Exhibit 10.9
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE
AGREEMENT (this
“Agreement”), dated as of January 13, 2004, is made by
and among SPARHAWK LABORATORIES, INC. , a Missouri
corporation (“Sparhawk” or “Buyer”),
POLYDEX PHARMACEUTICALS LIMITED , a Bahamian corporation
(“Polydex”), CHEMDEX, INC. , a Kansas
corporation (“Chemdex”), and VETERINARY
LABORATORIES, INC. , a Kansas corporation (“Vet
Labs”). Polydex, Chemdex and Vet Labs are collectively
referred to herein as “Sellers.”
RECITALS
A.
Sparhawk and Vet Labs are the only
general partners or other equity holders of that certain Kansas
general partnership known as the Veterinary Laboratories, Inc.
– Sparhawk Laboratories, Inc. Joint Venture (the “Joint
Venture”).
B.
Sparhawk, Polydex, Chemdex, Vet Labs
and two shareholder of Sparhawk, E. Bert Hughes
(“Hughes”) and John Bascom (“Bascom”), are
parties to that certain litigation in the County of Johnson, State
of Kansas, Case No. 02CV07426, captioned Sparhawk Laboratories,
Inc. v. Veterinary Laboratories, Inc., et al ., (the
“Joint Venture Litigation”).
C.
Sparhawk, Hughes, Bascom and Sellers
now desire to resolve and settle their differences without
resorting to time-consuming and costly litigation through the sale
of substantially all of the assets of Vet Labs, including, but not
limited to, its ownership interest in the Joint Venture, to
Sparhawk, on the terms and conditions set forth herein.
D.
Vet Labs is a wholly-owned
subsidiary of Chemdex, and Chemdex is a wholly-owned subsidiary of
Polydex, and each of Chemdex and Polydex will derive significant
benefit from the consummation of the transactions contemplated
hereby.
AGREEMENT
ACCORDINGLY
, in consideration of the premises,
the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I — PURCHASE OF ASSETS
Section
1.1.
Sale of
Assets .
(a)
Subject to the
terms and conditions of this Agreement, at the Closing (as
hereinafter defined), Vet Labs shall sell, assign, convey, transfer
and deliver to the Buyer, and the Buyer shall purchase and acquire
from Vet Labs, free and clear of all liens, claims and
encumbrances, except for liens, claims and encumbrances (i) created
to secure the current indebtedness of the Joint Venture to Commerce
Bank, N.A., or (ii) arising out of the business or operations of
the Joint Venture (collectively, the “Permitted
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Liens”),
all of Vet Labs’ right, title, and interest in and to all of
Vet Labs’ real and personal property and assets, tangible and
intangible, of every kind and description, wherever located, which
are owned by Vet Labs as of November 6, 2003 or acquired
thereafter, other than the Excluded Assets (as defined below),
including, without limitation, the following:
(1)
all of Vet
Labs’ ownership interest as a general partner in the Joint
Venture (including, but not limited to, all of Vet Labs’
indirect ownership interest in the assets of the Joint
Venture);
(2)
all accounts
receivable of Vet Labs;
(3)
all
inventories;
(4)
all equipment and
other tangible personal property, including without limitation
those items described in Schedule 1.1(a)(4)
hereto;
(5)
all
contracts;
(6)
all transferable
NADAs, ANADAs, JINADs that are owned directly by Vet Labs, all
transferable NADAs, ANADAs and JINADs that are sponsored by Vet
Labs on behalf of the Joint Venture and all other transferable
governmental authorizations, approvals and licenses and pending
applications, approvals and licenses, including without limitation
those listed in Schedule 1.1(a)(6) hereto as transferable
(the “Governmental Authorizations”); excluding ,
however , those authorizations, approvals and licenses that,
by law, cannot be assigned or transferred by Vet Labs, which are
listed in Schedule 1-1(a)(6) hereto as nontransferable (the
“Nontransferable Licenses”);
(7)
that certain real
property owned by Vet Labs located in the County of Johnson, State
of Kansas, commonly known as 12340 Santa Fe Trail Drive, Lenexa, KS
66215 (the “Real Estate”), the legal description of
which is set forth in Schedule 1.1(a)(7) hereto.
(8)
all data and
records related to the operations of Vet Labs and the Joint
Venture, including client and customer lists and records, referral
sources, research and development reports and records, production
reports and records, service and warranty records, equipment logs,
operating guides and manuals, financial and accounting records,
creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and
records and, copies of all personnel records;
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(9)
all intangible
rights and property of Vet Labs, including trademarks, patents, and
other intellectual property rights, the trademark and tradenames
“Veterinary Laboratories, Inc.” and “Vet
Labs”, and the local telephone number
“913-888-7500” (including all associated rollover
numbers), the toll free telephone number
“800-255-6368”, the facsimile telephone number
“913-888-6741”, and the internet domain name
registration for “Sparhawk-VetLabs.com”;
(10)
all insurance
benefits (net of any deductibles and co-payments) that are
assignable to the Buyer, including rights and proceeds, arising
from or relating to the Assets or the Assumed Liabilities (as
defined below) prior to the Closing Date (as defined
below);
(11)
all warranty and
other claims of Vet Labs against third parties relating to the
Assets, whether choate or inchoate, known or unknown, contingent or
noncontingent; and
(12)
all rights of Vet
Labs relating to deposits and prepaid expenses, claims for refunds
and rights to offset in respect thereof.
All of the property and assets to be transferred
to Buyer hereunder are herein referred to collectively as the
“Assets.” Except for the NADAs, ANADAs and JINADs
that are sponsored by Vet Labs, on behalf of the Joint Venture,
which are being transferred from Vet Labs to Sparhawk, the defined
term “Assets” shall be deemed to refer to assets
directly owned by Vet Labs, not the assets owned by the Joint
Venture. One half of the assets of the Joint Venture, which
are indirectly owned by Vet Labs by virtue of its ownership of a
general partner interest in the Joint Venture, will be effectively
transferred to Buyer through the sale of Vet Labs’ interest
in the Joint Venture, as described in item 1 above.
(b)
The Assets being
purchased by Sparhawk do not include:
(1)
the rights of Vet
Labs pursuant to or under this Agreement and the other agreements
Vet Labs is required to deliver to the Buyer pursuant to the terms
hereof;
(2)
any rights of Vet
Labs in connection with the Polydex website;
(3)
any refunds or
claims for refunds of Vet Labs with respect to any federal, state
or local income and other taxes, and all tax returns and related
work papers, records and documents of Vet Labs related
thereto;
(4)
except as
provided in Section 1(a)(9) above, all telephone numbers, telecopy
numbers and e-mail addresses of Vet Labs;
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(5)
minute books,
stock books and shareholder records of Vet Labs; and
(6)
the
Nontransferable Licenses.
all of which are being retained by Vet Labs
(collectively, the “Excluded Assets”).
(c)
Notwithstanding
anything to the contrary herein, in no event shall Sparhawk acquire
ownership of any real property, tangible personal property or
intangible personal property or intellectual property of, or assume
any liability or obligation of, Chemdex or Polydex.
Section
1.2.
Assumption of
Liabilities .
(a)
Subject to the
terms and conditions of this Agreement, on the Closing Date, Vet
Labs shall assign and Buyer shall assume and agree to pay, perform
or otherwise discharge, in accordance with their respective terms
and subject to the respective conditions thereof, (i) all
obligations and liabilities with respect to the indebtedness of the
Joint Venture to Commerce Bank, N.A. secured by the Permitted
Liens, (ii) all obligations and liabilities in connection with or
arising out of the use or ownership of the Assets by the Joint
Venture, the Buyer or any successor to the business of the Joint
Venture following the Closing Date, and (iii) all obligations and
liabilities arising out of the business or operations of the Joint
Venture (collectively, the “Assumed Liabilities”), and
no others. Other than the Assumed Liabilities, the Buyer
assumes no obligations and liabilities of Vet Labs, whether related
to the Assets or otherwise.
(b)
ALL OBLIGATIONS
AND LIABILITIES OF VET LABS, WHETHER ACCRUED OR CONTINGENT, OR DUE
OR NOT DUE, WHICH ARE NOT SPECIFICALLY ASSUMED HEREIN, SHALL BE AND
REMAIN THE SOLE OBLIGATIONS AND LIABILITIES OF VET LABS, AND BUYER
SHALL HAVE ABSOLUTELY NO OBLIGATION OR LIABILITY WITH RESPECT
THERETO.
Section
1.3.
Purchase
Price .
(a)
The purchase
price for the Assets and the Non-competition Agreement (the
“Purchase Price”) shall be an amount equal to
$5,500,000.00, which shall be payable to Vet Labs on the Closing
Date by wire transfer of immediately available funds to an account
designated by Vet Labs prior thereto.
(b)
The Purchase
Price shall be allocated among the Assets and the Non-competition
Agreement as set forth on Schedule 1.3(b)
hereto.
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Section
1.4.
Supply
Contract . At the Closing,
Sparhawk and Chemdex shall execute and deliver a ten-year exclusive
supply contract, substantially in the form attached hereto as
Exhibit A (the “Supply Contract”).
Section
1.5.
Non-competition
Agreement . At the Closing,
Polydex, Chemdex and Vet Labs shall enter into a 5-year
non-competition agreement with Sparhawk, substantially in the form
attached hereto as Exhibit B (the “Non-competition
Agreement”).
Section
1.6.
Settlement
Agreement and Joint Venture Litigation .
(a)
At the Closing,
Sellers and Buyer shall execute and deliver, and Sparhawk shall
cause Hughes and Bascom to execute and deliver, a Settlement
Agreement substantially in the form attached hereto as Exhibit
C (the “Settlement Agreement”).
(b)
On the Closing
Date, the parties hereto shall dismiss, and Sparhawk shall cause
Hughes and Bascom to dismiss, all claims they asserted in the Joint
Venture Litigation with prejudice pursuant to a Motion of Approval
of Settlement and Stipulation of Dismissal With Prejudice
substantially in the form attached hereto as Exhibit D (the
“Motion to Dismiss”), and each party to bear its own
costs related thereto.
(c)
On the Closing
Date, Sellers and Buyer shall obtain any required approval of the
Settlement Agreement by the court appointed receiver, each party to
bear its own fees and costs related thereto; provided ,
however , all fees incurred for the receiver’s
services in the Joint Venture Litigation shall be borne by the
Joint Venture.
Section
1.7.
Additional
Affirmative Undertakings and Covenants .
(a)
Polydex, Chemdex
and Vet Labs shall use all reasonable commercial efforts to obtain
all third party consents, approvals and agreements necessary to
effectuate the assignment, transfer or sale of any of the Assets,
and to consummate the transactions contemplated by this Agreement,
and Sparhawk and its employees shall cooperate with and assist
Seller in obtaining such consents. Each of the Sellers and
Buyer shall pay their own legal fees and expenses incurred in
obtaining such consents.
(b)
Contemporaneous
with the Closing Date, Vet Labs shall change its corporate name and
make all necessary and proper filings evidencing such
change.
Section
1.8.
Acknowledgement Regarding
Transfer of Joint Venture Interest . Sellers acknowledge
and agree that the sale of Vet Labs’ partnership interest in
the Joint Venture to Sparhawk transfers all of Vet Labs’
right, title and interest in the Joint Venture and all claims
related thereto.
Section
1.9.
Personal
Property Taxes . All personal property
taxes assessed against or in respect of the Assets purchased by the
Buyer for calendar year 2004 (the “Taxable Period”)
shall be prorated between Vet Labs and Buyer as of the Closing
Date. The Buyer shall pay all of the property taxes on the
Assets for the Taxable Period when
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due. Following the Buyer’s payment
of such property taxes, the Buyer shall then forward copies of the
property tax assessments for the Taxable Period to Vet Labs, which
amount Vet Labs shall promptly reimburse Buyer for the pro rata
amounts due thereunder.
Section
1.10.
Real Estate
Property Taxes; Prorations . The Joint Venture
shall pay on behalf of Vet Labs all general real estate taxes
levied and assessed against the Real Estate, and all installments
of special assessments for the years prior to the calendar year of
Closing. Buyer shall assume and pay all such taxes and
installments of special assessment accruing or payable after the
Closing. Notwithstanding the foregoing, Buyer shall be liable
for any expenses or interest with respect to the Real Estate in
connection with or arising out of the indebtedness of the Joint
Venture to Commerce Bank, N.A.
Section
1.11.
Title
Insurance . Vet Labs shall
deliver and pay for an owner’s ALTA title insurance policy
(the “Title Policy”) insuring marketable fee simple
title in Buyer in the amount allocated to the Real Estate pursuant
to Section 1.3(b) hereof, subject only to the Permitted Exceptions
defined below. Vet Labs shall, as promptly as practicable
after the date of this Agreement, cause to be furnished to Buyer a
current commitment to issue the policy (the “Title
Commitment”), issued through Chicago Title Insurance Company
(the “Title Company”), and copies of all recorded
documents listed in the Title Commitment as exceptions to title,
other than such documents in connection with or arising out of the
indebtedness of the Joint Venture to Commerce Bank, N.A.
Buyer shall have ten (10) days after receipt of the Title
Commitment and copies of all such recorded documents (the
“Review Period”) in which to notify Vet Labs in writing
of any objections Buyer has to any matters shown or referred to in
the Title Commitment. Any matters which are set forth in the
Title Commitment and to which Buyer does not object within the
Review Period shall be deemed to be permitted exceptions to the
status of Vet Labs’ title (the “Permitted
Exceptions”); provided , however , that on or
prior to the Closing Date, Vet Labs shall pay off the indebtedness
to, and obtain a release of lien from, Continental Grain Company;
provided , further , that if Vet Labs fails to do so,
Buyer may deduct from the Purchase Price the pay-off amount owed to
Continental Grain Company and, in such event, shall promptly pay
over such amount directly to Continental Grain Company to obtain a
release of its lien on the Real Estate. With regard to other
items to which Buyer reasonably objects within the Review Period,
Vet Labs shall have until Closing to correct such other matters to
Buyer’s reasonable satisfaction. If Vet Labs fails to
correct such other matters to Buyer’s reasonable satisfaction
on or prior to the date of Closing, Buyer shall have the right to
terminate this Agreement by written notice given to the Sellers on
or prior to the Closing Date, in which event no party shall have
any further liability under this Agreement.
Section
1.12.
Survey
. Vet Labs,
at its sole cost and expense, shall provide to Buyer as promptly as
practicable after the date of this Agreement, a current survey of
the Real Estate and all buildings and improvements thereon,
prepared and certified to Buyer and, if applicable, Buyer’s
lender by a surveyor licensed in the State of Kansas. Such
survey shall contain a legal description of the Real Estate and
identify the boundaries of the Real Estate, the dimensions thereof,
the location and dimensions of any improvements on the Real Estate,
the location and dimensions of all recorded easements on the Real
Estate, the location and dimensions of all easements,
rights-of-way, driveways, roads,
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power lines, fences and encroachments on the
Real Estate which are observable from a visual inspection of the
Real Estate, and shall otherwise be sufficient to permit the Title
Company to issue the Title Policy without standard survey
exceptions. If upon receipt of the certificate of survey,
Buyer has any objection to a matter shown therein which affects or
could affect the Real Estate or Buyer’s use of the Real
Estate, Buyer shall promptly notify Vet Labs of said objection(s)
in writing and Vet Labs shall have until Closing to correct such
matters to Buyer’s reasonable satisfaction. If Vet Labs
fails to correct such matters to Buyer’s reasonable
satisfaction on or prior to the date of Closing, Buyer shall have
the right to terminate this Agreement by written notice given to
Seller on or prior to the date of Closing, in which event no party
shall have any further liability under this Agreement.
ARTICLE II — CLOSING
Section
2.1.
Closing
. The
closing of the transactions provided for hereunder (the
“Closing”) shall take place at 10:00 a.m. at the
offices of Stinson Morrison Hecker LLP as soon as possible after
the date hereof, but no later than January 30, 2004 (the
“Closing Date”), or on such other date, time and place
as may be mutually agreed to by the parties hereto.
Section
2.2.
Termination
. This
Agreement may be terminated at any time before the Closing (a) by
the mutual consent of the Buyer and the Sellers, or (b) by either
Buyer, on the one hand, or the Sellers, on the other hand, by
written notice to the other party, if the Closing has not occurred
by January 30, 2004, by reason of the failure of any condition
precedent to such terminating party’s obligation under
Article V hereof, unless the failure results primarily from such
terminating party’s material breach of any representation,
warranty, covenant or agreement contained in this Agreement.
Each party’s right of termination under this Section 2.2 is
in addition to any other rights it may have under this Agreement,
and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated
pursuant to this Section 2.2, all obligations of the parties under
this Agreement will terminate, except that the obligations of the
parties in this Section 2.2 and VII will survive, provided ,
however , that, if this Agreement is terminated because of a
breach of this Agreement by the nonterminating party or because one
or more of the conditions to the terminating party’s
obligations under this Agreement is not satisfied as a result of
the nonterminating party’s failure to comply with its
obligations under this Agreement, the terminating party’s
right to pursue all legal remedies will survive such termination
unimpaired.
Section
2.3.
Conveyance
Documents . On the Closing Date,
Polydex, Chemdex and Vet Labs shall execute and deliver to Sparhawk
such bills of sale, general warranty deed, assignments and other
conveyance documents as Sparhawk shall reasonably request to sell,
assign, transfer and convey the Assets to Sparhawk, free and clear
of all liens, claims and encumbrances, excepting for the Permitted
Liens and, with respect to the Real Estate, the Permitted
Exceptions, and Buyer shall execute such assumption agreements as
Vet Labs shall reasonably request in order to assume the Assumed
Liabilities.
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Section
2.4.
Payment and
Execution of Closing Documents .
(a)
On the Closing
Date:
(1)
Sparhawk shall
deliver the Purchase Price to Vet Labs by wire transfer of
immediately available funds;
(2)
Polydex, Chemdex,
Vet Labs and Sparhawk shall execute and deliver the Non-competition
Agreement and the Settlement Agreement;
(3)
Chemdex and
Sparhawk shall execute and deliver the Supply Contract;
(4)
The parties
hereto shall cause, and Sparhawk shall cause Hughes and Bascom to
cause, their respective counsel to execute and file the Motion to
Dismiss,
(5)
Vet Labs shall
deliver a General Warranty Deed properly executed and conveying the
Real Estate free and clear of all liens, encumbrances, easements,
restrictions, leases, reservations and burdens whatsoever, except
as for the Permitted Exceptions, shall execute and deliver an
affidavit in form satisfactory to the Title Company to permit the
Title Company to delete any mechanic’s lien exceptions from
the Title Policy, and shall execute and deliver to Buyer a
Non-Foreign Person Affidavit; and
(6)
Vet Labs shall
pay the title premium for the Title Policy and shall provide the
Title Company all other documentation required to permit the Title
Company to issue to Buyer, and shall cause the Title Company to
issue to Buyer, the Title Policy following Closing and recording of
the deed to Buyer.
(b)
Both Sellers and
Buyer agree to execute and deliver such other documents on the
Closing Date as may be reasonably required to consummate the
transaction contemplated hereby.
ARTICLE III — REPRESENTATIONS AND
WARRANTIES
Section
3.1.
Representations and
Warranties of Sellers . Polydex, Vet Labs and
Chemdex hereby jointly and severally represent and warrant to Buyer
that as of the date hereof and as of the Closing Date:
(a)
Polydex is a
limited company organized and existing in good standing under the
laws of the Commonwealth of the Bahamas. Each of Chemdex and
Vet Labs is a corporation duly organized, validly existing and in
good standing under the laws
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