Breach of, or give Bactolac or any other Person the right
to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Bactolac Contract that is being assigned to,
or assumed by, Buyer;
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(iv) no event has occurred, or circumstance exists, under, or by
virtue of, any Contract that (with or without notice or lapse of time)
would cause the creation of any Encumbrance affecting any of the
Bactolac Assets; and
(v) Bactolac has not given to, or received from, any other
Person, at any time since January 1, 2002, any notice or other
communication (whether oral or written) regarding any actual, alleged,
possible or potential violation or Breach of, or default or intent to
exercise a remedy under, any Contract that is being assigned to, or
assumed by, Buyer.
(d) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate, any material amounts paid or payable to
(or other material rights or obligations of) Bactolac under current or
completed Contracts, and no Persons have made written demand for
renegotiation.
Section 5.11. Insurance. Section 5.11 of the Disclosure Schedule contains a
true and complete list of all policies of insurance and fidelity or surety bonds
currently in force covering the Bactolac Assets. The Bactolac Assets are insured
by reputable insurance companies against loss or damage by fire and other risks
to the extent and in the manner customary for companies engaged in similar
businesses. Bactolac is in compliance in all material respects with the terms of
all policies and instruments so listed in Section 5.11 of the Disclosure
Schedule and, except with respect to termination by Bactolac post-Closing of
such policies post-Closing (which termination shall not affect coverage in place
prior to Closing), to Bactolac's Knowledge, coverage thereunder will not be
affected by the transactions contemplated hereby. Also included on Section 5.11
of the Disclosure Schedule is a list of all claims, if any, currently pending or
that have been settled during the last twenty four (24) months under any of the
policies set forth on Section 5.11 of the Disclosure Schedule.
Section 5.12. Environmental Matters. Except as disclosed in Section 5.12 of
the Disclosure Schedule:
(a) Bactolac is, and at all times has been, in full compliance with,
and has not been and is not in violation of, or liable under, any
Environmental Law with respect to a Facility or other property or asset
(whether real, personal or mixed) included in the Bactolac Assets. Bactolac
has no basis to expect, nor has it, or any other Person for whose conduct
it is, or may be, held to be responsible, received, any actual or
threatened order, notice or other communication from (i) any Governmental
Body or private citizen acting in the public interest or (ii) the current
or prior owner or operator of the Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual, or threatened, obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to a Facility or
other property or asset (whether real, personal or mixed) included in the
Bactolac Assets, or with respect to any property or Facility at, or to,
which Hazardous Materials were generated, manufactured, refined,
transferred, imported, used, treated, stored or disposed of or processed by
Bactolac or any other Person for whose conduct it is, or may be, held
responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
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(b) There are no pending or, to the Knowledge of Bactolac, threatened
claims, Encumbrances, or other restrictions of any nature resulting from
any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law with respect to, or affecting, any
Facility or any other property or asset (whether real, personal or mixed)
included in the Bactolac Assets.
(c) Bactolac has no Knowledge of, nor any basis to expect, nor has it
or any other Person for whose conduct it is, or may be, held responsible,
received, any citation, directive, inquiry, notice, Order, summons, warning
or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to
comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health and
Safety Liabilities with respect to any Facility or property or asset
(whether real, personal or mixed) included in the Bactolac Assets, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used or processed by Seller
or any other Person for whose conduct it is, or may be, held responsible,
have been transported, treated, stored, handled, transferred, disposed,
recycled or received.
(d) Neither Bactolac nor any other Person for whose conduct it is, or
may be, held responsible has any Environmental, Health and Safety
Liabilities with respect to any Facility or, to the Knowledge of Bactolac,
with respect to any other property or asset (whether real, personal or
mixed) included in the Bactolac Assets or, to the Knowledge of Bactolac, at
any property geologically or hydrologically adjoining any Facility or any
such other property or asset.
(e) There are no Hazardous Materials present on, or in, the
Environment at any Facility or, to the Knowledge of Bactolac, at any
geographically or physically adjoining property, including any Hazardous
Materials contained in barrels, aboveground or underground storage tanks,
landfills, land deposits, dumps, equipment (whether movable or fixed) or
other containers, either temporary or permanent, and deposited or located
in land, water, sumps, or any other part of the Facility or such adjoining
property, or incorporated into any structure therein or thereon. Neither
Seller nor any Person for whose conduct it is, or may be, held responsible,
or to the Knowledge of Bactolac, any other Person, has permitted or
conducted, or is aware of, any Hazardous Activity conducted with respect to
any Facility or any other property or assets (whether real, personal or
mixed) included in the Bactolac Assets except in full compliance with all
applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Bactolac, Threat
of Release, of any Hazardous Materials at, or from, any Facility or at any
other location where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed, treated,
stored or disposed from, or by, any Facility, or from any other property or
asset (whether real, personal or mixed) included in the Bactolac Assets, or
to the Knowledge of Bactolac any geographically or physically adjoining
property, whether by Bactolac or any other Person.
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(g) Bactolac has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed,
or initiated, by Bactolac pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance, by
Bactolac or any other Person for whose conduct it is or may be held
responsible, with Environmental Laws.
(h) The Facilities do not contain any wetlands, as defined in the
Clean Water Act and regulations promulgated thereunder, or similar Legal
Requirements, or other especially sensitive or protected areas or species
of flora or fauna.
Section 5.13. Certain Proceedings. There is no pending Proceeding that has
been commenced against Bactolac and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions. To Bactolac's Knowledge, no such Proceeding has been
threatened.
Section 5.14. Brokers and Finders. Except as set forth in Section 5.14 of
the Disclosure Schedule, neither Bactolac nor any of its Representatives has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
the Contemplated Transactions.
Section 5.15. Disclosure. No representation or warranty or other statement
made by Bactolac in this Agreement, the Disclosure Schedules, any supplement to
the Disclosure Schedules, the certificates delivered pursuant to Section 9.3 or
otherwise in connection with the Contemplated Transactions contains any untrue
statement or omits to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.
Section 5.16. Indebtedness. Section 5.16 of the Disclosure Schedule lists
generally all indentures, mortgages, trusts deeds, loan agreements, or other
instruments pursuant to which Bactolac has incurred or secured Indebtedness or
has guaranteed the Indebtedness of any Person pursuant to which there is an
Encumbrance on any of the Bactolac Assets. All such Encumbrances shall be
terminated and released with respect to Bactolac and the Bactolac Assets on or
prior to the Closing Date.
Section 5.17. Solvency.
(a) Bactolac is not now insolvent and will not be rendered insolvent
by any of the Contemplated Transactions. As used in this section,
"insolvent" means that the sum of the debts and other probable Liabilities
of Bactolac exceeds the present fair saleable value of its assets.
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(b) Immediately after giving effect to the consummation of the
Contemplated Transactions: (i) Bactolac will be able to pay its Liabilities
as they become due in the usual course of its business; (ii) Bactolac will
not have unreasonably small capital with which to conduct its present or
proposed business; (iii) Bactolac will have assets (calculated at fair
market value) that exceed its Liabilities; and (iv) taking into account all
pending and threatened litigation, final judgments against Bactolac in
actions for money damages are not reasonably anticipated to be rendered at
a time when, or in amounts such that, Bactolac will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into
account the maximum probable amount of such judgments in any such actions
and the earliest reasonable time at which such judgments might be rendered)
as well as all other obligations of Bactolac. The cash available to
Bactolac, after taking into account all other anticipated uses of the cash,
will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.
Section 5.18. Bactolac Assets. The Bactolac Assets constitute all assets
used or held for use in the Business that are owned by Bactolac.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and Affiliates as follows,
which representations and warranties are true, correct and complete as of the
date of this Agreement and will be true, correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article VI):
Section 6.1. Organization and Good Standing.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation with full corporate
power and authority to conduct its business as it is now conducted. Buyer is
duly qualified to do business and is in good standing under the laws of the
State of Mississippi.
Section 6.2. Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding obligation
of Buyer, enforceable against it in accordance with its terms. Upon the
execution and delivery by Buyer of the Assignment and Assumption Agreement,
the Escrow Agreement and each other agreement to be executed or delivered
by Buyer at Closing (collectively, the "Buyer's Closing Documents"), each
of the Buyer's Closing Documents will constitute the legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
respective terms. Buyer has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents, and such action has been duly authorized by all
necessary corporate action.
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(b) The execution, delivery and performance by Buyer of each
Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby: (a) have been duly authorized
by all necessary corporate action; (b) do not contravene the terms of
Buyer's Governing Documents, or any amendment thereto; and (c) will not
violate, conflict with or result in any breach or contravention of any
Contract to which Buyer may be bound or any Legal Requirement applicable to
Buyer.
Section 6.3. Consents. Buyer is not, and will not be, required to obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
Section 6.4. Certain Proceedings. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
Section 6.5. Brokers and Finders. Neither of Buyer nor any of its
Representatives has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with the Contemplated Transactions.
ARTICLE VII
PRE-CLOSING COVENANTS OF SELLER AND AFFILIATES
Section 7.1. Access and Investigation. Between the date of this Agreement
and the Closing Date, and upon reasonable advance notice received from Buyer,
Seller and Bactolac (solely with respect to the Bactolac Assets) shall (and ANI
shall cause Seller and Bactolac to) (a) afford Buyer and its Representatives and
prospective lenders and their Representatives (collectively, "Buyer Group") full
and free access, during regular business hours, to Seller's and Bactolac's
personnel, properties (including subsurface testing), Contracts, Governmental
Authorizations, books and Records and other documents and data, such rights of
access to be exercised in a manner that does not unreasonably interfere with the
operations of Seller or Bactolac; (b) furnish Buyer Group with copies of all
such Contracts, Governmental Authorizations, books and Records and other
existing documents and data as Buyer may reasonably request; (c) furnish Buyer
Group with such additional financial, operating and other relevant data and
information as Buyer may reasonably request; and (d) otherwise cooperate and
assist, to the extent reasonably requested by Buyer, with Buyer's investigation
of the properties, assets and financial condition related to Seller or the
Bactolac Assets. In addition, Buyer shall have the right to have the Real
Property and Tangible Personal Property included in the Assets inspected by
Buyer Group, at Buyer's sole cost and expense, for purposes of determining the
physical condition and legal characteristics of such Real Property and Tangible
Personal Property. In the event subsurface or other destructive testing is
recommended by any of Buyer Group, Buyer shall be permitted to have the same
performed.
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Section 7.2. Operation of the Business of Seller and Bactolac. Between the
date of this Agreement and the Closing, Seller and Bactolac (solely with respect
to the Bactolac Assets) shall (and ANI shall cause Seller and Bactolac to):
(a) conduct its business only in the Ordinary Course of Business;
(b) except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer's behalf, use its best efforts to preserve
intact its current business organization, keep available the services of
its officers, employees and agents and maintain its relations and good will
with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with it;
(c) confer with Buyer prior to implementing operational decisions of a
material nature, including capital expenditures;
(d) otherwise report periodically to Buyer concerning the status of
its business, operations and finances;
(e) make no material changes in management personnel without prior
consultation with Buyer;
(f) maintain the Assets in a state of repair and condition that
complies with Legal Requirements and is consistent with the normal conduct
of Seller's business;
(g) keep in full force and effect, without amendment, all material
rights relating to the Business and the Assets;
(h) comply with all Legal Requirements and contractual obligations
applicable to the operations of the Business and the ownership, use and
operation of the Assets;
(i) continue in full force and effect the insurance coverage under the
policies set forth in Section 3.18 and 5.11 of the Disclosure Schedule or
substantially equivalent policies;
(j) except as required to comply with ERISA or to maintain
qualification under Section 401(a) of the Code, not amend, modify or
terminate any Employee Plan without the express written consent of Buyer,
and except as required under the provisions of any Employee Plan, not make
any contributions to, or with respect to, any Employee Plan without the
express written consent of Buyer, provided that Seller shall contribute
that amount of cash to each Employee Plan necessary to fully fund all of
the benefit liabilities of such Employee Plan on a plan-termination basis
as of the Closing Date; and provided further, however, that Seller may
terminate its 401(k) Plan as of the Effective Time;
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(k) cooperate with Buyer and assist Buyer in identifying the
Governmental Authorizations required by Buyer to operate the business from
and after the Closing Date, and either transferring existing Governmental
Authorizations of Seller or Bactolac to Buyer, where permissible, or
obtaining new Governmental Authorizations for Buyer;
(l) upon request from time to time, execute and deliver all documents,
make all truthful oaths, testify in any Proceedings and do all other acts
that may be reasonably necessary or desirable in the opinion of Buyer to
consummate the Contemplated Transactions, all without further
consideration; and
(m) maintain all books and Records of Seller relating to the Business
and the Assets in the Ordinary Course of Business.
Section 7.3. Physical Inventory. Prior to the Closing, Seller will cause to
be conducted a physical inventory as of a date at, or as near as practicable, to
the Closing Date. Such inventory shall be conducted in accordance with GAAP and
prudent business procedures. Buyer and its Representatives have the right to
observe such inventory.
Section 7.4. Negative Covenant. Except as otherwise expressly permitted
herein, between the date of this Agreement and the Closing Date, Seller and
Bactolac (solely with respect to the Bactolac Assets) shall not, and ANI shall
not permit Seller or Bactolac to, without the prior written consent of Buyer,
(a) take any affirmative action, or fail to take any reasonable action within
its control, as a result of which any of the changes or events listed in
Sections 3.15 and 3.18 would be likely to occur; (b) make any modification to
any material Contract or Governmental Authorization; (c) allow the levels of raw
materials, supplies or other materials included in the Inventories to vary
materially from the levels customarily maintained; (d) enter into any compromise
or settlement of any litigation, proceeding or governmental investigation
relating to the Assets, the Business or the Assumed Liabilities; or (e) enter
into any material Contract the that shall be listed on Section 3.17(a) or
5.10(a) of the Disclosure Schedule without Buyer's consent.
Section 7.5. Required Approvals. As promptly as practicable after the date
of this Agreement, Seller and Bactolac shall make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Seller and Affiliates also shall cooperate with Buyer and its
Representatives with respect to all filings that Buyer elects to make or,
pursuant to Legal Requirements, shall be required to make in connection with the
Contemplated Transactions. Seller and Affiliates also shall cooperate with Buyer
and its Representatives in obtaining all Consents.
Section 7.6. Notification.
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(a) Between the date of this Agreement and the Closing, Seller and
Affiliates shall promptly notify Buyer in writing if any of them becomes
aware of (a) any fact or condition that causes or constitutes a Breach of
any of Seller's or either Affiliate's representations and warranties made
as of the date of this Agreement or (b) the occurrence after the date of
this Agreement of any fact or condition that would or be reasonably likely
to (except as expressly contemplated by this Agreement) cause or constitute
a Breach of any such representation or warranty had that representation or
warranty been made as of the time of the occurrence of, or Seller's or
either Affiliate's discovery of, such fact or condition. Should any such
fact or condition require any change to the Disclosure Schedule, Seller or
the appropriate Affiliate shall promptly deliver to Buyer a supplement to
the Disclosure Schedule specifying such change. Such delivery shall not
affect any rights of Buyer under Section 11.2 and Article XIII. During the
same period, Seller and Affiliates also shall promptly notify Buyer of the
occurrence of any event that may make the satisfaction of the conditions in
Article IX impossible or unlikely.
(b) Seller and Affiliates shall provide to Buyer, promptly upon
receipt thereof, a copy of any notice from any Governmental Body of the
revocation, suspension, violation, or limitation of the rights of Seller or
Bactolac under any license or permit held by Seller or Bactolac relating to
the Business, or any notice of violation relating to any Real Property, as
well as give written notice to Buyer promptly upon the commencement of any
action, investigation, arbitration or proceeding (including any proceeding
before any Governmental Body), or promptly upon obtaining Knowledge of any
facts giving rise to a threat of any such action, investigation,
arbitration or proceeding that would, if adversely determined, have a
Material Adverse Change.
(c) Seller and Affiliates shall promptly notify Buyer upon (i)
becoming aware of any order or decree or any complaint praying for an order
or decree restraining or enjoining the consummation of this Agreement or
the Contemplated Transactions, or (ii) receiving any notice from any
Governmental Body of its intention (A) to institute an investigation into,
or institute a suit or proceeding to restrain or enjoin consummation of
this Agreement or such transactions, or (B) to nullify or render
ineffective this Agreement or such transactions if consummated.
(d) Seller and Affiliates shall promptly notify Buyer in writing of,
and furnish any information that Buyer may reasonably request with respect
to, any material claim, litigation, proceeding or governmental
investigation threatened or asserted by or against Seller or Bactolac or
otherwise relating to the Business or Assets, or any notice of default or
potential default received by Seller or Bactolac under any Lease, or any
material adverse development with respect to any such claim, litigation,
proceeding, investigation or default or potential default; any event or
condition that would cause any of the conditions to Buyer's obligation to
consummate the Contemplated Transactions not to be fulfilled; and any other
occurrence of any kind that has had or may have a Material Adverse Change.
(e) No more than fifteen (15) days and no less than three (3) days
prior to the Closing Date, Seller and Affiliates shall provide to Buyer a
list identifying all material Contracts entered into by Seller or Bactolac
(with respect to the Bactolac Assets) subsequent to the date hereof and
prior to the date of such list, together with correct and complete copies
of such agreements.
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Section 7.7. No Negotiation. Until such time as this Agreement shall be
terminated pursuant to Section 11.1, neither Seller nor either Affiliate shall
directly or indirectly solicit, initiate, encourage or entertain any inquiries
or proposals from, discuss or negotiate with, provide any nonpublic information
to, or consider the merits of any inquiries or proposals from, any Person (other
than Buyer) relating to any business combination transaction involving Seller,
including the sale by ANI of Seller's stock, the merger or consolidation of
Seller or the sale of Seller's business or any of the Assets (other than in the
Ordinary Course of Business) (an "Acquisition Transaction"); provided, however,
that Seller and the Affiliates may furnish information concerning Seller's
business, properties, or assets to any person (a "Potential Acquiror") if (A)
ANI's Board of Directors determines that such Potential Acquiror has the
financial wherewithal to consummate an Acquisition Transaction with ANI or
Seller on terms that would yield a higher value to ANI's shareholders than will
the Contemplated Transactions, and (B) after consultation with counsel, ANI's
Board determines that the failure to provide such information would constitute a
breach of its fiduciary duty to ANI's shareholders. Upon receipt of a bona fide
offer from a Potential Acquiror proposing an Acquisition Transaction with ANI or
Seller and determination of the ANI Board of Directors that such offer will
likely yield a higher value to ANI shareholders than would consummation of the
Contemplated Transactions, ANI or Seller may, with respect to such Potential
Acquiror, negotiate and enter into a definitive agreement for an Acquisition
Transaction with the Potential Acquiror and take any of the other actions
otherwise prohibited by this Section 7.7. Seller and Affiliates shall notify
Buyer of any such inquiry or proposal as promptly as practicable after of
receipt or awareness of the same by Seller or either Affiliate.
Section 7.8. Best Efforts. Seller and Affiliates shall use their best
efforts to cause the conditions in Article IX and Section 10.3 to be satisfied.
Section 7.9. Interim Financial Statements. Until the Closing Date, Seller
shall deliver to Buyer within fifteen (15) days after the end of each month a
copy of the financial statements prepared by or for Seller for such month
prepared in a manner and containing information consistent with Seller's current
practices and, in the case of the February 2004 financial statements, certified
by Jeffrey McGonegal and David Boney, as to compliance with Section 3.3.
Section 7.10. Change of Name. On or before the Closing Date, Seller shall
(a) amend its Governing Documents and take all other actions necessary to change
its name to one sufficiently dissimilar to its present name, in Buyer's
judgment, to avoid confusion with the name "ANI Pharmaceuticals" or marks "ANI"
and "ANIP", and (b) take all actions requested by Buyer to enable Buyer to
change its name to Seller's present name or any similar name. Subsequent to the
Closing neither Seller nor either of the Affiliates nor any of their respective
Related Persons may use "ANI Pharmaceuticals", "ANI" (except as provided in
Section 12.8 hereof), "ANIP" or any similar name or mark.
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Section 7.11. Payment of Liabilities. Seller shall pay or otherwise satisfy
in the Ordinary Course of Business all of its Liabilities and obligations. Buyer
and Seller hereby waive compliance with the bulk-transfer provisions of the
Uniform Commercial Code (or any similar law) ("Bulk Sales Laws") in connection
with the Contemplated Transactions.
Section 7.12. Lease. Bactolac shall terminate that certain lease agreement
between Bactolac and Seller, dated December 12, 2001, for the Real Property and
the items of Tangible Personal Property included in the Bactolac Assets
("Bactolac Lease").
ARTICLE VIII
PRE-CLOSING COVENANTS OF BUYER
Section 8.1. Required Approvals. As promptly as practicable after the date
of this Agreement, Buyer shall make, or cause to be made, all filings required
by Legal Requirements to be made by it to consummate the Contemplated
Transactions. Buyer also shall cooperate, and cause its Related Persons to
cooperate, with Seller (a) with respect to all filings Seller shall be required
by Legal Requirements to make and (b) in obtaining all Consents, provided,
however, that Buyer shall not be required to dispose of, or make any change to,
its business, expend any material funds or incur any other burden in order to
comply with this Section 8.1.
Section 8.2. Best Efforts. Buyer shall use its best efforts to cause the
conditions in Article X and Section 9.3 to be satisfied.
ARTICLE IX
Conditions Precedent to Buyer's Obligation to Close
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
Section 9.1. Accuracy of Representations. All of Seller's and Affiliates'
representations and warranties in this Agreement (considered collectively), and
each of those representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement,
and shall be accurate in all material respects as of the time of the Closing as
if then made, without giving effect to any materiality qualifications contained
therein or to any supplement to the Disclosure Schedule.
Section 9.2. Seller's and Affiliates' Performance. All of the covenants and
obligations that Seller and Affiliates are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered collectively),
and each of these covenants and obligations (considered individually), shall
have been duly performed and complied with in all material respects without
giving effect to any materiality qualifications contained therein.
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Section 9.3. Documents. Seller and the Affiliates, as the case may be,
shall have delivered to Buyer, together with funds sufficient to pay all Taxes
necessary for the transfer, filing or recording thereof, the following documents
and instruments to be delivered (or tendered subject only to Closing) to Buyer:
(a) an opinion of Patton Boggs LLP, dated the Closing Date, in the
form of Exhibit A;
(b) The certificate of incorporation and all amendments thereto of
Seller and Bactolac, duly certified as of a recent date by the Secretary of
State of the jurisdictions of Seller's and Bactolac's incorporation;
(c) a bill of sale for all of the Assets that are Tangible Personal
Property in the form of Exhibit B (the "Bill of Sale") executed by Seller
and Bactolac;
(d) an assignment of all of the Assets that are intangible personal
property in the form of Exhibit C, which assignment shall also contain
Buyer's undertaking and assumption of the Assumed Liabilities (the
"Assignment and Assumption Agreement") executed by Seller;
(e) a recordable warranty deed relating to the owned Real Property
identified in Sections 3.6 and 5.4 of the Disclosure Schedule in form and
substance reasonably satisfactory to Buyer and its counsel and executed by
Bactolac;
(f) assignments of all Intellectual Property and separate assignments
of all registered Marks, patents and copyrights in the form of Exhibit D
(the "Assignment of Intellectual Property") executed by Seller;
(g) title commitments (with legible copies of all underlying title
documents) issued by the Title Insurer to insure title to all Real Property
(except the Wetland Parcel), in the amount of that portion of the Purchase
Price allocated to the Real Property, as specified in Section 3.6 of the
Disclosure Schedule, covering such Real Property, naming Buyer as the
proposed insured and having an effective date after the date of this
Agreement, wherein the Title Insurer shall agree to issue an ALTA 1992 form
owner's policy (the "Title Policy") of title insurance, with extended
coverage (and with the creditors rights and arbitration provisions deleted)
(each a "Title Commitment") subject only to Permitted Encumbrances and
otherwise free and clear of all Title Objections,
(h) an ALTA survey of the Real Property that is satisfactory in form
and substance to Buyer made after the date of this Agreement by a land
surveyor licensed by the state in which such property is located and
bearing a certificate, signed and sealed by the surveyor, with a
certification to Buyer and the Title Insurer that is acceptable to Buyer (a
"Survey");
(i) results of a recent Uniform Commercial Code, tax and judgment lien
search against Seller in Mississippi, Bactolac in Delaware and Mississippi
and each other jurisdiction in which Seller and Bactolac are licensed or
qualified to do business as a foreign corporation;
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(j) evidence reasonably satisfactory to Buyer that all liens, claims
and encumbrances on the Assets (other than Permitted Encumbrances) have
been or, at the Closing, will be satisfied, terminated, released or waived,
as appropriate;
(k) noncompetition and nonsolicitation agreements in the form of
Exhibit E, executed by each of Jeff McGonegal, Gregory Pusey and Pailla
Reddy (the "Noncompetition Agreements");
(l) an escrow agreement in the form of Exhibit F, executed by Seller,
each Affiliate and the escrow agent (the "Escrow Agreement");
(m) certificates executed by each of Seller and the Affiliates as to
the accuracy of their representations and warranties as of the date of this
Agreement and as of the Closing in accordance with Section 9.1 and as to
their compliance with, and performance of, their covenants and obligations
to be performed or complied with at or before the Closing in accordance
with Section 9.2; and
(n) all documentation necessary to transfer Seller's domain names and
website addresses http://www.anipharmaceuticals.com/ and
http://anipharmaceuticals.net/ ("ANIP Websites").
(o) a certificate of the Secretary of each of Seller and Bactolac
certifying, as complete and accurate as of the Closing, attached copies of
the Governing Documents of Seller, certifying and attaching all requisite
resolutions or actions of Seller's and Bactolac's board of directors and
shareholders approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions and the change of name
contemplated by Section 7.10 and certifying to the incumbency and
signatures of the officers of Seller and Bactolac executing this Agreement
and any other document relating to the Contemplated Transactions and
accompanied by the requisite documents for amending the relevant Governing
Documents of Seller required to effect such change of name in form
sufficient for filing with the appropriate Governmental Body.
(p) If requested by Buyer, any Consents or other instruments that may
be required to permit Buyer's qualification in each jurisdiction in which
Seller is licensed or qualified to do business as a foreign corporation
under the name of Seller or any derivative thereof;
(q) Certificates dated as of a date not earlier than the third (3rd)
Business Day prior to the Closing as to the good standing of Seller and
Bactolac and payment of all applicable state Taxes by Seller and Bactolac,
executed by the appropriate officials of the State of Mississippi and the
State of Delaware, respectively, and each jurisdiction in which Seller and
Bactolac are licensed or qualified to do business as a foreign corporation;
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(r) Such other documents as Buyer may reasonably request for the
purpose of:
(i) evidencing the accuracy of any of Seller's and each
Affiliate's representations and warranties;
(ii) evidencing the performance by Seller or either Affiliate of,
or the compliance by Seller or either Affiliate with, any covenant or
obligation required to be performed or complied with by Seller or such
Affiliate;
(iii) evidencing the satisfaction of any condition referred to in
this Article IX; or
(iv) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions;
(s) valid signature cards for the Lockboxes used by Seller and such
other documents reasonably requested by Buyer in order to transfer
ownership and control of the Lockboxes to Buyer, including evidence of
termination or amendment of that certain Lock Box and Blocked Account
Agreement among Seller, Bactolac, AmSouth Bank, and CapitalSource Finance,
LLC relating to the Lockboxes;
(t) a FIRPTA Non-Foreign Seller Certificate from Bactolac certifying
that it is not a foreign person within the meaning of Section 1445 of the
Code reasonably satisfactory in form and substance to Buyer;
(u) evidence of termination of the Bactolac Lease;
(v) stock certificates representing the K-Mart Stock duly endorsed in
blank or accompanied by duly executed assignment documents or other
evidence reasonably satisfactory to Buyer of the transfer of ownership to
Buyer.
Section 9.4. No Proceedings. Since the date of this Agreement, there shall
not have been commenced or threatened against Buyer, or against any Related
Person of Buyer, any Proceeding (a) involving any challenge to, or seeking
Damages or other relief in connection with, any of the Contemplated Transactions
or (b) that may have the effect of preventing, delaying, making illegal,
imposing limitations or conditions on, or otherwise interfering with, any of the
Contemplated Transactions.
Section 9.5. No Conflict. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), contravene, conflict with, result in a
violation of, or cause Buyer or any Related Person of Buyer to suffer any
adverse consequence under, (a) any applicable Legal Requirement or Order or (b)
any Legal Requirement or Order that has been published, introduced or otherwise
proposed by or before any Governmental Body, excluding Bulk Sales Laws.
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Section 9.6. Title Insurance. Buyer shall have received, at Seller's cost
and expense, unconditional and binding Title Commitments to issue the Title
Policy, dated the Closing Date, in an aggregate amount equal to the amount of
the Purchase Price allocated to the Real Property, subject only to Permitted
Encumbrances and otherwise free and clear of all Title Objections, amending the
effective date to the date and time of recordation of the deed transferring
title to the Real Property to Buyer with no exception for the gap between
closing and recordation, attaching all endorsements required by Buyer in order
to ensure provision of all coverage and otherwise in form satisfactory to Buyer
insuring Buyer's interest in each parcel of Real Property or interest therein.
Section 9.7. Governmental Authorizations. Buyer shall have received such
Governmental Authorizations as are necessary or desirable to allow Buyer to
operate the Business and own Assets from and after the Closing.
Section 9.8. Environmental Report. At Buyer's expense, Buyer shall have
received an environmental site assessment report with respect to Seller's
Facilities, which report shall be acceptable in form and substance (including
results of said report) to Buyer in its sole discretion.
Section 9.9. Due Diligence. Buyer shall be satisfied with the results of
its due diligence investigation of Seller.
Section 9.10. Material Adverse Change. There shall not have occurred a
Material Adverse Change since December 31, 2003.
Section 9.11. Use of Purchase Price Proceeds. Seller and Affiliates shall
have made preparations for, and shall provide Buyer with evidence satisfactory
thereof, application of the Adjusted Cash Portion of the Purchase Price for
payment and satisfaction in full of the mortgage held by InterBay Funding, LLC
on the Real Property and to utilize the balance thereof as a payment toward
satisfaction of the Seller's indebtedness to CapitalSource Finance LLC.
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller in whole or in part):
Section 10.1. Accuracy of Representations. All of Buyer's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the time of the Closing as if then made.
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Section 10.2. Buyer's Performance. All of the covenants and obligations
that Buyer is required to perform or to comply with pursuant to this Agreement
at or prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), shall have been performed
and complied with in all material respects.
Section 10.3. Documents and Other Deliveries. Buyer shall have caused the
following documents, instruments and items to be delivered (or tendered subject
only to Closing) to Seller and Affiliates including:
(a) the Escrow Agreement, executed by Buyer and the escrow agent,
together with the delivery of two hundred fifty thousand dollars ($250,000)
to the escrow agent thereunder, by wire transfer to an account specified by
the escrow agent;
(b) the balance of the Adjusted Cash Portion by wire transfer to an
account or accounts specified by Seller or the Affiliates in a writing
delivered to Buyer at least three (3) Business Days prior to the Closing
Date;
(c) the Assignment and Assumption Agreement executed by Buyer;
(d) the Assignment of Intellectual Property executed by Buyer;
(e) a certificate executed by Buyer as to the accuracy of its
representations and warranties as of the date of this Agreement and as of
the Closing in accordance with Section 10.1 and as to its compliance with
and performance of its covenants and obligations to be performed or
complied with at or before the Closing in accordance with Section 10.2; and
(f) a certificate of the Secretary of Buyer certifying, as complete
and accurate as of the Closing, attached copies of the Governing Documents
of Buyer and certifying and attaching all requisite resolutions or actions
of Buyer's board of directors approving the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions and
certifying to the incumbency and signatures of the officers of Buyer
executing this Agreement and any other document relating to the
Contemplated Transactions; and
(g) such other documents as Seller may reasonably request for the
purpose of:
(i) evidencing the accuracy of any representation or warranty of
Buyer,
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(ii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or
complied with by Buyer or
(iii) evidencing the satisfaction of any condition referred to in
this Article X.
Section 10.4. No Injunction. There shall not be in effect any Legal
Requirement or any injunction or other Order that prohibits the consummation of
the Contemplated Transactions.
ARTICLE XI
TERMINATION
Section 11.1. Termination Events. By notice given prior to, or at, the
Closing, subject to Section 11.2, this Agreement may be terminated as follows:
(a) by Buyer if a material Breach of any provision of this Agreement
has been committed by Seller or Affiliates and such Breach has not been
cured or waived by Buyer;
(b) by Seller if a material Breach of any provision of this Agreement
has been committed by Buyer and such Breach has not been cured or waived by
Seller;
(c) by Buyer if any condition in Article IX has not been satisfied as
of the date specified for Closing in the first sentence of Section 2.7 or
if satisfaction of such a condition by such date is, or becomes, impossible
(other than through the failure of Buyer to comply with its obligations
under this Agreement), and Buyer has not waived such condition on or before
such date;
(d) by Seller if any condition in Article X has not been satisfied as
of the date specified for Closing in the first sentence of Section 2.7 or
if satisfaction of such a condition by such date is or becomes impossible
(other than through the failure of Seller or Affiliates to comply with
their obligations under this Agreement), and Seller has not waived such
condition on or before such date;
(e) by mutual consent of Buyer and Seller;
(f) by Buyer if the Closing has not occurred on or before March 23,
2004, or such later date as the parties may agree upon, unless such failure
of the Closing to occur is due to a material Breach by Buyer of this
Agreement; or
(g) by Seller if the Closing has not occurred on or before March 23,
2004, or such later date as the parties may agree upon, unless such failure
of the Closing to occur is due to a material Breach by the Seller or
Affiliates of this Agreement.
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Section 11.2. Effect of Termination. Each party's right of termination
under Section 11.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of such right of termination will not
be an election of remedies. If this Agreement is terminated pursuant to Section
11.1, all obligations of the parties under this Agreement will terminate, except
that the obligations of the parties in this Sections 11.2 and 12.9 and Articles
XIV (except for those in Section 14.6) will survive, provided, however, that, if
this Agreement is terminated because of a Breach of this Agreement by the
nonterminating party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
nonterminating party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE XII
ADDITIONAL COVENANTS
Section 12.1. Employees and Employee Benefits.
(a) Employment of Employees by Buyer.
(i) Buyer intends to extend employment offers to each Employee,
but is not obligated to hire any Employee and may interview all
Employees. Subject to Legal Requirements, Buyer will have reasonable
access to the Facilities and personnel Records (including performance
appraisals, disciplinary actions, grievances and medical Records) of
Seller for the purpose of preparing for, and conducting, employment
interviews with all Employees, and will conduct the interviews as
expeditiously as possible prior to the Closing Date. Access will be
provided by Seller upon reasonable prior notice during normal business
hours. Buyer will provide Seller with a list of Employees to whom
Buyer has made an offer of employment that has been accepted to be
effective on the Closing Date (the "Hired Employees"). Effective
immediately before the Closing, Seller will terminate the employment
of all of its Hired Employees.
(ii) Neither Seller nor either Affiliate nor their Related
Persons shall solicit the continued employment of any Employee or the
employment of any Hired Employee after the Closing.
(iii) It is understood and agreed that (A) Buyer's expressed
intention to extend offers of employment as set forth in this section
shall not constitute any commitment, Contract or understanding
(expressed or implied) of any obligation on the part of Buyer to a
post-Closing employment relationship of any fixed term or duration or
upon any terms or conditions other than those that Buyer may establish
pursuant to individual offers of employment, and (B) employment
offered by Buyer is "at will" and may be terminated by Buyer or by an
employee at any time for any reason (subject to any written
commitments to the contrary made by Buyer or an employee and Legal
Requirements). Nothing expressed or implied in this Agreement is
intended to confer upon any Employee or his or her Legal
Representative any rights or remedies. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Employees
after the Closing or to change adversely or favorably the title,
powers, duties, responsibilities, functions, locations, salaries,
benefits, other compensation or terms or conditions of employment of
such employees.
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(b) Salaries and Benefits.
(i) Seller and Affiliates shall be responsible for (A) the payment of
all wages and other remuneration due to Employees with respect to their
services to Seller through the close of business on the Closing Date,
including pro rata bonus payments and, except to the extent assumed by
buyer under Section 2.5(a)(i), all vacation pay earned prior to the Closing
Date; (B) the payment of any termination or severance payments and the
provision of health plan continuation coverage in accordance with the
requirements of COBRA and Sections 601 through 608 of ERISA for Employees;
and (C) any and all payments to Employees required under the Worker
Adjustment and Retraining Notification Act (the "WARN Act").
(ii) Seller and Affiliates shall be liable for any claims made or
incurred by Employees and their beneficiaries through the Closing Date
under the Employee Plans, irrespective of the time at which claims are
presented. For purposes of the immediately preceding sentence, a charge
will be deemed incurred, in the case of hospital, medical or dental
benefits, when the services that are the subject of the charge are
performed and, in the case of other benefits (such as disability or life
insurance), when an event has occurred or when a condition has been
diagnosed that entitles the Employee to the benefit.
(iii) Seller and Affiliates agree to discharge Seller's obligations to
Employees to pay compensation and benefits to which each Employee is
entitled pursuant to any Employee Plan through the Closing and to fund its
payroll accounts with sufficient funds within an appropriate amount time to
satisfy its payroll obligations to Employees through the Closing consistent
with past practice until each such obligation has been discharged in full.
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(c) Seller's Retirement and Savings Plans. All Hired Employees who are
participants in Seller's savings or retirement plans shall retain their
account balances or accrued benefits, as applicable, under Seller's savings
or retirement plans as of the Closing Date, and Seller and Affiliates (or
Seller's retirement or savings plans) shall retain sole liability for the
payment of such account balances or benefits as and when such Hired
Employees become eligible therefor under such plans.
(d) No Transfer of Assets. Neither Seller nor Affiliates nor their
respective Related Persons will make any transfer of pension or other
employee benefit plan assets to Buyer, and Buyer shall have no Liability or
responsibility with respect to such pension or other employee benefits
assets.
(e) Collective Bargaining Matters. Buyer will set its own initial
terms and conditions of employment for the Hired Employees and others it
may hire, including work rules, benefits and salary and wage structure, all
as permitted by Legal Requirements. Seller and Affiliates shall be solely
liable for any severance payment required to be made to its employees due
to the Contemplated Transactions.
(f) If Seller terminates any Employee as a result of the Contemplated
Transactions or otherwise, any obligations arising out of such termination
of employment, including severance, accrued vacation pay (except to the
extent assumed by Buyer pursuant to Section 2.5(a)(i)), obligations,
notices or compensation required under WARN, COBRA, employment
discrimination complaints, unfair labor practice charges, grievance under
any collective bargaining agreement, breach of contract claims, and
wrongful termination and related tort claims shall be the sole
responsibility of Seller and Affiliates.
(g) General Employee Provisions.
(i) Seller and Buyer shall give any notices required by Legal
Requirements and take whatever other actions with respect to the
plans, programs and policies described in this Section 12.1 as may be
necessary to carry out the arrangements described in this Section
12.1.
(ii) Seller and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or other
information as may be reasonably required to carry out the
arrangements described in this Section 12.1.
(iii) If any of the arrangements described in this Section 12.1
are determined by the IRS or other Governmental Body to be prohibited
by Legal Requirements, Seller and Buyer shall modify such arrangements
to reflect as closely as possible their expressed intent and retain
the allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by Legal
Requirements.
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(iv) Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Hired Employees, except for such
employees as Seller certifies in writing to Buyer are exempt from such
requirement.
(v) Buyer shall not have any responsibility, liability or
obligation, whether to Employees, former employees, their
beneficiaries or to any other Person, with respect to any
compensation, Employee Plans, practices, programs or arrangements
(including the establishment, operation or termination thereof and the
notification and provision of COBRA coverage including, but not
limited to Employee Plans) maintained by Seller.
Section 12.2. Payment of all Taxes Resulting from Sale of Assets by Seller.
Seller shall pay in a timely manner all Taxes, including all sales, use,
transfer, filing, recordation, registration and similar Taxes and fees,
resulting from or payable in connection with the sale of the Assets pursuant to
this Agreement, regardless of the Person on whom such Taxes are imposed by Legal
Requirements, and Seller shall file all necessary documentation with respect to,
and make all payments of, such Taxes and fees on a timely basis.
Section 12.3. Payment of Other Liabilities. In addition to payment of Taxes
pursuant to Section 12.2, Seller shall pay, or make adequate provision for the
payment of, in full all of the Retained Liabilities and other Liabilities of
Seller under this Agreement. Buyer shall pay, or make adequate provision for the
payment of, in the ordinary course, all of the Assumed Liabilities.
Section 12.4. Reports and Returns. Seller shall promptly after the Closing
prepare and file all reports and returns required by Legal Requirements relating
to the Business as conducted using the Assets, to and including the Effective
Time.
Section 12.5. Noncompetition; Nonsolicitation.
(a) Noncompetition. For a period of three (3) years after the Closing
Date, Seller and Affiliates shall not, directly or indirectly invest in,
own, manage, operate, finance, control, advise, render services to or
guarantee the obligations of any Competing Business, provided, however,
that Seller may purchase or otherwise acquire up to (but not more than)
five percent (5%) of any class of the securities of any Person (but may not
otherwise participate in the activities of such Person) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Exchange Act.
(b) Nonsolicitation. For a period of three (3) years after the Closing
Date, Seller and each Affiliate shall not, directly or indirectly:
(i) solicit the business of any Person who is a customer of Buyer
to become a customer of a Competing Business;
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(ii) cause, induce, or attempt to cause or induce, any customer,
supplier, licensee, licensor, franchisee, Employee, consultant or
other business relation of Buyer to cease doing business with Buyer,
to deal with any competitor of Buyer or in any way interfere with its
relationship with Buyer;
(iii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, Employee, consultant or
other business relation of Seller on the Closing Date or within the
year preceding the Closing Date to cease doing business with Buyer, to
deal with any competitor of Buyer or in any way interfere with its
relationship with Buyer; or
(iv) hire, retain or attempt to hire or retain any employee
(including Hired Employees) or independent contractor of Buyer or in
any way interfere with the relationship between Buyer and any of its
employees or independent contractors.
(c) Modification of Covenant. If a final judgment of a court or
tribunal of competent jurisdiction determines that any term or provision
contained in Section 12.5(a) through (c) is invalid or unenforceable, then
the parties agree that the court or tribunal will have the power to reduce
the scope, duration or geographic area of the term or provision, to delete
specific words or phrases or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision. This Section 12.5 will be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed. This Section 12.5 is reasonable and necessary to protect and
preserve Buyer's legitimate business interests and the value of the Assets
and to prevent any unfair advantage conferred on Seller.
Section 12.6. Customer and Other Business Relationships. After the Closing,
Seller and each Affiliate will cooperate with Buyer in its efforts to continue
and maintain for the benefit of Buyer those business relationships of Seller
existing prior to the Closing and relating to the business to be operated by
Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others, and Seller
or the Affiliates will satisfy the Retained Liabilities in a manner that is not
detrimental to any of such relationships. Seller and each Affiliate will refer
to Buyer all inquiries relating to the Business. None of Seller, the Affiliates
or any of their Representatives shall take any action that would tend to
diminish the value of the Assets after the Closing or that would interfere with
the business of Buyer to be engaged in after the Closing, including disparaging
the name or business of Buyer.
Section 12.7. Retention of and Access to Records. After the Closing Date,
Buyer and Seller each shall retain, for a period consistent with their
respective record-retention policies and practices, but not less than a period
of four (4) years, those Records of the other party delivered to it. Buyer also
shall provide Seller and Affiliates and their Representatives reasonable access
thereto, during normal business hours and on at least three (3) days' prior
written notice, to enable them to prepare financial statements or tax returns or
deal with financial statement or tax audits. After the Closing Date, Seller
shall provide Buyer and its Representatives reasonable access to Records that
are Excluded Assets, during normal business hours and on at least three (3)
days' prior written notice, for any reasonable business purpose specified by
Buyer in such notice.
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Section 12.8. Use of Name and Marks. Buyer acknowledges that Seller's name
is derived from ANI's name and is an abbreviation thereof. Nevertheless,
Seller's name and any and all marks related thereto (including the name and mark
"ANI") are included in the Assets purchased by Buyer hereunder, and Seller has
covenanted under Section 7.10 to change its name. Buyer agrees to grant, and
hereby does grant, to ANI a non-exclusive, non-transferable, royalty-free,
worldwide license, without the right to sublicense, to use by ANI as an
abbreviation of its corporate name (as opposed to a trademark or service mark),
provided that ANI is and remains only a holding company (as distinguished from
an operating entity). ANI understands and agrees that it is not permitted under
the license to use, and ANI covenants not to use, the "ANI" name or mark as part
of any name or mark of, or used by, any operating division or entity or for, or
in connection with, any products or services provided by it or any of its
Related Persons. ANI understands and agrees that it and its Related Persons must
not damage or impair the valuable goodwill and reputation that have heretofore
become associated with the "ANI" name and mark. In that regard, Seller and ANI
will provide Buyer with information, materials and documentation requested by
Buyer for the purpose of determining whether any action or omission of ANI or
its Related Persons has damaged or impaired or will damage or impair such
valuable goodwill and reputation. If, in the reasonable judgment of Buyer, any
action or omission of ANI or its Related Persons has damaged or impaired or will
damage or impair such valuable goodwill and reputation, Buyer will so notify
ANI, and if ANI does not remedy the matter to Buyer's reasonable satisfaction
within thirty (30) days after Buyer so notifies ANI, Buyer shall have the right
to terminate this license upon notice to ANI. Buyer specifically disclaims any
representation or warranty regarding this license or the name or mark "ANI",
including, without limitation, any representation or warranty that ANI's use of
the name or mark "ANI" will not infringe or violate the rights of any third
party.
Section 12.9. Confidentiality. Seller and the Affiliates each acknowledge
and agree that Confidential Information (as hereinafter defined) that each may
receive as a result of the negotiation and consummation of the transactions
contemplated hereby is, and will be valuable and proprietary to Buyer and/or its
Related Persons. Seller and the Affiliates agree to hold, and will cause their
Representatives to hold, all of Buyer's Confidential Information in the
strictest confidence, and, except as required hereunder, they will not, and they
will prevent their Representatives and Related Persons from, at any time prior
to the Closing or after the Closing, directly or indirectly, use, publish,
disseminate, describe, or otherwise disclose any of Buyer's Confidential
Information without the prior written approval of Buyer.
Section 12.10. Cooperation with Respect to Assets and Business. Seller and
the Affiliates agree to provide reasonable cooperation and assistance to Buyer
in connection with any inquiry, claim, or proceeding to enforce its rights in
the Assets and the Business, including, but not limited to, cooperation in the
prosecution of any litigation or legal proceeding with respect to the Assets or
the Business, by making witnesses available and providing all information within
their possession (including, upon reasonable advance notice, access to employees
with relevant information and access to books and records that may relate to the
proceedings, in each case without interfering in any material respect with the
conduct of the business of Seller or the Affiliates) that Buyer may reasonably
require in connection with such litigation or legal proceedings.
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Section 12.11. Websites. As soon as possible post-Closing, Seller and
Affiliates shall remove any and all hyperlinks to and from its own websites and
the ANIP Websites. As soon as possible post-Closing, Buyer shall remove any and
all references on the ANIP Websites to Seller and the Affiliates.
Section 12.12. Sirkin Vehicle. Seller or either of the Affiliates shall (a)
pay the balance of the loan on the Sirkin Vehicle, (b) secure a release from the
lender of any security interest it holds thereon (including a completed and
signed U.C.C.-3 Termination Statement), (c) secure a fully-executed bill of sale
from Neil Sirkin transferring title to the Sirkin Vehicle to Seller, (d) secure
an appropriate vehicle title certificate duly endorsed by Sirkin transferring
title to Seller, and (e) deliver, within thirty (30) days after the Closing, a
fully-executed bill of sale from Seller to Buyer along with an appropriate
vehicle title certificate duly endorsed by Seller, each transferring title to
the Sirkin Vehicle to Buyer.
Section 12.13. Further Assurances. Subject to the provision in Section 8.1,
the parties shall cooperate reasonably with each other and with their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and deliver to each
other such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the Contemplated Transactions.
ARTICLE XIII
INDEMNIFICATION; REMEDIES
Section 13.1. Survival. All representations, warranties, covenants and
obligations in this Agreement, the Disclosure Schedule, the supplements to the
Disclosure Schedule, the certificates delivered pursuant to Section 9.3 and any
other certificate or document delivered pursuant to this Agreement shall survive
the Closing and the consummation of the Contemplated Transactions, subject to
Section 13.7. The right to indemnification, reimbursement or other remedy based
upon such representations, warranties, covenants and obligations shall not be
affected by any investigation (including any environmental investigation or
assessment) conducted with respect to, or any Knowledge acquired (or capable of
being acquired) at any time, whether before or after the execution and delivery
of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of, or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based upon the accuracy of any
representation or warranty, or on the performance of, or compliance with, any
covenant or obligation, will not affect the right to indemnification,
reimbursement or other remedy based upon such representations, warranties,
covenants and obligations.
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Section 13.2. Indemnification and Reimbursement by Seller and Affiliates.
Seller and each Affiliate, jointly and severally, will indemnify and hold
harmless Buyer, and its Representatives, shareholders, subsidiaries and Related
Persons (collectively, the "Buyer Indemnified Persons"), and will reimburse the
Buyer Indemnified Persons for any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable attorneys' fees and
expenses), whether or not involving a Third-Party Claim (collectively,
"Damages"), arising from or in connection with:
(a) any Breach of any representation or warranty made by Seller or
either Affiliate in (i) this Agreement (without giving effect to any
supplement to the Disclosure Schedule), (ii) the Disclosure Schedule, (iii)
the supplements to the Disclosure Schedule, (iv) the certificates delivered
pursuant to Section 9.3 (for this purpose, each such certificate will be
deemed to have stated that Seller's and Affiliates' representations and
warranties in this Agreement fulfill the requirements of Section 9.1 as of
the Closing Date as if made on the Closing Date without giving effect to
any supplement to the Disclosure Schedule), (v) any transfer instrument or
(vi) any other certificate, document, writing or instrument delivered by
Seller or either Affiliate pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Seller or either
Affiliate in this Agreement or in any other certificate, document, writing
or instrument delivered by Seller or either Affiliate pursuant to this
Agreement;
(c) any Liability arising out of the ownership or operation of the
Business and the Assets prior to the Effective Time other than the Assumed
Liabilities;
(d) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been
made, by any Person with Seller or either Affiliate (or any Person acting
on their behalf) in connection with any of the Contemplated Transactions;
(e) any product or component thereof manufactured by or shipped, or
any services provided by, Seller, in whole or in part, prior to the Closing
Date;
(f) any noncompliance with any Bulk Sales Laws or fraudulent transfer
law in respect of the Contemplated Transactions;
(g) any liability under the WARN Act or any similar state or local
Legal Requirement that may result from an "Employment Loss", as defined by
29 U.S.C. sect. 2101(a)(6), caused by any action of Seller prior to the
Closing or by Buyer's decision not to hire previous employees of Seller;
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(h) any Employee Plan established or maintained by Seller;
(i) any Retained Liabilities; or
(j) any fraud or other willful act of Seller or Affiliates.
Section 13.3. Indemnification and Reimbursement by Seller - Environmental
Matters. In addition to the other indemnification provisions in this Article
XIII, Seller and each Affiliate, jointly and severally, will indemnify and hold
harmless Buyer and the other Buyer Indemnified Persons, and will reimburse Buyer
and the other Buyer Indemnified Persons, for any Damages (including costs of
cleanup, containment or other remediation) arising from or in connection with:
(a) any Environmental, Health and Safety Liabilities arising out of,
or relating to: (i) the ownership or operation by any Person at any time on
or prior to the Closing Date of any of the Facilities, Assets or the
business of Seller, or (ii) any Hazardous Materials or other contaminants
that were present on the Facilities or Assets at any time on or prior to
the Closing Date; or
(b) any bodily injury (including illness, disability and death,
regardless of when any such bodily injury occurred, was incurred or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction and deprivation of the use of real property) or
other damage of, or to, any Person or any Assets in any way arising from,
or allegedly arising from, any Hazardous Activity conducted by any Person
with respect to the business of Seller or the Assets prior to the Closing
Date or from any Hazardous Material that was (i) present, or suspected to
be present, on or before the Closing Date on or at the Facilities (or
present, or suspected to be present, on any other property, if such
Hazardous Material emanated, or allegedly emanated, from any Facility and
was present, or suspected to be present, on any Facility, on or prior to
the Closing Date) or (ii) Released, or allegedly Released, by any Person on
or at any Facilities or Assets at any time on or prior to the Closing Date.
Although Seller and the Affiliates shall have the right to participate, Buyer
will be entitled to control any Remedial Action, any Proceeding relating to an
Environmental Claim and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
13.3. The procedure described in Section 13.9 will apply to any claim solely for
monetary damages relating to a matter covered by this Section 13.3.
Section 13.4. Indemnification and Reimbursement by Buyer. Buyer will
indemnify and hold harmless Seller and the Affiliates, and will reimburse Seller
and Affiliates, for any Damages arising from or in connection with:
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(a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate, document, writing or instrument delivered
by Buyer pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting
on Buyer's behalf) in connection with any of the Contemplated Transactions;
(d) any obligations of Buyer with respect to bargaining with the
collective bargaining representatives of Hired Employees subsequent to the
Closing;
(e) any Assumed Liabilities; or
(f) the fraud or other willful act of Buyer.
Section 13.5. Limitations on Amount -- Seller and Affiliates. Seller and
Affiliates shall have no liability (for indemnification or otherwise) with
respect to claims under Section 13.2(a) until the total of all Damages with
respect to such matters exceeds twenty-five thousand dollars ($25,000), and then
only for the amount by which such Damages exceed $25,000. Similarly, Seller and
the Affiliates shall only be liable up to a maximum amount with respect to
claims under Section 13.2(a) of five hundred thousand dollars ($500,000).
However, this Section 13.5 will not apply to claims under Section 13.2(b)
through (j) or to matters arising under Section 13.2(a) in respect of Sections
3.7, 3.12, 3.21, 3.23, 5.5 and 5.7, and Seller and the Affiliates will be
jointly and severally liable for all Damages with respect to such Breaches, and
this Section shall similarly not apply to claims under Section 13.2(a) in
respect of Sections 3.19 and 5.12 and claims under Section 13.3, and Seller and
the Affiliates will be jointly and severally liable for Damages up to a maximum
amount of the Cash Portion of the Purchase Price for breaches of such Sections.
Section 13.6. Limitations on Amount -- Buyer. Buyer will have no liability
(for indemnification or otherwise) with respect to claims under Section 13.4(a)
until the total of all Damages with respect to such matters exceeds twenty-five
thousand dollars ($25,000), and then only for the amount by which such Damages
exceed $25,000. Similarly, Buyer shall only be liable up to a maximum amount
with respect to claims under Section 13.4(a) of two hundred fifty thousand
dollars ($250,000). However, this Section 13.6 will not apply to claims under
Section 13.4(b) through (f) and Buyer will be liable for all Damages with
respect to such Breaches.
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Section 13.7. Time Limitations.
(a) If the Closing occurs, Seller and Affiliates will have liability
(for indemnification or otherwise) with respect to any Breach of (i) a
covenant or obligation to be performed or complied with prior to the
Closing Date (other than those in Sections 2.1 and 2.5(b) and Articles XII,
as to which a claim may be made at any time) or (ii) a representation or
warranty (other than those in Sections 3.7, 3.12, 3.19, 3.21, 3.23, 5.5,
5.7 and 5.12, as to which a claim may be made at any time prior to the
expiration of the statute of limitations therefor), only if, on or before
the date that is twelve (12) months after the Closing Date, Buyer notifies
Seller or Affiliates of a claim specifying the factual basis of the claim
in reasonable detail to the extent then known by Buyer.
(b) If the Closing occurs, Buyer will have liability (for
indemnification or otherwise) with respect to any Breach of (i) a covenant
or obligation to be performed or complied with prior to the Closing Date or
(ii) a representation or warranty, only if on or before the date that is
twelve (12) months after the Closing Date, Seller or Affiliates notify
Buyer of a claim specifying the factual basis of the claim in reasonable
detail to the extent then known by Seller or Affiliates.
Section 13.8. Escrow. Upon notice to Seller specifying in reasonable detail
the basis therefor, Buyer may give notice of a claim in such amount under the
Escrow Agreement. Neither the exercise of nor the failure to give a notice of a
claim under the Escrow Agreement will constitute an election of remedies or
limit Buyer in any manner in the enforcement of any other remedies that may be
available to it. The Escrow Agreement shall govern the release of the Escrow to
Buyer in satisfaction of indemnification claims made under this Article XIII and
will provide for the release of the balance of the Escrow to Seller (net of any
pending claims) on the date that is six (6) months after the Closing Date,
except that release of the Disputed Escrow Portion shall be made upon resolution
of the Adjustment Amount, if sooner than six (6) months after Closing.
Section 13.9. Third-Party Claims.
(a) Promptly after receipt by a Person entitled to indemnity under
this Section (an "Indemnified Person") of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to
the Person obligated to indemnify under such Section (an "Indemnifying
Person") of the assertion of such Third-Party Claim, provided that the
failure to notify the Indemnifying Person will not relieve the Indemnifying
Person of any liability that it may have to any Indemnified Person, except
to the extent that the Indemnifying Person demonstrates that the defense of
such Third-Party Claim is prejudiced by the Indemnified Person's failure to
give such notice.
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(b) If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 13.9(a) of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to participate in the defense of such
Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying Person fails
to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such Third-Party Claim and provide indemnification with
respect to such Third-Party Claim), to assume the defense of such
Third-Party Claim with counsel satisfactory to the Indemnified Person.
After notice from the Indemnifying Person to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable
to the Indemnified Person under this Article XIII for any fees of other
counsel or any other expenses with respect to the defense of such
Third-Party Claim, in each case subsequently incurred by the Indemnified
Person in connection with the defense of such Third-Party Claim, other than
reasonable costs of investigation. If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) such assumption will conclusively
establish for purposes of this Agreement that the claims made in that
Third-Party Claim are within the scope of, and subject to, indemnification,
and (ii) no compromise or settlement of such Third-Party Claims may be
effected by the Indemnifying Person without the Indemnified Person's
consent unless (A) there is no finding or admission of any violation of
Legal Requirement or any violation of the rights of any Person, and (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Person, and the Indemnified Person shall have no liability
with respect to any compromise or settlement of such Third-Party Claims
otherwise effected without its consent. If notice is given to an
Indemnifying Person of the assertion of any Third-Party Claim, and the
Indemnifying Person does not, within ten (10) days after the Indemnified
Person's notice is given, give notice to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person will be bound by any determination made in such Third-Party Claim or
any compromise or settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person determines
in good faith that there is a reasonable probability that a Third-Party
Claim may adversely affect it or its Related Persons other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the Indemnified Person may, by notice to the Indemnifying
Person, assume the exclusive right to defend, compromise or settle such
Third-Party Claim, but the Indemnifying Person will not be bound by any
determination of any Third-Party Claim so defended for the purposes of this
Agreement or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(d) Notwithstanding the provisions of Section 14.4, Seller and each
Affiliate hereby consent to the nonexclusive jurisdiction of any court in
which a Proceeding in respect of a Third-Party Claim is brought against any
Buyer Indemnified Person for purposes of any claim that a Buyer Indemnified
Person may have under this Agreement with respect to such Proceeding or the
matters alleged therein and agree that process may be served on Seller and
Affiliates with respect to such a claim anywhere in the world.
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(e) With respect to any Third-Party Claim subject to indemnification
under this Article XIII: (i) both the Indemnified Person and the
Indemnifying Person, as the case may be, shall keep the other Person fully
informed of the status of such Third-Party Claim and any related
Proceedings at all stages thereof where such Person is not represented by
its own counsel, and (ii) the parties agree (each at its own expense) to
render to each other such assistance as they may reasonably require of each
other and to cooperate in good faith with each other in order to ensure the
proper and adequate defense of any Third-Party Claim.
(f) With respect to any Third-Party Claim subject to indemnification
under this Article XIII, the parties agree to cooperate in such a manner as
to preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it will
use its best efforts, in respect of any Third-Party Claim in which it has
assumed or participated in the defense, to avoid production of Confidential
Information (consistent with applicable Legal Requirements and rules of
procedure), and (ii) all communications between any party hereto and
counsel responsible for, or participating in, the defense of any
Third-Party Claim shall, to the extent possible, be made in a manner so as
to preserve any applicable attorney-client or work-product privilege.
Section 13.10. Other Claims. A claim for indemnification for any matter not
involving a Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.
Section 13.11. Indemnification in Case of Strict Liability or Indemnittee
Negligence. THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE XIII SHALL BE
ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR
FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE
BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY
AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND
REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION
IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE
NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT
STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1. Expenses. Except as otherwise provided in this Agreement,
each party to this Agreement will bear its respective fees and expenses incurred
in connection with the preparation, negotiation, execution and performance of
this Agreement and the Contemplated Transactions, including all fees and expense
of its Representatives. Seller will pay all amounts payable to the Title Insurer
in respect of the Title Commitments, copies of exceptions and the Title Policy,
including premiums (including premiums for endorsements) and search fees. Buyer
will pay one-half and Seller and Affiliates will pay the other half of the fees
and expenses of the escrow agent under the Escrow Agreement. If this Agreement
is terminated, the obligation of each party to pay its own fees and expenses
will be subject to any rights of such party arising from a Breach of this
Agreement by another party. Notwithstanding the foregoing, however, if this
Agreement is terminated by Buyer pursuant to Sections 11.1(a) or (c), Buyer
shall be entitled to reimbursement from Seller and Affiliates of all expenses
actually incurred by it, its Related Persons, and its attorneys in connection
with this Agreement, any other documents required pursuant hereto, and the
Contemplated Transactions. Seller and Affiliates shall not be required to
reimburse Buyer for any such amounts in excess of two hundred thousand dollars
($200,000) in the aggregate.
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Section 14.2. Public Announcements. Except with the prior consent of the
other parties hereto or as permitted by this Agreement, no party nor any of its
Representatives shall disclose to any Person other than its Representatives on a
confidential basis (a) the fact that any Confidential Information of Seller or
Affiliates has been disclosed to Buyer or its Representatives, that Buyer or its
Representatives have inspected any portion of the Confidential Information of
Seller or Affiliates, that any Confidential Information of Buyer has been
disclosed to Seller, Affiliates or their Representatives or that Seller,
Affiliates or their Representatives have inspected any portion of the
Confidential Information of Buyer or (b) any information about the Contemplated
Transactions, including the status of such discussions or negotiations, the
execution of any documents (including this Agreement) or any of the terms of the
Contemplated Transactions or the related documents (including this Agreement).
Seller and Buyer will consult with each other concerning the means by which
Seller's employees, customers, suppliers and others having dealings with Seller
will be informed of the Contemplated Transactions, and Buyer will have the right
to be present for any such communication. Buyer acknowledges that ANI is a
public company upon which certain disclosure requirements are imposed.
Nevertheless, ANI agrees that prior to making any statements in any public
disclosure or press release regarding Buyer or its Related Persons, it shall
submit the substance of such disclosure or release to Buyer for its approval,
which shall not be unreasonably withheld.
Section 14.3. Notices. All notices, consents, waivers and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile with confirmation of transmission by the transmitting
equipment; or (c) received or rejected by the addressee, if sent by certified
mail, return receipt requested, in each case to the following addresses or
facsimile numbers and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number or person as a
party may designate by notice to the other parties):
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If to Buyer: With a copy to:
ANIP Acquisition Company Sonnenschein Nath & Rosenthal LLP
c/o Meridian Venture Partners, II L.P. 1221 Avenue of the Americas
201 King of Prussia Road New York, New York 10020
Suite 240 (212) 768-6800 (facsimile)
Radnor, Pennsylvania 19087 Attention: Paul A. Gajer, Esq.
Attention: Charlotte C. Arnold
If to Seller (before the Closing): With a copy to:
ANI Pharmaceuticals, Inc. Patton Boggs LLP
c/o Jeffrey G. McGonegal 1660 Lincoln Street, Suite 1900
1905 West Valley Vista Drive Denver, Colorado 80264
Castle Rock, Colorado 80104 (303) 894-9239 (facsimile)
(303) 660-9583 (facsimile) Attention: Robert M. Bearman, Esq.
If to Seller (after the Closing): With a copy to:
NIB, Inc. Patton Boggs LLP
c/o Jeffrey G. McGonegal 1660 Lincoln Street, Suite 1900
1905 West Valley Vista Drive Denver, Colorado 80264
Castle Rock, Colorado 80104 (303) 894-9239 (facsimile)
(303) 660-9583 (facsimile) Attention: Robert M. Bearman, Esq.
If to ANI: With a copy to:
Advanced Nutraceuticals, Inc. Patton Boggs LLP
106 South University Boulevard, #14 1660 Lincoln Street, Suite 1900
Denver, Colorado 80209 Denver, Colorado 80264
(303) 722-4011 (facsimile) (303) 894-9239 (facsimile)
Attention: Attention: Robert M. Bearman, Esq.
If to Bactolac: With a copy to:
Bactolac Pharmaceutical, Inc. Patton Boggs LLP
7 Oser Avenue 1660 Lincoln Street, Suite 1900
Hauppauge, New York 11788 Denver, Colorado 80264
(631) 951-4749 (facsimile) (303) 894-9239 (facsimile)
Attention: Pailla M. Reddy Attention: Robert M. Bearman, Esq.
Section 14.4. Jurisdiction; Service of Process. Any Proceeding arising out
of, or relating to, this Agreement or any Contemplated Transaction may be
brought in the courts of the State of New York, County of New York, if it has or
can acquire jurisdiction, in the United States District Court for the Southern
District of New York or in the Commercial Division of the Supreme Court of the
State of New York, and each of the parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Proceeding, waives any objection it
may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the Proceeding shall be heard and determined only in any
such court and agrees not to bring any Proceeding arising out of, or relating
to, this Agreement or any Contemplated Transaction in any other court. The
parties agree that either or both of them may file a copy of this paragraph with
any court as written evidence of the knowing, voluntary and bargained agreement
between the parties irrevocably to waive any objections to venue or to
convenience of forum. Process in any Proceeding referred to in the first
sentence of this section may be served on any party anywhere in the world.
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Section 14.5. Waiver of Trial by Jury. THE PARTIES HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE
THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER AMONG THEM
RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 14.6. Enforcement of Agreement. Seller and Affiliates acknowledge
and agree that Buyer would be irreparably damaged if any of the provisions of
this Agreement were not performed in accordance with their specific terms and
that any Breach of this Agreement by Seller or Affiliates could not be
adequately compensated in all cases by monetary damages alone. Accordingly, in
addition to any other right or remedy to which Buyer may be entitled, at law or
in equity, it shall be entitled to enforce any provision of this Agreement by a
decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent Breaches or threatened Breaches of any of the
provisions of this Agreement, without posting any bond or other undertaking.
Section 14.7. Waiver; Remedies Cumulative. The rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither any
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or any of the documents referred to in this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or any of the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of that party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
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Section 14.8. Entire Agreement; Modification. This Agreement supersedes all
prior agreements, whether written or oral, between the parties with respect to
its subject matter (including any letter of intent and any confidentiality
agreement between Buyer and Seller) and constitutes (along with the Disclosure
Schedule, Exhibits and other documents delivered pursuant to this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended,
supplemented, or otherwise modified except by a written agreement executed by
the party to be charged with the amendment.
Section 14.9. Disclosure Schedule.
(a) The information in the Disclosure Schedule constitutes (i)
exceptions to particular representations, warranties, covenants and
obligations of Seller and Affiliates as set forth in this Agreement or (ii)
descriptions or lists of assets and liabilities and other items referred to
in this Agreement. If there is any inconsistency between the statements in
this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with
respect to a specifically identified representation or warranty), the
statements in this Agreement will control.
(b) The statements in the Disclosure Schedule, and those in any
supplement thereto, relate only to the provisions in the Section of this
Agreement to which they expressly relate and not to any other provision in
this Agreement.
Section 14.10. Assignments; Successors; No Third-Party Rights. No party may
assign any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of the other parties, except that Buyer may
assign any of its rights and delegate any of its obligations under this
Agreement to any Subsidiary of Buyer and may collaterally assign its rights
hereunder to any financial institution providing financing in connection with
the Contemplated Transactions. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement, except such rights
as shall inure to a successor or permitted assignee pursuant to this Section
14.10.
Section 14.11. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
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Section 14.12. Construction. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Articles" and "Sections" refer to the
corresponding Articles and Sections of this Agreement and the Disclosure
Schedule.
Section 14.13. Governing Law. This Agreement will be governed by and
construed under the laws of the State of New York without regard to
conflicts-of-laws principles that would require the application of any other
law.
Section 14.14. Execution of Agreement. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. The exchange of copies of this Agreement
and of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for all
purposes.
Section 14.15. Affiliate Obligations. The liability of each Affiliate
hereunder shall be joint and several with Seller and with the other Affiliate.
Where in this Agreement provision is made for any action to be taken or not
taken by Seller, Affiliates jointly and severally undertake to cause Seller to
take or not take such action, as the case may be. Without limiting the
generality of the foregoing, Affiliates shall be jointly and severally liable
with Seller for the indemnities set forth in Article XIII.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BUYER:
ANIP ACQUISITION COMPANY
By:
-----------------------------------
Name: Thomas L. Anderson
Title: Chief Executive Officer
SELLER:
ANI PHARMACEUTICALS, INC.
By:
-----------------------------------
Name: Jeffrey McGonegal
Title: Treasurer
AFFILIATES:
ADVANCED NUTRACEUTICALS, INC.
By:
-----------------------------------
Name: Jeffrey McGonegal
Title: Senior Vice President, Finance
BACTOLAC PHARMACEUTICAL, INC.
By:
-----------------------------------
Name: Jeffrey McGonegal
Title: Vice President
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EXHIBIT A
---------
Form of Opinion of Patton Boggs LLP
March ___, 2004
ANIP Acquisition Company
c/o Meridian Venture Partners II, L.P.
201 King of Prussia Road, Suite 240
Radnor, PA 19087
Gentlemen and Ladies:
We have acted as counsel to ANI Pharmaceuticals, Inc., a Mississippi corporation
("ANIP"), Bactolac Pharmaceutical Inc., a Delaware corporation ("Bactolac"), and
Advanced Nutraceuticals, Inc., a Texas corporation ("ANI"), in connection with
the transactions contemplated by that certain Asset Purchase Agreement among
ANIP, Bactolac, ANI and ANIP Acquisition Company, a Delaware Corporation ("ANIP
Acquisition"), dated March ___, 2004 (the "Agreement") and the Bill of Sale,
Assignment and Assumption Agreement, Assignment of Intellectual Property and
Escrow Agreement executed in connection therewith ("Transaction Documents").
This opinion is being delivered to you pursuant to Section 9.4(a) of the
Agreement. All capitalized terms not otherwise defined herein shall have the
meanings ascribed in the Agreement.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Agreement and the Transaction Documents
and such corporate records, agreements, documents and other instruments, and
such certificates or comparable documents of public officials and of officers
and representatives of the parties to the Agreement and have made such inquiries
of such officers and representatives as we have deemed relevant and necessary as
a basis for the opinions hereinafter set forth. As to all questions of fact
material to this opinion that have not been independently established, we have
relied upon certificates or comparable documents of officers and representatives
of ANIP, Bactolac and ANI, and upon the representations and warranties of ANIP,
Bactolac and ANI contained in the Agreement. As to all matters of Mississippi
law, we have relied upon the legal opinion of Alfred Koenenn, Esq. ("Koenenn
Opinion").
In issuing the opinions set forth in this letter, we have made and relied upon
the following assumptions: (a) the authenticity of each document submitted to us
as an original; (b) the conformity to the original of each document submitted to
us as a copy and the authenticity of the original of the document; (c) the
genuineness of all signatures (except for those signatures of officers and
representatives of ANIP, Bactolac and ANI); (d) the legal capacity of all
natural persons; (e) the correctness of the factual matters set forth in the
Agreement and the Transaction Documents; (f) the accuracy and completeness of
the corporate records of ANIP, Bactolac and ANI, as delivered to us; and (g) the
due execution of the Agreement and each Transaction Document executed in
connection with the transactions contemplated thereby by ANIP Acquisition.
Based upon the foregoing, and subject to the qualifications and limitations set
forth in this letter, we are of the following opinion:
1. ANIP is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Mississippi and has the requisite
corporate power and authority to carry on its business as now being
conducted. Bactolac is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as now
being conducted. Bactolac is duly qualified and in good standing as a
foreign corporation in the State of Mississippi. ANI is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Texas and has the requisite corporate power and authority to carry
on its business as now being conducted.
2. Each of ANIP, Bactolac and ANI has full corporate power and authority to
execute, deliver and perform the Agreement and the Transaction Documents,
and the Agreement and Transaction Documents have been duly authorized,
executed and delivered by each of ANIP, Bactolac and ANI.
3. Assuming due and valid authorization, execution and delivery by ANIP
Acquisition, the Agreement and the Transaction Documents constitute the
legal, valid and binding agreements of ANIP, Bactolac and ANI, enforceable
in accordance with their terms.
4. The execution, delivery and performance by ANIP, Bactolac and ANI of the
Agreement and the Transaction Documents, and the consummation by ANIP,
Bactolac and ANI of the transactions contemplated thereby, did not, do not,
and will not (a) conflict with or violate the provisions of any
Mississippi, Texas or federal law, rule or regulation or the General
Corporation Law of the State of Delaware applicable to ANIP, Bactolac or
ANI, (b) conflict with or violate the provisions of the Articles of
Incorporation of any of ANIP, Bactolac and ANI or the Bylaws of any of
ANIP, Bactolac or ANI, (c) violate any judgment, decree, order or award
known to us of any court, governmental body or arbitration applicable to
ANIP, Bactolac or ANI, or (d) require the consent or authorization of, or
approval by, or notice to, (i) any Governmental Body, (ii) the stockholders
of ANIP, Bactolac or ANI, (iii) any party to any material contract or
agreement listed in Section 3.17 of the Disclosure Schedule to which ANIP,
Bactolac or ANI is a party, or (iv) to our knowledge, any other third party
(other than the third parties to the material contracts listed in Section
3.17 of the Disclosure Schedules), in each case except for such consents,
authorizations, approvals or notices that (A) (assuming the power and
authority of the consenting entity and the authority and capacity of the
person signing on its behalf) have been obtained or made or (B) are listed
as required in Section 3.17(c)(ii) of the Disclosure Schedule.
This opinion is limited by, subject to and based on the following:
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(i) Enforceability of the Agreement and any related documents may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally.
(ii) No opinion is expressed herein with respect to enforceability of any
choice of law, indemnification of a party for, liability for its own
action or inaction (to the extent the action or inaction involves
gross negligence, recklessness, willful misconduct, unlawful conduct,
or violation of public policy) or specific performance provisions or
regarding injunctive relief or other equitable remedies or waiver
provisions.
(iii) Any opinion or statement herein which is expressed to be "to our
knowledge" or is otherwise qualified by words of like import means
that the lawyers currently practicing law with this firm who
represented ANIP, Bactolac and ANI in connection with the transactions
contemplated by the Agreement have no current conscious awareness of
any facts or information contrary to such opinion or statement but
have undertaken no independent investigation with respect to such
facts or information.
(iv) We have made no examination or investigation to verify the accuracy or
completeness of any representation or warranty of any party to the
Transaction Documents or any financial, accounting or statistical
information furnished to you or with respect to any other accounting
or financial matters and express no opinion with respect thereto.
(v) No opinion is expressed herein with respect to title to any property.
(vi) With respect to the opinions hereinbefore set forth in Opinion 4
(d)(iii), our opinion is limited solely to consents required by the
terms of the contracts listed in Section 3.17 of the Disclosure
Schedule. No opinion is herein provided as to whether the law of any
State other than the States of Texas and Mississippi would require the
consent of any third party where the contract is silent and does not
specifically require the consent of a third party. Additionally, no
opinion is herein provided as to whether the law of any State,
including the States of Texas and Mississippi, implicated by a choice
of law provision in a contract would require application of the law of
another State to be considered in this regard.
The opinions expressed herein relate solely to federal laws, the laws of Texas,
the General Corporation Law of the State of Delaware, and, solely in reliance on
the Koenenn Opinion, the laws of Mississippi. We express no opinion with respect
to any other laws. This opinion does not relate, without limitation, to any
matters of law of other states or the rules or regulations of any federal agency
or any agency of any state, county or municipal agency or authority of another
state, territory or possession.
The opinions expressed herein are limited solely to the matters stated herein,
and no opinion is to be inferred or may be implied beyond the matters expressly
stated herein. This opinion is rendered solely for your benefit in connection
with the transactions described above, but may be relied upon by your lenders in
connection with the transactions described herein. This opinion may not be used
-3-
or relied upon by any other person, and may not be disclosed, quoted, filed with
a governmental agency, or otherwise referred to without our prior written
consent.
Very truly yours,
PATTON BOGGS, LLP
-4-
Exhibit B
---------
Form of Bill of Sale
BILL OF SALE
THIS BILL OF SALE is made this __th day of March, 2004, by and among ANIP
Acquisition Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals,
Inc., a Mississippi corporation ("ANIP"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANIP, "Sellers").
WHEREAS, pursuant to that certain Asset Purchase Agreement dated March __,
2004 (the "Purchase Agreement") by and among Buyer, Sellers and Advanced
Nutraceuticals, Inc., a Texas corporation ("ANI"), Sellers shall assign to
Buyer, and Buyer shall accept from Sellers, for the consideration and upon the
terms and conditions set forth in the Purchase Agreement, all of the rights,
title and interest of each Seller in and to all of the Assets that are Tangible
Personal Property and all of the rights, title and interest of each Seller in
all of the Assets that are Contracts (collectively, the "Purchased Assets"). All
capitalized terms used herein without definition shall have the meaning ascribed
to them in the Purchase Agreement.
NOW, THEREFORE, pursuant to the Purchase Agreement and in consideration of
the mutual covenants and agreements contained therein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
1. Conveyance. Each Seller hereby transfers, assigns and conveys to Buyer
all of its respective right, title and interest in and to the Purchased Assets;
provided that no transfer, assignment or delivery shall be made of any Contract
or any material portion thereof if an attempted assignment, transfer or
delivery, without the consent of a third party, would constitute a breach or
other contravention thereof or in any way adversely affect the rights of Buyer
or Sellers thereunder. When such consent is obtained, and provided Buyer is
properly notified and confirms acceptance of such assignment in accordance with
the Purchase Agreement, then this Bill of Sale shall be effective to provide for
the assignment and assumption (pursuant hereto and to the Assignment and
Assumption Agreement of the date hereof) thereof without need for further
action.
2. Acceptance. Buyer hereby accepts the foregoing transfer, conveyance and
assignment.
3. Excluded Assets. The Excluded Assets are specifically excluded from this
Bill of Sale, and Sellers do not transfer, assign or convey to Buyer, and Buyer
does not acquire from Sellers any Excluded Asset.
4. The Purchase Agreement. This Bill of Sale is subject in all respects to
the terms and conditions of the Purchase Agreement, and it is intended only to
document the assignment of the Purchased Assets. Nothing contained in this Bill
of Sale shall be deemed to supersede any of the covenants, obligations,
agreements, representations, or warranties of either of the Sellers or of the
Buyer contained in the Purchase Agreement.
5. Governing Law. This Bill of Sale shall be construed and interpreted
according to the laws of the State of Delaware, without regard to the conflict
of laws principles thereof.
6. Counterparts. This Bill of Sale may be executed in several counterparts,
each of which shall be deemed an original, but such counterparts shall together
constitute but one and the same Bill of Sale.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-2-
IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale as
of the date first above written.
ANI PHARMACEUTICALS, INC.
By:
---------------------------------------
Name: Jeffrey McGonegal
Title: Treasurer
BACTOLAC PHARMACEUTICAL, INC.
By:
---------------------------------------
Name: Jeffrey McGonegal
Title: Vice President
-3-
Exhibit C
---------
Form of Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Assignment and Assumption
Agreement") is made and entered into as of March __, 2004, by and between, ANI
Pharmaceuticals, Inc., a Mississippi corporation ("Assignor"), and ANIP
Acquisition Company, a Delaware corporation ("Assignee"). Capitalized terms used
but not defined herein shall have the meanings for such terms that are set forth
in the Purchase Agreement (as defined herein).
WHEREAS, Assignor and Assignee are parties to that certain Asset Purchase
Agreement dated as of March __, 2004 (the "Purchase Agreement"), pursuant to
which Assignee has purchased substantially all of the assets of Assignor used or
held for use in the Business; and
WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to assign
certain rights and agreements to Assignee, and Assignee has agreed to assume
certain obligations of Assignor, as set forth herein, and this Assignment and
Assumption Agreement is contemplated by Section 9.4(d) of the Purchase
Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:
1. Assignment and Assumption.
-------------------------
Effective as of March __, 2004, Assignor hereby assigns, sells, transfers
and sets over (collectively, the "Assignment") to Assignee all of
Assignor's right, title, benefit, privileges and interest in and to all of
the Assets that are intangible personal property, and all of Assignor's
burdens, obligations and liabilities in connection with each of the Assumed
Liabilities. Assignee hereby accepts the Assignment and assumes and agrees
to observe and perform all of the duties, obligations, terms, provisions
and covenants, and to pay and discharge all of the liabilities of Assignor
to be observed, performed, paid or discharged from and after the Closing,
in connection with the Assumed Liabilities. In the event that a third party
consent is required to assign any portion of the Seller Contracts included
in the Assets, when such consent is obtained, and provided Assignee is
properly notified and confirms acceptance of such assignment in accordance
with the terms of the Purchase Agreement, then this Assignment and
Assumption Agreement shall be effective to provide for the assignment and
assumption thereof without need for further action.
2. Terms of the Purchase Agreement.
-------------------------------
The terms of the Purchase Agreement, including but not limited to
Assignor's representations, warranties, covenants, agreements and
indemnities relating to the Assumed Liabilities, are incorporated herein by
this reference. Assignor acknowledges and agrees that the representations,
warranties, covenants, agreements and indemnities contained in the Purchase
Agreement shall not be superseded hereby, but shall remain in full force
and effect to the full extent provided therein. In the event of any
conflict or inconsistency between the terms of the Purchase Agreement and
the terms hereof, the terms of the Purchase Agreement shall govern.
3. Further Actions.
---------------
Each of the parties hereto covenants and agrees, at its own expense, to
execute and deliver, at the request of the other party hereto, such further
instruments of transfer and assignment and to take such other action as
such other party may reasonably request to more effectively consummate the
assignments and assumptions contemplated by this Assignment and Assumption
Agreement.
4. Governing Law.
-------------
This Assignment and Assumption Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, without giving effect
to the principles of conflict of laws thereof, and shall be subject to the
jurisdiction thereof.
5. Assignment.
----------
Assignor and Assignee may at any time assign all or any of their rights and
benefits under this Assignment and Assumption Agreement to any transferee
of the Assets covered hereby; provided, however, that neither Assignor nor
Assignee may assign any of their obligations hereunder without the consent
of the other party.
6. Counterparts.
------------
This Assignment and Assumption Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
an original, and such counterparts together shall constitute only one
original.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
ANI PHARMACEUTICALS, INC.
By: ___________________________
Name: Jeffrey McGonegal
Title: Treasurer
ANIP ACQUISITION COMPANY
By: ___________________________
Name: Thomas L. Anderson
Title: Chief Executive Officer
- 2 -
Exhibit D
---------
Form of Assumption of Intellectual Property
ASSIGNMENT OF INTELLECTUAL PROPERTY
ASSIGNMENT OF INTELLECTUAL PROPERTY made as of the __th day of March, 2004,
by ANI Pharmaceuticals, Inc., a Mississippi corporation ("Assignor"), to ANIP
Acquisition Company, a Delaware corporation ("Assignee").
RECITAL
Assignee and Assignor are parties to an Asset Purchase Agreement dated as
of March __, 2004 (the "Agreement"), pursuant to which Assignor has agreed to
sell to Assignee and Assignee has agreed to buy from Assignor the Assets (as
defined in the Agreement), including without limitation the servicemarks,
trademarks and trade names of Assignor and such other items of Intellectual
Property used or held for use in the Business. Pursuant to the Agreement,
Assignor has agreed to execute such instruments as the Assignee may reasonably
request in order to more effectively assign, transfer, grant, convey, assure and
confirm to Assignee and its successors and assigns, or to aid and assist in the
collection of or reducing to possession by the Assignee of the Assets.
In accordance therewith, Assignor desires to transfer and assign to
Assignee, and Assignee desires to accept the transfer and assignment of, all of
Assignor's worldwide right, title and interest in, to and under all of
Assignor's registered and unregistered Intellectual Property, including, without
limitation, its domestic and foreign servicemarks, trademarks, marks, trade
names, formulas, products, know-how, trade secrets, discoveries, inventions,
conceptions and ideas for inventions, including formulas for and enhancements of
products, filling processes, other manufacturing processes, packaging,
marketing, improvements and valuable discoveries, whether patentable or not (all
of the foregoing being referred to herein as the "Transferred Intellectual
Property").
NOW, THEREFORE, Assignor, for and in exchange for the payment of the
purchase price set forth in the Agreement, the receipt and sufficiency of which
are hereby acknowledged, does hereby agree to, and Assignee hereby accepts, the
following:
1. Intellectual Property. The transfer and assignment to Assignee, all of
Assignor's worldwide right, title and interest in, to and under the Transferred
Intellectual Property, together with the goodwill of the business associated
therewith and that is symbolized thereby, all rights to sue, enjoin and recover
damages for infringement of any Transferred Intellectual Property, whether
arising prior or subsequent to the date of this Assignment of Intellectual
Property, and any and all renewals and extensions thereof that may hereafter be
secured under the laws now or hereafter in effect in the United States, Canada
and in any other jurisdiction, the same to be held and enjoyed by the said
Assignee, its successors and assigns from and after the date hereof as fully and
entirely as the same would have been held and enjoyed by the said Assignor had
this Assignment of Intellectual Property not been made.
2. Terms of the Agreement. The terms of the Agreement, including but not
limited to Assignor's representations, warranties, covenants, agreements and
indemnities, are incorporated herein by this reference. Assignor acknowledges
and agrees that the representations, warranties, covenants, agreements and
indemnities contained in the Agreement shall not be superseded hereby but shall
remain in full force and effect to the full extent provided therein. In the
event of any conflict or inconsistency between the terms of the Agreement and
the terms hereof, the terms of the Agreement shall govern.
3. Amendments. No amendment, change or modification of this Assignment of
Intellectual Property shall be effective unless set forth in writing and signed
by the parties.
4. Assignment. This Assignment of Intellectual Property shall bind and
inure to the benefit of Assignee and its respective successors, assigns, heirs
and personal representatives. Assignor may not assign its obligations hereunder
to any other person or entity.
5. Severability. In the event that any one or more provisions of this
Assignment of Intellectual Property are deemed to be illegal or unenforceable,
then the parties shall hereby request a tribunal, forum or court of competent
jurisdiction to reform any such provision so as to make it enforceable while
also maximizing the intent of the parties. If said provisions cannot be so
modified, then such illegality or unenforceability will not affect any of the
remaining legal and enforceable provisions hereof, which will be continued as if
the illegal and unenforceable provisions had not been inserted herein.
6. Waiver. No waiver of any breach or default hereunder shall be considered
valid unless in writing, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by certified or registered mail, return receipt requested and with
postage prepaid, to the address of such party set forth in the Agreement. Either
party hereto may change the address to which the notices shall be sent by
providing written notification thereof to the other party.
8. Governing Law. This Assignment of Intellectual Property shall be
governed by and construed under the laws of the State of Delaware without regard
to the conflict of laws principles that would require application of any other
law.
9. Further Actions and Documents. Each party shall cooperate and take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Assignment of Intellectual Property.
-2-
10. Counterparts. This Assignment of Intellectual Property may be executed
in two or more counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, Assignor has caused its duly authorized officer to
execute this Assignment of Intellectual Property as of the date first above
written.
ANI PHARMACEUTICALS, INC.
By: ___________________
Name: Jeffrey McGonegal
Title: Treasurer
[SEAL]
State of )
) ss.:
County of )
On this ______ day of ______, 20______, before me, ______, personally
appeared ______, ______ of ______, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
____________________________
Notary Public
-4-
Exhibit E
---------
Form of Noncompetition Agreements
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this
"Agreement") is made as of March __, 2004, by and between ANIP Acquisition
Company, a Delaware corporation ("Buyer"), and Pailla Reddy ("Reddy").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from ANI Pharmaceuticals, Inc. ("Seller") certain, but not all, of
the assets of Seller and Bactolac Pharmaceutical, Inc. ("Bactolac"), including
without limitation, Seller's good will, pursuant to the terms and conditions of
an asset purchase agreement made of even date herewith (the "Asset Purchase
Agreement").
B. Seller and Bactolac are wholly-owned subsidiaries of Advanced Nutraceuticals,
Inc. ("ANI").
C. Seller is, or has been, engaged in the business of manufacturing, marketing
and distributing over-the-counter liquid, powder and semi-solid (creams and
ointments) products and Paas tablets (the "Business").
D. Reddy is President and Chief Executive Officer of Bactolac and a member of
the Board of Directors of ANI.
E. As an inducement for Buyer to enter into the Asset Purchase Agreement and to
consummate the transactions contemplated thereby, Reddy has agreed to enter into
this Agreement. Section 9.4(k) of the Asset Purchase Agreement requires that
this noncompetition agreement be executed and delivered by Reddy to Buyer at the
Closing.
F. Capitalized terms used, but not defined, herein shall have the meanings
accorded to them in the Asset Purchase Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Acknowledgements of Reddy
Reddy acknowledges that he has occupied a position of trust and confidence
with ANI, Seller and Bactolac prior to the date hereof and has had access to,
and has become familiar with, Seller's Confidential Information and, in
negotiating the transactions contemplated by the Asset Purchase Agreement, has
had access to, and has become familiar with, certain of Buyer's Confidential
Information. Reddy acknowledges that (a) the activities of Seller relating to
the use of the Assets and operation of the Business by Seller prior to Closing
are national in scope; (b) its products and services related to such Business
are marketed throughout the United States; (c) Seller' s Business competes with
other businesses that are, or could be, located in any part of the United
States; (d) Buyer has required that Reddy make the covenants set forth in
Sections 2 and 3 of this Agreement as a condition to Buyer's purchase of the
Assets; (e) the provisions of Sections 2 and 3 of this Agreement are reasonable
and necessary to protect and preserve Buyer's interests in, and right to, the
use of the Assets and operation of the Business from and after Closing; and (f)
Buyer would be irreparably damaged if Reddy were to breach the covenants set
forth in Sections 2 and 3 of this Agreement.
2. Confidential Information
Reddy acknowledges and agrees that the protection of Confidential
Information is necessary to protect and preserve the value of the Assets and the
Business. Therefore, Reddy hereby agrees not to disclose to any unauthorized
Persons or use for his own account or for the benefit of any third party any of
Seller's Confidential Information relating to the Assets or the Business or any
of Buyer's Confidential Information, whether or not such information is embodied
in writing or other physical form or is retained in the memory of Reddy, without
Buyer's prior written consent. Reddy agrees to deliver to Buyer at any time that
Buyer may request, all documents, memoranda, notes, plans, records, reports and
other documentation, models, components, devices or computer software, whether
embodied in electronic or in other form (and all copies of all of the
foregoing), that contain Confidential Information of Seller or Buyer and any
other such Confidential Information that Reddy may then possess or have under
his control.
For the purposes hereof, "Confidential Information" shall mean and include
(i) all customer and prospective customer information, including details of
agreements with customers; (ii) acquisition, expansion, financial and other
business information and plans, whether in respect of the transactions
contemplated by the Asset Purchase Agreement or otherwise; (iii) market research
and analyses, projections, forecasts and forecast assumptions; (iv) research and
development; (v) formulas for the development or enhancement of products,
filling processes and other manufacturing processes; (vi) business practices,
operations and procedures; (vii) marketing and merchandising information; (viii)
consulting, distribution and sales methods and techniques; (ix) computer
programs; (x) sources of supply; (xi) employee information (including, but not
limited to, personnel, payroll, compensation and benefit data and plans); and
(xii) other business information, processes and strategies, including records,
designs, patents, trade secrets, business plans, financial statements, manuals,
memoranda, minutes, drawings, formula books, specifications and computer
programs.
-2-
Confidential Information shall not include (i) information once it has
become publicly disclosed (other than by breach of obligation under this
Section) or that rightfully has come into the possession of a third party (other
than by breach of obligation under this Section or any other obligation of
confidentiality owed the disclosing party), or (ii) information that may be
compelled to be disclosed by law, legal process or regulatory proceeding,
provided, to the extent feasible, that the party proposing to disclose first
notifies the owner of the Confidential Information concerning the proposed
disclosure.
3. Noncompetition and Nonsolicitation
As an inducement for Buyer to enter into the Asset Purchase Agreement,
Reddy agrees that:
(a) For a period of three (3) years from the date hereof:
(A) Reddy will not, anywhere in the United States, participate or
engage, directly or indirectly, for himself or on behalf of, or in
conjunction with, any Person, whether as an employee, agent, officer,
manager, consultant, director, stockholder, member, partner, joint
venturer, investor, or otherwise, in any business that is in competition
with the Business with respect to both over-the-counter and prescription
products, sales and services; provided, however, that the foregoing
restriction shall not apply in the case of ownership of five percent (5%)
or less of a competing business that is publicly-traded on a national
securities exchange or traded in the over-the-counter market. Reddy agrees
that this covenant is reasonable with respect to its duration, geographical
area and scope;
(B) Reddy agrees not to, directly or indirectly, (1) induce or attempt
to induce any Employee of Seller who becomes an employee of Buyer, or any
Related Person of Buyer, in connection with the purchase of the Business or
Assets or any employee who was an employee of Buyer, or of any Related
Person of Buyer, prior to the Closing Date who continues in the employ of
Buyer or of any Related Person of Buyer, after the Closing Date to leave
the employ of Buyer, or of such Related Person; (2) in any way interfere
with the relationship between Buyer, or any Related Person of Buyer, and
any such employee of Buyer, or of any Related Person of Buyer; (3) employ
or otherwise engage as an employee, independent contractor or otherwise,
any such employee of Buyer, or of any Related Person of Buyer; or (4)
induce or attempt to induce any customer, supplier, licensee or other
Person to cease doing business with Buyer, or with any Related Person of
Buyer, or in any way interfere with the relationship between any such
customer, supplier, licensee or other business entity and Buyer, or any
Related Person of Buyer; and
(C) Reddy agrees not to, directly or indirectly, encourage, solicit or
attempt to induce (or provide assistance to others who may be encouraging,
soliciting or attempting to induce) any customer, or user of products, of
Buyer or any Related Person of Buyer, to become a business that is in
competition with the Business with respect to either over-the-counter or
prescription products or to enter into any affiliation with a business that
is in competition with the Business with respect to either over-the-counter
or prescription products (as a customer or otherwise);
-3-
(b) In the event of a breach by Reddy of any covenant set forth in
Subsection 3(a) of this Agreement, the term of such covenant will be extended by
the period of the duration of such breach;
(c) Reddy will not, at any time during or after the three-year period
referred to in Subsection 3(a) of this Agreement, disparage Buyer, any Related
Person of Buyer, the Assets, the Business, the business conducted by Buyer, or
by any Related Person of Buyer using the Assets or any stockholder, member,
director, manager, officer, employee or agent of Buyer, or of any Related Person
of Buyer.
4. Remedies
If Reddy breaches or threatens to breach the covenants set forth in
Sections 2 or 3 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from Reddy; and
(b) In addition to its right to Damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 2 and 3 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Buyer and would be an inadequate remedy for
such breach.
The rights and remedies of the Buyer under this Section are cumulative and
not alternative.
5. Successors and Assigns
This Agreement will be binding upon Buyer and Reddy and will inure to the
benefit of Buyer and its Related Persons, successors and assigns. The
obligations of Reddy hereunder are personal in nature and may not be assigned by
him.
6. Waiver
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by either party in exercising
any right, power or privilege under this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged, in whole or in part, by a
waiver or renunciation of the claim or right except in writing; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to, or demand on, one party will be
deemed to be a waiver of any obligation of such party, or of the right of the
party giving such notice or demand to require the other party, to take further
action without notice or demand as provided in this Agreement.
-4-
7. Governing Law
This Agreement will be governed by the laws applied by courts of the State
of Delaware without giving effect to the principles of conflict of laws thereof.
8. Jurisdiction; Service of Legal Process
Any action or proceeding seeking to enforce any provision of, or based upon
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, County of New Castle or, if it
has or can acquire jurisdiction, in the United States District Court for the
District of Delaware, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
9. Severability
Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid, but if any provision or term
of this Agreement is held to be prohibited or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 3 of this Agreement are held to be
unreasonable, arbitrary or against public policy, such covenants will be
considered divisible with respect to scope, time and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Reddy to the greatest extent permissible.
10. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original. Any such counterpart may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same was a manually executed and delivered original counterpart. Each
counterpart shall be deemed to be an original and it shall not be necessary in
making proof of the contents of this Agreement to produce or account for more
than one counterpart. Any such counterpart signature page may be attached to the
body of a copy of this Agreement to form a complete integrated whole. All
counterparts shall be construed together and shall constitute one agreement.
-5-
11. Section Headings; Construction
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
12. Notices
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt); (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is also promptly
mailed by registered mail, return receipt requested; or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to Reddy, to:
Pailla Reddy
c/o Bactolac Pharmaceutical Inc.
7 Oser Avenue
Hauppauge, NY 11788
Facsimile No.: (631) 951-4749
With a copy, which shall not constitute notice, to:
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, CO 80264
Attention: Robert M. Bearman, Esq.
Facsimile No.: (303) 894-9239
-6-
If to Buyer, to:
ANIP Acquisition Company
c/o Meridian Venture Partners II, L.P.
201 King of Prussia Road, Suite 240
Radnor, PA 19087
Attention: Charlotte C. Arnold
Facsimile No.: (610) 254-2996
With a copy, which shall not constitute notice, to:
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Paul A. Gajer, Esq.
Facsimile No.: (212) 768-6800
13. Entire Agreement
This Agreement and the Asset Purchase Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between the parties with respect to the subject matter of this Agreement. This
Agreement may not be amended except by a written agreement executed by both
parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
-7-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER: REDDY:
ANIP ACQUISITION COMPANY
By: _________________________ ___________________________
Name: Thomas L. Anderson Pailla Reddy
Title: Chief Executive Officer
And President
-8-
Exhibit E
---------
Form of Noncompetition Agreements
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this
"Agreement") is made as of March __, 2004, by and between ANIP Acquisition
Company, a Delaware corporation ("Buyer"), and Jeffrey McGonegal ("McGonegal").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from ANI Pharmaceuticals, Inc. ("Seller") certain, but not all, of
the assets of Seller and Bactolac Pharmaceutical, Inc. ("Bactolac"), including
without limitation, Seller's good will, pursuant to the terms and conditions of
an asset purchase agreement made of even date herewith (the "Asset Purchase
Agreement").
B. Seller and Bactolac are wholly-owned subsidiaries of Advanced Nutraceuticals,
Inc. ("ANI").
C. Seller is, or has been, engaged in the business of manufacturing, marketing
and distributing over-the-counter liquid, powder and semi-solid (creams and
ointments) products and Paas tablets (the "Business").
D. McGonegal is Senior Vice President of Finance and Treasurer of ANI; Treasurer
of Seller; and Secretary and Vice President of Bactolac.
E. As an inducement for Buyer to enter into the Asset Purchase Agreement and to
consummate the transactions contemplated thereby, McGonegal has agreed to enter
into this Agreement. Section 9.4(k) of the Asset Purchase Agreement requires
that this noncompetition agreement be executed and delivered by McGonegal to
Buyer at the Closing.
F. Capitalized terms used, but not defined, herein shall have the meanings
accorded to them in the Asset Purchase Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Acknowledgements of McGonegal
McGonegal acknowledges that he has occupied a position of trust and
confidence with ANI, Seller and Bactolac prior to the date hereof and has had
access to, and has become familiar with, Seller's Confidential Information and,
in negotiating the transactions contemplated by the Asset Purchase Agreement,
has had access to, and has become familiar with, certain of Buyer's Confidential
Information. McGonegal acknowledges that (a) the activities of Seller relating
to the use of the Assets and operation of the Business by Seller prior to
Closing are national in scope; (b) its products and services related to such
Business are marketed throughout the United States; (c) Seller' s Business
competes with other businesses that are, or could be, located in any part of the
United States; (d) Buyer has required that McGonegal make the covenants set
forth in Sections 2 and 3 of this Agreement as a condition to Buyer's purchase
of the Assets; (e) the provisions of Sections 2 and 3 of this Agreement are
reasonable and necessary to protect and preserve Buyer's interests in, and right
to, the use of the Assets and operation of the Business from and after Closing;
and (f) Buyer would be irreparably damaged if McGonegal were to breach the
covenants set forth in Sections 2 and 3 of this Agreement.
2. Confidential Information
McGonegal acknowledges and agrees that the protection of Confidential
Information is necessary to protect and preserve the value of the Assets and the
Business. Therefore, McGonegal hereby agrees not to disclose to any unauthorized
Persons or use for his own account or for the benefit of any third party any of
Seller's Confidential Information relating to the Assets or the Business or any
of Buyer's Confidential Information, whether or not such information is embodied
in writing or other physical form or is retained in the memory of McGonegal,
without Buyer's prior written consent. McGonegal agrees to deliver to Buyer at
any time that Buyer may request, all documents, memoranda, notes, plans,
records, reports and other documentation, models, components, devices or
computer software, whether embodied in electronic or in other form (and all
copies of all of the foregoing), that contain Confidential Information of Seller
or Buyer and any other such Confidential Information that McGonegal may then
possess or have under his control.
For the purposes hereof, "Confidential Information" shall mean and include
(i) all customer and prospective customer information, including details of
agreements with customers; (ii) acquisition, expansion, financial and other
business information and plans, whether in respect of the transactions
contemplated by the Asset Purchase Agreement or otherwise; (iii) market research
and analyses, projections, forecasts and forecast assumptions; (iv) research and
development; (v) formulas for the development or enhancement of products,
filling processes and other manufacturing processes; (vi) business practices,
operations and procedures; (vii) marketing and merchandising information; (viii)
consulting, distribution and sales methods and techniques; (ix) computer
programs; (x) sources of supply; (xi) employee information (including, but not
limited to, personnel, payroll, compensation and benefit data and plans); and
(xii) other business information, processes and strategies, including records,
designs, patents, trade secrets, business plans, financial statements, manuals,
memoranda, minutes, drawings, formula books, specifications and computer
programs.
-2-
Confidential Information shall not include (i) information once it has
become publicly disclosed (other than by breach of obligation under this
Section) or that rightfully has come into the possession of a third party (other
than by breach of obligation under this Section or any other obligation of
confidentiality owed the disclosing party), or (ii) information that may be
compelled to be disclosed by law, legal process or regulatory proceeding,
provided, to the extent feasible, that the party proposing to disclose first
notifies the owner of the Confidential Information concerning the proposed
disclosure.
3. Noncompetition and Nonsolicitation
As an inducement for Buyer to enter into the Asset Purchase Agreement,
McGonegal agrees that:
(a) For a period of three (3) years from the date hereof:
(A) McGonegal will not, anywhere in the United States, participate or
engage, directly or indirectly, for himself or on behalf of, or in
conjunction with, any Person, whether as an employee, agent, officer,
manager, consultant, director, stockholder, member, partner, joint
venturer, investor, or otherwise, in any business that is in competition
with the Business with respect to both over-the-counter and prescription
products, sales and services; provided, however, that the foregoing
restriction shall not apply in the case of ownership of five percent (5%)
or less of a competing business that is publicly-traded on a national
securities exchange or traded in the over-the-counter market. McGonegal
agrees that this covenant is reasonable with respect to its duration,
geographical area and scope;
(B) McGonegal agrees not to, directly or indirectly, (1) induce or
attempt to induce any Employee of Seller who becomes an employee of Buyer,
or any Related Person of Buyer, in connection with the purchase of the
Business or Assets or any employee who was an employee of Buyer, or of any
Related Person of Buyer, prior to the Closing Date who continues in the
employ of Buyer or of any Related Person of Buyer, after the Closing Date
to leave the employ of Buyer, or of such Related Person; (2) in any way
interfere with the relationship between Buyer, or any Related Person of
Buyer, and any such employee of Buyer, or of any Related Person of Buyer;
(3) employ or otherwise engage as an employee, independent contractor or
otherwise, any such employee of Buyer, or of any Related Person of Buyer;
or (4) induce or attempt to induce any customer, supplier, licensee or
other Person to cease doing business with Buyer, or with any Related Person
of Buyer, or in any way interfere with the relationship between any such
customer, supplier, licensee or other business entity and Buyer, or any
Related Person of Buyer; and
(C) McGonegal agrees not to, directly or indirectly, encourage,
solicit or attempt to induce (or provide assistance to others who may be
encouraging, soliciting or attempting to induce) any customer, or user of
products, of Buyer or any Related Person of Buyer, to become a business
that is in competition with the Business with respect to either
over-the-counter or prescription products or to enter into any affiliation
with a business that is in competition with the Business with respect to
either over-the-counter or prescription products (as a customer or
otherwise);
-3-
(b) In the event of a breach by McGonegal of any covenant set forth in
Subsection 3(a) of this Agreement, the term of such covenant will be extended by
the period of the duration of such breach;
(c) McGonegal will not, at any time during or after the three-year period
referred to in Subsection 3(a) of this Agreement, disparage Buyer, any Related
Person of Buyer, the Assets, the Business, the business conducted by Buyer, or
by any Related Person of Buyer using the Assets or any stockholder, member,
director, manager, officer, employee or agent of Buyer, or of any Related Person
of Buyer.
4. Remedies
If McGonegal breaches or threatens to breach the covenants set forth in
Sections 2 or 3 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from McGonegal; and
(b) In addition to its right to Damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 2 and 3 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Buyer and would be an inadequate remedy for
such breach.
The rights and remedies of the Buyer under this Section are cumulative and
not alternative.
5. Successors and Assigns
This Agreement will be binding upon Buyer and McGonegal and will inure to
the benefit of Buyer and its Related Persons, successors and assigns. The
obligations of McGonegal hereunder are personal in nature and may not be
assigned by him.
6. Waiver
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by either party in exercising
any right, power or privilege under this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged, in whole or in part, by a
waiver or renunciation of the claim or right except in writing; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to, or demand on, one party will be
deemed to be a waiver of any obligation of such party, or of the right of the
party giving such notice or demand to require the other party, to take further
action without notice or demand as provided in this Agreement.
-4-
7. Governing Law
This Agreement will be governed by the laws applied by courts of the State
of Delaware without giving effect to the principles of conflict of laws thereof.
8. Jurisdiction; Service of Legal Process
Any action or proceeding seeking to enforce any provision of, or based upon
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, County of New Castle or, if it
has or can acquire jurisdiction, in the United States District Court for the
District of Delaware, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
9. Severability
Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid, but if any provision or term
of this Agreement is held to be prohibited or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 3 of this Agreement are held to be
unreasonable, arbitrary or against public policy, such covenants will be
considered divisible with respect to scope, time and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against McGonegal to the greatest extent permissible.
10. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original. Any such counterpart may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same was a manually executed and delivered original counterpart. Each
counterpart shall be deemed to be an original and it shall not be necessary in
making proof of the contents of this Agreement to produce or account for more
than one counterpart. Any such counterpart signature page may be attached to the
body of a copy of this Agreement to form a complete integrated whole. All
counterparts shall be construed together and shall constitute one agreement.
-5-
11. Section Headings; Construction
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
12. Notices
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt); (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is also promptly
mailed by registered mail, return receipt requested; or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to McGonegal, to:
Jeffrey McGonegal
1905 West Valley Vista Drive
Castle Rock, CO 80109
Facsimile No.: (303) 660-9583
With a copy, which shall not constitute notice, to:
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, CO 80264
Attention: Robert M. Bearman, Esq.
Facsimile No.: (303) 894-9239
-6-
If to Buyer, to:
ANIP Acquisition Company
c/o Meridian Venture Partners II, L.P.
201 King of Prussia Road, Suite 240
Radnor, PA 19087
Attention: Charlotte C. Arnold
Facsimile No.: (610) 254-2996
With a copy, which shall not constitute notice, to:
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Paul A. Gajer, Esq.
Facsimile No.: (212) 768-6800
13. Entire Agreement
This Agreement and the Asset Purchase Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between the parties with respect to the subject matter of this Agreement. This
Agreement may not be amended except by a written agreement executed by both
parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
-7-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER: MCGONEGAL:
ANIP ACQUISITION COMPANY
By: _________________________ ___________________________
Name: Thomas L. Anderson Jeffrey McGonegal
Title: Chief Executive Officer
and President
-8-
Exhibit E
---------
Form of Noncompetition Agreements
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this
"Agreement") is made as of March __, 2004, by and between ANIP Acquisition
Company, a Delaware corporation ("Buyer"), and Gregory Pusey ("Pusey").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from ANI Pharmaceutical, Inc. ("Seller") certain, but not all, of the
assets of Seller and Bactolac Pharmaceuticals, Inc. ("Bactolac"), including
without limitation, Seller's good will, pursuant to the terms and conditions of
an asset purchase agreement made of even date herewith (the "Asset Purchase
Agreement").
B. Seller and Bactolac are wholly-owned subsidiaries of Advanced Nutraceuticals,
Inc. ("ANI").
C. Seller is, or has been, engaged in the business of manufacturing, marketing
and distributing over-the-counter liquid, powder and semi-solid (creams and
ointments) products and Paas tablets (the "Business").
D. Pusey is President, Chief Executive Officer and Chairman of the Board of ANI;
Secretary of Seller; and Assistant Secretary of Bactolac.
E. As an inducement for Buyer to enter into the Asset Purchase Agreement and to
consummate the transactions contemplated thereby, Pusey has agreed to enter into
this Agreement. Section 9.4(k) of the Asset Purchase Agreement requires that
this noncompetition agreement be executed and delivered by Pusey to Buyer at the
Closing.
F. Capitalized terms used, but not defined, herein shall have the meanings
accorded to them in the Asset Purchase Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Acknowledgements of Pusey
Pusey acknowledges that he has occupied a position of trust and confidence
with ANI, Seller and Bactolac prior to the date hereof and has had access to,
and has become familiar with, Seller's Confidential Information and, in
negotiating the transactions contemplated by the Asset Purchase Agreement, has
had access to, and has become familiar with, certain of Buyer's Confidential
Information. Pusey acknowledges that (a) the activities of Seller relating to
the use of the Assets and operation of the Business by Seller prior to Closing
are national in scope; (b) its products and services related to such Business
are marketed throughout the United States; (c) Seller' s Business competes with
other businesses that are, or could be, located in any part of the United
States; (d) Buyer has required that Pusey make the covenants set forth in
Sections 2 and 3 of this Agreement as a condition to Buyer's purchase of the
Assets; (e) the provisions of Sections 2 and 3 of this Agreement are reasonable
and necessary to protect and preserve Buyer's interests in, and right to, the
use of the Assets and operation of the Business from and after Closing; and (f)
Buyer would be irreparably damaged if Pusey were to breach the covenants set
forth in Sections 2 and 3 of this Agreement.
2. Confidential Information
Pusey acknowledges and agrees that the protection of Confidential
Information is necessary to protect and preserve the value of the Assets and the
Business. Therefore, Pusey hereby agrees not to disclose to any unauthorized
Persons or use for his own account or for the benefit of any third party any of
Seller's Confidential Information relating to the Assets or the Business or any
of Buyer's Confidential Information, whether or not such information is embodied
in writing or other physical form or is retained in the memory of Pusey, without
Buyer's prior written consent. Pusey agrees to deliver to Buyer at any time that
Buyer may request, all documents, memoranda, notes, plans, records, reports and
other documentation, models, components, devices or computer software, whether
embodied in electronic or in other form (and all copies of all of the
foregoing), that contain Confidential Information of Seller or Buyer and any
other such Confidential Information that Pusey may then possess or have under
his control.
For the purposes hereof, "Confidential Information" shall mean and include
(i) all customer and prospective customer information, including details of
agreements with customers; (ii) acquisition, expansion, financial and other
business information and plans, whether in respect of the transactions
contemplated by the Asset Purchase Agreement or otherwise; (iii) market research
and analyses, projections, forecasts and forecast assumptions; (iv) research and
development; (v) formulas for the development or enhancement of products,
filling processes and other manufacturing processes; (vi) business practices,
operations and procedures; (vii) marketing and merchandising information; (viii)
consulting, distribution and sales methods and techniques; (ix) computer
programs; (x) sources of supply; (xi) employee information (including, but not
limited to, personnel, payroll, compensation and benefit data and plans); and
(xii) other business information, processes and strategies, including records,
designs, patents, trade secrets, business plans, financial statements, manuals,
memoranda, minutes, drawings, formula books, specifications and computer
programs.
-2-
Confidential Information shall not include (i) information once it has
become publicly disclosed (other than by breach of obligation under this
Section) or that rightfully has come into the possession of a third party (other
than by breach of obligation under this Section or any other obligation of
confidentiality owed the disclosing party), or (ii) information that may be
compelled to be disclosed by law, legal process or regulatory proceeding,
provided, to the extent feasible, that the party proposing to disclose first
notifies the owner of the Confidential Information concerning the proposed
disclosure.
3. Noncompetition and Nonsolicitation
As an inducement for Buyer to enter into the Asset Purchase Agreement,
Pusey agrees that:
(a) For a period of three (3) years from the date hereof:
(A) Pusey will not, anywhere in the United States, participate or
engage, directly or indirectly, for himself or on behalf of, or in
conjunction with, any Person, whether as an employee, agent, officer,
manager, consultant, director, stockholder, member, partner, joint
venturer, investor, or otherwise, in any business that is in competition
with the Business with respect to both over-the-counter and prescription
products, sales and services; provided, however, that the foregoing
restriction shall not apply in the case of ownership of five percent (5%)
or less of a competing business that is publicly-traded on a national
securities exchange or traded in the over-the-counter market. Pusey agrees
that this covenant is reasonable with respect to its duration, geographical
area and scope;
(B) Pusey agrees not to, directly or indirectly, (1) induce or attempt
to induce any Employee of Seller who becomes an employee of Buyer, or any
Related Person of Buyer, in connection with the purchase of the Business or
Assets or any employee who was an employee of Buyer, or of any Related
Person of Buyer, prior to the Closing Date who continues in the employ of
Buyer or of any Related Person of Buyer, after the Closing Date to leave
the employ of Buyer, or of such Related Person; (2) in any way interfere
with the relationship between Buyer, or any Related Person of Buyer, and
any such employee of Buyer, or of any Related Person of Buyer; (3) employ
or otherwise engage as an employee, independent contractor or otherwise,
any such employee of Buyer, or of any Related Person of Buyer; or (4)
induce or attempt to induce any customer, supplier, licensee or other
Person to cease doing business with Buyer, or with any Related Person of
Buyer, or in any way interfere with the relationship between any such
customer, supplier, licensee or other business entity and Buyer, or any
Related Person of Buyer; and
-3-
(C) Pusey agrees not to, directly or indirectly, encourage, solicit or
attempt to induce (or provide assistance to others who may be encouraging,
soliciting or attempting to induce) any customer, or user of products, of
Buyer or any Related Person of Buyer, to become a business that is in
competition with the Business with respect to either over-the-counter or
prescription products or to enter into any affiliation with a business that
is in competition with the Business with respect to either over-the-counter
or prescription products (as a customer or otherwise);
(b) In the event of a breach by Pusey of any covenant set forth in
Subsection 3(a) of this Agreement, the term of such covenant will be extended by
the period of the duration of such breach;
(c) Pusey will not, at any time during or after the three-year period
referred to in Subsection 3(a) of this Agreement, disparage Buyer, any Related
Person of Buyer, the Assets, the Business, the business conducted by Buyer, or
by any Related Person of Buyer using the Assets or any stockholder, member,
director, manager, officer, employee or agent of Buyer, or of any Related Person
of Buyer.
4. Remedies
If Pusey breaches or threatens to breach the covenants set forth in
Sections 2 or 3 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from Pusey; and
(b) In addition to its right to Damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 2 and 3 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Buyer and would be an inadequate remedy for
such breach.
The rights and remedies of the Buyer under this Section are cumulative and
not alternative.
5. Successors and Assigns
This Agreement will be binding upon Buyer and Pusey and will inure to the
benefit of Buyer and its Related Persons, successors and assigns. The
obligations of Pusey hereunder are personal in nature and may not be assigned by
him.
6. Waiver
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by either party in exercising
any right, power or privilege under this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged, in whole or in part, by a
waiver or renunciation of the claim or right except in writing; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to, or demand on, one party will be
deemed to be a waiver of any obligation of such party, or of the right of the
party giving such notice or demand to require the other party, to take further
action without notice or demand as provided in this Agreement.
-4-
7. Governing Law
This Agreement will be governed by the laws applied by courts of the State
of Delaware without giving effect to the principles of conflict of laws thereof.
8. Jurisdiction; Service of Legal Process
Any action or proceeding seeking to enforce any provision of, or based upon
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, County of New Castle or, if it
has or can acquire jurisdiction, in the United States District Court for the
District of Delaware, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
9. Severability
Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid, but if any provision or term
of this Agreement is held to be prohibited or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 3 of this Agreement are held to be
unreasonable, arbitrary or against public policy, such covenants will be
considered divisible with respect to scope, time and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Pusey to the greatest extent permissible.
10. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original. Any such counterpart may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same was a manually executed and delivered original counterpart. Each
counterpart shall be deemed to be an original and it shall not be necessary in
making proof of the contents of this Agreement to produce or account for more
than one counterpart. Any such counterpart signature page may be attached to the
body of a copy of this Agreement to form a complete integrated whole. All
counterparts shall be construed together and shall constitute one agreement.
-5-
11. Section Headings; Construction
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
12. Notices
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt); (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is also promptly
mailed by registered mail, return receipt requested; or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to Pusey, to:
Gregory Pusey
106 S. University Blvd., #14
Denver, CO 80209
Facsimile No.: (303) 722-4011
With a copy, which shall not constitute notice, to:
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, CO 80264
Attention: Robert M. Bearman, Esq.
Facsimile No.: (303) 894-9239
-6-
If to Buyer, to:
ANIP Acquisition Company
c/o Meridian Venture Partners II, L.P.
201 King of Prussia Road, Suite 240
Radnor, PA 19087
Attention: Charlotte C. Arnold
Facsimile No.: (610) 254-2996
With a copy, which shall not constitute notice, to:
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Paul A. Gajer, Esq.
Facsimile No.: (212) 768-6800
13. Entire Agreement
This Agreement and the Asset Purchase Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between the parties with respect to the subject matter of this Agreement. This
Agreement may not be amended except by a written agreement executed by both
parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
-7-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER: PUSEY:
ANIP ACQUISITION COMPANY
By: _________________________ ___________________________
Name: Thomas L. Anderson Gregory Pusey
Title: Chief Executive Officer
And President
-8-
Exhibit F
---------
Form of Escrow Agreement
ESCROW AGREEMENT
This Escrow Agreement, dated as of March __, 2004 (the "Closing Date"),
among ANIP Acquisition Company, a Delaware corporation ("Buyer"), ANI
Pharmaceuticals, Inc., a Mississippi corporation ("Seller"), Advanced
Nutraceuticals, Inc., a Texas corporation ("ANI"), and Bactolac Pharmaceutical,
Inc., a Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors"), and J.P. Morgan Chase & Co., a national banking association, as
escrow agent ("Escrow Agent").
This is the Escrow Agreement referred to in the Asset Purchase Agreement
dated March __, 2004 (the "Purchase Agreement"), by and among Buyer and
Indemnitors. Capitalized terms used in this Agreement without definition shall
have the respective meanings given to them in the Purchase Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent (i) an amount equal to TWO
HUNDRED FIFTY THOUSAND dollars ($250,000.00) in immediately available funds and
(ii) all amounts, if any, in dispute as of the Closing under Section 2.9 of the
Purchase Agreement (as increased by any earnings thereon and as reduced by any
disbursements, amounts withdrawn under paragraph 8(j), or losses on investments,
the "Escrow Fund").
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.
2. INVESTMENT OF FUNDS
(a) The Escrow Agent shall invest and reinvest the Escrow Fund in any of
the following temporary investments: (i) a J.P. Morgan Chase Bank Money Market
Account; (ii) a trust account with J.P. Morgan Chase Bank; (iii) a
"money-market" mutual fund, including without limitation the J.P. Morgan Fund or
any other mutual fund for which Escrow Agent serves as investment manager,
administrator, shareholder servicing agent and/or custodian or subcustodian;
(iv) the J.P. Morgan 100% U.S. Treasury Securities Money Market Fund; or (iv)
such other investments as Buyer, Indemnitors and Escrow Agent may from time to
time mutually agree upon in writing executed and delivered by Buyer and
Indemnitor and accepted by Escrow Agent. In the absence of a specific direction
from Indemnitors and Buyer, Escrow Agent shall invest the Escrow Fund in
securities described in clause (iv) of this paragraph 2(a).
(b) Any interest or other income accrued or received on the investments or
reinvestments described in paragraph 2(a) shall be held as part of the Escrow
Fund subject to the terms of this Agreement and shall be distributed by Escrow
Agent only in accordance with, and as provided by, this Agreement.
3. CLAIMS
(a) From time to time, Buyer may give notice (a "Notice"), in a form
substantially similar to that attached hereto as Exhibit A, to Indemnitors and
Escrow Agent specifying in reasonable detail the nature and dollar amount of any
claim (a "Claim") it may have under Article XIII of the Purchase Agreement.
Buyer may make more than one claim with respect to any underlying set of facts.
If Indemnitors give notice to Buyer and Escrow Agent disputing any Claim (a
"Counter Notice") within thirty (30) days following receipt by Escrow Agent of
the Notice regarding such Claim, such Claim shall be resolved as provided in
paragraph 3(b). A Counter Notice shall specify the basis of the dispute and
shall be in a form substantially similar to that attached hereto as Exhibit B.
If no Counter Notice is received by Escrow Agent within such thirty (30) day
period, then the dollar amount of damages claimed by Buyer as set forth in its
Notice shall be deemed established for purposes of this Agreement and the
Purchase Agreement and, at the end of such thirty (30) day period, Escrow Agent
shall pay to Buyer the dollar amount claimed in the Notice from (and only to the
extent of) the Escrow Fund. Escrow Agent shall not inquire into or consider
whether a Claim complies with the requirements of the Purchase Agreement.
(b) If a Counter Notice is given with respect to a Claim, Escrow Agent
shall make payment with respect thereto only in accordance with the provisions
of Section 4 hereof.
4. DISBURSEMENTS FROM THE ESCROW FUND
Escrow Agent shall only disburse amounts held in the Escrow Fund upon
receipt of a Disbursement Request. The Disbursement Request shall be provided to
Escrow Agent no less than two (2) business days prior to the requested
disbursement date. For purposes hereof, a "Disbursement Request" means: (i)
joint written instructions from Buyer and Indemnitors, in a form substantially
similar to that attached as Exhibit C, specifying (1) the Claim that has been
resolved (or, in the case of a disbursement pursuant to Section 2.9 of the
Purchase Agreement, that the disbursement is of the Dispute Escrow Portion); (2)
the amount to be disbursed; (3) the recipient of the disbursement and (4) the
manner of disbursement and delivery instructions, or (ii) written instructions
from Buyer or Indemnitors, in a form substantially similar to that attached as
Exhibit D, specifying (1) the Claim has been resolved pursuant to a final,
nonappealable order of a court of competent jurisdiction (a "Court Order"); (2)
the amount to be disbursed; (3) the recipient of the disbursement and (4) the
manner of disbursement and delivery instructions, accompanied by a certified
copy of such Court Order and a legal opinion satisfactory to Escrow Agent of
counsel for the presenting party to the effect that such Court Order is final
and nonappealable. Escrow Agent shall be entitled to rely on a Court Order and
to act on a Court Order and legal opinion without further question and make
disbursements as required pursuant to the Disbursement Request containing such
Court Order.
-2-
5. RELEASE OF ESCROW FUND TO INDEMNITORS
(a) On September 19, 2004 being six (6) months after the Closing Date, and
upon receipt by Escrow Agent of a Disbursement Request to such effect, Escrow
Agent must pay to Indemnitors the balance of the Escrow Fund less (i) the
aggregate of all amounts specified in Notices lodged under Section 3 in respect
of Claims that have not been resolved by agreement between Buyer and Indemnitors
or a Court Order and (ii) the aggregate of all amounts payable to Buyer under
Section 3 that remain unpaid. For this purpose, a Claim is treated as having
been resolved only if Escrow Agent has received a Disbursement Request in
relation to that Claim under Section 4.
(b) If any amount is retained by Escrow Agent after the end of the six (6)
month period in respect of any Claims that remain unresolved, and subsequently
any such Claims are resolved, Escrow Agent shall disburse that portion of the
Escrow Fund required to satisfy any such resolved Claims pursuant to a
Disbursement Request issued therefor, and shall thereafter pay to Indemnitors
the amount (if any) by which the balance of the Escrow Fund (after payment of
such resolved Claims) exceeds the amounts claimed in respect of all remaining
unresolved Claims.
6. PAYMENT OF INTEREST
All interest accrued on any portion of the Escrow Fund shall be paid to the
party receiving that portion of the Escrow Fund.
7. TERMINATION OF ESCROW AGREEMENT
This Agreement shall terminate the earlier of (i) the receipt by Escrow
Agent of three (3) business days prior joint written notice of termination, in a
form substantially similar to that attached hereto as Exhibit E, by Buyer and
Indemnitors directing the distribution of all assets then held by Escrow Agent
under and pursuant to this Agreement and (ii) when all amounts in the Escrow
Fund (including all the securities in which any of the funds deposited into the
Escrow Fund shall have been invested) shall have been distributed by Escrow
Agent in accordance with the terms of this Agreement; provided, however, that
the rights and obligations of the parties hereto shall survive the termination
hereof.
8. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Fund held
by it hereunder any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Agreement. Uninvested funds held hereunder shall not earn or
accrue interest.
-3-
(b) Escrow Agent shall not be liable for actions or omissions hereunder,
except for its own gross negligence or willful misconduct and, except with
respect to claims based upon such gross negligence or willful misconduct that
are successfully asserted against Escrow Agent. Buyer, on the one hand, and
Indemnitors, on the other hand, shall jointly and severally indemnify, defend
and save harmless Escrow Agent and its directors, officers, agents and employees
(the "Escrow Agent Indemnitees") from all loss, liability or expense (including
the fees and expenses of in-house or outside counsel) arising out of or in
connection with (i) Escrow Agent's execution and performance of this Escrow
Agreement, except in the case of any Escrow Agent Indemnitee to the extent that
such loss, liability or expense is due to the gross negligence or willful
misconduct of such Escrow Agent Indemnitee, or (ii) Escrow Agent's following of
any instruction or other directions from Buyer or Indemnitors, except to the
extent that its following any such instruction or direction is expressly
forbidden by the terms thereof. The parties to this Escrow Agreement hereby
acknowledge that the forgoing indemnities shall survive the resignation or
removal of Escrow Agent or the termination of this Escrow Agreement, and hereby
grant Escrow Agent a lien on, right of set-off against, and security interest
in, the Escrow Fund for the payment of any claim for indemnification,
compensation, expenses and amounts due hereunder. Without limiting the
foregoing, Escrow Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in good faith, in
accordance with the terms hereof, including, without limitation, any liability
for any delays (not resulting from its negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund or any loss of interest incident
to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto that is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund deposited
hereunder but is serving as escrow holder only and has only possession thereof.
Any payments of income from the Escrow Fund shall be subject to withholding
regulations then in force with respect to United States taxes. The parties
hereto will provide Escrow Agent with appropriate Internal Revenue Service Forms
W-9 or W-8 upon execution of this Escrow Agreement for tax identification number
certification, or nonresident alien certifications. This paragraph 8(e) and
paragraph 8(b) shall survive notwithstanding any termination of this Agreement
or the resignation of Escrow Agent.
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or collectability of any security or other document or instrument
held by or delivered to it.
-4-
(g) Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time resign as
such by delivering the Escrow Fund to any successor Escrow Agent jointly
designated by Buyer and Indemnitors in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Agreement. The resignation
of Escrow Agent will take effect on the earlier of (i) the appointment of a
successor (including a court of competent jurisdiction) or (ii) the day that is
thirty (30) days after the date of delivery of its written notice of resignation
to the other parties hereto. If, at that time, Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until receipt
of a designation of successor Escrow Agent of a Disbursement Request.
(i) Escrow Agent shall not be liable for any action taken or omitted by it
in good faith except to the extent that a Court Order determines that Escrow
Agent's gross negligence or willful misconduct was the primary cause of any loss
to Buyer or Indemnitors. Escrow Agent may execute any of its powers and perform
any of its duties hereunder directly or indirectly through its agents or
attorneys (and shall be liable only for the careful selection of any such agent
or attorney) and may consult with counsel, accountants and other skilled persons
to be selected and retained by it. Escrow Agent shall not be liable for anything
done, suffered or omitted in good faith and in accordance with the advice or
opinion of any such counsel, accountant or other skilled person. In the event
that Escrow Agent shall be uncertain as to its duties or rights hereunder, or
shall receive instructions, claims or demands from any party hereto that, in its
opinion, conflict with any of the provisions of this Escrow Agreement, it shall
be entitled to refrain from taking any action and its sole obligation shall be
to keep safely all property held in escrow until it shall be directed otherwise
in writing by all of the other parties hereto or by Court Order. Anything in
this Escrow Agreement to the contrary notwithstanding, in no event shall Escrow
Agent be liable for special, indirect or consequential loss or damage (including
but not limited to lost profits), even if Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action except in
the case of gross negligence or willful misconduct of any kind whatsoever of
Escrow Agent, in which case, Escrow Agent shall be liable hereunder.
(j) Buyer and Indemnitors shall pay Escrow Agent compensation (as payment
in full) for the services to be rendered by Escrow Agent hereunder in the amount
of three thousand five hundred dollars ($3,500) at the time of execution of this
Agreement and three thousand five hundred dollars ($3,500) annually thereafter,
which compensation shall be payable to Escrow Agent in advance each year with no
effect given to proration, and agree to reimburse Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made by Escrow Agent
in performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). Provided that Escrow Agent provides Buyer and
Indemnitors reasonable documentation thereof, any such compensation and
reimbursement to which Escrow Agent is entitled shall be borne fifty percent
(50%) by Buyer and fifty percent (50%) by Indemnitors. Any compensation or
expenses of Escrow Agent that are not paid as provided for herein may be taken
from any property held by Escrow Agent hereunder. Buyer and Indemnitors hereby
acknowledge that (i) Escrow Agent (or an affiliate of Escrow Agent) receives
fees from the investment funds described in Section 2(a)(iii) for services
rendered in connection therewith, (ii) the fees charged by Escrow Agent to Buyer
and Indemnitors hereunder are separate and distinct from such fees, and (iii)
the services performed by Escrow Agent in connection with such investment funds
may at times duplicate the services performed by Escrow Agent hereunder.
-5-
(k) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities
depository it reasonably deems appropriate, including, without limitation, the
Depository Trust Company and the Federal Reserve Book Entry System.
9. SECURITY PROCEDURES
In the event a Disbursement Request is given (other than in writing at the
time of execution of this Escrow Agreement), Escrow Agent is authorized to seek
confirmation of such Disbursement Request by telephone call-back to the person
or persons designated on Schedule 1 hereto, and Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so designated. The
persons and telephone numbers for call-backs may be changed only in a writing
actually received and acknowledged by Escrow Agent. If Escrow Agent is unable to
contact any of the authorized representatives identified in Schedule 1, Escrow
Agent is hereby authorized to seek confirmation of such instructions by
telephone call-back to any one or more of executive officers of Buyer or
Indemnitors, ("Executive Officers"), which shall include the titles of (i) Chief
Executive Officer, Chief Financial Officer, Chief Business Officer or President
for Buyer, (ii) Chief Executive Officer or Secretary for Seller, (iii) Chief
Executive Officer or Senior Vice President of Finance ANI or (iv) President or
Vice President for Bactolac, each as the Escrow Agent may select. Such Executive
Officer shall deliver to Escrow Agent a fully executed certificate of Buyer or
any of the Indemnitors, as the case may be, certifying to the incumbency and
signatures of such Executive Officers, and Escrow Agent may rely upon the
confirmation of anyone purporting to be any such Executive Officer. Escrow Agent
and the receiving party's bank in any funds transfer may rely solely upon any
account numbers or similar identifying numbers provided by Buyer or Indemnitors
to identify (i) the receiving party, (ii) the receiving bank, or (iii) an
intermediary bank. Escrow Agent may apply any portion of the Escrow Fund for any
payment order it executes using any such identifying number, even when its use
may result in a person other than the receiving party being paid, or the
transfer of funds to a bank other than the receiving party's bank or an
intermediary bank designated. The parties to this Escrow Agreement hereby
acknowledge that these security procedures are commercially reasonable.
-6-
10. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. Escrow Agent shall not be bound
by the provisions of any agreement among the other parties hereto except this
Agreement.
11. OWNERSHIP FOR TAX PURPOSES
For purposes of federal and other taxes based on income, the party
receiving any portion of interest accrued on the Escrow Fund pursuant to Section
5 will report such interest as its income in the taxable year or years in which
such income is properly includible and pay any taxes attributable thereto.
12. RECEIPT OF FUNDS
By execution hereof, Escrow Agent acknowledges receipt of the Escrow Fund.
13. NOTICES
All notices, consents, waivers and other communications required or
permitted under this Agreement shall be in writing and shall be deemed given to
a party when (a) delivered to the appropriate address by hand or by a nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail (with confirmation by the transmitting equipment); or (c) received by the
addressee, if sent by certified mail, return receipt requested, in each case to
the following addresses and facsimile numbers and marked to the attention of the
person (by name or title) designated below (or to such other address, facsimile
number or person as a party may designate by notice to the other parties in
accordance herewith):
If to Seller: Copy to:
- ------------- --------
NIB, Inc. Patton Boggs LLP
c/o Jeffrey G. McGonegal 1660 Lincoln Street, Suite 1900
1905 West Valley Vista Drive Denver, Colorado 80264
Castle Rock, Colorado 80104 (303) 894-9239 (facsimile)
(303) 660-9583 (facsimile) Attention: Robert M. Bearman, Esq.
If to ANI: Copy to:
- --------- -------
Advanced Nutraceuticals, Inc. Patton Boggs LLP
106 South University Boulevard, #14 1660 Lincoln Street, Suite 1900
Denver, Colorado 80209 Denver, Colorado 80264
(303) 722-4011 (facsimile) (303) 894-9239 (facsimile)
Attention: Jeffrey McGonegal Attention: Robert M. Bearman, Esq.
-7-
If to Bactolac: Copy to:
- -------------- -------
Bactolac Pharmaceutical, Inc. Patton Boggs LLP
7 Oser Avenue 1660 Lincoln Street, Suite 1900
Hauppauge, New York 11788 Denver, Colorado 80264
(631) 951-4749 (facsimile) (303) 894-9239 (facsimile)
Attention: Pailla M. Reddy Attention: Robert M. Bearman, Esq.
If to Buyer: Copy to:
- ------------ --------
c/o Meridian Venture Partners II, L.P. Sonnenschein Nath & Rosenthal LLP
201 King of Prussia Road., Suite 240 1221 Avenue of the Americas
Radnor, Pennsylvania 19087 New York, New York 10020
(610) 254-2996 (facsimile) (212) 768-6800 (facsimile)
Attention: Charlotte C. Arnold Attention: Paul A. Gajer, Esq.
If to the Escrow Agent: Copy to:
- ----------------------- --------
J.P. Morgan Chase & Co. No copy required
4 New York Plaza, 21st Floor
New York, New York 10004
(212) 623-6180 (facsimile)
Attention: Joe Morales
14. JURISDICTION; SERVICE OF PROCESS
Buyer and Indemnitors submit to the jurisdiction of any state or federal
court sitting in New Castle County, Delaware, in any action or proceeding
arising out of or relating to this Agreement and agree that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each party waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
the other party with respect thereto. Any party may make service on any other
party by sending or delivering a copy of the process to the party to be served
at the address and in the manner provided for the giving of notices in Section
13 above. Each party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or at equity.
15. EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for any purpose whatsoever.
-8-
16. SECTION HEADINGS, CONSTRUCTION
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
17. WAIVER
Except with respect to a failure of Indemnitors to deliver a Counter Notice
under paragraph 3(a) within the prescribed time period, the rights and remedies
of the parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
18. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by Buyer, Indemnitors
and Escrow Agent.
19. GOVERNING LAW
This Agreement shall be governed by the Laws of the State of Delaware
without regard to principles of conflict of law that would require the
application of any other Law.
[SIGNATURES ON NEXT PAGE]
-9-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER:
ANIP ACQUISITION COMPANY
By:
----------------------------------------
Name: Thomas L. Anderson
Title: Chief Executive Officer
INDEMNITORS:
ANI PHARMACEUTICALS, INC.
By:
----------------------------------------
Name: Jeffrey G. McGonegal
Title: Treasurer
BACTOLAC PHARMACEUTICAL, INC.
By:
----------------------------------------
Name: Jeffrey G. McGonegal
Title: Vice President
ADVANCED NUTRACEUTICALS, INC.
By:
----------------------------------------
Name: Jeffrey G. McGonegal
Title: Senior Vice President of Finance
ESCROW AGENT:
J.P. MORGAN CHASE & CO.
By:
----------------------------------------
Name: Saverio A. Lunetta
Title: Vice President
-10-
Schedule 1
----------
Telephone Number(s) for Call-Backs and
Person(s) Designated to Confirm Funds Transfer Instructions
Telephone call-backs shall be made to each Buyer and Indemnitor if joint
instructions are required pursuant to this Escrow Agreement.
If to Buyer:
Name Telephone Number
---- ----------------
1. Thomas L. Anderson (410) 349-8806
2. Robert Estey (513) 469-1260
If to Seller:
Name Telephone Number
---- ----------------
1. Gregory Pusey (303) 722-4008
If to ANI:
Name Telephone Number
---- ----------------
1. Jeffrey McGonegal (303) 660-9583
If to Bactolac:
Name Telephone Number
---- ----------------
1. Jeffrey McGonegal (303) 660-9583
Exhibit A
---------
Form of Notice
_________, 200_
NIB, Inc.
c/o Jeffrey G. McGonegal
1905 West Valley Vista Drive
Castle Rock, Colorado 80104
Advanced Nutraceuticals, Inc.
106 South University Boulevard, #14
Denver, Colorado 80209
Attention: Jeffrey McGonegal
Bactolac Pharmaceutical, Inc.
7 Oser Avenue
Hauppauge, New York 11788
Attention: Pailla M. Reddy
J.P. Morgan Chase & Co.
4 New York Plaza, 21st Floor
New York, New York 10004
Attention: Joe Morales
Re: Escrow Agreement dated as of March [ ], 2004, among ANIP Acquisition
Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals, Inc.,
a Mississippi corporation ("Seller"), Advanced Nutraceuticals, Inc., a
Texas corporation ("ANI"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors")
Dear Ladies and Gentlemen:
Pursuant to paragraph 3(a) of the above-referenced Escrow Agreement, please
be advised that Buyer is asserting a claim a Claim of $__________ against
Indemnitors under Article XIII of the Purchase Agreement.
1
Details of the basis of the Claim are set forth as: [insert sufficient
details of relevant facts and the legal basis for the Claim to enable
Indemnitors to evaluate the Claim.]
Very truly yours,
ANIP ACQUISITION COMPANY
By:
-----------------------------------
Name: Thomas L. Anderson
Title: Chief Executive Officer
2
Exhibit B
---------
Form of Counter Notice
_________, 200_
ANIP Acquisition Company
c/o Meridian Venture Partners II, L.P.
201 King of Prussia Road., Suite 240
Radnor, Pennsylvania 19087
Attention: Charlotte C. Arnold
J.P. Morgan Chase & Co.
4 New York Plaza, 21st Floor
New York, New York 10004
Attention: Joe Morales
Re: Escrow Agreement dated as of March [ ], 2004, among ANIP Acquisition
Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals, Inc.,
a Mississippi corporation ("Seller"), Advanced Nutraceuticals, Inc., a
Texas corporation ("ANI"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors")
Dear Ladies and Gentlemen:
Pursuant to paragraph 3(a) of the above-referenced Escrow Agreement, please
be advised that Indemnitors are disputing [state dollar amount of disputed Claim
or state that dispute is for the total value of the Claim] of the Claim dated
[date] brought by Buyer against Indemnitors.
Details of the basis of the dispute are set forth as: [insert sufficient
details of relevant facts and the legal basis for the dispute to enable Buyer to
evaluate the dispute].
Very truly yours,
NIB, INC.
By:
----------------------------------------
Name: Jeffrey G. McGonegal
Title: Treasurer
1
BACTOLAC PHARMACEUTICAL, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Vice President
ADVANCED NUTRACEUTICALS, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Senior Vice President of Finance
2
Exhibit C
---------
Form of Joint Written Instructions
----------------------------------
_________, 200_
J.P. Morgan Chase & Co.
4 New York Plaza, 21st Floor
New York, New York 10004
Attention: Joe Morales
Re: Escrow Agreement dated as of March[ ], 2004, among ANIP Acquisition
Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals, Inc.,
a Mississippi corporation ("Seller"), Advanced Nutraceuticals, Inc., a
Texas corporation ("ANI"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors")
Dear Ladies and Gentlemen:
Pursuant to Section 4 of the above-referenced Escrow Agreement, please be
advised that Buyer and Indemnitors have resolved [the Dispute Escrow Portion]
[the Claim specified in a notice sent from Buyer to Indemnitors and Escrow Agent
on ___________, 200__] and are requesting $_______ be disbursed from the Escrow
Fund on [date] to [recipient] in the following manner: [specify manner].
Very truly yours,
ANIP ACQUISITION COMPANY
By:
----------------------------------------
Name: Thomas A. Anderson
Title: Chief Executive Officer
NIB, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Treasurer
1
BACTOLAC PHARMACEUTICAL, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Vice President
ADVANCED NUTRACEUTICALS, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Senior Vice President of Finance
2
Exhibit D
---------
Form of Instructions to Accompany Court Order
---------------------------------------------
_________, 200_
J.P. Morgan Chase & Co.
4 New York Plaza, 21st Floor
New York, New York 10004
Attention: Joe Morales
Re: Escrow Agreement dated as of March [ ], 2004, among ANIP Acquisition
Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals, Inc.,
a Mississippi corporation ("Seller"), Advanced Nutraceuticals, Inc., a
Texas corporation ("ANI"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors")
Dear Ladies and Gentlemen:
Pursuant to Section 4 of the above-referenced Escrow Agreement, attached
please find a certified copy of Court Order resolving the Claim specified in a
notice sent from Buyer to Indemnitors and Escrow Agent on _____, 200_, and a
legal opinion of _______, counsel to [Buyer or Indemnitors] to the effect that
such order is final and nonappealable. In accordance with the Court Order,
[Buyer or Indemnitors] is/are requesting $_______ be disbursed from the Escrow
Fund on [date] to [recipient] in the following manner: [specify manner].
Very truly yours,
[BUYER OR INDEMNITORS]
1
Exhibit E
Form of Notice of Termination
-----------------------------
_________, 200_
J.P. Morgan Chase & Co.
4 New York Plaza, 21st Floor
New York, New York 10004
Attention: Joe Morales
Re: Escrow Agreement dated as of March [__], 2004, among ANIP Acquisition
Company, a Delaware corporation ("Buyer"), ANI Pharmaceuticals, Inc.,
a Mississippi corporation ("Seller"), Advanced Nutraceuticals, Inc., a
Texas corporation ("ANI"), and Bactolac Pharmaceutical, Inc., a
Delaware corporation ("Bactolac" and together with ANI and Seller,
"Indemnitors")
Dear Ladies and Gentlemen:
Pursuant to Section 7 of the above-referenced Escrow Agreement, please be
advised that Buyer and Indemnitors are requesting the termination of the Escrow
Fund effective [date]. Buyer and Indemnitors are further requesting the
distribution of all assets from the Escrow Fund less all amounts payable to
Buyer pursuant to Section 3 and all amounts with respect to any unresolved Claim
pursuant to Section 3. Such distribution shall be made on [date] to [recipient]
in the following manner: [specify manner].
Very truly yours,
ANIP ACQUISITION COMPANY
By:
----------------------------------------
Name: Thomas A. Anderson
Title: Chief Executive Officer
NIB, INC.
By:
----------------------------------------
Name: Jeffrey G. McGonegal
Title: Treasurer
1
BACTOLAC PHARMACEUTICAL, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Vice President
ADVANCED NUTRACEUTICALS, INC.
By:
--------------------------------------------
Name: Jeffrey G. McGonegal
Title: Senior Vice President of Finance
2
Schedule 2.1(b)
Tangible Personal Property
--------------------------
Attached as Appendix A-1 is a list reproduced from the Loeb Equipment and
Appraisal Company Report dated November 15, 2002 (the "Loeb Report"), which has
been marked as indicated on the legend with the cover sheet to Appendix A-1 for
items that have been sold and \ or disposals and items which constitute
equipment that is not owned by the Seller or Bactolac and is not being
transferred to the Buyer.
Additional items of Tangible Personal Property which are not included in
the Loeb Report as they were acquired subsequent thereto are listed in Appendix
A-2.
Schedule 2.1(k)
---------------
Claims Against Third Parties
Section 14.16. Microcrystalline Cellulose anti-trust litigation master file
number 01-CV-111, MDL#1402, as per letter dated February 19, 2004. Seller
believes it may be a beneficial indirect party to this litigation. Seller knows
nothing of the specifics and believes the chance of receiving any benefit from
this are remote.
Section 14.17. Open credits and debit memos for normal and routine operating
claims against various suppliers and freight lines totaling $26,722.93 are in
process regarding open items and such amounts are recorded in the books and
records of the Seller net of reserves for collectability. The details are
reproduced as follows:
ANI Pharmaceuticals, Inc.
Vendor Claims As Of March 12, 2004
Reject # Item Vendor P.O.# Quantity UOM Amount
- -------- ---- ------ ----- -------- --- ------
04-001 12oz DG MOM F/Label Dot Label 17792 38,216.00 EA 555.66
04-005 26oz Freds F/Label PharmaLabel 17863 960.00 EA 50.25
04-006 16oz Bismuth Label Dot Label 17226 500.00 EA 14.87
04-008 12oz Chry Sup F/Label Dot Label 17443 3,221.00 EA 70.64
04-010 12oz DG MOM F/Label Dot Label 17792 2,409.00 EA 35.05
04-011 12oz Antacid Bottles Ryco 17328 398.00 EA 47.44
04-014 12oz Chry Sup F/Label Dot Label 17724 1,000.00 EA 19.45
04-015 Bismuth Subsalicylate Am Inter Chem 17401 725.00 KG 12,143.75
04-018 98X84 Red Neckband Shrink Solutions 17738 5,500.00 EA 67.93
04-019 12oz Mint Ant B/Label Dot Label 18158 12,225.00 EA 655.26
04-020 8oz DG Bismuth Label Dot Label 18041 1,220.00 EA 31.65
04-017 12oz DG Chry B/Label Dot Label 18080 2,000.00 EA 43.86
04-016 16oz Bismuth Label Dot Label 17966 115.00 EA 5.94
04-035 1/2oz Equate Wrt Label PharmaLabel 17954 2,615.00 EA 272.75
04-021 98X84 Red Neckband Shrink Solutions 17971 3,800.00 EA 46.93
04-022 Wrong Bottles Ryco 17055 900.00 EA 97.92
04-023 Wrong Bottles Ryco 15605 199.00 EA 19.87
04-024 Wrong Bottles Ryco 17055 199.00 EA 21.65
04-026 8oz Pov Iod Bottles J.Rice 17744 600.00 EA 58.44
04-027 38/400 Caps Berry Plastics 16559 15,500.00 EA 238.39
04-029 Gal Jugs Inmark 17932 13.00 EA 14.16
04-039 Mag. Carbonate H.M Royal 18061 22.68 KG 67.32
04-040 Bismuth Am Inter Chem 18241 725.00 KG 12,143.75
-------------
26,722.93
=============
Schedule 2.5(a)
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Assumed Liabilities
Schedule 2.6
------------
Purchase Price Allocation
- -------------------------------------------------- ------------
Current Assets | $1,300,000 |
- -------------------------------------------------- ------------
Tangible Personal Property | $764,000 |
- -------------------------------------------------- ------------
Real Property | $255,000 |
- -------------------------------------------------- ------------
Building located at 3600 25th Avenue, | $1,681,000 |
Gulfport, Mississippi, 39501 | |
- -------------------------------------------------- ------------
Schedule 2.8(b)
---------------
Approved Capital Expenditures
Approved Capital Expenditures made and accrued to date are as follows:
1. Water treatment installation costs $ 71,362.16
2. Vision inspection equipment $ 7,711.20
-----------
$ 79,073.36