ASSET PURCHASE AGREEMENT

INTRODUCTION			1
BACKGROUND			1
1.	Definitions		1
2.	Sale and Purchase		10
	2.1	Agreement to Sell and Purchase	10
	2.2	Purchase Price	12
	2.3	Assumption of Liabilities	12
	2.4	Consent of Third Parties	13
3.	Closing		14
	3.1	Location; Date	14
	3.2	Deliveries	14
4.	Representations and Warranties of Seller		15
	4.1	Organization and Standing	16
	4.2	[Reserved]	16
	4.3	Authority and Binding Effect	16
	4.4	Consents and Approvals	16
	4.5	[Reserved]	16
	4.6	[Reserved]	16
	4.7	Taxes	16
	4.8	[Reserved]	17
	4.9	[Reserved]	17
	4.10	Inventory	17
	4.11	Title to Purchased Assets and Related Matters	17
	4.12	Condition of Purchased Assets	18
	4.13	Real Property	18
	4.14	Intellectual Property.	19
	4.15	Contracts	20
	4.16	Employees/Independent Contractors	21
	4.17	Governmental Permits	21
	4.18	Compliance with Law and Court Orders	21
	4.19	Claims	22
	4.20	Insurance	22
	4.21	Non-Real Estate Leases	22

 

 

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“ Business Day ” means any calendar day which is not a Saturday, Sunday or public holiday under the laws of the State of New Jersey.

 

“ Buyer ” is defined in the Introduction.

 

“ Buyer Officer’s Certificate ” is defined in Section 9.1 .

 

“ CERCLA ” is defined in Section 4.24 .

 

“ Change Order ” means the change order between the Parties pursuant to the Existing Manufacturing Agreement, originally dated February 16, 2005 and as amended from time to time.

 

“ Change Order No. 2 ” means the change order between the Parties pursuant to the Existing Manufacturing Agreement, dated October 4, 2005.

 

“ Charter Documents ” means an entity’s certificate or articles of incorporation or formation, certificate defining the rights and preferences of securities, articles of organization, general or limited Seller agreement, operating agreement, certificate of limited Seller, joint venture agreement or similar document governing the entity.

 

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

 

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

 

“ Closing ” is defined in Section 3.1 .

 

“ Closing Consents ” is defined in Section 8.3 .

 

“ Closing Date ” is defined in Section 3.1 .

 

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder.

 

“ Commercially Reasonable ” means, with respect to arrangements made by, and performance of covenants of, a Party under this Agreement, means that such Party shall, if appropriate, incur expenses in the nature of processing fees (including legal review), administrative and other costs and expenses that are reasonable in amount, but such Party shall not be required to make any payment or offer or grant any financial accommodation or other benefit to any counterparty not otherwise provided under any applicable agreement between such Party and such counterparty, or release any claim or right under any such applicable agreement.

 

“ Confidential Information ”means any confidential or proprietary information of Seller Related to the Business, including but not limited to, personnel information that Seller is not permitted to disclose pursuant to law and its existing privacy policies, correspondence and communications between Seller and the FDA or other Governmental Body, know-how, trade secrets, formulae, specifications, technical information, processes, models, inventions, discoveries, graphical and computer generated material, manuals, plans, designs, prototypes, drawings (including engineering and auto-cad drawings), proprietary information, the DMF numbered 17159, blue prints, data, databases, software, source codes, advertising and marketing plans or systems, distribution and sales methods or systems, pricing lists and pricing formulae, customer and client lists, customer, client, dealer, distributor, wholesaler and supplier information (including principal contacts, addresses and telephone numbers), purchasing history, financial information and all documentation related to the foregoing. Notwithstanding the foregoing, Confidential Information shall not include information (a) which was publicly known prior to the date of this Agreement or (b) that becomes publicly known without any act or omission by Seller.

 

“ Confidentiality Agreement ” is defined in Section 13.1 .

 

“ Consent to Assignment ” means the Consent to Assignment and Assumption of Lease Agreement, by and between Seller, as tenant, and Buyer, as assignee, Safeguard, as guarantor, and consented to by the Landlord, substantially in the form of Exhibit F

 

“ Contingent Claim ” is defined in Section 10.8 .

 

“ Contract ” means any written or oral contract, agreement, purchase order, lease, instrument or other document, commitment, arrangement, or undertaking that is binding on any Person or its property under applicable Law.

 

“ Court Order ” means any judgment, decree, injunction, order or ruling of any federal, state, local or foreign court or governmental or regulatory body or authority that is binding on any Person or its property under applicable Law.

 

“ Current Renovations ” means the construction and alterations activities being conducted at the Totowa Property by Buyer pursuant to Change Order No. 2.

 

“ Damages ” is defined in Section 10.1(a) .

 

“ DAS Agreement ” means the Supply Agreement dated May 31, 2002 (the “ Agreement ”) between Seller (as successor to Laureate Pharma L.P.) and DrugAbuse Pharmaceuticals, Inc. (as successor to Drug Abuse Sciences, Inc.) (“ DAS ”), including any subsequent agreements defining the relationship between Seller and DAS, including that certain Assignment, Amendment and Reaffirmation Agreement dated June 17, 2004.

 

“ Default ” means (i) a breach, default or violation, (ii) the occurrence of an event that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or (iii) with respect to any Contract, the occurrence of an event that with or without the passage of time or the giving of notice, or both, would give rise to a right of termination, renegotiation or acceleration.

 

“ Disclosing Party ” is defined in Section 6.6(b) .

 

“ DMFs ” is defined in Section 4.32 .

 

“ Drug Establishment Registration ” means a registration with the FDA under 21 C.F.R. Sec. 207.20 by an owner or operator of a drug establishment (as defined in 21 C.F.R. Sec. 207.3).

 

“ Drug Master File ” means a drug master file as described in 21 C.F.R. Sec. 314.420.

 

“ Employee Lease ” means that certain agreement, dated December 3, 2004, between Seller and the P.F. Laboratories, Inc., a New Jersey corporation, relating to the lease by Seller of unionized employees at the Totowa Property.

 

“ Employee Compensation List ” is defined in Section 4.16 .

 

“ Encumbrances ” means any lien, mortgage, security interest, pledge, restriction on transferability, defect of title or other claim, charge or encumbrance of any nature whatsoever on any property or property interest.

 

“ Environmental Claims ” is defined in Section 4.24(i) .

 

“ Environmental Laws ” is defined in Section 4.24(ii) .

 

“ Environmental Liability ” means any and all liabilities, claims, costs, damages, losses, expenses, penalties, fines, attorneys’ fees, court costs and other costs incurred or imposed (a) pursuant to any order, notice of responsibility, injunction, judgment or similar act (including settlements) by any Governmental Body to the extent arising out of (i) Seller’s violation of Environmental Laws occurring at any property owned or operated by Seller prior to the Closing Date or (ii) the Previous Owner’s violation of Environmental Laws occurring at any property owned or operated by Previous Owner prior to December 3, 2004 or (b) pursuant to any claim or cause of action by a Governmental Body or other third Person for personal injury, property damage, or remediation costs to the extent arising out of or attributable to (i) Seller’s violation of, or Seller’s actions which result in a remedial obligation under, any Environmental Law occurring prior to the Closing Date or (ii) the Previous Owner’s violation of, or the Previous Owner’s actions which result in a remedial obligation under, any Environmental Law occurring prior to December 3, 2004.

 

“ Environmental Permit ” is defined in Section 4.24(iii) .

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and all regulations and rules issued thereunder, or any successor law.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

“ Excluded Assets ” is defined in Section 2.1(b) .

 

“ Excluded Equipment ” is defined in Section 2.1(b)(iii) .

 

“ Existing Manufacturing Agreement ” means the Technology Transfer and Manufacturing Agreement, dated October 3, 2003, between the Parties, together with any amendments thereto following the date hereof.

 

“ Expiration Date ” is defined in Section 10.4(b) .

 

“ FDA ” is defined in Section 4.32 .

 

“ FDA Documents ” is defined in Section 4.32 .

 

“ FDA Requirements ” is defined in Section 4.32 .

 

“ FFDCA ” is defined in Section 4.32.

 

“ Fixed Assets is defined in Section 4.28 .

 

“ GAAP ” means generally accepted accounting principles in the United States, consistently applied.

 

“ Governmental Body ” means any United States (a) federal, state, commonwealth, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal or other government or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, regulatory body or other entity and any court, arbitrator or other tribunal).

 

“ Governmental Permit ” means any permit, license, registration, certificate of occupancy, approval, privilege, franchise, variance, exemption, consent or other authorization of any nature whatsoever, granted, approved or allowed by any Governmental Body.

 

“ Hazardous Material ” is defined in Section 4.24(iv) .

 

“ Indemnified Buyer Party ” is defined in Section 10.1 .

 

“ Indemnified Party ” means an Indemnified Buyer Party or an Indemnified Seller Party.

 

“ Indemnified Seller Party ” is defined in Section 10.2 .

 

“ Indemnitor ” is defined in Section 10.3(a) .

 

“ INDs ” is defined in Section 4.32 .

 

“ Information Technology ” means all communications systems and computer systems used or held for use in the conduct of the Business by Seller including all hardware, software, and URLs.

 

“ Insurance Claims List ” is defined in Section 4.20 .

 

“ Inventory ” means (i) all items purchased by Buyer and delivered to Seller under the Existing Manufacturing Agreement, wherever located, and (ii) the items that shall be the subject of the Inventory Payment at Closing, in each case as listed on Schedule 1.1 , which shall be updated by mutual agreement immediately prior to the Closing.

 

“ Inventory Payment ” means the dollar amount payable for the items specified on Schedule 1.1 .

 

“ ISRA ” is defined in Section 4.24 .

 

“ Knowledge of Buyer ” means the actual knowledge of Robert J. Capetola, Ph.D., Christopher J. Schaber, Ph.D., John G. Cooper, David Lopez, Cynthia Davis and Jerry Orehostky, in each case, after reasonable investigation without any constructive or imputed knowledge of Buyer or any of its directors, officers or employees or owner.

 

“ Knowledge of Seller ” means the actual knowledge of Robert J. Broeze, Mary-Joan Hampson-Carlin, Ernest Tyler, John Morris, Steven J. Grenfell, Steven J. Feder and Christopher J. Davis, in each case, after reasonable investigation without any constructive or imputed knowledge of Seller or any of its directors, officers or employees or owner.

 

“ Landlord ” means Norwell Land Company, the landlord under the Totowa Lease.

 

“ Law ” means any statute, law, ordinance, regulation, order, code or rule of any United States federal, state, or local governmental or regulatory body or authority, including those covering biopharmaceuticals, pharmaceuticals (including drugs, biologics, radiopharmaceuticals, and controlled substances), environmental, energy, safety, health, information technology, transportation, bribery, record keeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters.

 

“ Legal Proceeding ” means any action, lawsuit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative, or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted, or heard by or before, or otherwise involving, any court or other Governmental Body or any arbitrator or arbitration panel.

 

“ Liability ” means any direct or indirect liability, indebtedness, obligation, expense, debt, claim, loss, damage, deficiency, guaranty or endorsement of any nature, of or by any Person, whether absolute or contingent, known or unknown, secured or unsecured, recourse or non-recourse, filed or unfiled, accrued or unaccrued, due or to become due, or liquidated or unliquidated.

 

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

 

“ Litigation ” means any action, lawsuit, arbitration, administrative or other proceeding (including any civil, criminal, investigative, or appellate proceeding), hearing, criminal prosecution or investigation or inquiry by any court or Governmental Body.

 

“ LNA ” is defined in Section 6.15 .

 

“ Material Adverse Effect ” means a material adverse effect on the business, Assets (including the Purchased Assets), operation or condition (financial or otherwise), results of operations of Seller as it Relates to the Business, consistent with past practice.

 

“ Milestone Payments ” means the milestone payments aggregating $636,000 (consisting of payments in the amounts of $530,000 and $106,000 under the Change Order) that were to be paid upon written agreement of the quality committee that the facility, quality systems and Surfactant manufacturing process are ready for FDA re-inspection, which payments shall accelerate and become due and owing at the Closing.

 

“ Minor Contract ” means (a) any Contract Relating to the Business that is terminable by a Party on not more than 30 days’ notice without any Liability, (b) any Contract Relating to the Business (other than Off-the-Shelf Software) under which the obligation of a Party (fulfilled and to be fulfilled) involves an amount of less than $5,000 and any group of similar Contracts under which the obligation of a Party (fulfilled and to be fulfilled) involves an amount of less than $10,000, and (c) any Off-the-Shelf Software.

 

“ NDAs ” is defined in Section 4.32 .

 

“ NJDEP ” means the New Jersey Department of Environmental Protection.

 

“ Non-Assignable Contract ” is defined in Section 2.4 .

 

“ Non-Offeree Employee ” is defined in Section 6.5 .

 

“ Non-Real Estate Leases ” is defined in Section 4.21 .

 

“ Offeree Employee ” is defined in Section 6.5 .

 

“ Off-the-Shelf Software ” means any software license implied by the sale of a product and perpetual, paid-up royalty free and transferable license rights for “off-the-shelf” third party application software licensed for use in the Business, in any individual case, under a license with a maximum payment obligation on the part of Seller of less than $3,000.

 

“ Ordinary course ” or “ ordinary course of business ” means the ordinary course of business that is consistent with past practices.

 

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“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

“ Seller Contracts ” is defined in Section 4.15(a) .

 

“ Seller Insurance ” is defined in Section 4.20 .

 

“ Seller Officer’s Certificate ” is defined in Section 8.1 .

 

“ Seller Required Consent ” is defined in Section 4.4 .

 

“ SOPs ” means the methods, processes, reports and standard operating procedures (collectively, the “SOPs”) of Seller used in the operation of the Business, including without limitation those listed on Schedule 2.1(a)(iii) .

 

“ Structures ” means all buildings, structures, fixtures, facilities and improvements to any Real Property.

 

“ Taxes ” shall mean all taxes, duties, charges, fees, levies or other assessment imposed by any taxing authority, including income, capital gains, gross revenue, profits, gross receipts, value-added, excise, withholding, personal property, real estate, sale, use, ad valorem, license, capital, lease, goods and services, severance, stamp, transfer, payroll, employment, customs, duties, alternative, add-on minimum, estimated and franchise taxes (including any interest, penalties or additions attributable to or imposed on or with respect to any such assessment, which shall be deemed to be Taxes for any taxable period with respect to which they shall arise, regardless of when they shall accrue or be payable.).

 

“ Tax Returns ” means any and all returns, reports, claims for refund, information returns, or other statements (including elections, declarations, disclosures, schedules, estimates, and attachments), including estimates or amendments thereof, required to be filed by a Party with respect to any Taxes.

 

“ Termination Agreement ” means the Termination Agreement, by and among Seller, Safeguard and The P.F. Laboratories, Inc., in substantially the form attached as Exhibit I .

 

“ Termination and Option Agreement ” means that certain agreement, dated December 3, 2004, between Seller and Norwell Land Company relating to the parties’ respective rights and obligations under the Totowa Lease and relating to the Totowa Property.

 

“ Termination Date ” is defined in Section 11.1(b) .

 

“ Third-Party Claim ” is defined in Section 10.5(a) .

 

“ Threshold Amount ” is defined in Section 10.4(a) .

 

“ Totowa Lease ” means that certain lease, dated December 3, 2004, for the Totowa Property between Seller, as tenant, and the Norwell Land Company, as landlord.

“ Totowa Property ” means the facility leased by Seller consisting of approximately 21,000 square feet in a building located at 710 Union Boulevard, Totowa, New Jersey.

“ 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.

 

 

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.

(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 adverse