ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

You are currently viewing:

This Asset Purchase Agreement involves

CYCLACEL PHARMACEUTICALS, INC. | Achilles Acquisition LLC | ALIGN Holdings, LLC | ALIGN PHARMACEUTICALS, LLC | Cyclacel Pharmaceuticals, Inc

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: ASSET PURCHASE AGREEMENT
Governing Law: New York Date: 11/7/2007
Industry: Biotechnology and Drugs Law Firm: Smith Anderson;Mintz Levin Sector: Healthcare

ASSET PURCHASE AGREEMENT

BY AND AMONG

ALIGN PHARMACEUTICALS, LLC

ALIGN HOLDINGS, LLC,

as Seller,

and

ACHILLES ACQUISITION, LLC,

as Buyer

Dated as of October 5, 2007

Table of Contents

		Page
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION		1
1.1	Definitions	1

ARTICLE II PURCHASE AND SALE		8
2.1	Purchased Assets	8
2.2	Excluded Assets	9
2.3	Assumed Liabilities	9
2.4	Excluded Liabilities	10
2.5	Collection of Purchased Receivables	11
2.6	Returned Products	11

ARTICLE III PURCHASE PRICE		11
3.1	Purchase Price	11
3.2	Payment of Purchase Price; Earn-Out	12
3.3	Closing	12
3.4	Transfer Taxes	12

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER		12
4.1	Organization and Qualification	12
4.2	Charter and Limited Liability Company Records	13
4.3	Authorization; Enforceability	13
4.4	No Violation or Conflict	13
4.5	Contracts	13
4.6	Litigation	14
4.7	Brokers	15
4.8	Compliance with Law	15
4.9	Certain Practices	15
4.10	Governmental Consents and Approvals	15
4.11	No Other Agreements to Purchase	15
4.12	Receivables	15
4.13	Balance Sheet	15
4.14	Absence of Undisclosed Liabilities	16
4.15	Conduct in the Ordinary Course; Absence of Changes	16
4.16	Inventory	16
4.17	Personal Property	16
4.18	Purchased Assets	17
4.19	Permits	18
4.20	Taxes	18
4.21	Intellectual Property	19
4.22	Labor Matters	21
4.23	Employee Benefit Plans	22
4.24	Environmental Matters	24
4.25	Products	24

Table of Contents

(continued)

		Page
4.26	Certain Interests	24
4.27	Real Property	25
4.28	Disclosure	25
4.29	Purchase For Investment; Residence	25

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		25
5.1	Organization and Qualification	25
5.2	Authorization; Enforceability	25
5.3	No Violation or Conflict	26
5.4	Governmental Consents and Approvals	26
5.5	Brokers	26

ARTICLE VI COVENANTS		26
6.1	Performance	26
6.2	Regulatory and Other Authorizations; Notices and Consents	26
6.3	Conduct of the Business Prior to the Closing	27
6.4	Access	28
6.5	Notification	28
6.6	Use of Intellectual Property	29
6.7	Transfer or other Disposition of Shares	29

ARTICLE VII CONDITIONS PRECEDENT TO CLOSING; TERMINATION		29
7.1	Conditions Precedent to the Obligations of the Purchaser	29
7.2	Conditions Precedent to the Obligations of the Seller	32
7.3	Termination	33

ARTICLE VIII INDEMNIFICATION		35
8.1	Survival of Representations, Warranties and Covenants	35
8.2	Investigation	35
8.3	Definitions	35
8.4	Indemnification Generally; Limitations	36
8.5	Event of Indemnification in Excess of Stock Consideration	36
8.6	Valuation of Parent Common Stock	37
8.7	Notice and Defense of Third Party Claims	37

ARTICLE IX MISCELLANEOUS		38
9.1	Notices	38
9.2	Entire Agreement	39
9.3	Binding Effect	39
9.4	Assignment	39
9.5	Modifications and Amendments	39
9.6	Waivers and Consents	39
9.7	No Third Party Beneficiary	39

Table of Contents

(continued)

		Page
9.8	Severability	39
9.9	Publicity	40
9.10	Governing Law; Jurisdiction	40
9.11	Counterparts	40
9.12	Headings	40
9.13	Expenses	40
9.14	Further Assurances	40

iii

Portions of this Agreement were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “ Agreement ”) is entered into as of October 5, 2007 by and among ALIGN Pharmaceuticals, LLC (“ Pharmaceuticals ”) and ALIGN Holdings, LLC (“ Holdings ,” and, unless the context otherwise requires, collectively with Pharmaceuticals, the “ Seller ”), Cyclacel Pharmaceuticals, Inc. (“ Parent ”) and Achilles Acquisition LLC, a limited liability company that is wholly-owned by Parent (the “ Purchaser ”).

WHEREAS , the Seller is engaged in the business of the sale and distribution of specialty pharma drugs being sold by the Seller as of the date hereof (the “ Business ”);

WHEREAS , the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, substantially all of the assets of the Seller used in or relating to the Business, all upon the terms and conditions set forth herein;

WHEREAS , the managers of the Seller deem it advisable and in the best interest of their respective creditors and members to enter into this Agreement and to consummate the transactions contemplated hereby on the terms and subject to the conditions provided for in this Agreement; and

WHEREAS , the board of directors of Parent deems it advisable and in the best interest of its stockholders and the Seller’s creditors to enter into this Agreement and to consummate the transactions contemplated hereby on the terms and subject to the conditions provided for in this Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual covenants, representations and warranties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

1.1 Definitions . In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the respective meanings set forth below:

“ Action ” means any claim, demand, action, cause of action, chose in action, right of recovery, right of set-off, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“ Affiliate ” means, with respect to a specified Person, any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to the specified Person: (a) any other Person which beneficially owns or holds 5% or more of the outstanding voting securities or other securities convertible into voting securities of such Person; (b) any other Person of which the specified Person beneficially owns or holds 5% or more of the outstanding voting securities or other securities convertible into voting securities; or (c) any director, manager, officer or employee of such Person.

“ Agreement ” has the meaning set forth in the recitals to this Agreement.

“ Ancillary Agreements ” means the Bill of Sale, the Assumption Agreement, the Employment Agreement, the Consulting Agreements, the Compromise Agreements, the Supply Agreement and all other agreements, certificates, instruments, documents and writings delivered by the parties hereto in connection with any transaction contemplated hereby or thereby (excluding the Documents, as defined herein).

“ Assumed Liabilities ” has the meaning set forth in Section 2.3 .

“ Assumption Agreement ” has the meaning set forth in Section 2.3 .

“ Balance Sheet ” has the meaning set forth in Section 4.13 .

“ Balance Sheet Date ” has the meaning set forth in Section 4.13 .

“ Bill of Sale ” has the meaning set forth in Section 2.1 .

“ Business ” has the meaning set forth in the recitals to this Agreement.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which banks are required or authorized to be closed in the city of New York.

“ Cash ” means all cash and cash equivalents (including marketable securities and short-term investments) on hand or in banks or other depositories calculated in accordance with GAAP applied on a consistent basis.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended through the date hereof and any regulations promulgated thereunder.

“ Closing ” has the meaning set forth in Section 3.3 .

“ Closing Date ” has the meaning set forth in Section 3.3 .

“ COBRA Coverage ” has the meaning set forth in Section 4.23(d) .

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Compromise Agreements ” has the meaning set forth in Section 7.1(o) .

“ Compromised Claims ” means those Liabilities of the Seller set forth on Schedule A .

“ Confidentiality Agreement ” has the meaning set forth in Section 6.4(d) .

“ Consents ” has the meaning set forth in Section 4.5(c) .

“ Consulting Agreement ” has the meaning set forth in Section 7.1(k) .

“ Contract ” means any contract, plan, undertaking, understanding, agreement, license, lease, note, mortgage or other binding commitment, whether written or oral.

“ Court ” means any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political subdivision thereof.

“ Copyrights ” mean all copyrights (registered or otherwise) and registrations and applications for registration thereof, and all rights therein provided by multinational treaties or conventions.

“ Database ” means all data and other information recorded, stored, transmitted and retrieved in electronic form.

“ Disclosure Schedule ” has the meaning set forth in Article IV .

“ Documents ” means this Agreement, together with the Ancillary Agreements, the Schedules and Exhibits hereto and thereto, and the Disclosure Schedule and the other agreements, documents and instruments executed in connection herewith.

“ Employee Plans ” has the meaning set forth in Section 4.23(a) .

“ Employment Agreement ” has the meaning set forth in Section 7.1(j) .

“ Environmental Condition ” means a condition relating to, or arising or resulting from a failure to comply with any applicable Environmental Law or Environmental Permit, or any release of a Hazardous Substance into the environment.

“ Environmental Law ” means any Law or Regulation pertaining to: (a) the protection of health, safety and the indoor or outdoor environment; (b) the conservation, management or use of natural resources and wildlife; (c) the protection or use of surface water and ground water; (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, emission, discharge, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Substance; or (e) pollution (including any emission, discharge or release to air, land, surface water and ground water of any material); and includes, without limitation, CERCLA and the Solid Waste Disposal Act, as amended 42 U.S.C. § 6901 et seq.

“ Environmental Permits ” means all Permits required under any Environmental Law.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” has the meaning set forth in Section 4.23(a) .

“ Event of Indemnification ” has the meaning set forth in Section 8.3(a) .

“ Excluded Assets ” has the meaning set forth in Section 2.2 .

“ Excluded Liabilities ” has the meaning set forth in Section 2.4 .

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

“ GAAP ” means United States generally accepted accounting principles and practices in effect from time to time consistently applied.

“ Governmental Authority ” means any governmental, or legislative agency or authority (other than a Court) of the United States, any domestic state, any foreign country, and any political subdivision or agency thereof, and includes any authority having governmental or quasi-governmental powers, including any administrative agency or commission.

“ Hardware ” means all mainframes, midrange computers, personal computers, notebooks, servers, switches, printers, modems, drives, peripherals and any component of any of the foregoing.

“ Hazardous Substance ” means any Hazardous Substance, as defined in CERCLA, and any other chemical, compound, product, solid, gas, liquid, pollutant, contaminant or material which is regulated under any Environmental Law, and includes without limitation, asbestos or any substance containing asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof).

“ Holdings ” has the meaning set forth in the recitals to this Agreement.

“ Indebtedness ” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the Seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire, decease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Indebtedness of others referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss and all Indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.

“ Indemnified Persons ” has the meaning set forth in Section 8.3(b) .

“ Indemnifying Persons ” has the meaning set forth in Section 8.3(c) .

“ Information System ” means any combination of Hardware, Software and/or Database(s) employed primarily for the creation, manipulation, storage, retrieval, display and use of information in electronic form or media.

“ Intellectual Property ” means (a) inventions, whether or not patentable, whether or not reduced to practice or whether or not yet made the subject of a pending Patent application or applications, (b) ideas and conceptions of potentially patentable subject matter, including, without limitation, any patent disclosures, whether or not reduced to practice and whether or not yet made the subject of a pending Patent application or applications, (c) Patents, (d) Trademarks, (e) Copyrights, (g) Software, (h) trade secrets and confidential, technical or business information (including ideas, formulas, compositions, inventions, and conceptions of inventions whether patentable or unpatentable and whether or not reduced

to practice), (i) whether or not confidential, technology (including know-how and show-how), manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, (j) copies and tangible embodiments of all the foregoing, in whatever form or medium, (k) all rights to obtain and rights to apply for Patents, and to register Trademarks and Copyrights, (l) all rights under the License Agreements and any licenses, registered user agreements, technology or materials, transfer agreements, and other agreements or instruments with respect to items in (a) to (k) above; and (m) all rights to sue and recover and retain damages and costs and attorneys’ fees for present and past infringement of any of the Intellectual Property rights hereinabove set out.

“ Inventory ” means all inventory, including, without limitation, merchandise, raw materials, work-in-process, finished products, including drugs, replacement parts, packaging, office supplies and maintenance supplies related to the Business, maintained, held or stored by or for the Seller at any location whatsoever and any prepaid deposits for any of the same.

“ IRS ” shall mean the United States Internal Revenue Service.

“ Knowledge ” means (a) in the case an individual, knowledge of a particular fact or other matter if (i) such individual is actually aware of such fact or other matter, or (ii) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the existence of such fact or other matter, and (b) in the case of a Person (other than an individual) such Person will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, or has at any time served, as a manager, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.

“ Law ” means all laws, statutes, ordinances and Regulations of any Governmental Authority including all decisions of Courts having the effect of law in each such jurisdiction.

“ Leased Real Property ” means the real property leased by the Seller as tenant, together with, to the extent leased by the Seller, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Seller attached or appurtenant thereto, and all easements, licenses, rights and appurtenances relating to the foregoing.

“ Liabilities ” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including, without limitation, those arising under any Law (including, without limitation, any Environmental Law), Action or Order, Liabilities for Taxes and those Liabilities arising under any Contract (any one of the Liabilities, a “Liability” ).

“ License Agreements ” has the meaning set forth in Section 4.21(c) .

“ Licensed Intellectual Property ” means all Intellectual Property licensed or sublicensed by the Seller from a third party, including the License Agreements.

“ Liens ” means any mortgage, pledge, security interest, attachment, encumbrance, lien (statutory or otherwise), option, conditional sale agreement, right of first refusal, first offer, termination, participation or purchase, or charge of any kind (including any agreement to give any of the foregoing).

“ Litigation ” means any suit, action, arbitration, cause of action, claim, complaint, criminal prosecution, investigation, inquiry, demand letter, governmental or other administrative proceeding, whether at law or at equity, before or by any Court, Governmental Authority, arbitrator or other tribunal.

“ Losses ” has the meaning set forth in Section 8.3(d) .

“ Material Adverse Effect ” means any circumstance, change in, or effect on, the Business or the Seller that, individually or in the aggregate with any other circumstances, changes in, or effects on, the Seller or the Business (a) is, or could be, materially adverse to the business, operations, assets or liabilities (including, without limitation, contingent liabilities), employee relationships, customer or supplier relationships, prospects, results of operations or the condition (financial or otherwise) of the Business, or (b) could materially adversely affect the ability of the Purchaser to operate or conduct the Business in the manner in which it is currently operated or conducted, or contemplated to be conducted, by the Seller.

“ Material Contract ” has the meaning given to it in Section 4.5(a) .

“ Milestone One ” has the meaning given to it in Section 3.2(b)(iii) .

“ Milestone Two ” has the meaning given to it in Section 3.2(b)(iii) .

“ Net Sales ” has the meaning given to it in Section 3.2(b)(iii) .

“ Order ” shall mean any judgment, order, writ, injunction, ruling, stipulation, determination, award or decree of or by, or any settlement under the jurisdiction of, any Court or Governmental Authority.

“ Owned Intellectual Property ” means all Intellectual Property in and to which the Seller has, or has a right to hold, right, title and interest.

“ Parent Common Stock ” means the common stock, par value $0.001 per share, of the Parent.

“ Parent Common Stock Price ” means the average of the closing prices per share of Parent Common Stock for the 90 Trading Day period ending on the date hereof.

“ Patents ” mean all national (including the United States) and multinational statutory invention registrations, patents, patent registrations and patent applications, including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations, and all rights therein provided by multinational treaties or conventions and all improvements to the inventions disclosed in each such registration, patent or application.

“ Permits ” means any licenses, permits, pending applications, consents, certificates, registrations, approvals and authorizations.

“ Person ” means any natural person, corporation, limited liability company, unincorporated organization, partnership, association, joint stock company, joint venture, trust or any other entity.

“ Pharmaceuticals ” has the meaning set forth in the recitals to this Agreement.

“ Products ” has the meaning set forth in Section 4.25 .

“ Purchase Price ” has the meaning set forth in Section 3.1 .

“ Purchased Assets ” has the meaning set forth in Section 2.1 .

“ Purchased Receivables ” has the meaning set forth in Section 2.1(c) .

“ Purchaser ” has the meaning set forth in the recitals to this Agreement.

“ Real Property ” means the Leased Real Property and the Owned Real Property.

“ Receivables ” means any and all accounts receivable, notes, book debts and other amounts due or accruing due to the Seller in connection with the Business, whether or not in the ordinary course, together with any unpaid financing charges accrued thereon and the benefit of all security for such accounts, notes and debts.

“ Regulation ” shall mean any rule or regulation of any Governmental Authority .

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Seller ” has the meaning set forth in the recitals to this Agreement.

“ Seller’s Taxes ” has the meaning set forth in Section 2.4(c) .

“ Software ” means any and all (a) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (d) the technology supporting any Internet site(s) operated by or on behalf of the Seller and (e) all documentation, including user manuals and training materials, relating to any of the foregoing.

“ Subsidiary ” or “ Subsidiaries ” of a specified Person means any other Person in which such Person owns, directly or indirectly, more than 50% of the outstanding voting securities or other securities convertible into voting securities, or which may effectively be controlled, directly or indirectly, by such Person.

“ Supply Agreement ” means that certain Supply Agreement to be entered into by and between the Purchaser and Sinclair Pharmaceuticals Ltd on or before the Closing.

“ Survival Date ” has the meaning set forth in Section 8.1 .

“ Tangible Personal Property ” has the meaning set forth in Section 4.17(a) .

“ Tax ” or “ Taxes ” means any and all federal, state, local, or foreign taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority or other taxing authority, including, without limitation: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, disability, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs, and similar charges, whether computed on a separate or consolidated, unitary or combined basis or in any

other manner, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“ Tax Returns ” means returns, reports and information statements, including any schedule or attachment thereto, with respect to Taxes required to be filed with the IRS or any other Governmental Authority or other taxing authority or agency, domestic or foreign, including consolidated, combined and unitary tax returns.

“ Third Party Claim ” has the meaning set forth in Section 8.7 .

“ Trading Day ” means a day on which securities are traded on the NASDAQ market.

“ Trademarks ” mean all trademarks, service marks, trade dress, logos, trade names and corporate names, whether or not registered, including all common law rights, and registrations and applications for registration thereof, including, but not limited to, all marks registered in the United States Patent and Trademark Office, the Trademark Offices of the States and Territories of the United States of America, and the Trademark Offices of other nations throughout the world, and all rights therein provided by multinational treaties or conventions.

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

ARTICLE II

PURCHASE AND SALE

2.1 Purchased Assets . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, each of Holdings and Pharmaceuticals agrees to sell, assign, transfer, convey and deliver to the Purchaser (each pursuant to a Bill of Sale (together the “ Bills of Sale ”) in substantially the form of Exhibit 2.1 attached hereto), and the Purchaser agrees to purchase from the Seller, free and clear of all Liens and Liabilities, substantially all of the assets and property used in connection with or otherwise relating to the Business (other than the Excluded Assets), whether real or personal, tangible or intangible (including, without limitation, the telephone numbers used in the Business), of every kind and description and wherever situated and whether or not specifically referred to in this Agreement (collectively, the “ Purchased Assets ”), including, without limitation, the following:

(a) Machinery, Equipment and Furniture . All furniture, fixtures, equipment, machinery and other tangible personal property used or held for use by the Seller at the locations at which the Business is conducted, or otherwise owned or held by the Seller at the Closing Date for use in the conduct of the Business, including, without limitation, the furniture, fixtures, equipment, machinery and tangible personal property listed in Schedule 4.17 ;

(b) Inventories . All Inventories;

(d) Books and Records . All books and records (other than those required by law to be retained by the Seller, copies of which will be made available to the Purchaser) including, without limitation, customer lists, sales records, price lists and catalogues, sales literature, advertising material,

manufacturing data, production records, employee manuals, personnel records, supply records, inventory records and correspondence files (together with, in the case of any such information which is stored electronically, the media on which the same is stored);

(e) Goodwill . The goodwill of the Seller relating to the Business together with the exclusive right for the Purchaser to represent itself as carrying on the Business in succession to the Seller and the right to use any words indicating that the Business is so carried on, including the exclusive right to use the name Align Pharmaceuticals, or any variation thereof, as part of the name or style under which the Business or any part thereof is carried on by the Purchaser;

(f) Intellectual Property . All the Seller’s right, title and interest in, to and under the Licensed Intellectual Property and the Owned Intellectual Property of the Seller;

(g) Claims and Causes of Action . All Actions of any kind (including rights to insurance proceeds and rights under and pursuant to all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof) pertaining to or arising out of the Business, and inuring to the benefit of the Seller, together with any and all Liens granted or otherwise available to the Seller as security for collection of any of the foregoing;

(h) Prepaid Expenses . All prepaid expenses of the Seller;

(i) Contracts . All rights under Contracts of or relating to the Business, listed in Schedule 4.5(a) , together with all of the Seller’s claims or rights of action now existing or hereafter arising thereunder;

(j) Hardware and Software . All of the Seller’s Information Systems and other Hardware, Software and Databases, including, without limitation, all rights under licenses and other agreements or instruments related thereto; and

(k) Permits . To the extent transferable, all Permits held or used by the Seller in connection with, or required for or useful for, the Business, including, without limitation, those listed in Schedule 4.19 .

2.2 Excluded Assets . Notwithstanding the provisions of Section 2.1 , the Purchased Assets shall not include any of the following property and assets of the Seller (collectively, the “ Excluded Assets ”):

(a) Indebtedness Owed to Any Seller . All Indebtedness owed to any Seller by another Seller or any Affiliate of any Seller.

(b) Income Taxes . All income tax installments paid by the Seller and the right to receive any refund of income taxes paid by the Seller;

(c) All corporate records, including, but not limited to, the Seller’s minute book and stock record book (but not including records of the Business relating to operation of the Business described in Section 2.1(d) ); and

(d) The assets listed on Exhibit 2.2(d) attached hereto.

2.3 Assumed Liabilities . At the Closing, the Purchaser shall execute and deliver the Assumption Agreement substantially in the form of Exhibit 2.3 attached hereto (the “ Assumption

Agreement ”), pursuant to which, subject to the provisions of Section 2.4 , it shall assume and agree to pay, perform and discharge only the Liabilities of the Seller arising under the Contracts listed in Schedule 4.5(a) and included in the Purchased Assets from and after the Closing Date (other than Liabilities or obligations attributable to any failure by the Seller to comply with the terms thereof) (the “ Assumed Liabilities ”). All other Liabilities of the Seller shall be settled at or prior to Closing through the Compromise Agreements or otherwise.

2.4 Excluded Liabilities . The Seller shall retain, and shall be responsible for paying, performing and discharging when due, and the Purchaser shall not assume or have any responsibility for, any and all Liabilities of the Seller (including, without limitation, the Compromised Claims) other than the Assumed Liabilities (the “ Excluded Liabilities ”). Without limiting the generality of the foregoing, the Purchaser shall not assume, and the Seller shall remain responsible for, and shall indemnify the Purchaser with respect to, the following:

(a) all obligations or Liabilities for any administrative expenses or fees or expenses of professional persons (including any attorney, consultant or financial advisor) employed or retained by the Seller in connection with the transaction contemplated by this Agreement;

(b) subject to Section 2.3 , all Liabilities or obligations (whether absolute, contingent, or otherwise) which accrue with respect to, arise out of, or relate to, the Purchased Assets on or prior to the Closing Date, including any Liability or obligation of the Seller or any of its employees, directors, managers, officers, members, affiliates or agents arising out of, relating to, or caused by (whether directly or indirectly), the Seller’s ownership, possession, operation, interest in, use or control of the Purchased Assets;

(c) any liability or obligation for (i) Taxes of the Seller or any of its Affiliates or (ii) Taxes attributable to the Purchased Assets or the Business, in each case, relating to any period or any portion of any period ending on or prior to the Closing Date (for this purpose, ad valorem taxes shall be prorated as of the Closing Date) (the Taxes under clauses (i) and (ii), collectively, the “ Seller’s Taxes ”);

(d) subject to Section 2.3 , with respect to current or former employees, directors, managers, officers, members and consultants of the Seller and its Affiliates, all liabilities or obligations in respect of any compensation, benefit plan, pension plan, unpaid vacation days, agreement, arrangement, program, policy or understanding relating to such individuals, their service to and tenure with the Seller and its Affiliates, and their benefits, including any employment, consulting, severance or other termination payments, Liability in respect of WARN, change in control or similar agreements, workers’ compensation Liabilities, any other employment-related claim (including for actual, constructive or deemed termination, employment discrimination or wrongful discharge) or any right of indemnification;

(e) all Liabilities or obligations which arise, whether before, on or after the Closing Date, out of, or in connection with, the Excluded Assets;

(f) all Liabilities or obligations arising out of or in connection with any Indebtedness of the Seller or any of its Affiliates;

(g) all Liabilities or obligations arising from any litigation, investigation or other proceeding pending or threatened in respect of the Seller or any of its officers, directors, managers, representatives or agents or, to the extent relating to any transaction or event occurring on or prior to the Closing Date, in respect of the Purchased Assets;

(h) all Liabilities or obligations arising out of or in connection with any Real Property on or after the Closing Date; and

(i) all Liabilities and obligations incurred by the Seller on or after the Closing Date.

2.5 Collection of Purchased Receivables . The Seller agrees that, from and after the Closing Date, the Purchaser shall have the right and authority to collect for its own account the Purchased Receivables, subject to the provisions hereof, and to endorse with the name of the Seller all checks received on account of the Purchased Receivables. The Seller agrees that it will, within five Business Days, transfer, assign and deliver to the Purchaser all cash and other property which it may receive with respect to any Purchased Receivable, and pending any such delivery to the Purchaser of any such property, the Seller shall hold any such property in trust for the benefit of the Purchaser

2.6 Returned Products . Except as otherwise expressly set forth below, during the one year period immediately following the Closing Date, the Purchaser shall be responsible for processing returns of all Products which were sold by the Seller prior to the Closing Date and which are returned by customers for credit after the Closing Date. The Purchaser shall handle such returns during such period in accordance with the Seller’s applicable returned goods policy. The Seller agrees to provide the Purchaser with any information reasonably requested by the Purchaser from time to time in order to facilitate such returned products policy. In the event that [I NFORMATION O MITTED AND F ILED S EPARATELY WITH THE C OMMISSION UNDER R ULE 24B-2] or more of Products which were sold by the Seller prior to the Closing Date are returned for credit during the period after the Closing Date and ending on the second anniversary of the Closing Date, the Seller shall indemnify the Purchaser for the value of the returned Products in excess of [I NFORMATION O MITTED AND F ILED S EPARATELY WITH THE C OMMISSION UNDER R ULE 24B-2] in accordance with the terms and provisions of Article VIII hereof .

ARTICLE III

PURCHASE PRICE

3.1 Purchase Price . As consideration for the purchase of the Purchased Assets, upon the terms and conditions set forth in this Agreement, the Purchaser shall pay to the Seller the Cash Consideration and Stock Consideration (each as hereinafter defined) as follows:

(a) On the Closing Date, the Purchaser shall pay to Seller (or creditors on behalf of Seller) in cash in the aggregate amount of $3,331,428.00. The Purchaser shall remain obligated to pay up to an additional $452,464.00 (the “ Creditor Reserve ”) to creditors of the Seller (the “ Creditor Reserve Creditors ”) based on obligations to such creditors of the Seller under Compromise Agreements, to the extent Purchaser determines it is required to make such payments within 120 business days from the Closing Date. (Cash paid at closing or within 120 business days after closing shall be the “ Cash Consideration ”).

To the extent Purchaser pays the Creditor Reserve Creditors in cash, the Creditor Reserve shall be reduced by the actual amount of cash paid. To the extent Purchaser pays the Creditor Reserve Creditors with product rather than cash, the Creditor Reserve shall be reduced by Purchaser’s cost of such product. To the extent part of or the entire Creditor Reserve is not expended within 130 business days from the Closing Date, additional Stock Consideration will be provided to Seller equal to the value of the unexpended amount. The Stock Consideration would be valued at the Parent Common Stock Price. These determinations shall be made by the Purchaser, in its sole commercially reasonable discretion and Section 8.5(c) of this Agreement shall not apply to such determinations by the Purchaser which shall be final and

conclusive. In the event [I NFORMATION O MITTED AND F ILED S EPARATELY WITH THE C OMMISSION UNDER R ULE 24B-2] or more of any product distributed pursuant to this Section 3.1 is returned for credit, Seller will indemnify Purchaser in the amount of the benefit received by Seller under this Section 3.1 on account of a creditor initially accepting such returned product in lieu of cash, as payment for Seller’s obligations. Such indemnification shall be in accordance with Article VIII hereof.

(b) The Stock Consideration shall consist of shares of Parent Common Stock equal to $1,116,108, increased by the value of any additional stock issued pursuant to Section 3.1(a) above, and decreased by the value of any stock retained pursuant to Section 8 below (the “ Stock Consideration ,” and, together with Cash Consideration, the Purchase Price”) .

3.2 Payment of Purchase Price; Earn-Out .

(a) At the Closing, except as set forth in Section 3.1(a) above, the Purchaser shall pay the Seller (or creditors on behalf of the Seller) the Cash Consideration by delivery of the requisite amount of cash by wire transfer, bank check or certified check as provided in Section 3.1 .

(b) Subject to Section 3.1 and the terms of Article VIII , and following the Closing, Parent shall issue to Holdings such number of shares of Parent Common Stock as amount to the Stock Consideration, valued at the Parent Common Stock Price, to the extent the value of such Parent Common Stock is not used to satisfy the Seller’s indemnification obligations under Article VIII , as follows:

[I NFORMATION O MITTED AND F ILED S EPARATELY WITH THE C OMMISSION UNDER R ULE 24B-2]

3.3 Closing . Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500 Wachovia Capitol Center, Raleigh, North Carolina 27601 , at 12:00 P.M. on October 5, 2007 (the day on which the Closing takes place being the “ Closing Date ”).

3.4 Transfer Taxes . The Seller shall be liable for and shall pay all federal and state sales Taxes (including any retail sales Taxes and land transfer Taxes) and all other Taxes, duties, fees or other like charges of any jurisdiction properly payable in connection with the transfer of the Purchased Assets by the Seller to the Purchaser.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Disclosure Schedule attached hereto (the “ Disclosure Schedule ”) identifies by Section and Subsection any exception to a representation or warranty in this Article IV . As an inducement to the Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, each of Holdings and Pharmaceuticals, jointly and severally, represents and warrants to the Purchaser as follows:

4.1 Organization and Qualification . Each Seller is (a) a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, and (b) duly licensed or

qualified to transact business as a foreign corporation and is in good standing in each of the jurisdictions listed on Schedule 4.1 , such jurisdictions being the only jurisdictions in which the nature of the Business or the ownership or leasing of its properties by the Seller requires such licensing or qualification and where the failure to be so licensed or qualified could have a Material Adverse Effect on the Business or any of the Purchased Assets.

4.2 Charter and Limited Liability Company Records . True, correct and complete copies of each of (a) the certificate of formation of each Seller, as amended and in effect on the date hereof, (b) the operating agreement of each Seller, as amended and in effect on the date hereof, and (c) the minute books of each Seller have been previously delivered to the Purchaser. Such minute books contain complete and accurate records of all meetings and other actions of the managers, members, committees and incorporators of each Seller from the date of their respective formation to the date hereof and have been maintained in a manner consistent with good business practices. Except as set forth on Schedule 4.2 , each Seller is in compliance with, and not in default or violation of, its respective certificate of formation and operating agreement.

4.3 Authorization; Enforceability . Each Seller has the power and authority to own, hold, lease and operate its respective properties and assets and to carry on its business as currently conducted. Each Seller has the power and authority to execute, deliver and perform this Agreement and the other Documents. The execution, delivery and performance of this Agreement and the other Documents and the consummation of the transactions contemplated herein and therein have been duly authorized and approved by each Seller and all of its members or equityholders, and no other action on the part of either Seller or its members or equityholders is necessary in order to give effect thereto. This Agreement and each of the other Documents to be executed and delivered by each Seller and each of its members or equityholders have been duly executed and delivered by, and constitute the legal, valid and binding obligations of, each Seller, enforceable against each Seller, in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.

4.4 No Violation or Conflict . Except as set forth in Schedule 4.4 , none of (a) the execution and delivery by either Seller and each of its members or equityholders of this Agreement and the other Documents to be executed and delivered by each Seller and each of their members or equityholders, (b) consummation by each Seller and each of their respective members or equityholders of the transactions contemplated by this Agreement and the other Documents, or (c) the performance of this Agreement and the other Documents required by this Agreement to be executed and delivered by each Seller and each of its members or equityholders at the Closing, will (i) conflict with or violate the respective certificate of formation or operating agreement of either Seller, (ii) conflict with or violate any Law, Order or Permit applicable to any Seller or by which any Seller’s properties are bound or affected, or (iii) result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair any Seller’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the properties or assets of any Seller pursuant to, any Contract or other instrument or obligation to which either Seller is a party or by which any Seller or its properties are bound or affected except, in the case of clause (b) or (c) above, for any such conflict, breach, violation, default or other occurrence that would not individually or in the aggregate, have a Material Adverse Effect.

4.5 Contracts .

(a) Schedule 4.5(a) lists each of the Contracts to which each Seller is a party or by which it or any of its properties or assets may be bound (each of such Contracts being a “ Material Contract ” and, collectively, being the “ Material Contracts ”).

(b) The Seller has delivered or made available to the Purchaser true, correct and complete copies of all Material Contracts which are in writing, and Schedule 4.5(a) contains an accurate summary of all Material Contracts which are not in writing. As of the Closing Date, each Seller shall have satisfied in full all of its liabilities and obligations (that are subject to and capable of being fulfilled prior to the Closing Date) under the Material Contracts prior to the Closing, including, without limitation, the execution and fulfillment of the Compromise Agreements.

(c) The Material Contracts are in full force and effect and are the valid and binding obligations of the Seller and the other parties thereto, enforceable in accordance with their respective terms, subject only to bankruptcy, insolvency or similar laws affecting the rights of creditors generally and to general equitable principles. Except as set forth on Schedule 4.5(c)(i) , each Material Contract is freely and fully assignable to the Purchaser without penalty or other adverse consequences and no consent of or notice to any third party (the “ Consents ”) is required in order to validly assign and transfer the Material Contracts to the Purchaser. The Seller has not received notice of default by the Seller under any of the Material Contracts and no event has occurred which, with the passage of time or the giving of notice or both, would constitute a default by the Seller thereunder. To the Knowledge of the Seller, none of the other parties to any of the Material Contracts is in default thereunder, nor has an event occurred which, with the passage of time or the giving of notice or both would constitute a default by such other party thereunder. Except as set forth on Schedule 4.5(c)(ii) , the Seller has not received notice of the pending or threatened cancellation, revocation or termination of any of the Material Contracts, nor does it have Knowledge of any facts or circumstances that could reasonably be expected to lead to any such cancellation, revocation or termination.

(d) Except to the extent Consents are not obtained prior to the closing, the continuation, validity and effectiveness of the Material Contracts under the current terms thereof will in no way be affected by the execution of this Agreement and the other Documents or the consummation of the transactions contemplated herein and therein.

(e) None of the Material Contracts was entered into outside the ordinary course of business, contains any unusual, onerous or burdensome provisions that could impair or adversely affect in any material way the operations of the Seller or the Business, or is reasonably likely to be performed at a material loss.

4.6 Litigation . Except as set forth on Schedule 4.6 , there is no Litigation or investigation pending or, to the Knowledge of the Seller, threatened against, or otherwise adversely affecting, the Business or the properties, assets (including the Purchased Assets) or rights of the Seller relating thereto, before any Court or Governmental Authority, nor does there exist any reasonable basis for any such Litigation. The Seller is not subject to any outstanding Litigation or Order, which, individually or in the aggregate, would prevent, hinder or delay the Seller from consummating the transactions contemplated by this Agreement. There is no Litigation pending or threatened that might call into question the validity of this Agreement or any of the other Documents or any action taken or to be taken pursuant hereto or thereto, nor does there exist any reasonable basis for any such Litigation. There is no action by the Seller pending or threatened against any third party with respect to the Business or any of the Purchased Assets.

4.7 Brokers . Except as set forth on Schedule 4.7 , the Seller has not employed any financial advisor, broker or finder, and the Seller has not incurred and will not incur any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement. The Seller shall be solely responsible for payment of all such fees incurred in connection with this transaction.

4.8 Compliance with Law . The Seller is, and has conducted and continues to conduct the Business, in compliance with, and is not in default or violation of, all Laws, Orders and other requirements applicable to it or by which any of its assets or properties are bound or affected including, without limitation, those relating to (a) the development, manufacture, packaging, distribution and marketing of products, (b) employment, safety and health, and (c) building, zoning and land use. The Seller is not subject to any Order that adversely affects, individually or in the aggregate, the Business, or its operations, properties, assets or condition (financial or otherwise). The Seller has not received any notice or other communication (whether written or oral) from any Governmental Authority or other Person regarding any actual, alleged, possible or potential breach, violation of or non-compliance with any Order to which the Seller, the Business or any of the Purchased Assets is or has been subject. There is no existing Law or Order, and the Seller is not aware of any proposed Law or Order, which would prohibit or materially restrict or otherwise materially adversely affect the conduct of the Business in any jurisdiction in which such business is now conducted.

4.9 Certain Practices . Neither the Seller, nor any of its directors, managers, officers, employees or agents has, directly or indirectly, given or agreed to give any rebate, gift or similar benefit to any supplier, customer, governmental employee or other Person who was, is, or may be in a position to help or hinder the Seller (or assist in connection with any actual or proposed transaction by the Seller).

4.10 Governmental Consents and Approvals . Except as set forth in Schedule 4.10 , the execution, delivery and performance of this Agreement and the other Documents by the Seller do not and will not require any consent, approval, authorization, Permit or other order of, action by, filing with or notification to, any Governmental Authority.

4.11 No Other Agreements to Purchase . No person other than the Purchaser has any written or oral agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase or acquisition from the Seller of any of the Purchased Assets, other than purchase orders for Inventories accepted by the Seller in the ordinary course of business, consistent with past practice.

4.12 Receivables . Schedule 4.12 contains an aged list of the Receivables as of the Balance Sheet Date. Except as set forth on Schedule 4.12 , all Receivables reflected on the Balance Sheet arose from, and the Receivables existing on the Closing Date will have arisen from, the sale of Inventory in the ordinary course of business, consistent with past practice, to Persons not affiliated with the Seller and, except as reserved against on the Balance Sheet, constitute or will constitute, as the case may be, only valid, undisputed claims of the Seller not subject to valid claims of set-off or other defenses or counterclaims.

4.13 Balance Sheet . The Seller has furnished to the Purchaser, and attached hereto as Schedule 4.13 is, the unaudited balance sheet of the Seller as at September 30, 2007 (the “ Balance Sheet ”). Except as set forth on Schedule 4.13 , the Balance Sheet has been prepared in accordance with GAAP consistently applied (with the exception of the lack of notes thereto for unaudited financial statements), is complete and correct in all material respects and accurately reflects all transactions of the Business. The Balance Sheet fairly presents the financial position of the Business as of the date thereof.

Except as set forth on Schedule 4.13 , the Balance Sheet reflects reserves appropriate and adequate for all known material Liabilities and reasonably anticipated losses as required by GAAP. Except as set forth on Schedule 4.13 , since the date of the Balance Sheet (the “ Balance Sheet Date ”), (a) there has been no change in the assets, liabilities or financial condition of the Business from that reflected in the Balance Sheet, except for changes in the ordinary course of business, and (b) none of the business, prospects, condition (financial or otherwise), operations, property or affairs of the Business has been materially or adversely affected by any occurrence or development, individually or in the aggregate, whether or not insured against.

4.14 Absence of Undisclosed Liabilities . Except as set forth on Schedule 4.14 , there are no Liabilities of the Seller other than the Compromised Claims or Liabilities which have been or will be satisfied at or prior to Closing. Except as expressly contemplated in the preceding sentence, the Seller does not know of, and has no reason to know of, any basis for the assertion against the Seller with respect to the Business of any Liability.

4.15 Conduct in the Ordinary Course; Absence of Changes . Since the Balance Sheet Date, except as disclosed in Schedule 4.15 , the Business has been conducted in the ordinary course of business, consistent with past practice, and there has been no change in the Purchased Assets or the Business which has had, or could reasonably be anticipated to result in, a Material Adverse Effect.

4.16 Inventory .

(a) The Inventory consists only of items of a quality and quantity usable or saleable by the Business in the ordinary course of business, and within a reasonable period of time, as first quality goods. Subject to amounts reserved therefor on the Balance Sheet, all Inventory is valued on the Balance Sheet at the lower of cost, determined by the first in first-out method of accounting, or market value, in accordance with GAAP. The Seller has good and marketable title to the Inventory, free and clear of all Liens. The Inventory does not include any items held on consignment. The Seller is not under any obligation or Liability with respect to accepting returns of items of Inventory or merchandise in the possession of its customers other than in the ordinary course of business consistent with past practice.

(b) The Inventory is in good and merchantable condition in all material respects, is suitable and usable for the purposes for which it is intended. To the extent the Inventory has been acquired from vendors or manufacturers, the Inventory is (i) returnable to such vendors or manufacturers for credit on customary terms, (ii) listed in such vendors’ or manufacturers’ current catalogs in use as of the Closing Date and (iii) is in “as new” condition.

4.17 Personal Property .

(a) Schedule 4.17 lists each item or distinct group of machinery, equipment, tools, supplies, furniture, fixtures, vehicles, rolling stock and other tangible personal property used in the Business and owned or leased by the Seller (the “ Tangible Personal Property ”), and the location thereof.

(b) The Seller has delivered to the Purchaser correct and complete copies of all leases for Tangible Personal Property and any and all material ancillary documents pertaining thereto (including, but not limited to, all amendments, consents and evidence of commencement dates and expiration dates). With respect to each of such leases:

(i) such lease, together with all ancillary documents delivered pursuant to the first s

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates