ASSET PURCHASE AGREEMENT

Exhibit 2.1

 

E XECUTION C OPY

 

ASSET PURCHASE AGREEMENT

 

dated as of

 

January 6, 2003

 

by and between

 

SkinMedica, Inc.

 

and

 

Advanced Tissue Sciences, Inc.

TABLE OF CONTENTS

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (“ Agreement ”) is made and entered into as of January 6, 2003 by and between SkinMedica, Inc., a Delaware corporation (“ Buyer ”) and Advanced Tissue Sciences, Inc., a Delaware corporation (“ Seller ”).

 

WHEREAS, subject to the terms and conditions of this Agreement, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Purchased Assets (as defined below).

 

NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, OF THE REPRESENTATIONS, WARRANTIES, COVENANTS AND MUTUAL AGREEMENTS HEREINAFTER CONTAINED, AND OF OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

 

ARTICLE I

DEFINITIONS

 

The terms defined in this Article I , whenever used herein (including without limitation the Exhibits and Schedules hereto), shall have the following meanings for all purposes of this Agreement:

 

“ ATS Business ” means any business engaged in by Seller or its Affiliates other than the Business.

 

“ Affiliate ” means, with respect to any Person, any other Person which controls, is controlled by or is under common control with such Person. A Person shall be regarded as in control of another entity if it owns or controls, directly or indirectly, (a) in the case of corporate entities at least fifty percent (50%) (or the maximum ownership interest permitted by law) of the equity securities in the subject entity entitled to vote in the election of directors and (b) in the case of an entity that is not a corporation, at least fifty percent (50%) (or the maximum ownership interest permitted by law) of the equity securities or other ownership interests with the power to direct the management and policies of such subject entity or entitled to elect the corresponding management authority; provided, however, that the term “Affiliate” shall not include subsidiaries or other entities in which a party or its Affiliates owns a majority of the ordinary voting power necessary to elect a majority of the board or directors or other governing board, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.

 

“ Agreement ” has the meaning set forth in the Preamble hereto.

 

“ Assumed Contracts ” means those Contracts listed in Schedule 3.5 of Seller’s Disclosure Schedule and designated by Buyer as “Assumed Contracts” for purposes of this Agreement.

 

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

“ Auction ” means the auction conducted pursuant to the Sales Procedure Order.

 

“ Bankruptcy Code ” means 11 U.S.C. §§ 101 et seq.

 

“ Bankruptcy Court ” means the United States Bankruptcy Court for the Southern District of California or any other court of competent jurisdiction agreed to by Buyer and Seller.

 

“ Bankruptcy Court Order ” means a final, non-appealable order of the Bankruptcy Court approving this Agreement and the Operative Documents, and authorizing, pursuant to all applicable sections of the Bankruptcy Code, all of the transactions and agreements contemplated hereby, which order shall not have been stayed, vacated or otherwise rendered ineffective, and with respect to which no appeal shall be pending and all applicable periods for appeal shall have expired, and which includes the following provisions:

 

(i) a finding that all parties in interest, including each Person known to Seller to have any ownership interest in or lien on the Purchased Assets, have been given proper and adequate notice of the motion seeking entry of the Bankruptcy Court Order and of the hearing on the motion;

 

(ii) approval of Seller’s assignment to Buyer of the Assumed Contracts, and Buyer’s assumption of the Assumed Contracts, in accordance with Section 365 of the Bankruptcy Code;

 

(iii) a provision that authorizes the sale of the Purchased Assets to Buyer free and clear of all Encumbrances (other than Permitted Encumbrances and Assumed Liabilities); and

 

(iv) a finding that Buyer has acted in good faith within the meaning of Section 363(m) of the Bankruptcy Code.

 

“ Bankruptcy Proceedings ” means the bankruptcy proceedings in the Bankruptcy Court under case number 02-09988-M11, involving Seller as a debtor.

 

“ Bidding Procedures ” means the bidding procedures set forth in Exhibit A, which shall include the following terms, among others: (i) any competing bidder for the Purchased Assets shall offer not less than $500,000 over Buyer’s proposed consideration of $7,000,000; and (ii) any such bid must be accompanied by a form of purchase agreement that is not materially more burdensome than the terms of this Agreement and may not be conditioned upon the outcome of unperformed due diligence by the bidder.

 

“ Books and Records ” means all Permits, files, documents, instruments, papers, promotional material, books and records owned by Seller or an Affiliate of Seller to the extent they relate to, or are used or held for use in, the Business, including any pricing lists, customer lists, vendor lists, financial data, documentation relating to the Transferred Intellectual Property, regulatory files, clinical data, correspondence with the FDA or any other Person, medical vigilance records, product specifications and correspondence with Seller’s FDA regulatory legal counsel, but, subject to Section 2.6 hereof, excluding any such items to the extent that (i) any applicable law prohibits their transfer or (ii) any transfer thereof by Seller or any of its Affiliates would constitute a material contractual violation.

 

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“ Break-up Fee ” has the meaning set forth in Section 9.2(b) hereof.

 

“ Business ” means the activities of developing, manufacturing, marketing and selling Products.

 

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are required or authorized by law to be closed.

 

“ Buyer ” has the meaning given to it in the caption hereof.

 

“ Buyer’s Disclosure Schedule ” has the meaning set forth in the preamble to Article IV of this Agreement.

 

“ Cash Payment ” has the meaning set forth in Section 2.4(a)(i) hereof.

 

“ Claims ” means all rights, claims or causes of action against third parties to the extent related to the Business and as set forth on Schedule 1 .

 

“ Closing ” means the closing of the transactions contemplated by this Agreement.

 

“ Closing Date ” means the second Business Day after the satisfaction or waiver of the conditions set forth in Article VIII hereto, or such other date as the parties may mutually agree, upon which the Closing takes place.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

 

“ Confidential Information ” has the meaning set forth in Section 6.1(b) hereof.

 

“ Consent ” means any consent, approval, authorization, license or order of, registration, declaration or filing with, or notice to, or waiver from, any federal, state, local, foreign or other Governmental and Regulatory Authority or any Person, including, without limitation, any security holder or creditor which is necessary to be obtained, made or given in connection with the execution and delivery of this Agreement and/or any Operative Document, the performance by a Person of its obligations hereunder and/or thereunder and the consummation of the transactions contemplated hereby and/or thereby.

 

“ Contracts ” means all contracts, agreements, leases, subleases, licenses, sublicenses, permits, evidences of indebtedness, mortgages, indentures, notes, bonds, concessions, franchises, security agreements, joint settlement agreements, commitments, indemnities, assignments, understandings and arrangements, whether written or oral.

 

“ Copyrights ” means United States and foreign copyrights, copyrightable works mask works, whether registered or unregistered, and pending applications to register the same.

 

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“ DL&S Agreement ” has the meaning set forth in Section 7.11(a) hereof.

 

“ Disclosing Party ” has the meaning set forth in Section 6.1(a) hereof.

 

“ Domain Names ” means any alphanumeric designation registered with or assigned by a domain name registrar, registry, or domain name registration authority as part of an electronic address on the Internet. A Domain Name may, or may not, also be a Trademark.

 

“ Encumbrance ” means any security interests, liens (statutory or otherwise), pledges, levies, charges, escrows, encumbrances, options, license, rights of first refusal, transfer restrictions, conditional sale contracts, title retention contracts, mortgages, hypothecations, indentures, deeds of trust, security agreements, and any easements, covenants, restrictions, rights of way or defects in title or other Contracts or obligations to give any of the foregoing in the future.

 

“ Equity Securities ” has the meaning set forth in the Promissory Note.

 

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

 

“ Excluded Contracts ” means all Contracts relating to, or used or held for use in, the Business that are not designated by Buyer as “Assumed Contracts” for purposes of this Agreement.

 

“ FDA ” means the United States Food and Drug Administration.

 

“ Governmental and Regulatory Authority ” means any federal, state, local or foreign government, political subdivision, legislature, court, agency, department, bureau, commission or other governmental regulatory authority, body or instrumentality, including, without limitation, the FDA.

 

“ Intellectual Property ” means Copyrights, Patents, Trademarks, Trade Secrets, Know-How and Domain Names, and any Contract that relates to any of the foregoing.

 

“ Intellectual Property License Agreement ” has the meaning set forth in Section 7.10(a) hereof.

 

“ Inventory ” means all inventory owned as of the Closing by Seller or any Affiliate thereof of finished Product, or works in progress, sub-assemblies, samples, supplies, packaging materials or raw materials wherever located to the extent they relate to, or are used or held for use in the manufacture of finished Product, or other materials included in the inventory of the Business.

 

“ Know-How ” means designs, plans, ideas, concepts, inventions, processes, specifications for the Product, manufacturing, engineering and other manuals and drawings, standard operating procedures, formulae, flow diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical, analytical, safety, quality assurance, quality control and clinical data, technical information, research records and other know-how related to the Business.

 

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“ Knowledge , ” with respect to any Person, means the actual knowledge of the senior management of such Person.

 

“ Manufacturing and Supply Agreement ” has the meaning set forth in Section 8.1(h) hereof.

 

“ Marks ” has the meaning as set forth in Section 3.4(c)(iii) hereof.

 

“ Method Patent ” means United States Patent Application 09/313,538, now United States Patent Number 6,372,494 B1 (the “ ‘494 Patent ”) and all United States patent applications and patents, all international applications, and all foreign applications and foreign patents (including PCT Application PCT/US00/13016, Australian Patent Application 200048430, Brazilian Patent Application PI0010568, Canadian Patent Application 2,373,302, Chinese Patent Application 00810345.3, European Patent Application 00930643.3, Hungarian Patent Application P0201887, Japanese Patent Application 12-617908, Mexican Patent Application 2001/011487, Russian Federation Patent Application 2001133453) that claim priority from the ‘494 Patent, including all divisions, renewals, continuations, continuations-in-part, extensions, substitutions or equivalent international intellectual property assets.

 

“ Material Adverse Effect ” means any fact, condition, change or event that could reasonably be expected to, individually or in the aggregate, materially and adversely affect the Purchased Assets or the operations or financial condition of the Business, except to the extent that any such fact, condition, change or event results from or arises out of (i) changes in general economic conditions or (ii) changes affecting the industry in which the Business operates generally.

 

“ Material Adverse Effect on Buyer ” means any fact, condition, change or event that could reasonably be expected to, individually or in the aggregate, materially and adversely affect the ability of Buyer to consummate the transactions contemplated hereby.

 

“ Non-disclosing Party ” has the meaning set forth in Section 6.1(a) hereof.

 

“ Operative Document ” means any agreement, instrument or other document to be executed and delivered in connection with the consummation of the transactions contemplated by this Agreement.

 

“ Option ” has the meaning set forth in Section 7.11(a) hereof.

 

“ Patent ” means United States and foreign patents, patent applications, provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, extensions, patent disclosures, inventions (whether or not patentable or reduced to practice) or improvements thereto (such patent disclosures, inventions and improvements include only those made prior to the Closing Date).

 

“ Permits ” means all licenses, certificates of authority, permits, orders, Consents, approvals, registrations, local siting approvals, authorizations, qualifications and filings under any federal, state or local laws or with any Governmental and Regulatory Authorities.

 

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“ Permitted Encumbrance ” means any minor imperfection of title or similar Encumbrance that individually or in the aggregate would not have a Material Adverse Effect.

 

“ Person ” means an individual, corporation, partnership, limited liability company, firm, joint venture, association, joint stock company, trust, unincorporated organization or other entity, or any Governmental and Regulatory Authority or quasi-governmental body or regulatory authority.

 

“ Product ” means the NouriCel ^™ product, NouriCel-MD ^™ product and similar solutions of varying degrees of potency.

 

“ Product Data ” means all toxicology, pre-clinical, clinical, and manufacturing information and data, and all submissions and correspondence with or to any Governmental and Regulatory Authority regarding any Product, or with any Governmental and Regulatory Authority regarding any Product, all as any of the above may be in Seller’s or any of Seller’s Affiliates’ possession or control, including but not limited to validation data and documentation supporting the Product manufacturer’s process of manufacturing the Product.

 

“ Promissory Note ” has the meaning set forth in Section 2.4(a)(ii) hereof.

 

“ Purchase Price ” has the meaning set forth in Section 2.4(a) hereof.

 

“ Purchased Assets ” means, subject to Section 2.6 hereof: (i) the Transferred Intellectual Property; (ii) the Assumed Contracts; (iii) the Books and Records; (iv) the Inventory; (v) the Product Data; (vi) the Purchased Equipment; and (vii) the Claims.

 

“ Purchased Equipment ” has the meaning set forth in Section3.7(a) hereof.

 

“ Representatives ” mean with respect to any Person such Person and its officers, employees, agents, counsel, accountants, financial advisors, consultants and other representatives.

 

“ Retained Patents ” mean United States Patent Nos. 4,963,489 (the “ ‘489 Patent ”) and 5,266,480 (the “ ‘480 Patent ”), and all other United States patent applications and patents, all international applications, and all foreign applications and foreign patents, including all divisions, renewals, continuations, continuations-in-part, extensions, substitutions or equivalent international intellectual property assets, owned in part or in whole by Seller that claim priority from the ‘489 Patent or the ‘480 Patent, or both, or that claim subject matter necessary to make, use, offer for sale, sell or import any material, substance or composition, or any combination of the foregoing (including, without limitation, the Product) to the extent necessary to operate the Business, in each case in the Territory, other than the Method Patent.

 

“ S&N/ATS Supply Agreement ” has the meaning set forth in Section 5.7 hereof.

 

“ Sale Approval Order ” has the meaning specified in the Bidding Procedures.

 

“ Sale Motion ” means a motion filed with the Bankruptcy Court seeking entry of the Sales Procedure Order.

 

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“ Sale Procedures Order ” means a final, non-appealable order entered by the Bankruptcy Court setting forth the procedures for the sale contemplated by this Agreement.

 

“ Seller ” has the meaning given to it in the caption hereof.

 

“ Seller’s Disclosure Schedule ” has the meaning set forth in the preamble to Article III of this Agreement.

 

“ Smith & Nephew ” means Smith & Nephew Wound Management (La Jolla) or any Affiliate thereof.

 

^“ Tax ” means (i) any federal, state, local or foreign net income, alternative or add-on minimum, ad valorem, value-added, gross income, gross receipts, windfall profits, severance, production, environmental, property, sales, use, transfer, stamp, gains, license, excise, employment, payroll, withholding or minimum tax, or any other tax, custom, duty, governmental fee or other like assessment or charge, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental and Regulatory Authority; and (ii) any liability of any Seller for the payment of amounts of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation of any Seller under any tax sharing arrangement or tax indemnity agreement.

 

“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.

 

“ Territory ” means the worldwide cosmetic and aesthetic market for dermatological and aesthetic applications regardless of regulatory designation or jurisdiction, including without limitation, cosmetic skin care and hair growth applications, but not including the market for cosmetic surgery for skin tissue defects or post–surgical skin tissue or post-trauma skin tissue rehabilitation, medical care and treatment of skin tissue wounds, humans or ostomy applications.

 

“ Trade Secrets ” means confidential ideas, trade secrets, know-how, concepts, methods, processes, formulae, reports, data, customer lists, mailing lists, business plans, product specifications, supplier lists or other proprietary information.

 

“ Trademarks ” means United States, state and foreign trademarks, service marks, logos, trade dress, trade names and Domain Names (including all assumed or fictitious names under which the Business has been conducted), whether registered or unregistered and pending applications to register the foregoing, and all goodwill associated therewith.

 

“ Transfer Taxes ” has the meaning set forth in Section 7.12(b) hereof.

 

“ Transferred Intellectual Property ” means the Method Patent, Marks and other Intellectual Property owned in part or in whole by Seller or its Affiliates to the extent such Intellectual Property relates to, or is used or held for use in, the Business but not including the Retained Patents licensed to Buyer under the Intellectual Property License Agreement as set forth in Section 7.10(a) .

 

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“ Trust ” has the meaning set forth in Section 2.4(a) hereof.

 

ARTICLE II

SALE AND PURCHASE OF ASSETS; CLOSING

 

2.1 Asset Purchase .

 

(a) Subject to the terms and conditions of this Agreement, at the Closing, Seller shall, or shall cause its relevant Affiliates to, sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller and such Affiliates of Seller, all of Seller’s and each such Affiliate’s right, title and interest, as of the Closing, in and to the Purchased Assets.

 

(b) Notwithstanding anything contained in this Agreement to the contrary, (i) from and after the Closing, Seller and its Affiliates shall retain all of their right, title and interest in and to the Excluded Assets, and (ii) Seller may retain an archival copy for purposes of regulatory compliance of all documents or materials sold, transferred, assigned, conveyed or delivered to the Buyer hereunder; provided that Seller’s use of such copy shall be subject to the confidentiality provisions of Article VI of this Agreement.

 

2.2 Excluded Assets .

 

Buyer shall not acquire any right, title or interest in any assets or properties of the Seller or any of its Affiliates other than the Purchased Assets or under the Intellectual Property License Agreement (the “ Excluded Assets ”). Excluded Assets shall include, but not be limited to, the following assets and properties:

 

(a) all cash, cash equivalents, accounts receivable, deposits and prepaid expenses of Seller relating to the Business;

 

(b) any claims that Seller may have against any of its respective current or former Representatives;

 

(c) any books, records, files, customer lists, research and development files, records and laboratory books and credit records of customers if and to the extent Seller is required by law to retain such books, records, files or lists; provided that Buyer shall be entitled to receive copies of any such items to the extent they relate to, or are used or held for use in, the Business, Purchased Assets or Assumed Liabilities and to the extent that the provision of such copies is not otherwise prohibited by law;

 

(d) all Excluded Contracts;

 

(e) all Contracts of insurance held by Seller; provided that nothing herein shall diminish or reduce Buyer’s rights under Seller’s Contracts of insurance under which Buyer is named as an additional insured or otherwise entitled to benefits pursuant to Section 9.9 of the DL&S Agreement;

 

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(f) any Intellectual Property which is not directly related to, or used or held for use in, the Business in any respect; and

 

(g) the Retained Patents.

 

2.3 Assumption of Liabilities .

 

Buyer shall not be liable for, and is not assuming, any liabilities of the Seller or its Affiliates whatsoever, whether related or unrelated to the Purchased Assets or the Business, other than (i) liabilities of the Seller accruing or arising after the Closing under the Assumed Contracts, and not arising out of a breach or default of Seller or Seller’s Affiliates under any of such Assumed Contracts on or prior to the Closing, (ii) all accounts payable incurred by Buyer with respect to the Business subsequent to the Closing, and (iii) all other liabilities and obligations incurred by Buyer after the date and time of the Closing related to the ownership of the Purchased Assets or operation of the Business (such liabilities set forth in (i) through (iii), the “ Assumed Liabilities ”). After the date and time of the Closing, Buyer agrees to assume, satisfy, perform, pay, discharge and otherwise be responsible for the Assumed Liabilities.

 

2.4 Consideration .

 

(a) The purchase price (the “ Purchase Price ”) for the Purchased Assets shall consist of:

 

(i) A cash payment at Closing in the amount of Five Million Dollars ($5,000,000) (“ Cash Payment ”); and

 

(ii) A secured promissory note of Buyer in the amount of Two Million Dollars ($2,000,000) payable to Seller and assignable to Seller’s designated liquidating trust or other entities as specified, if applicable, in the form attached hereto as Exhibit B (“ Promissory Note ”) and reasonably agreeable to Seller, which shall include the following terms, among others:

 

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Interest rate . The Promissory Note will bear interest at a rate of 8% per annum, payable upon maturity.

 

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Maturity . The Promissory Note will mature two (2) years after the Closing.

 

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Security. The Promissory Note will be secured by the Purchased Assets.

 

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Prepayment . At Buyer’s option, the Promissory Note and any accrued interest thereunder may be prepaid, in whole or in part, at any time.

 

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Payment method . The Promissory Note will be payable in cash or, at Buyer’s option, in common stock or other equity securities (or a combination of the foregoing), provided that such common stock or other equity securities are publicly traded or otherwise liquid (whether as a result of Buyer’s

 

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public offering in the interim or another liquidation event involving Buyer ( e.g. , sale or acquisition of Buyer by a public company)). Such common stock or other equity securities would be valued at the fair market value thereof at the time of payment.

 

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Cancellation . The Promissory Note will be canceled if on or prior to its maturity:

 

(a) there has been a material delay or interruption in the marketing, sale, supply or production of the Product or any products derived from the Product ( e.g. , TNS Recovery Complex ^™ ) (to be defined as a period of ninety (90) days or more during the term of the Promissory Note) despite the reasonable commercial efforts of Buyer to prevent such a delay or interruption, and

 

(b) if such delay or interruption is the result of (1) any action taken by the FDA or other applicable government agency, including a request for clinical trials or (2) a breach by Seller of the representations in Section 3.4 below ( e.g. , patent infringement).

 

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Transfer restrictions . Neither the Promissory Note nor any interest therein may be transferred, sold, syndicated, assigned or pledged prior to its maturity, except for the transfer of the Promissory Note by Seller to its liquidating trust in connection with Seller’s bankruptcy proceedings (the “ Trust ”). The Trust may seek to monetize the Promissory Note in the reasonable business judgment of its trustee, provided that (i) the Promissory Note shall be transferred in its entirety or, if transferred in part, to not more than four parties and (ii) Buyer is afforded the right of first refusal to purchase the Promissory Note on the same terms as offered to any third party (such right to be exercised by Buyer within ten (10) days of notice from the Trust, and, if exercised, such repurchase of the Promissory Note by Buyer to close within the following twenty (20) days).

 

(iii) Assumption of the Assumed Liabilities.

 

(b) The Purchase Price shall be allocated among the Purchased Assets in a manner consistent with Section 1060 of the Code and as mutually agreed to by Buyer and Seller.

 

(c) On the Closing Date, payment of the Purchase Price shall be made to the Seller by (i) delivery of the Cash Payment by wire transfer of immediately available funds to the account or accounts designated in writing by the Seller and (ii) delivery of the Promissory Note to Seller.

 

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2.5 The Closing .

 

The Closing shall take place as promptly as practicable, but no later than two (2) Business Days following satisfaction or waiver of the conditions set forth in Article VIII hereof.

 

2.6 Sales and Use Tax .

 

Buyer shall be responsible for all sales and use taxes, if any , arising out of the sale of the Purchased Assets to Buyer pursuant to this Agreement. Buyer hereby waives compliance by Seller with the provisions of the bulk transfer laws of any state.

 

2.7 Assignability and Consents .

 

Notwithstanding anything to the contrary in this Agreement, if the sale, assignment, transfer, conveyance or delivery or attempted sale, assignment, transfer, conveyance or delivery to Buyer of any asset that would be a Purchased Asset is (a) prohibited by any applicable law or (b) would require any Consents from a third Person or Governmental and Regulatory Authority and such Consents shall not have been obtained prior to the Closing, then in either case the Closing shall proceed without the sale, assignment, transfer, conveyance or delivery of such asset and this Agreement shall not constitute an agreement for the sale, assignment, transfer, conveyance or delivery of such asset; provided that nothing in this Section 2.7 shall be deemed to waive the rights of Buyer not to consummate the transactions contemplated by this Agreement if the conditions to its obligations set forth in Article VIII have not been satisfied. In the event that the Closing proceeds without the sale, assignment, transfer, conveyance or delivery of any such asset, then following the Closing, the parties shall use their commercially reasonable efforts, and cooperate with each other, to obtain promptly such Consents. Pending such Consent, the parties shall cooperate with each other in any mutually agreeable, reasonable and lawful arrangements designed to provide to Buyer the benefits of use of such asset and to Seller the benefits, including any indemnities, that, in each case, it would have obtained had the asset been conveyed to Buyer at Closing. To the extent that Buyer is provided the benefits pursuant to this Section 2.7 of any Assumed Contract, Buyer shall (x) perform for the benefit of the other parties thereto the obligations of Seller or any Affiliate of Seller thereunder and (y) shall satisfy any related liabilities with respect to such Assumed Contract that, but for the lack of Consent to assign such obligations or liabilities to Buyer, would be Assumed Liabilities. Once Consent for the sale, assignment, transfer, conveyance or delivery of any such asset not sold, assigned, transferred, conveyed or delivered at the Closing is obtained, Seller shall assign, transfer, convey and deliver such asset to Buyer at no additional cost to Buyer and Buyer shall assume the obligations incurred by Buyer from and after the date such asset is assigned, transferred, conveyed and delivered to Buyer.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

Seller represents and warrants to Buyer as of the date hereof, subject to such exceptions are as specifically disclosed in the Seller’s Disclosure Schedule supplied by Seller to Buyer within ten (10) days after the signing of the Agreement (the “ Seller’s Disclosure Schedule ”),

 

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which Seller’s Disclosure Schedule shall be deemed to be representations and warranties of Seller as if made herein, as follows:

 

3.1 Organization and Qualification .

 

The Seller is a corporation duly organized, validly existing and in good standing in the State of Delaware, with corporate power and authority to own, lease and operate its assets and properties and carry on its business as presently owned or conducted. The Seller is licensed or qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which, because of its business conducted there or the nature of its assets or properties there, it would be required to be so licensed or qualified, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.

 

3.2 Authority; No Breach .

 

(a) The Seller has all requisite power and authority to execute and deliver this Agreement and the Operative Documents to which it is a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Operative Documents to which it is a party have been duly authorized and approved by the Board of Directors of Seller and all other necessary corporate action on the part of the Seller, and are in accordance with the Bankruptcy Code and do not require any further authorization or consent of Seller or its stockholders. This Agreement has been duly executed and delivered by the Seller and, subject to the entry of the Bankruptcy Court Order, constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. Each Operative Document to be signed by Seller after the date hereof will constitute, when delivered by the Seller, and subject to the entry of the Bankruptcy Court Order, the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Neither the execution and delivery of this Agreement or any Operative Document by the Seller nor the consummation of any of the transactions contemplated herein or therein, nor the full performance by the Seller of its obligations hereunder or thereunder do or will:

 

(i) violate any provision of the certificate of incorporation or by-laws of the Seller;

 

(ii) conflict with or result in a breach or default (or an event which, with notice or lapse of time or both, would constitute a breach or default) under, or result in the termination or cancellation of, or accelerate the performance required by any Assumed Contract, or result in the creation or imposition of any Encumbrance (other than a Permitted Encumbrance) upon any Purchased Asset.

 

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(iii) conflict with, violate, result in a breach of or constitute a default under any writ, injunction, statute, law, ordinance, rule, regulation, judgment, award, Permit, decree, order, or process of any Governmental and Regulatory Authority to which the Seller or any Purchased Assets are subject, other than such conflicts, violations, breaches or defaults which could not reasonably be expected to have a Material Adverse Effect; or

 

(iv) require the Seller to obtain any Consent, except to the extent that the failure to obtain such Consent would not have a Material Adverse Effect.

 

3.3 Assets .

 

(a) The Seller or its Affiliates have good and freely transferable title to the Purch