ASSET PURCHASE AGREEMENT among LAUREATE PHARMA, INC. (a Delaware corporation), and DISCOVERY LABORATORIES, INC. (a Delaware corporation) TABLE OF CONTENTS

 

(continued)

Section

Page

	6.13	[Reserved]	31
	6.14	Environmental	31
	6.15	Further Assurances	31
7.	Post-Closing Covenants		31
	7.1	Transition Period	31
	7.2	Employees	31
	7.3	Tax Matters	32
	7.4	Governmental Permits	33
	7.5	Existing Seller Clients	34
	7.6	DMF	34
	7.7	Insurance	34
	7.8	Totowa Property Signage	34
8.	Conditions Precedent to Obligations of Buyer		34
	8.1	Representations and Warranties; Performance of Obligations	34
	8.2	Closing Documents	34
	8.3	Closing Consents	34
	8.4	[Reserved]	35
	8.5	[Reserved]	35
	8.6	Legal Matters	35
	8.7	Opinion of Seller’s Counsel	35
9.	Conditions Precedent to Obligations of Seller		35
	9.1	Representations and Warranties; Performance of Obligations	35
	9.2	Legal Matters	35
	9.3	Consents	35
10.	Indemnification		35
	10.1	By Seller	35
	10.2	By Buyer	36
	10.3	Procedure for Claims	37
	10.4	Limitations on Liability	37
	10.5	Third Party Claims	39
	10.6	Right of Offset	40
	10.7	Effect of Investigation or Knowledge	40
	10.8	Contingent Claims	40

 

 

 

11.	Termination		40
	11.1	Grounds for Termination	40
	11.2	Effect of Termination	41
12.	Other Matters		41
	12.1	Public Announcements	41
	12.2	Reasonable Best Efforts	41
	12.3	Nondisparagement	41
13.	Miscellaneous		41
	13.1	Contents of Agreement	41
	13.2	Amendment, Parties in Interest, Assignment, Etc	42
	13.3	Interpretation	42
	13.4	Sole Remedy	42
	13.5	Dispute Resolution	42
	13.6	Expenses	43
	13.7	Bulk Sales	43
	13.8	Notices	43
	13.9	Governing Law	44
	13.10	Counterparts	44

 

“Trademarks” means any trademarks, service marks, brand names, certification marks, trade names, logos, trade dress, and all goodwill associated with the foregoing throughout the world and registrations in any jurisdictions of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application.

 

“Transaction Documents” means this Agreement, the Bill of Sale, Assignment and Assumption Agreement, the Transition Services Agreement, the Quality Agreement, the Consent to Assignment, the Assignment of Lease and Termination and Option Agreement, the Parent Guaranty, that certain letter agreement between the Parties, dated the date hereof, and any other certificate, instrument, agreement or document required to be delivered pursuant to the terms hereof and thereof.

“Transactions” means the purchase and sale of the Purchased Assets and the transfer and assumption of the Assumed Liabilities at the Closing and the other transactions contemplated by the Transaction Documents.

 

“Transferred Employees” is defined in Section 6.5.

 

“Transition Services Agreement” means an agreement to be entered into effective on the Closing Date between Seller and Buyer, substantially in the form of Exhibit B-1, relating to the provision by Seller of certain services following the Closing.

 

“Unassumed Liability” is defined in Section 2.3(b).

 

“Unliquidated Claim” is defined in Section 10.3(a).

 

“Union” is defined in Section 6.5(e).

 

“Union Employees” means (i) employees of the Landlord who are members of the Union and provide services to Seller at the Totowa Property pursuant to the Employee Lease, and (ii) following the Closing, employees of Buyer who are members of the Union and who provide services to Buyer at the Totowa Property pursuant to an agreement between Buyer and the Union, as provided in Section 6.5(e).

 

“US” means the United States of America.

 

“WARN Act” means the Worker Adjustment and Retraining Notification Act, as amended. 

 

2.    Sale and Purchase.

 

2.1    Agreement to Sell and Purchase.

 

(a)    Subject to the satisfaction or waiver by the applicable Party prior to the Closing of the various conditions set forth in Section 8 and Section 9 herein, at the Closing, Seller shall grant, sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase from Seller, all right, title and interest of Seller in and to all of the Assets (other than the Excluded Assets) (the “Purchased Assets”), free and clear of all Encumbrances (other than Permitted Encumbrances) as follows:

(i)    all Inventory;

 

(ii)    all Fixed Assets (including all Structures), furniture, fixtures, leasehold improvements, tooling, machinery and equipment;

 

(iii)    all Business Documents, Systems and Information, including without limitation the SOPs;

 

(iv)    all telephone numbers and facsimile numbers currently used in the Business and identified on Schedule 2.1(a)(iv);

 

(v)    all manufacturing, warehouse and office supplies Related to the Business;

 

(vi)    DMF numbered 17159;

 

(vii)   to the extent transferable, all Governmental Permits that are Related to the Business and have been issued to Seller or applied for by Seller and all rights thereunder; and

 

(viii)   all Seller Contracts; and

 

(ix)    an assignment of Seller’s rights as tenant under the Totowa Lease and the Termination and Option Agreement.

 

(b)    Notwithstanding the foregoing, the Purchased Assets shall not include any of the following (the “Excluded Assets”):

 

(i)    the seals, Charter Documents, minute books, Tax Returns, books of account or other records having to do with the organization of Seller;

 

(ii)    the rights that accrue or will accrue to Seller under this Agreement;

 

(iii)   the equipment set forth on Schedule 2.1(b)(iii), as such Schedule may be modified from time to time (with the written consent of Buyer not to be unreasonably withheld) on or prior to the Closing Date (the “Excluded Equipment”);

 

(iv)   all trade names and abbreviations used by Seller whether or not in connection with the Business including “Laureate Pharma” and “Laureate”;

 

(v)    claims, demands, causes of action, choses in action, rights of recovery, rights of set-off, rights to refunds and similar rights in favor of Seller or any Affiliate of Seller of any kind to the extent Relating to (a) the Excluded Assets or the Unassumed Liabilities, (b) the Existing Manufacturing Agreement or (c) the ownership of the Assets, or operation of the Business, prior to the Closing Date;

 

(vi)   DMF numbered 16941;

 

(vii)    all motor vehicles;

 

(viii)   all cash and cash equivalents, including bank accounts, money market funds and temporary cash investments;

 

(ix)    all of Seller’s and its Affiliates’ right, title and interest in and to all Accounts Receivable and all notes, bonds, and other evidences of indebtedness of and rights to receive payments arising out of sales, services, rentals and other business activities of Seller and its Affiliates, including with respect to the Business, and including all rights with respect to any third party collection procedures or any other actions or proceedings in connection therewith;

 

(x)    all rights to use SOPs included in Section 2.1(a)(ix) that also relate to the operation of Seller’s business at the Princeton Property, as well as any SOP which was the basis for such an SOP or which was derived from such an SOP prior to the Closing Date;

 

(xi)    any and all of Seller’s and its Affiliates’ rights arising under any outstanding receivable or payable between Seller, on the one hand, and any Affiliate of Seller, on the other hand;

 

(xii)   Assets of Seller or its Affiliates that are located at or used in connection with Seller’s business operations conducted at the Princeton Property;

 

(xiii)   all assets Related to any pension, profit sharing, stock bonus, stock option, thrift or other retirement plan, medical, hospitalization, dental, life, disability, vacation or other insurance or benefit plan, employee stock ownership plan, deferred compensation, stock ownership, stock purchase, bonus, benefit or other incentive plan, severance plan or other similar plan relating to Seller, its Affiliates or their respective employees;

 

(xiv)   all rights, titles, claims and interests of Seller or its Affiliates under any policy or agreement of insurance or under any bond;

 

(xv)    (A) all Trademarks, (B) all rights to intellectual property owned by customers of Seller other than Buyer, and (C) all rights to intellectual property owned or otherwise used by Seller exclusively with respect to customers of Seller other than Buyer;

 

(xvi)   all rights Related to the prepaid expenses identified on Schedule 2.1(b)(xvi) that accrue or are paid by Seller prior to the Closing;

 

(xvii)   all rights or claims by any Seller or any Affiliate of any Seller to (a) any Tax refund relating to the period prior to the Closing Date;

 

(xviii)   the Employee Lease; and

 

(xix)    the Assets specified on Schedule 2.1(b)(xix).

 

2.2    Purchase Price. In consideration of the grant, sale, conveyance, assignment, transfer and delivery of the Purchased Assets to Buyer and the assumption by Buyer of the Assumed Liabilities, Buyer shall pay a total amount (the “Purchase Price”) equal to Sixteen Million Dollars ($16,000,000). Buyer shall pay the Purchase Price at the Closing by a wire transfer of immediately available funds, in accordance with written instructions provided by Seller to Buyer prior to the Closing Date.

 

2.3    Assumption of Liabilities.

 

(a)    At the Closing, Buyer shall assume and agree to pay, discharge or perform, as appropriate, when due only the Liabilities of Seller specifically identified below in this subsection (a) (the “Assumed Liabilities”):

 

(i)    all Liabilities set forth on Schedule 2.3(a), to the extent that such Liabilities accrue, are caused by, arise out of, are associated with, are in respect of, or are incurred, in each case, at any time on and after the Closing Date in connection with the Purchased Assets and the ownership or operation of the Purchased Assets after the Closing Date (to the extent that such Liabilities are not overdue or delinquent on the Closing Date, without regard to any grace period and without incurring any increase in the amounts due);

 

(ii)    all Liabilities expressly assumed by Buyer under Section 7.3 of this Agreement; and

 

(iii)   all Liabilities relating to the ownership of the Purchased Assets from and after the Closing Date and the conduct by Buyer of its business after the Closing Date.

 

(b)    Notwithstanding subsection (a) above or any other provision of this Agreement, Buyer is not assuming under this Agreement or any other Transaction Document, and Seller shall continue to be responsible for, any Liability (each, an “Unassumed Liability”) that is not specifically identified as an Assumed Liability under subsection (a) above, including, without limitation, any of the following: (i) except as may otherwise be provided under the Existing Manufacturing Agreement, any product or service liability or similar claim for injury to any Person or property, regardless of when made or asserted, that arises out of or is based upon any alleged action or failure to act by Seller or any express or implied representation, warranty, agreement or guarantee made by Seller, or alleged to have been made by Seller, or that is imposed or asserted to be imposed by operation of law or otherwise in connection with any service performed or product sold or leased by or on behalf of Seller on or prior to the Closing, whether or not billed as of the Closing Date; (ii) (A) any Taxes of Seller or (B) except as otherwise provided in Section 7.3(c) (relating to property Taxes), any Tax payable with respect to the Business, the Purchased Assets and the performance by Seller of its obligations under the Existing Manufacturing Agreement (except as may otherwise be provided therein) with respect to any period or portion thereof ending on or before the Closing Date; (iii) any Liabilities under or in connection with any Excluded Assets; (iv) any Liabilities of Seller arising or incurred in connection with Seller’s performance or failure to perform under any agreement with any customer of Seller other than Buyer; (v) any Liabilities arising prior to the Closing Date or as a result of the Closing relating to Seller’s employment of Persons, including Liabilities, if any, with respect to any employee wages, salaries, benefits or withholding taxes, the Plans or other pension plan, supplemental savings plan, any workers compensation claim or any other Liability of Seller to or with respect to its respective employees relating in any way to their employment by Seller; (vi) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the Transactions; (vii) any Environmental Liability arising prior to the Closing or relating to the conduct of the Business prior to the Closing; (viii) Liabilities arising from or related to governmental fines or penalties arising out of or based upon Seller’s actions or failure to act or the conduct of the Business or otherwise incurred by Seller, in each case during any period prior to the Closing Date; (ix) any Liabilities for money borrowed or pursuant to any financing agreement or arrangement, whether direct or contingent; (x) any Liability of Seller owing to any of its Affiliates; (xi) any Liabilities arising prior to the Closing Date or as a result of Seller’s activities in connection with the Closing relating to the infringement, misappropriation, trademark dilution or other violation of the confidential information, proprietary information or intellectual property of any Person other than Buyer; and (xii) any other Liabilities (including any lease agreement) regardless of when made or asserted, that are not specifically assumed by Buyer under this Agreement.

 

2.4    Consent of Third Parties. Nothing in this Agreement shall be construed as an attempt by Seller to assign to Buyer pursuant to this Agreement any Seller Contract, permit, franchise, claim or Asset included in the Purchased Assets that is by its terms expressly or implicitly or by law nonassignable without the consent of any other party or parties, unless such consent or approval shall have been given, or as to which all the remedies for the enforcement thereof available to Seller would not by law pass to Buyer as an incident of the assignments provided for by this Agreement (a “Non-Assignable Contract”). To the extent that any Seller Required Consent in respect of, or a novation of, a Non-Assignable Contract shall not have been obtained on or before the Closing Date, Seller shall at its sole expense continue to use its Commercially Reasonable efforts to obtain any such Seller Required Consent or novation after the Closing Date until such time as it shall have been obtained, and Seller shall cooperate with Buyer in any Commercially Reasonable arrangement to provide that Buyer shall receive the interest of Seller in the benefits under each such Non-Assignable Contract, including performance, to the extent permitted by applicable Law, by Seller as agent if Commercially Reasonable; provided that, so long as Seller shall provide to Buyer substantially all the benefits of each such Non-Assignable Contracts, Buyer shall undertake to pay or satisfy the corresponding Liabilities under the terms of each such Non-Assignable Contract (or such lesser amount corresponding to the value of benefits actually provided to Buyer by Seller with respect to such Non-Assignable Contract) to the extent that Buyer would have been responsible therefor if such consent or approval had been obtained. Nothing contained in this Section 2.4 or elsewhere in this Agreement shall be deemed a waiver by Buyer of its right to have received on the Closing Date an effective assignment of all of the Purchased Assets or of the covenant of Seller to obtain all of Seller Required Consents, nor shall this Section 2.4 or any other provision of this Agreement be deemed to constitute an agreement to exclude from the Purchased Assets any Contracts as to which a Seller Required Consent may be necessary.

 

3.    Closing.

 

3.1    Location; Date. The closing for the Transactions (the “Closing”) shall be held at the offices of Morgan, Lewis & Bockius LLP in Philadelphia, Pennsylvania, on a date which shall be no more than three Business Days after satisfaction or waiver of the conditions set forth in Section 8 and Section 9, or at such other date and place as may be mutually agreed by the parties (the “Closing Date”).

 

3.2    Deliveries. At the Closing, subject to the satisfaction of the conditions set forth in Section 8 or Section 9, as applicable,

 

(a)    Seller shall deliver, or cause to be delivered, to Buyer:

 

(i)    duly executed counterparts to the Transaction Documents to which each of Seller, Safeguard and the Landlord are parties;

 

(ii)    true and complete copies of the duly executed Ancillary Agreements, certified by an executive officer of Seller;

 

(iii)   an updated Employee Compensation List, if necessary, to show changes to the information contained in the Employee Compensation List dated as of December 27, 2005;

 

(iv)   an opinion of Seller’s Counsel in substantially the form set forth on Exhibit D;

 

(v)    a non-foreign certification (in form and substance reasonably satisfactory to Buyer) that satisfies the requirements of Treasury Regulation section 1.1445-2(b)(2);

 

(vi)    Closing Consents in such forms as are reasonably acceptable to Buyer and any other Seller Required Consent that Seller receives on or prior to the Closing;

 

(vii)    a copy of the duly executed Notice related to Drug Establishment Registrations for Totowa Property in substantially the form set forth on Exhibit C-3 that will be transmitted by Seller on the Closing Date for filing with the FDA pursuant to Section 7.4;

 

(viii)   such applications and notices (in such forms as are reasonably acceptable to Buyer) that will be filed by Seller on or, as may be reasonably practicable, following the Closing Date with respect to those Governmental Permits that are being transferred to Buyer pursuant to Section 2.1(a)(vii);

 

(ix)    administrative passwords for all Purchased Assets, as applicable;

 

(x)    copies of all Business Documents, Systems and Information, including without limitation, the SOP’s;

 

(xi)    termination statements or other evidence (in a form reasonably acceptable to Buyer) that any liens identified on Schedule 4.11 have been released;

 

(xii)    if in Seller’s possession, the LNA with respect to the Transactions from the NJDEP; and

 

(xiii)    such other instruments of conveyance and transfer, in form reasonably satisfactory to Buyer and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, Buyer all of Seller’s right, title and interest in and to the Purchased Assets.

 

With respect to the items contemplated by clause (x) above, Buyer acknowledges that such items are maintained at the Totowa Property and, as such, shall be deemed delivered at the Closing.

 

(b)    Buyer shall deliver to Seller:

 

(i)    duly executed counterparts to the Transaction Documents to which it is a party; and

 

(ii)    such other documents, instruments, certificates and agreements as may be reasonably required by Seller to consummate and give effect to the Transactions.

 

(c)    Buyer shall deliver the Purchase Price to Seller in accordance with Section 2.2.

 

(d)    Buyer shall deliver the Inventory Payment.

 

(e)    Buyer shall deliver the Milestone Payments.

 

(f)    Buyer shall deliver, if applicable, Buyer’s pro rated portion of any property tax prepaid by Seller with respect to the period up to and including the Closing Date.

 

Each of the payments contemplated to be delivered at the Closing by Buyer shall be made by wire transfer of immediately available funds in accordance with instructions provided by Seller to Buyer prior to the Closing Date.

4.    Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows with respect to the Purchased Assets and the Business; provided, however, that the Parties acknowledge and agree that (i) only the provisions of the Existing Manufacturing Agreement shall govern the performance by Seller of its obligations under the Existing Manufacturing Agreement, such that no right of indemnification under this Agreement shall arise in connection with any breach of any representation or warranty under the Existing Manufacturing Agreement or any Default by Seller in the performance of its obligations under the Existing Manufacturing Agreement, and (ii) nothing in this Agreement shall have the effect of expanding or otherwise modifying the rights and obligations of the Parties under the Existing Manufacturing Agreement.

 

4.1    Organization and Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation in the State of New Jersey, which is the only jurisdiction where the Business or the ownership of the Purchased Assets requires it to be so qualified, except for failures to be so qualified that would not reasonably be expected to have a Material Adverse Effect. During the four years immediately preceding the date of this Agreement, Seller has conducted business, and its Assets have been held, only under the names of Laureate Pharma, Inc., Bard Biopharma, LP and Biopharma Acquisition Corp., each of which was organized under the laws of the State of Delaware.

 

4.2    [Reserved]

 

4.3    Authority and Binding Effect. Seller has the full power and authority to (i) own the Purchased Assets, (ii) carry on the Business as presently conducted, (iii) execute and deliver each Transaction Document to which it is or will be a party, (iv) perform the Transactions performed or to be performed by it pursuant to the terms of the Transaction Documents and (v) satisfy or perform, as the case may be, its obligations under those Transaction Documents to which it is a party. The execution, delivery and performance by Seller of the Transaction Documents to which it is a party have been duly authorized by all necessary corporate action. Assuming due authorization, execution and delivery by Buyer, this Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

 

4.4    Consents and Approvals. Except for any notices, filings, consents, approvals, permits, licenses or authorization of, or registration, declaration or filing with, any third party or court or Governmental Body specified in Schedule 4.4 (the “Seller Required Consents”), neither the execution and delivery by Seller of any of the Transaction Documents to which it is a party, nor the performance of the Transactions performed or to be performed by Seller under the Transaction Documents, require any notice, filing, consent, approval, permit, license or authorization of, or registration, declaration or filing with, or renegotiation with any third party or court or Governmental Body, constitute a Default under, cause any payment obligation to arise or give any Person the right to challenge any of the Transactions under (i) any Law or Court Order which is applicable to Seller, (ii) any Contract, Governmental Permit or other document to which Seller is a party or by which the properties or other assets of Seller, including the Purchased Assets, may be bound or (iii) except as have already been obtained, the Charter Documents of Seller.

 

4.5    [Reserved]

 

4.6    [Reserved]

 

4.7    Taxes.

 

(a)    Seller has filed all Tax Returns that it was required to file and all such Tax Returns are current and complete in all material respects. All material Taxes owed by Seller (whether or not shown on any Tax Return) have been paid. Seller is not currently the beneficiary of any extension of time within which to file any Tax Return. There are no ongoing examinations or claims against Seller for Taxes with respect to or affecting the Purchased Assets or the Business, and no written notice of any audit, examination or claim for Taxes or any dispute with respect to or affecting the Purchased Assets or the Business, whether pending or threatened, has been received by Seller.

 

(b)    Seller has withheld and paid over or will pay over to the proper taxing authorities all Taxes required to have been withheld and paid over with respect to or affecting the Purchased Assets and the Business, including, without limitation, all employer contributions and premiums, withholding taxes and social security and unemployment Taxes and premiums, required to be remitted to all taxing authorities, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto.

 

(c)    There are (and as of immediately before the Closing there will be) no Encumbrances (other than Permitted Encumbrances) on the Purchased Assets of Seller relating to or attributable to Taxes and no current Liability for any Taxes due and payable in connection with the Business and the Purchased Assets.

 

(d)    Schedule 4.7(d) lists all federal, state, local, and foreign jurisdictions in which Seller has filed Tax Returns with respect the Business.

 

(e)    No written claim that remains unresolved has ever been made by any Governmental Body in a jurisdiction where Seller does not file a Tax Return that the Business may be subject to taxation by that jurisdiction or that Tax Returns must be filed with regard to the Business in such jurisdiction. Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax Assessment or deficiency.

 

(f)    None of the Purchased Assets (i) is tax-exempt use property within the meaning of Section 168(h) of the Code, (ii) directly or indirectly secures any debt, the interest on which is exempt under Section 103(a) of the Code, or (iii) is property that is required to be treated as being owned by any Person (other than Seller) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately before the enactment of the Tax Reform Act of 1986.

 

(g)    Seller has not received any written notice of any special tax assessment affecting the Totowa Property or Seller’s obligations under the Totowa Lease and, to the Knowledge of Seller, no such assessment is pending or threatened.

 

(h)    Seller has not made, and is not obligated to make, and is not a party to any agreement that under certain circumstances could obligate it to make, any payment to any Person involved in the Business that will not be deductible under §280G of the Code.

 

4.8    [Reserved]

 

4.9    [Reserved]

 

4.10   Inventory. Except as described in Schedule 4.10, the Inventory to be included in the Purchased Assets will consist of items of good, usable and merchantable quality usable in the ordinary course of business. None of the Inventory is damaged or obsolete. Seller has valued the Inventory in accordance with U.S. generally accepted accounting principles at the lower of cost, calculated on a first-in, first-out basis, or market value. All Inventory not owned by Buyer is owned by Seller and no Inventory has been consigned to Seller.

 

4.11   Title to Purchased Assets and Related Matters. Except as otherwise set forth on Schedule 4.11, Seller has good and marketable title to, valid leasehold interest in or valid licenses to use, as applicable, all the Purchased Assets, free from any Encumbrances (other than Permitted Encumbrances). The use of the Purchased Assets is not subject to any Encumbrances (other than Permitted Encumbrances), and such use does not encroach on the property or the rights of any Person.

 

4.12    Condition of Purchased Assets. Except as set forth on Schedule 4.12, the equipment and all other tangible assets and properties which are part of the Purchased Assets are in good operating condition and repair, normal wear and tear excepted, and are usable in the ordinary course of the Business and conform in all material respects to all applicable Laws relating to their use and operation as such Purchased Assets are currently used in the conduct of the Business. Except for Purchased Assets held pursuant to the Non-Real Estate Leases described on Schedule 4.21 and the Excluded Equipment, no Person other than Laureate owns any Fixed Assets or other tangible Assets situated on the Totowa Property. Seller confirms that there are no Assets of Seller located at the Totowa Property that are not Purchased Assets. Except for (i) the Excluded Assets, (ii) the services provided by the Union Employees under the Employee Lease and the Non-Offeree Employees, (iii) the services to be provided by Seller after the Closing pursuant to the Transition Services Agreement and assuming the replenishment of Inventory in the ordinary course of the Business, the Purchased Assets are sufficient to enable Buyer to conduct its operations after the Closing in all respects as Seller conducted its operations of the Business prior to commencement of the Current Renovations.

 

4.13    Real Property. The Totowa Property is in good condition, ordinary wear and tear excepted. Seller has peaceful, undisturbed and exclusive possession of the leasehold estate created under the Totowa Lease, and other than the Termination and Option Agreement and the Employee Lease, there are no leases, subleases, licenses, concessions, or other Contracts granting to any other Person the right to use or occupy the Totowa Property. Seller has not mortgaged or otherwise encumbered the Totowa Lease and, to the Knowledge of Seller, there are no Encumbrances that would adversely affect the use and occupancy of the Totowa Property. Except as set forth on Schedule 4.13, the Totowa Lease is valid and in full force and effect and, other than with respect to the 483 Letter received January 21, 2005 and related correspondence, copies of which have been provided to Buyer, (i) Seller is not, and to the Knowledge of Seller, the Landlord is not, in Default under the Totowa Lease or any Contract or Law with respect to the occupancy, maintenance or use of the Totowa Property, (ii) no notice or threat from any landlord, Governmental Body or other Person has been received by Seller or served upon the Totowa Property claiming any Default or obligation under the Totowa Lease or any Contract or Law, or requiring or calling attention to the need for any work, repairs, construction, alteration, installations or environmental remediation, or otherwise indicating that there is pending or anticipated any action of the landlord, such Governmental Body or other Person that would adversely affect the Totowa Property or the ability of Buyer to conduct its manufacturing activities following the Closing, (iii) there does not exist any event or condition that is likely to result in a Default under the Totowa Lease by Seller or, to the Knowledge of Seller, by the Landlord, and (iv) all security deposits required to be made by Seller under the Totowa Lease have been made by Seller and no portion of such security deposits has been applied to cure any prior Default by Seller under the Totowa Lease. The Totowa Lease has not been assigned, modified, supplemented or amended. To the Knowledge of Seller, no Legal Proceedings are pending which would affect the zoning or use of the Totowa Property. No portion of the Totowa Property is within an identified flood plain or other designated flood hazard area as established under any Law or otherwise by any governmental authority. The Totowa Property has direct legal access to, abuts, and is served by a publicly maintained road, which road does and shall provide a valid means of ingress and egress thereto and therefrom, without additional expense. All utilities, including water, gas, telephone, electricity, sanitary and storm sewers, are currently available to the Totowa Property at normal and customary rates, and are adequate to serve the Business as currently conducted and Seller’s current use of the Totowa Property. There are no claims or Legal Proceedings which are pending against Seller, or, to the Knowledge of Seller, pending or threatened against the Landlord or the owner of the Totowa Property, which could reasonably be expected to affect the continued use of the Totowa Property in substantially the same manner as presently used by Seller.

 

4.14    Intellectual Property.

 

(a)    Contracts.

 

(i)    Schedule 4.14(a)(i)(A) contains a complete and accurate list of all Contracts relating to the Confidential Information in written form, except for Minor Contracts. Except as specified on Schedule 4.14(a)(i)(B), Seller is not currently engaged in any dispute or disagreement with respect to any such Contract nor, to the Knowledge of Seller, are there any threatened disputes or disagreements with respect to any such Contracts. Except for any rights under written licenses or written Contracts set forth in Schedule 4.14(a)(i)(C), no current or former employee of Seller (including any current or former Union Employee under the Employee Lease) owns or has any interest in any Business Confidential Information or Information Technology.

 

(ii)    To the Knowledge of Seller, Schedule 4.14(a)(ii)(A) contains a complete and accurate list of all Contracts relating to the Confidential Information that are not in written form, except for Minor Contracts, and an accurate summary description of all material terms of all such Contracts. Except as specified on Schedule 4.14(a)(ii)(B), Seller is not currently engaged in any dispute or disagreement with respect to any such Contract nor, to the Knowledge of Seller, are there any threatened disputes or disagreements with respect to any such non-written Contracts.

 

(b)    Seller has made available to Buyer complete and correct copies of all written Contracts, together with all amendments, supplements or modifications thereto, as required to be set forth on Schedule 4.14(a)(i)A.

 

(c)    Business Confidential Information.

 

(i)    The Business Confidential Information constitutes all of the Confidential Information that has been used or held for use, or relied upon by Seller in the Business. Seller has not transferred ownership of, nor granted any exclusive license with respect to, any Business Confidential Information to any other Person. Except as set forth on Schedule 4.14(c)(i)(A), Seller is the owner of all right, title and interest in and to, or has licensed, with full power to transfer and assign to Buyer, free and clear of any Encumbrances, each item comprising the Business Confidential Information and has the right to bring actions for infringement, misappropriation or other violation thereof. Schedule 4.14(c)(i)(B) contains a complete and accurate list of all payments due to a third party for any licensed Business Confidential Information. All Business Confidential Information is fully transferable and alienable to Buyer without payment of any kind to any other Person; however, all Business Confidential Information described in those Contracts listed on Schedule 4.4, is fully transferable and alienable to Buyer without payment of any kind to any other Person in accordance with its terms. The documentation relating to all Business Confidential Information is current, accurate, and sufficient in detail and content to identify and explain it to an individual having appropriate education and experience and to allow its full and proper use by an individual having appropriate education and experience without reliance on the knowledge or memory of any other individual. Seller has used reasonable efforts to maintain the confidentiality of its Confidential Information. Except as set forth in Schedule 4.14(c)(i)(C), all Business Confidential Information is not part of the public knowledge or literature, and, has not been used, divulged, or appropriated by Seller to the detriment of the Business. Seller is not currently engaged in any dispute or disagreement with respect to any Business Confidential Information nor, to the Knowledge of Seller, are there any threatened disputes or disagreements regarding the Business Confidential Information.

 

(ii)    No Business Confidential Information is, to the Knowledge of Seller, subject to any proceeding or outstanding order or stipulation, (other than any license agreement to Seller), restricting in any manner the use, transfer, assignment or licensing thereof to Buyer, or which may adversely affect the validity, use or enforceability of such Business Confidential Information. Each item of Business Confidential Information is valid, subsisting, and enforceable and any maintenance and renewal fees due in connection with such Business Confidential Information have been made.

 

(iii)   Except as set forth in Schedule 4.14(c)(iii)(A), the Business, including, without limitation, the business processes of the Business, does not, and, to the Knowledge of Seller, has not been alleged to, infringe upon, misappropriate, dilute (with respect to trademarks only), or otherwise violate any confidential or proprietary information or intellectual property owned by any other Person. Except as set forth in Schedule 4.14(c)(iii)(B), no written notice or claim has been received by Seller asserting that the Business, including, without limitation, the business processes of the Business, infringes upon, misappropriates or otherwise violates any confidential information, proprietary information, or any intellectual property owned or controlled by any other Person.

 

(iv)    Except as specified on Schedule 4.14(c)(iv)(A), Seller has not been informed in writing that any Person is infringing, misappropriating or otherwise violating or challenging or threatening in any way, any Business Confidential Information. To the Knowledge of Seller, Seller has not received any unwritten or verbal notification that any Person is infringing, misappropriating or otherwise violating or challenging or threatening in any way, any Business Confidential Information. Except as specified on Schedule 4.14(c)(iv)(B), Seller has not given any indemnification rights, other than those provided under the Uniform Commercial Code or any equivalent thereof, to any other Person against infringement, misappropriation or other violation of any confidential information of a third party.

 

(v)    All Information Technology necessary to the present operation of the Business is owned by Seller, free and clear of any Encumbrances, or is leased or licensed by Seller, with full power to transfer and assign such Information Technology to Buyer.

 

(vi)   All Off-the-Shelf Software necessary to the operation of the Business as of the Closing have been licensed (including shrink-wrap and click-wrap licenses) by Seller.

 

4.15    Contracts.

 

(a)    Schedule 4.15 lists all Contracts Related to the Business to which Seller is a party or by which it is bound, whether written or oral, except for (i) Minor Contracts, (ii) Contracts that are Excluded Assets and (iii) Contracts that relate to Unassumed Liabilities. The Contracts listed in Schedule 4.15 and the Minor Contracts excluded from Schedule 4.15 are referred to in this Agreement as the “Seller Contracts.”

 

(b)    Except as described on Schedule 4.15, Seller has made available to Buyer complete and correct copies of all written Seller Contracts, together with all amendments, supplements or modifications thereto, and accurate summary descriptions of all material terms of all oral Seller Contracts (other than Minor Contracts), as set forth or required to be set forth on Schedule 4.15.

 

(c)    The Seller Contracts (as such may be modified through the Closing) constitute all of the Purchased Assets that are Contracts. Each of the Seller Contracts is legal, valid and binding upon Seller, enforceable against Seller in accordance with its terms. Seller is not in Default under any Seller Contracts (including any Seller Contracts that are leases). Seller has not received any communication from, or given any communication to, any other party indicating that Seller or such other party, as the case may be, is in Default under any Seller Contract. To the Knowledge of Seller, (i) none of the other parties to any such Seller Contract is in Default thereunder and (ii) each such Seller Contract is enforceable against any other parties thereto in accordance with the terms thereof. There are no renegotiations of (x) any amounts paid or payable to Seller under any current Seller Contract or (y) any material term or condition of any current Seller Contract, in each case, with any Person having the contractual or statutory right to demand or require such renegotiation and, to the Knowledge of Seller, no such Person has made any demand for such negotiation. Seller has not received written notice that any party to any Seller Contract intends to cancel or terminate any Seller Contract.

 

4.16    Employees/Independent Contractors. Except as set forth on Schedule 4.16, Seller is not (a) a party to, involved in or, to the Knowledge of Seller, threatened by, any labor dispute, strike, work stoppage or unfair labor practice charge or other employment-related claim (other than normal benefit claims under Seller’s health and welfare Plans in the ordinary course of business) affecting the Totowa Property or the Business, (b) currently negotiating any collective bargaining agreement, or (c) currently a party to any collective bargaining agreement. Seller has furnished Buyer with a complete and correct list as of December 27, 2005 of the names, job titles, 2004 year end bonuses, year-to-date base pay, year-to-date overtime, accrued and unused sick and vacation days, Accrued Bonus, 401(k) employer match percentages, severance plan eligibility, tuition reimbursements paid and gym reimbursements paid for each current employee of Seller engaged in performing services for Seller at the Totowa Property (the “Employee Compensation List”). On the date of this Agreement, there are seven active employees of Seller at the Totowa Property and no such employee is on authorized leave, medical or otherwise. The Employee Compensation List is true, complete and correct as of the date hereof and the Employee Compensation List, as updated pursuant to Section 6.4, shall be true, complete and correct as of Seller’s most recent regular pay-roll date prior to the Closing Date. Seller has furnished Buyer with a complete and correct list of the names of any Persons (other than as contemplated by Section 4.26) who will have a right to receive any cash consideration or other economic benefit as a result of the consummation of any of the Transactions and the nature and amount of such consideration or benefit. Seller has not violated the WARN Act or any New Jersey state Law relating to plant closings or mass layoffs with respect to the Totowa Property. During the 90 days prior to the date of this Agreement, Seller has not terminated any employees at the Totowa Property (one person has left).

 

4.17    Governmental Permits. Schedule 4.17 sets forth a complete list of all material Governmental Permits which Seller owns, possesses, uses or holds for use in connection with the Business or otherwise applied for or held by Seller. Except as otherwise noted on Schedule 4.17, Seller owns, possesses or lawfully uses in the operation of its Business all material Governmental Permits which are necessary (a) to conduct the Business as now conducted or (b) to the ownership of the Purchased Assets, free and clear of all Encumbrances. Except as set forth on Schedule 4.17, no present or former officer, employee (including any current or former Union Employee under the Employee Lease) or representative of Seller, or any other Person owns or has any proprietary, financial or other interest (direct or indirect) in any material Governmental Permit which Seller owns, possesses, uses or holds for use in connection with the Business. Each Governmental Permit listed on Schedule 4.17 that is issued in the name of Seller is in good standing and in effect in accordance with its terms.

 

4.18    Compliance with Law and Court Orders. Seller has complied with all, and is not in violation or Default of any, applicable Laws and Governmental Permits (except as otherwise stated in Section 4.32, and other than Laws and Governmental Permits pertaining to environmental matters and FDA Requirements, which are addressed exclusively by Section 4.24 and Section 4.32, respectively) and with all Court Orders listed on Schedule 4.18 affecting Seller’s Assets, the operation of the Business or the Purchased Assets, which are all of the Court Orders to which Seller is a party or, to the Knowledge of Seller, to which it, the Business or the Purchased Assets are subject. Seller has made available to Buyer full and complete copies of all Court Orders (including all related correspondence and documentation) listed on Schedule 4.18. Neither Seller nor, to the Knowledge of Seller, any officer, employee or agent of Seller (a) has used any corporate funds of Seller to make any payment to any officer or employee of any government, or to any political party or official thereof, where such payment either (i) was, at the time, unlawful under Laws applicable thereto; or (ii) was, at the time, unlawful under the Foreign Corrupt Practices Act of 1977, as amended; or (b) has made or received an illegal payment, remuneration, direct or indirect, bribe, kickback, political contribution or other similar questionable illegal payment in connection with the operation of the Business. Seller has not received any written, or, to the Knowledge of Seller, other notices or communications from any Governmental Body or other Person regarding any actual, alleged, threatened, possible, or potential violation of, or failure to comply with, any Law, Governmental Permit or Court Order. No material capital expenditures are anticipated or required for Seller to comply with any Law, Governmental Permit or Courts Order.

 

4.19    Claims. 

 

(a)    Except as disclosed in Schedule 4.19: (i) there is no Legal Proceeding pending or, to the Knowledge of Seller, threatened against Seller, the Business or the Purchased Assets; and (ii) there is no dispute or disagreement pending or threatened in writing between Seller and any of its customers, suppliers, employees or consultants, and, to the Knowledge of Seller, there is no set of facts or circumstances that, with the passage of time or otherwise, could give rise to any such dispute or disagreement; and (iii) there is no Legal Proceeding that has been commenced by Seller that could reasonably be expected to have a Material Adverse Effect.

 

(b)    There is no Litigation pending or, to the Knowledge of Seller, threatened against Seller that challenges the legality, validity or enforceability of this Agreement, the other Transaction Documents or the Transactions or that could be reasonably expected to materially adversely affect the ability of Seller to complete the Transactions or have a Material Adverse Effect.

 

4.20    Insurance. Schedule 4.20 lists all insurance coverage purchased by Seller currently in effect to which Seller is a party, a named insured or otherwise the beneficiary of insurance coverage (“Seller Insurance”). Copies of policies or binders evidencing Seller Insurance, to the extent available, have been made available for review by Buyer. All Seller Insurance is in full force and effect, and Seller is not in Default thereunder and any and all premiums that are due and payable with respect to any Seller Insurance have been paid in full. Except as described in Schedule 4.20, no written notice of cancellation that has not been rescinded has been received by Seller with respect to the Seller Insurance. Prior to the date hereof, Seller has delivered to Buyer a list of all insurance claims (other than any individual claims of less than $5,000 that do not exceed $30,000 in the aggregate) made by Seller during its ownership and operation of the Business (the “Insurance Claims List”). The Insurance Claims List is true, complete and correct. Except as set forth on Schedule 4.20, there are no claims (other than any individual claims of less than $5,000 that do not exceed $30,000 in the aggregate) made by Seller currently outstanding under any of the Seller Insurance.

 

4.21    Non-Real Estate Leases. Schedule 4.21 lists all Purchased Assets used in the Business (other than Real Property) that are possessed by Seller under an existing lease, including all trucks, automobiles, forklifts, machinery, equipment, furniture and computers. Schedule 4.21 also lists the leases under which such Assets listed in Schedule 4.21 are possessed. All of such leases are referred to herein as the “Non-Real Estate Leases.” All Purchased Assets under a Non-Real Estate Lease are in good condition, ordinary wear and tear excepted, and are sufficient for the current operations of the Business. Seller is not in Default under any Non-Real Estate Lease.

 

4.22    Employee Benefit Plans.

 

(a)    Attached hereto as Schedule 4.22 is a list of all employee benefit plans, all employee welfare benefit plans, all employee pension benefit plans, all multiemployer plans and all multiple employer welfare arrangements (as defined in Sections 3(3), (1), (2), (37) and (40) respectively of ERISA) (collectively, the “Plans”, and individually, each a “Plan”), which are currently maintained and sponsored by Seller with respect to employees located at the Totowa Property, or to which Seller currently contributes, or currently existing Plans under which Seller will have an obligation to contribute in the future, or under which compensation or benefits are otherwise provided to employees of Seller located at the Totowa Property. Seller confirms that, under the terms of the Plans as in effect on the date of this Agreement and the Closing Date, the value of unused sick days and personal days are paid out to each non-exempt employee at the end of each calendar year, but vacation days may be carried over beyond the calendar year in which they are accrued.

 

(b)    The Purchased Assets will not be subject to any Encumbrance (including any statutory Encumbrance) to secure payment of any Liability to the Pension Benefit Guaranty Corporation under Title IV of ERISA or to the Internal Revenue Service for any excise tax or penalty or otherwise with respect to any such Plan.

 

(c)    All obligations of any nature under any Plan will constitute an Unassumed Liability and Buyer shall have no obligation or duty with respect to any Plan identified on Schedule 4.22 or other benefit made available by Seller to employees of Seller located at the Totowa Property. Seller shall continue to be responsible for the obligations and administration of all Plans and Seller’s employee benefits after the Closing.

 

4.23    [Reserved]

 

4.24    Environmental Matters. In addition to the representations and warranties in Section 4.18, hereof and not in limitation thereof, and except as disclosed on Schedule 4.24 hereto, (a) no releases of Hazardous Materials have occurred at or from the Totowa Property during the period it was owned or leased by Seller or, to the Knowledge of Seller, at any other time, (b) there are no past, pending, or, to the Knowledge of Seller, threatened Environmental Claims against Seller, (c) there are no underground storage tanks owned by Seller, or located at the Totowa Property, (d) there are no facts, circumstances, or conditions that could reasonably be expected to restrict, under any Environmental Law or Environmental Permit in effect prior to or at the Closing Date, the ownership, occupancy, use or transferability of the Totowa Property, or to give rise to any material legal Liability under the Environmental Laws pertaining to the Totowa Property, (e) none of Seller nor its Affiliates has received a request under any of the Environmental Laws for information relating to the Totowa Property, (f) there are no unsatisfied financial assurance or closure requirements under the Environmental Laws pertaining to the Totowa Property on account of Seller’s use or ownership of such property, (g) any contaminant levels resulting from any releases of Hazardous Materials at or from the Totowa Property meet applicable remediation standards under applicable Environmental Law, (h) to the Knowledge of Seller, the Totowa Property is not now nor has in the past been listed on the National Priorities List of sites under the Comprehensive Environmental Response, Compensation and Liability Act, as amended (42 U.S.C. §9601 et seq.) (“CERCLA”), the CERCLA Information System, or any comparable state or local environmental database, (i) to the Knowledge of Seller, there is no asbestos-containing material, lead-based paint or equipment containing polychlorinated biphenyls located at the Totowa Property, (j) Seller has not provided information to any governmental authority of any actual, threatened or suspected releases of Hazardous Materials or any violation of any Environmental Permit or Environmental Law and (k) there is no Liability with respect to the cleanup or investigation at the Totowa Property resulting from the disposal or treatment (with a transporter or otherwise) of Hazardous Materials by Seller or, with respect to any Hazardous Materials generated by Seller, by any other party (Seller has made available to Buyer the Phase I Environmental Study conducted by Urban Engineers, Inc. on the Totowa Property in October 2004), (l) to the extent that the Totowa Property is a “Major Facility”as that term is defined in N.J.S.A. 58:10-23.11b, Seller has furnished the New Jersey Department of Environmental Protection with all the information required by N.J.S.A. 58:10-23.11d1 through 11d17 inclusive, (m) to the Knowledge of Seller, no lien has been attached to any revenues or any real or any personal property owned by Seller and located in New Jersey, including the Totowa Property, as a result of the administrator of the New Jersey Spill Compensation Fund expending monies from such fund to pay for “Damages,” as that term is defined in N.J.S.A. 58:10-23.11g, and/or “Clean up and Removal Costs,” as that term is defined in N.J.S.A. 58:10-23.11b, arising from an intentional or unintentional action or omission by Seller or any previous owner and/or operator of the Totowa Property resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of any Hazardous Materials into the waters of New Jersey or onto land from which it might flow or drain into such waters or into waters outside the jurisdiction of New Jersey where damage may have resulted to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by New Jersey. As used in this Agreement:

 

(i)    “Environmental Claims” means any and all administrative or judicial actions, suits, orders, claims, liens, notices, investigations, violations or proceedings related to any applicable Environmental Law or any Environmental Permit brought, issued or asserted by a Governmental Body or third party for compliance, damages, penalties, removal, response, remedial or other action pursuant to any applicable Environmental Law or for personal injury or property damage resulting from the release of a Hazardous Material at, to or from the Totowa Property or any facility or property at which Seller disposed or arranged for the disposal or treatment (with a transporter or otherwise) of Hazardous Materials from the Totowa Property, including Seller employees seeking damages for exposure to Hazardous Materials;

 

(ii)    “Environmental Laws” means all federal, state and local Laws related to protection of the environment, natural resources, safety or health or the handling, use, recycle, generation, treatment, storage, transportation or disposal of Hazardous Materials, and any common Law cause of action relating to the environment, natural resources, safety, health or the management of or exposure to Hazardous Materials, including without limitation, (i) the CERCLA; (ii) the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. 6901 et seq. (“RCRA”), (iii) the New Jersey Industrial Site Recovery Act, as amended, N.J.S.A. 13:1K-6 et seq. (“ISRA”); (iv) the New Jersey Spill Compensation and Control Act, as amended, N.J.S.A. 58:10-23.11 et seq. (“Spill Act”); and (v) the New Jersey Leaking Underground Storage Tank Act, as amended, N.J.S.A. 58:10A-21 et seq., as the same may be amended or supplemented from time to time. Any terms mentioned in this Section 4.24 which are defined in any Environmental Law shall have the meanings ascribed to such terms in said laws; provided, however, that if any of such laws are amended so as to broaden any term defined therein, such broader meaning shall apply subsequent to the effective date of such amendment;

 

(iii)   “Environmental Permit” means all permits, licenses, approvals, authorizations or consents required by any Governmental Body under any applicable Environmental Law and includes any and all orders, consent orders or binding agreements issued or entered into by a Governmental Body under any applicable Environmental Law; and

 

(iv)    “Hazardous Material” means any hazardous, toxic or radioactive substance, material or waste which is regulated as of the Closing Date by any state or local Governmental Body or the US, including any material or substance that is: (A) defined as a “hazardous substance,”“regulated substance” or “hazardous waste” under applicable state law, (B) petroleum, petroleum products or wastes, (C) asbestos, (D) designated as a “hazardous substance” pursuant to section 311 of the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251 et seq. (33 U.S.C. § 1321), (E) defined as a “hazardous waste” pursuant to section 1004 of the RCRA, (F) defined as a “hazardous substance” pursuant to section 101 of the CERCLA, (G) defined as a “regulated substance” pursuant to section 9001 of the RCRA or (H) otherwise regulated under the Toxic Substances Control Act, as amended, 15 U.S.C. §2601 et seq., the Clean Air Act, as amended, 42 U.S.C. §7401 et seq., the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801 et seq., or the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. §136 et seq., the Emergency Planning and Community Right-to-Know Act, as amended, 42 U.S.C. §11001 et seq., the Safe Drinking Water Act, as amended, 42 U.S.C. §300(f) et seq., and the Occupational Safety and Health Act, as amended, 29 U.S.C. §651 et seq.

 

4.25    [Reserved]

 

4.26    Broker’s or Finder’s Fee. No agent, broker, Person or firm acting on behalf of Seller or its Affiliates is, or will be, entitled to any commission or broker’s or finder’s fees from Seller or from any of its Affiliates in connection with this Agreement or any of the Transactions.

 

4.27    [Reserved]

 

4.28    Certain Personal Property. Schedule 4.28 is a complete schedule of all fixed assets and tangible personal property included in the Purchased Assets (the “Fixed Assets”). Except for those items subject to the Non-Real Estate Leases described in Section 4.21 and the Excluded Equipment, no Person other than Seller owns any vehicles, equipment or other tangible assets located on the Totowa Property and comprising the Fixed Assets. The Purchased Assets that are personalty are suitable for the purposes for which such Assets are currently used or are held for use, and are in good working condition, subject to normal wear and tear. The Fixed Assets are in compliance with all material Laws.

 

4.29    [Reserved]

 

4.30    [Reserved]

 

4.31    Solvency. Seller is not now insolvent and will not be rendered insolvent by any of the 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. Immediately after giving effect to the consummation of the Transactions: (a) Seller will be able to pay its Liabilities as they become due in the usual course of its business; (b) Seller will not have unreasonably small capital with which to conduct its present or proposed business; (c) Seller will have assets (calculated at fair market value) that exceed its Liabilities; and (d) 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.

 

4.32    FDA. Except as otherwise indicated on Schedule 4.32, the Business is in compliance with all applicable requirements of the Federal Food, Drug, and Cosmetic Act (“FFDCA”), the Public Health Service Act (“PHSA”), and the regulations promulgated thereunder by the US Food and Drug Administration (the “FDA”), Related to the Business (collectively the “FDA Requirements”). Except as otherwise indicated on Schedule 4.32 or the FDA Documents, Seller has not received any written notice or, to the Knowledge of Seller, other communication from the FDA or other Governmental Body alleging any violation of the FDA Requirements. Seller has provided or made available to Buyer all documents and communications in its possession concerning communications from, and to, the FDA and any other Governmental Body or prepared by the FDA or any other Governmental Body that bear in any material respect on compliance by the Business with the FDA Requirements (as listed on Schedule 4.32, the “FDA Documents”). Seller has filed with the FDA DMFs bearing DMF numbers 16941 and 17159 and has maintained and kept current such DMFs. With respect to the Business, Seller is not directly engaged in any testing involving human subjects or human specimens, and has not filed investigational new drug applications (“INDs”), new drug applications (“NDAs”), supplemental NDAs, biologics license applications (“BLAs”) or submitted any other marketing application to the FDA; provided, however, Buyer hereby acknowledges that third parties are engaged in such testing of products manufactured or otherwise handled at the Totowa Property, and Seller disclaims any and all representations and warranties regarding or relating to any such testings, any such products, and any such INDs, NDAs and BLAs, as applicable. To the Knowledge of Seller, neither Seller, nor any officer, employee, or agent of Seller has made an untrue statement of a material fact or fraudulent statement to the FDA or other Governmental Body or knowingly failed to disclose a material fact required to be disclosed to the FDA or other Governmental Body Related to the Totowa Property or products manufactured at the Totowa Property. Neither Seller, nor, to the Knowledge of Seller, any officer or employee of Seller, has been or is subject to debarment, temporary denial of approval or suspension under 21 U.S.C. §§335a(a) or (b).

 

4.33    Statements and Other Documents Not Misleading.

 

(a)    Neither this Agreement, including all schedules and exhibits, nor any financial statement, document or other instrument specifically referred to herein or delivered pursuant hereto furnished by Seller to Buyer pursuant hereto in connection with the Transactions contains or will contain any untrue statement of any material fact or omits or will omit to state any material fact required to be stated in order to make such statement, document or other instrument not misleading.

 

(b)    THE EXPRESS INTENTION OF SELLER AND BUYER IS THAT BUYER SHALL PURCHASE THE PURCHASED ASSETS AND ASSUME THE ASSUMED LIABILITIES FROM SELLER WITHOUT ANY REPRESENTATIONS, WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED, FROM OR OF SELLER OTHER THAN OTHERWISE SET FORTH HEREIN. BUYER HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND PRIVILEGES ARISING OUT OF, OR WITH RESPECT OR IN RELATION TO, ANY REPRESENTATIONS, WARRANTIES, AND COVENANTS, WHETHER EXPRESS OR IMPLIED, WHICH MAY HAVE BEEN MADE OR GIVEN, OR WHICH MAY BE DEEMED TO HAVE BEEN MADE OR GIVEN, BY SELLER, OTHER THAN AS SET FORTH HEREIN.

 

5.    Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller as follows:

 

5.1    Organization and Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, having all requisite corporate power and authority to perform its obligations under this Agreement.

 

5.2    Authority and Binding Effect. Buyer has full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and has taken all actions necessary to secure all approvals required in connection therewith. The execution, delivery and performance of this Agreement and the consummation of the Transactions by Buyer have been duly authorized by all necessary corporation action. Assuming due authorization, execution and delivery by Seller, this Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms.

 

5.3    Validity of Contemplated Transactions. Neither the execution and delivery by Buyer of any of the Transaction Documents to which it is a party, nor the performance of the Transactions performed or to be performed by Buyer under the Transaction Documents, require any notice, filing, consent, renegotiation or approval, constitute a Default, cause any payment obligation to arise or give any Person the right to challenge any of the Transactions under (a) any Law or Court Order which is applicable to Buyer, (b) any Contract, Governmental Permit or other document to which Buyer is a party or by which the properties or other assets of Buyer may be bound or (c) except as have already been obtained, the Charter Documents of Buyer.

 

5.4    Broker’s or Finder’s Fee. No agent, broker, Person or firm acting on behalf of Buyer is, or will be, entitled to any commission or broker’s or finder’s fees from any of the Parties or from any of their Affiliates in connection with this Agreement or any of the Transactions.

 

5.5    Availability of Funds. Buyer has, or will have, cash or credit facilities available that are sufficient to enable it to make payment of the Purchase Price at Closing without the necessity of securing additional third-party financing.

 

5.6    Claims. There is no Litigation pending or, to the Knowledge of Buyer, threatened against Buyer that challenges the legality, validity or enforceability of this Agreement, the other Transaction Documents or the Transactions or that materially would adversely affect the ability of Buyer to complete the Transactions.

 

5.7    FDA. To the knowledge of Buyer, neither Buyer, nor any officer, employee, or agent of Buyer has made an untrue statement of a material fact or fraudulent statement to the FDA or other Governmental Body or failed to disclose a material fact required to be disclosed to the FDA or other Governmental Body pertaining to the Totowa Property or product manufactured at the Totowa Property. Neither Buyer, nor, to the knowledge of Buyer, any officer or employee of Buyer, has been or is subject to debarment, temporary denial of approval or suspension under 21 U.S.C. §§335a(a) or (b).

 

6.    Pre-Closing Covenants.

 

6.1    Access. From the date of this Agreement to the Closing Date, Seller shall give Buyer and its counsel, accountants and other representatives access during normal business hours to the premises of the Business, personnel, counsel, books and records, accounts and other representatives of Seller and furnish to Buyer and such representatives all such additional documents and information with respect to the Business as Buyer may from time to time reasonably request, subject to applicable confidentiality requirements and Seller’s existing obligations to its other customers, to permit Buyer to promptly complete its business, legal, accounting and financial due diligence investigation of the Purchased Assets and the Business prior to the Closing. Without limiting the foregoing, Seller shall provide Buyer copies of such documents and information or such access and introductions, and in each case, within the time periods, set forth on Schedule 6.1. Any visits shall be conducted in a manner so as to minimize disruptions to the operations of Seller. Seller shall promptly introduce Buyer to such of Seller’s employees, distributors and suppliers as Buyer may request. Seller agrees that no investigation by Buyer or its representatives shall affect or limit the scope of the representations and warranties of Seller herein or limit the liability of Seller for any breach of such representations and warranties.

 

6.2    [Reserved]

 

6.3    Operation of the Business. Except as set forth on Schedule 6.3 or as otherwise expressly permitted or required by this Agreement, between the date of this Agreement and the Closing Date Seller acknowledges that solely with respect to the Totowa Property:

 

(a)    Seller shall conduct the Business in the ordinary course in accordance with its past practice under the Existing Manufacturing Agreement, except that, without the written consent of Buyer, Seller shall not undertake any capital improvement or make any commitment for capital expenditures in excess of $15,000 in the aggregate. Seller shall maintain and service the Purchased Assets consistent with past practice and preserve intact the Business as it is currently operated;

 

(b)    For the avoidance of doubt, the Parties acknowledge and agree that (i) the DAS Agreement is not a Purchased Asset or an Assumed Liability, (ii) Buyer shall have no obligation with respect to the DAS Agreement, either before or after the Closing, and (iii) Seller shall be solely responsible for the performance of its obligations under the DAS Agreement;

 

(c)    Seller will use its Commercially Reasonable efforts to obtain in writing as promptly as possible all Seller Required Consents and all of the Closing Consents, which consents shall be in a form reasonably acceptable to Buyer and its counsel and shall not be subject to the satisfaction of any condition that has not been satisfied or waived;

 

(d)    Seller shall not: (i) incur any Liability that would be an Assumed Liability other than in the ordinary course of business; (ii) without the consent of Buyer, enter into, amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to any Seller Contract or incur any Liability Related to the Business other than in the ordinary course of business; (iii) Default under, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a Default under any term or provision of any Seller Contract; or (iv) create or permit any Encumbrance (other than Permitted Encumbrances) on any of the Purchased Assets;

 

(e)    Seller shall comply in all material respects with all applicable Laws; and

 

(f) Seller shall not (i) hire any new employee at the Totowa Property or enter into any employment contract, or, (ii) except in the ordinary course of business consistent with past practice, increase the rate of compensation payable or to become payable by it to any personnel at the Totowa Property, or (iii) amend, modify or increase the benefits available to employees at the Totowa Property under any Plan, or (iv) introduce any new Plan or benefit to such employees.

 

6.4   Update of Schedules. Prior to the Closing, Seller shall, after obtaining Knowledge thereof, as promptly as practicable disclose to Buyer in writing any information set forth in the Schedules hereto which has become inaccurate and any information of the nature of that set forth in the Schedules which arises after the date hereof and which would have been required to be included in the Schedules if such information had existed on the date hereof. Such disclosure shall not limit or affect any of Buyer’s rights hereunder for or with respect to any misrepresentation or breach of warranty by Seller or Seller’s failure to fulfill any covenant, agreement or condition contained in this Agreement. At or prior to the Closing, Seller shall (i) update the Insurance Claims List to reflect any insurance claims made by Seller prior to the Closing and since the last such claim identified on the Insurance Claims List originally delivered in accordance with Section 4.20, and (ii) update as of Seller’s most recent regular payroll date prior to the Closing Date the Employee Compensation List to reflect changes, if any, to the compensation and benefits reflected on the Employee Compensation List originally delivered in accordance with Section 4.16.

 

6.5    Employees and Business Relations.

 

(a)    From the date hereof and up to and including the Closing Date, (i) Seller shall use its Commercially Reasonable efforts (but shall not be required to increase wages or benefits) to keep available the services of the current employees and agents of the Business, and (ii) Seller shall use Commercially Reasonable efforts to maintain the relations and goodwill with the suppliers, distributors of the Business. Buyer shall make an offer of employment to at least five of the seven active employees of Seller dedicated to the Totowa Property (the “Offeree Employees”). Any employee who does not receive such an offer of employment is referred to herein as a “Non-Offeree Employee.” For purposes hereof, an employee shall be considered “active” if such employee is in good standing on the Closing Date, including any such employee who is on an authorized leave, medical or other, on the Closing Date. Buyer shall provide Seller with a list of the Non-Offeree Employees no more than five Business Days after the date of this Agreement. Each offer of employment to an Offeree Employee shall include salary and cash incentive compensation (excluding, for this purpose, payments under any severance plan or arrangement) that, in the aggregate, is substantially comparable to that provided to such employee by Seller, and benefits comparable to Buyer’s health, welfare and other benefit plans made available to Buyer’s current employees, provided, that Buyer shall credit each Offeree Employee with up to an aggregate of ten vacation and sick days that have been accrued as of the Closing Date but not taken by such Offeree Employee under Seller’s vacation and sick day policies (each such offer, a “Qualified Offer”). Each Qualified Offer shall comply in all material respects with all applicable Laws, including all employment Laws dealing with discrimination. In the event an Offeree Employee accepts a Qualified Offer and is hired by Buyer (each a “Transferred Employee”), such Transferred Employee’s employment with Buyer shall be effective the first business day following the Closing Date. In crediting such Transferred Employees with accrued sick and vacation days, Buyer shall be entitled to rely on the Employee Compensation List, as updated by Seller through the Closing Date pursuant to Section 6.4.

 

(b)    Seller shall not provide any offer of continued employment to any Offeree Employee or otherwise attempt to dissuade or discourage any Offeree Employee from accepting a Qualified Offer. On or before the Closing Date, Seller shall pay to each Transferred Employee identified on Schedule 6.5(b) the annual bonus accrued through the Closing Date (“Accrued Bonus”) in the amount set forth opposite such Transferred Employee’s on the Employee Compensation List, and shall be responsible for all costs related thereto.

 

(c)    On or before the Closing Date, Seller shall pay to each Transferred Employee, if applicable, an amount equal to the number of days’ pay that equals the number of accrued sick and vacation days in excess of ten that such Transferred Employee shall have accrued as of the Closing Date, and shall be responsible for all costs related thereto.

 

(d)    Buyer shall have no obligation under this Agreement to continue the employment of any Transferred Employee, to continue to pay any specified salary or bonus compensation to any such Transferred Employee or, except as provided in Section 6.5(a) with respect to credits for accrued sick and vacation days, to provide to any such Transferred Employee any specific health, welfare or other plan benefits or perquisites. Following the Closing, Buyer shall be entitled to manage its staff levels and administer its human resources policies and benefit plans in such manner as it, in its sole discretion, may deem appropriate.

 

(e)    From the date hereof and up to and including the Closing Date, without the written consent of Buyer, Seller shall not take any action under the Employee Lease to (i) increase or decrease the number of Union Employees, or (ii) substitute any Union Employees for any other Union Employees. Notwithstanding the foregoing, (A) Seller shall use its Commercially Reasonable efforts to assist Buyer in negotiating with the Lessor and the Labor Union representing the employees provided to Seller under the Employee Lease to achieve a replacement agreement (in a form acceptable to Buyer) between Buyer and Local 825, International Chemical Workers Union Council of the United Food and Commercial Workers International Union (the “Union”) and (B) on or before the Closing, Seller and the other parties thereto shall enter into the Termination Agreement.

 

6.6    Confidentiality.

 

(a)    If the Transactions are not consummated, each Party shall treat all information obtained in its investigation of another Party or any Affiliate thereof as confidential in accordance with the terms of the Confidentiality Agreement.

 

(b)    Each Party agrees that it will not file the Schedules to this Agreement with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Item 601(b)(2) of Regulation S-K; provided, that, if the SEC requests a copy of any Schedule so omitted from a Party (for this purpose, the “Disclosing Party”), the Disclosing Party shall furnish such requested Schedule to the SEC supplementally, with a request that the SEC return the Schedules pursuant to Rule 418(b) of the Securities Act or Rule 12b-4 of the Exchange Act; provided, further, that if after reviewing any Schedule furnished pursuant to the preceding proviso, the SEC determines that the Disclosing Party is required to file such Schedule, then the Disclosing Party shall file such Schedule or otherwise comply with any request of the SEC. If the Disclosing Party determines, in its sole discretion, that it must file any of the Exhibits to this Agreement with the SEC or any other Governmental Body or securities exchange pursuant to applicable Law, then the Disclosing Party agrees to consult with the other Party to determine if any of the information contained in such Exhibits is appropriate for confidential treatment. If the Disclosing Party, in its sole discretion, determines after such consultation that any information in such Exhibits is appropriate for confidential treatment, the Disclosing Party shall redact such information from the version of the Exhibit that is filed with the SEC and shall submit a confidential treatment request relating to such information. Notwithstanding the foregoing, nothing contained in this Agreement shall in any way affect the right of a Party to take, or refrain from taking, any actions that such Party, in its sole discretion, determines are necessary or advisable to in order to comply with (i) all applicable Laws or (ii) any request from the SEC or any other Governmental Body or securities exchange.

 

6.7    Related Parties. Each Party shall use its commercially reasonable efforts to cause its Affiliates to take or refrain from taking any action that may be necessary to carry out the Transactions.

 

6.8    Transfer of Purchased Assets and Business. Subject to the satisfaction of or waiver by the applicable Party of the conditions set forth in Section 8 or Section 9, as applicable, on and prior to the Closing Date, Seller shall take such reasonable steps as may be necessary or appropriate, in the judgment of Buyer, such that at and after the Closing Buyer shall be placed in actual possession and control of all of the Purchased Assets and the Business. In furtherance thereof, Seller shall execute and deliver such additional instruments of conveyance and transfer as Buyer may reasonably require, in the judgment of Buyer, in order to more effectively vest in it, and put it in possession of, the Purchased Assets.

 

6.9    Fulfillment of Closing Conditions. (a) At and prior to the Closing, each Party shall use Commercially Reasonable efforts to fulfill, and to cause each other to fulfill, as soon as practicable before the Termination Date the conditions specified in Section 8 and Section 9 to the extent that the fulfillment of such conditions is within its control. In connection with the foregoing, each Party will (i) refrain from any actions that would cause any of its representations and warranties to be inaccurate as of the Closing, and take any reasonable actions within its control that would be necessary to prevent its representations and warranties from being inaccurate as of the Closing, (ii) execute and deliver the applicable agreements and other documents referred to in Section 8 and Section 9, (iii) comply with all applicable Laws in connection with its execution, delivery and performance of this Agreement, the other Transaction Documents to which it is a party and the Transactions, (iv) use commercially reasonable efforts to obtain in a timely manner all necessary waivers, consents and approvals required under any Laws, Contracts or otherwise, including the Closing Consents and the Seller Required Consents in the case of Seller, and (v) use commercially reasonable efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the Transactions.

 

6.10    DMF.  On or prior to the Closing Date, Seller shall have provided to Buyer full and complete copies of DMF numbered 17159 and all related documentation.

 

6.11    [Reserved]

 

6.12    [Reserved]

 

6.13    [Reserved]

 

6.14    Environmental. Within five Business Days following the date of this Agreement, Seller shall file with the NJDEP (with copies to Buyer) an application (including all supporting documentation) requesting NJDEP issue a letter stating that ISRA, including the regulations promulgated thereunder, is not applicable to the transaction contemplated by this Agreement (the “LNA”). Seller shall use its commercially reasonable efforts to obtain the LNA prior to Closing but the Closing shall not be conditioned upon such issuance.

 

6.15    Further Assurances. Consistent with the terms and conditions hereof, each Party hereto shall use its best efforts to execute and deliver such other documents and take such other actions as reasonably requested by the other Party to fulfill the conditions precedent to the obligation of the other Party to consummate the purchase and sale of the Business, or as the other Party hereto may reasonably request in order to carry out this Agreement and the Transactions contemplated hereby.

 

7.    Post-Closing Covenants.

 

7.1    Transition Period. For a period of 12 months after the Closing Date, Seller and its Affiliates shall forward to Buyer all mail, remittance, receipts or other mailings received by any of them relating to the Business other than the Excluded Assets and the Unassumed Liabilities.

 

7.2    Employees.

 

(a)    Buyer shall be solely responsible for all Liabilities arising out of or related to the actual or constructive termination of employment occurring after the Closing Date of any Transferred Employee. Seller will be responsible for providing COBRA continuation coverage as required by Law to all Employees of Seller that are not Transferred Employees, and their eligible dependents covered under the health plans in which Seller participates. Seller shall provide COBRA continuation coverage at Buyer’s expense to Transferred Employees until such time as such Transferred Employees are eligible for benefits under Buyer’s health and welfare plans. In order to receive COBRA continuation coverage, such individuals must properly elect to receive such coverage, and make prompt and timely payment of all premiums due in respect of such COBRA continuation coverage. Seller acknowledges that Buyer will offer Transferred Employees and their eligible dependents coverage under Buyer’s health plan effective on the first day of the month following completion of 30 days of employment with Buyer. Seller shall be solely responsible for reasonable severance payments to not more than two Non-Offeree Employees identified by Buyer pursuant to Section 6.5 and to any Offeree Employees who do not accept a Qualified Offer from Buyer, provided that, if Buyer shall have failed to make a Qualified Offer to at least five employees of Seller, Buyer shall be solely responsible for reimbursing Seller for severance payments in accordance with Seller’s existing policy to all but two Non-Offeree Employees.