EX-2.3
Published on May 10, 2010
Exhibit 2.3
PURCHASE AGREEMENT
This Purchase Agreement (the Agreement) is entered into as of February 17, 2010,
among Ignacio Levy García and José de Jesús Levy García (each a Seller and collectively
the Sellers), Inmobiliaria Chapalita, S.A. de C.V. (Inmobiliaria), Pharmacos
Exakta, S.A. de C.V., a company formed under the laws of Mexico (the Company), OPKO
Health, Inc., a company formed under the laws of Delaware (OPKO), OPKO Health Mexicana S.
de R.L. de C.V. (Buyer) and OPKO Manufacturing Facilities S. de R.L. de C.V. (OMF).
Preliminary Statements
A. Sellers collectively own all of the issued and outstanding shares of capital stock of the
Company, and desire to sell to Buyer, and Buyer desires to purchase, on the terms and subject to
the conditions set forth in this Agreement, all of such shares except for one of those shares which
will be acquired by OMF.
B. On the Closing Date, OMF shall enter into a Land Purchase Agreement in the form attached
hereto as Exhibit A with Inmobiliaria, an Affiliate of the Company, pursuant to which it is
acquiring certain real estate including the building thereof (the Plant) used by the Company in
the operation of the Business (the Land Purchase Agreement).
C. On the Closing Date the Company shall terminate with Ignacio Levy García certain lease
agreements, and Ignacio Levy García shall enter into new Lease Agreements in the form attached
hereto as Exhibit B for the lease of (with an option to acquire) certain real properties
used by the Company in the operation of the Business (the Lease).
Agreement
In consideration of the preliminary statements and the respective mutual covenants,
representations and warranties contained in this Agreement, the parties agree as set forth below.
ARTICLE 1
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following terms when used in
this Agreement shall have the meanings indicated below:
Affiliate of a specified Person means a Person who directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common control with the
specified Person. As used in the foregoing sentence, the term control (including, with
correlative meaning, the terms controlling, controlled by and under common
control with) means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the ownership of
voting securities or otherwise.
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Agreement means this Agreement together with all exhibits and schedules referred to
herein.
Average Closing Sales Price means $1.75, the average closing sales price of a share
of OPKO Health Common Stock, as published in The Wall Street Journal, for the ten (10) trading day
period ending at the close of trading on February 12, 2010.
Closing Date means February 17, 2009 or such other closing date as may be mutually
agreed to among the parties in writing.
Closing Financial Statements means the unaudited closing statement of operations and
statement of cash flows from January 1, 2010 through February 5, 2010 and the balance sheet as of
February 5, 2010 of the Company provided by the Sellers to the Buyer in accordance with Section
4.9.
Company Capital Stock means the capital stock of the Company as described in
Section 4.7.
Company Products means all those products identified in Exhibit C.
Contracts means all contracts, agreements, covenants, commitments and other
instruments of any kind, to which the Company is a party or to which the assets or properties of
the Company are bound.
Environmental Laws means any applicable statute, law, ordinance, regulation, rule,
code or order and any enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to pollution or protection
of the environment or natural resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
Escrow means all the Escrow Shares deposited with the Escrow Agent under the Escrow
Agreement.
Escrow Agreement means the escrow agreement to be entered into as of the Closing
Date among the Sellers, Buyer, OPKO and the escrow agent, in the form attached hereto as
Exhibit D.
Hazardous Materials means (a) any petroleum, petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials or polychlorinated
byphenyls or (b) any chemical, material or substance defined or regulated as toxic or hazardous or
as a pollutant or contaminant or waste under any applicable Environmental Laws.
Intellectual Property means any or all of the following owned, used, controlled by
or residing in the Company prior to the Closing Date: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof; (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names (including Exakta), together
with all translations, adaptations, derivations, and combinations thereof and including all
goodwill
associated therewith, and all applications, registrations, and renewals in connection therewith;
(c) all copyrightable works, all copyrights in both published and unpublished works, and all
applications, registrations, and renewals in connection therewith; (d) all Know-How; (e) all
computer programs and software (including data and source and object codes and related
documentation); (f) all other property rights and all licenses and sublicenses granted by or to the
Company that relate to any of the foregoing; and (g) all copies and tangible embodiments thereof
(in whatever form or medium).
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Know-How means all trade secrets and confidential business information (including,
without limitation, databases, ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs, plans, drawings,
specifications, blueprints, customer and supplier lists, pricing and cost information, and business
and marketing plans and proposals).
Knowledge means, with respect to any representation or warranty or other statement
in this Agreement qualified by knowledge, the actual knowledge, information or belief of any party
as to the matters that are the subject of such representation, warranty or other statement, or any
knowledge, information, or belief that such party should have after a due and diligent
investigation. Where reference is made to the knowledge of any party, such reference shall be
deemed to include the directors, officers and managerial employees of such party, as well as each
of the Sellers in the case of the Sellers and the Company, all of whom shall be deemed to have
conducted the investigation required by this definition. Any knowledge of any Seller shall be
imputed to all the Sellers.
Law means any applicable law, statute, ordinance, rule, regulation, order, writ,
judgment or decree.
Liabilities means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated and whether due or to become due).
Liens means any liens, claims, charges, rights, pledges, security interests,
mortgages, options, title defects or other encumbrances, restrictions or limitations of any nature
whatsoever.
Material Adverse Effect means any change in or effect on the business of the Company
that is, or could reasonably be expected to be, materially adverse to the business, assets
(including intangible assets), liabilities (contingent or otherwise), condition (financial or
otherwise), or results of operations of the Company.
Net Working Capital shall mean (i) the current Assets of the Corporation (including
without limitation, cash, cash equivalents, Accounts Receivable, Inventory and prepaid expenses),
plus (ii) the expenses incurred by Sellers or the Company in preparing the financial information in
accordance with US GAAP less (ii) the current Liabilities of the Corporation (including without
limitation accrued bonuses, severance, transaction costs, Occupancy Costs, and accrued but unpaid
interest and Taxes), as shown on the Closing Financial Statements, and deferred Tax of cumulative
inventory (Inventario acumulable) calculated in accordance with Mexican GAAP consistent with past
practices, and delivered in accordance with US GAAP.
OPKO Common Stock means the common stock of OPKO, par value US$.01 per share.
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Organizational Documents means any and all documents pursuant to which an entity is
organized and/or operates under the applicable laws of its jurisdiction.
Person means any natural person, corporation, unincorporated organization,
partnership, association, joint stock company, joint venture, trust or government, or any agency or
political subdivision of any government, or any other entity.
Product Data means all toxicology, pre-clinical, clinical, and manufacturing
information and data, and all submissions and correspondence with or to any governmental or
regulatory authority regarding any Product, all as any of the above may be in the Company or any
Sellers possession or control.
Product Inventory all inventory owned as of the Closing Date by the Company
(including sample inventory) thereof of finished Product or works in progress or materials used in
the manufacture of finished Product, whether held at a location or facility of the Company (or of
any other Person on behalf of the Company) or in transit to or from the Company.
Regulatory Approvals means the new drug applications and new drug submissions for
the Products and all amendments and supplements thereto, whether through an abbreviated procedure
or through a new molecule procedure, or otherwise.
Securities Act means the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Subsidiary of any Person means any Person, whether or not capitalized, in which such
Person owns, directly or indirectly, an equity interest of 50% or more, or any Person which may be
controlled, directly or indirectly, by such Person, whether through the ownership of voting
securities, by contract, or otherwise.
Tax(es) means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, all
gross receipts, ad valorem, value added, excise, natural resources, severance, stamp, occupation,
premium, windfall profit, assets, minimum income, environmental, customs duties, fees, real
property, personal property, capital stock, social security obligations or contributions,
unemployment, disability, payroll, license, employee or other withholding, or other tax or
governmental charge, of any kind whatsoever, including any interest, penalties or additions to tax
or additional amounts in respect of the foregoing, or credit or reimbursement in respect of the
foregoing; the foregoing shall include any transferee or secondary liability for a Tax and any
liability assumed by agreement or arising as a result of being (or ceasing to be) a member of any
affiliated group (or being included, or required to be included, in any tax return relating
thereto).
Transaction Documents means this Agreement and all other documents to be executed
and delivered by either party pursuant to or in connection with this Agreement and consummation of
the transactions contemplated hereby, including without limitation, the Lease, the Land Purchase
Agreement, and the Escrow Agreement.
US$ means currency of the United States of America.
US GAAP means accounting principles generally accepted in the United States of
America.
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ARTICLE 2
PURCHASE OF SECURITIES AND OF REAL ESTATE; CONSIDERATION
2.1 Securities and Real Estate to be Purchased; Closing.
(a) Subject to the terms and conditions set forth herein, on the Closing Date, (i) each of the
Sellers shall sell to Buyer, and Buyer shall purchase from each of the Sellers, all of such
Sellers right, title and interest in and to the Company Capital Stock, indicated next to such
Sellers name on Schedule 2.1, except for one of the shares which will be acquired by OMF,
which shall represent all of the issued and outstanding Company Capital Stock as of the Closing
Date, and (ii) Inmobiliaria shall sell to OMF and OMF shall purchase from Inmobiliaria all of
Inmobiliarias right, title and interests in the Plant. To give effect to such sale, each of the
Sellers hereby waives any preemption rights it may have in relation to any of the Company Capital
Stock.
(b) Subject to the terms and conditions of this Agreement, the sale and purchase of the
Company Capital Stock and of the Plant contemplated hereby and the transfers and deliveries to be
made pursuant to this Agreement shall take place at a closing at the offices of Buyer at 4400
Biscayne Boulevard, Miami, Florida (the Closing) at 12:00 p.m. local time, on the Closing
Date, or at such other place as may be agreed to by the parties in writing. All proceedings to be
taken and all documents to be executed at the Closing shall be deemed to have been taken, delivered
and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed
or delivered until all have been taken, delivered and executed.
(c) At the Closing, the Sellers shall deliver or cause to be delivered to Buyer (i) all of the
certificates representing the Company Capital Stock indicated next to such Sellers name on
Schedule 2.1, sufficient to convey to Buyer good title to the Company Capital Stock, free
and clear of any and all claims or Liens of any nature whatsoever and together with all accrued
benefits and rights attaching thereto, (ii) the effective written resignations of each of the
directors and officers of the Company, as may be requested by Buyer, (iii) a public deed issued by
a Mexican Public notary transferring all rights, title and interests in the Plant free and clear of
any and all claims or Liens of any nature whatsoever, and (iv) such other documents as may be
specified, or required by Buyer to satisfy the conditions set forth, in Section 8.1.
2.2 Consideration.
(a) In consideration of the sale, assignment, transfer and delivery of the Company Capital
Stock by Sellers to Buyer and of the Plant by Inmobiliaria to OMF, at the Closing, OPKO shall pay
(i) to Inmobiliaria (on behalf of and as per instructions of OMF), an amount of Nine Hundred and
Fifty Thousand United States Dollars (US$950,000.00) and (ii) to Sellers (on behalf of and as per
instructions of Buyer) an amount of Three Million and Fifty Thousand United States Dollars
(US$3,050,000.00), in the manner described in (i), (ii), (iii), (iv), (v) and (b) below (as may be
adjusted in accordance with Section 2.3(a). OPKO on behalf of Buyer shall, however, withhold twenty
percent of the consideration for the sale of the capital Stock of the Company in compliance
with Mexican Laws, and Sellers shall deliver to Buyer a duly filed certification by a
Certified Public Accountant that complies with Mexican Law as to the calculation of the Taxes
payable by Sellers derived from the sale the capital stock of the Company. At Closing and subject
to any such amounts which must be withheld, OPKO on behalf of Buyer shall pay the following amounts
at Closing:
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(i) Nine Hundred and Fifty Thousand United States Dollars (US$950,000,000) payable to
Inmobiliaria in immediately available funds to an account designated by Inmobiliaria;
(ii) Three Hundred Thousand United States Dollars (US$300,000) payable to Sellers in
immediately available funds to an account designated by Sellers;
(iii) Fifty Thousand United States Dollars (US $50,000) payable to Sellers and delivered to
the Escrow Agent to secure Sellers obligations under Section 5.5 (the Betalactamic
Cleanup Escrow); (such amount together with the amount payable pursuant to subsections (i) and
(ii) above hereinafter referred to as the Cash Consideration);
(iv) Two Million Four Hundred Thousand U.S Dollars (US$2,400,000), payable in shares of OPKO
Common Stock to Sellers as follows: (A) delivery to the Escrow Agent of that number of shares
having an aggregate value of Eight Hundred Thousand United States Dollars (US$800,000), and
calculated by dividing such amount by the Average Closing Sales Price (the Escrow
Shares), and (B) delivery to the Sellers, in proportion to their percent ownership of the
Company as set forth in Schedule 2.1, that number of shares having an aggregate value of
One Million Six Hundred Thousand United States Dollars (US$1,600,000), and calculated by
dividing such amount by the Average Closing Sales Price (the Closing Shares).
The Closing Shares and the Escrow Shares are collectively referred to herein as the
Stock Consideration.
(v) Buyer shall hold back Three Hundred Thousand U.S. Dollars ($300,000) of the Purchase Price
in immediately available funds to offset any Working Capital Deficiency in accordance with Section
2.3 (the Working Capital Holdback).
(b) For a period of two years from Closing (the Lock-Up Period), the Sellers will
not be entitled to sell, transfer or otherwise dispose of the Closing Shares except as
otherwise provided in Section 5.4(b).
2.3 Purchase Price Adjustment; Dispute.
(a) If on the Closing Date, the Estimated Net Working Capital (as defined in Section
4.9) is less than the Agreed Net Working Capital (as defined in Section 4.27), the Cash
Consideration to be paid to Sellers at Closing pursuant to Section 2.2 shall be adjusted
downward dollar-for-dollar by the amount of the deficiency (the Closing Adjustment).
Within sixty (60) days after the Closing Date, or as soon thereafter as is reasonably practicable
after using commercially reasonable efforts, Buyer will prepare and deliver to Sellers (i) a
closing balance sheet (the Closing Date Balance Sheet) of the Company, as of the Closing
Date, in accordance with US GAAP and (ii) a calculation (the Working Capital Calculation)
of the Working Capital of the Company as of the Closing Date (the Closing Date Working
Capital). Within fifteen (15) days of receipt from Buyer of the Working Capital Calculation,
Sellers shall notify Buyer in writing in accordance with Section 2.3(b) if they disagree with the
accuracy of Buyers proposed Working
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Capital Calculation. Failure of Sellers to dispute the Working Capital Calculation in writing
within such fifteen-day period shall result in a final determination of the Closing Date Working
Capital as specified by Buyer. If the Closing Date Working Capital as set forth in Buyers Working
Capital Calculation or, if disputed, as finally determined pursuant to Section 2.3(b), is
less than the Estimated Net Working Capital (the Working Capital Deficiency), the
aggregate purchase price shall be adjusted downward dollar-for-dollar in the amount of the sum of
the Working Capital Deficiency, provided that the Working Capital Deficiency exceeds US $10,000.
Upon such determination, Buyer shall reduce from the Working Capital Holdback the amount of the
Working Capital Deficiency, and deliver to Sellers any remaining balance from the Working Capital
Holdback. In the event the Working Capital Holdback is less than the Working Capital Deficiency,
the Sellers shall immediately pay Buyer, by wire transfer of immediately available funds (in United
States Dollars), an amount equal to the difference between the Working Capital Holdback and the
Working Capital Deficiency. In the event that the Working Capital Holdback is less than the
Working Capital Deficiency and Sellers fail to pay Buyer the difference between the Working Capital
Holdback within (5) days of a final determination of Working Capital Deficiency as provided in
Section 2.3(a) the Escrow Agent shall release sufficient Escrow Shares that shall represent
such amount in accordance with Section 6.4(d). If the Closing Date Working Capital (as
finally determined) is greater than the Estimated Net Working Capital (the Working Capital
Surplus), the aggregate purchase price shall be adjusted upward dollar-for-dollar in an amount
equal to the Working Capital Surplus, provided that such Working Capital Surplus exceeds US$10,000,
and shall be paid to Sellers by wire transfer of immediately available funds (in United States
Dollars).
(b) If Sellers dispute the Closing Date Balance Sheet or the Closing Date Working Capital as
set forth in Buyers Working Capital Calculation, then, within the fifteen (15) day period referred
to in paragraph (a) above, Sellers shall give Buyer a detailed written statement identifying all
disputed items (collectively, the Disputed Amounts). Buyer and Sellers shall use
reasonable efforts to resolve any such dispute. If Buyer and Sellers are unable to finally resolve
such dispute within ten (10) days after Buyers receipt of Sellers statement of Disputed Amounts,
then the dispute shall be resolved by an independent registered public accounting firm that is
reasonably acceptable to Buyer and Sellers (the Independent Accounting Firm) considering
recent past, current and anticipated future engagements. Buyer and Sellers shall retain the
Independent Accounting Firm within ten (10) days of the end of the ten (10) day period for Buyer
and Sellers to resolve their dispute. The determination of the Independent Accounting Firm shall
be made as promptly as practicable and shall be final and binding on Buyer and Sellers. The fees
and expenses of the Independent Accounting Firm shall be allocated between Buyer and Sellers so
that Sellers aggregate share of such fees and expenses bears the same proportion to the total
amount of such fees and expenses as the Disputed Amounts unsuccessfully contested by Seller(s)
bears to the total of the Disputed Amounts submitted to the Independent Accounting Firm.
2.4 Escrow.
(a) The Betalactamics Cleanup Escrow shall exist solely for the purpose of securing Sellers
obligations under Section 5.5 of this Agreement. Upon the earlier of completion of the sanitary
cleanup by Buyer or nine (9) months from the date of Closing, Buyer and Sellers shall instruct the
Escrow Agent to remit the difference (if any) to Sellers between the amount of the
Betalactamics Cleanup Escrow and the expenses actually and reasonably incurred by Buyer in
conducting the sanitary clean-up activities.
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(b) The Escrow Shares shall provide security of Sellers payment to Buyer of all amounts due
as a result of (i) the indemnification obligations in ARTICLE 6 of this Agreement, (ii) any
purchase price adjustments pursuant to Section 2.3 of this Agreement, including without
limitation monies due to Buyer due to a Working Capital Deficiency that are not satisfied from the
Working Capital Holdback, (iii) betalactamic clean-up expenses that exceed the Betalactamics
Cleanup Escrow amount, and (iv) any other claims or costs or expenses arising under this Agreement
which are the responsibility of Sellers.
(c) The Escrow Shares shall be available to satisfy indemnification claims pursuant to Article
6 of this Agreement for a period of seven (7) years, provided that:
(i) Within ten days following the second anniversary of the Closing, Buyer shall instruct
Escrow Agent to distribute to Sellers Two Hundred Thousand United States Dollars ($200,000) of OPKO
Common Stock (less the sum of (i) the amount of any claims paid or pending under the Escrow Fund as
of such date, plus (ii) One Hundred Thousand United States Dollars ($100,000), in the event the
registration of the Exatka trademarks referenced in Section 4.25 shall not have been obtained by
such date). The amount retained relating to the Exakta marks shall be released to Sellers if such
registration is obtained prior to the 36th month after the Closing date. The number of
shares of OPKO Common Stock to be released to Sellers shall be calculated in accordance with
Section 6.4(d).
(ii) Within ten days following the fourth anniversary of the Closing, Buyer shall instruct
Escrow Agent to distribute to Sellers Two Hundred Thousand United States Dollars ($200,000) of OPKO
Common Stock (less the amount of any claims paid or pending under the Escrow as of such date), and
it being understood that the amounts remaining in the Escrow shall be available solely to satisfy
indemnification claims as a result of Sellers breach of the representations and warranties
contained in Sections 4.20 and any other tax obligation or liability arising from operation of the
Companys business prior to closing. The number of shares of OPKO Common Stock to be released to
Sellers shall be calculated in accordance with Section 6.4(d).
(iii) Within ten days following the seventh anniversary of the Closing, Buyer shall instruct
Escrow Agent to distribute to Sellers the remaining Escrow Shares (less the amount of any claims
pending under the Escrow as of such date),
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER, OMF AND OPKO
In order to induce Sellers to enter into this Agreement and to consummate the transactions
contemplated hereby, each of Buyer, OMF and OPKO makes the representations and warranties set forth
below to Sellers on the date hereof.
3.1 Organization. Each of Buyer and OMF are corporations duly organized and validly
existing under the laws of Mexico. OPKO is a corporation duly organized and validly existing under
the laws of Delaware.
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3.2 Authorization; Enforceability. Each of Buyer, OMF and OPKO has all requisite
right, power and authority to execute and deliver the Transaction Documents and to consummate the
transactions contemplated thereby. The execution and delivery of the Transaction Documents by each
of Buyer, OMF and OPKO and the consummation by Buyer, OMF and OPKO of the transactions contemplated
thereby have been duly authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Buyer, OMF and OPKO, and constitutes the legal, valid and binding
obligation of each of OMF and OPKO, enforceable in accordance with its terms.
3.3 No Consent, Violation or Conflict. The execution and delivery of the Transaction
Documents by each of Buyer, OMF and OPKO, the consummation by each of Buyer, OMF and OPKO of the
transactions contemplated thereby, and compliance by each of Buyer, OMF and OPKO with the
provisions hereof: (a) do not and will not violate or, if applicable, conflict with any provision
of Law, or any provision of either Buyer, OMF or OPKOs Organizational Documents; and (b) do not
and will not, with or without the passage of time or the giving of notice, result in the breach of,
cause the acceleration of performance or constitute a default or require any consent under, any
instrument or agreement to which either Buyer, OMF or OPKO is a party or by which their properties
may be bound or affected, other than instruments or agreements as to which consent shall have been
obtained at or prior to the Closing Date or any breaches or defaults which would not affect Buyer,
OMF, and OPKOs s ability to consummate the transactions contemplated thereby.
3.4 Brokers. Neither Buyer or OPKO has employed any financial advisor, broker or
finder and has not incurred and will not incur any brokers, finders, investment banking or
similar fees, commissions or expenses, in connection with the transactions contemplated by this
Agreement, which would be payable by Sellers.
3.5 Consent of Governmental Authorities. Each of Buyer, OMF and OPKO has obtained, or
will obtain prior to the Closing, all necessary authorizations and no further consent, approval or
authorization of, or registration, qualification or filing with any governmental or regulatory
authority, or any other Person, is required to be made or obtained by Buyer, OMF or OPKO in
connection with the execution and delivery of the Transaction Documents, or the consummation by the
Buyer, OMF and OPKO of the transactions contemplated thereby.
3.6 Legal Proceedings. There is no action, claim, dispute, suit, investigation or
proceeding pending or, to Buyers Knowledge, threatened against Buyer, OMF or OPKO or any of their
properties or rights, nor any judgment, order, injunction or decree before any court, arbitrator or
administrative or governmental body which might adversely affect or restrict the ability of Buyer,
OMF or OPKO to consummate the transactions contemplated by the Transaction Documents, or to perform
its obligations thereunder.
3.7 Validity of Stock Consideration; Listing. When issued and delivered in accordance
with this Agreement, the Stock Consideration shall be (a) duly and validly authorized, issued and
outstanding, fully paid and non-assessable, (b) listed for trading on the NYSE Amex Exchange, and
(c) free and clear of any Liens, except as provided (i) in the escrow provisions specified in
Section 2.4, (ii) the lock-up provisions specified in Section 5.4, and (iii) by
U.S. Securities Laws. The OPKO Common Stock shall have the rights, privileges and preferences set
forth in its Amended and Restated Certificate of Incorporation.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
In order to induce Buyer, OPKO and OMF to enter into this Agreement and to
consummate the transactions contemplated hereby, the Sellers jointly and severally make the
representations and warranties set forth below to Buyer and OPKO as of the date hereof, except as
otherwise noted herein or as set forth in the Disclosure Schedules prepared by Sellers and the
Company and delivered and attached hereto (the Disclosure Schedules). For purposes of
these representations and warranties, Sellers represent that they are the only shareholders and
administrators of Inmobiliaria and therefore they represent and warrant to Buyer with respect to
Inmobiliaria as mentioned below:
4.1 Organization. Each of the Company and Inmobiliaria is a corporation duly
organized and validly existing under the laws of Mexico. Each of the Company and Inmobiliaria is
duly qualified or licensed to do business in each jurisdiction where the character of the
properties owned or operated by it or the nature of its business makes such qualification or
licensing necessary. The Company has all requisite right, power and authority to (a) own and
operate its properties, (b) conduct its business as presently conducted and (c) engage in and
consummate the transactions contemplated hereby. The Company is not in default under its
Organizational Documents.
4.2 Authorization; Enforceability. Each of the Company, Inmobiliaria and each of the
Sellers has all requisite right, power and authority to execute and deliver the Transaction
Documents and consummate the transactions contemplated thereby. The execution and delivery of the
Transaction Documents by the Company, Inmobiliaria and each of the Sellers and the consummation by
the Company, Inmobiliaria and each of the Sellers of the transactions contemplated thereby have
been duly authorized by all requisite corporate action. This Agreement has been duly executed and
delivered by the Company and each of the Sellers and constitutes the legal, valid and binding
obligations of such party, enforceable in accordance with its terms.
4.3 No Consent, Violation or Conflict. With respect to the Company, Inmobiliaria and
each of the Sellers, the execution and delivery of the Transaction Documents and the consummation
of the transactions contemplated thereby, and compliance by the Company, Inmobiliaria and each of
the Sellers with the provisions hereof, (a) do not and will not violate or, if applicable, conflict
with any provision of Law, or any provision of the Companys, Inmobiliarias or such Sellers
Organizational Documents, and (b) except as describe in Schedule 4.3 (b) do not and will not, with
or without the passage of time or the giving of notice, result in the breach of, cause the
acceleration of performance or constitute a default or require any consent under, or result in the
creation of any Lien upon any property or assets of the Company or Inmobiliaria pursuant to any
instrument or agreement to which any of the Company or Inmobiliaria is a party or by which the
Companys or Inmobiliarias properties may be bound or affected.
4.4 Consent of Governmental Authorities. Each of the Company, Inmobiliaria and each
of the Sellers have obtained all necessary authorizations and no further consent, approval or
authorization of, or registration, qualification or filing, with any governmental or regulatory
authority, or any other Person, is required to be made or obtained by the Company, Inmobiliaria or
any of the Sellers in connection with the execution and delivery of the Transaction Documents by
the Company, Inmobiliaria and each of the Sellers or the consummation by the Company,
Inmobiliaria and each of the Sellers of the transactions contemplated thereby.
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4.5 Brokers. The Company, Inmobiliaria and Sellers have not incurred and will not
incur any brokers, finders, investment banking or similar fees, commissions or expenses in
connection with the transactions contemplated by this Agreement, which would be payable by Buyer or
the Company after the Closing Date.
4.6 Organizational Documents and Corporate Records. A true and complete copy of the
Organizational Documents of the Company, as amended, will be delivered to Buyer on the Closing
Date. The minute book of the Company (the Corporate Minute Book), the shares registry
book of the Company (the Share Registry Book) and the capital variation book of the
Company (the Capital Variation Book) (the Corporate Minute book, the Share Registry Book
and the Capital Variation Book all together (the Corporate Books) with all registrations
signed by the sole administrator of the Company will also be delivered to the Buyer on the Closing
Date. Such Corporate Books contain complete and accurate records of all meetings and other
corporate actions of the board of directors and/or the shareholders of the Company from 1993 to the
date hereof and all transfers of shares issued by the Company and variation in the capital stock of
the Company. Specifically Sellers and the Company represent that all Corporate Books that existed
from the date of Incorporation of the Company to January 1, 1993, got lost and therefore
specifically represent and warrant that all information contained in the Corporate Books is the due
continuation of all corporate records and transfers of shares that existed prior to January 1,
1993. All matters requiring the authorization or approval of the board of directors and/or the
shareholders of the Company have been duly and validly authorized and approved by them.
4.7 Capitalization. The authorized share capital of the Company, the names of the
holders thereof and the amount of capital held by each such holder, is set forth on Schedule
2.1 (Company Capital Stock). All of the Company Capital Stock, including all Company
Capital Stock issued prior to the Closing Date has been and will be duly authorized and are and
will be validly issued, fully paid and nonassessable. Sellers are and will be the only legal,
record and beneficial owners of the Company Capital Stock listed opposite their respective names on
Schedule 2.1, and such Company Capital Stock is and will be owned free and clear of any
Liens whatsoever, including, without limitation, claims or rights under any voting trust
agreements, shareholder agreements or other agreements. The Company has no Subsidiaries or
investment or equity interest in any other Person. None of the Company Capital Stock was or will
be issued in violation of any law, preemptive right or agreement. At the Closing, Sellers will
transfer and convey and Buyer will acquire good and valid title to the Company Capital Stock free
and clear of all Liens. No written or oral agreement or understanding with respect to the
disposition of the Company Capital Stock or any rights therein, other than this Agreement, exists.
4.8 Rights, Warrants, Options. There are no options, warrants or other rights,
arrangements or commitments of any character to which the Company or any of the Sellers is a party
or by which the Company or any of the Sellers is bound relating to the issued or unissued Company
Capital Stock or obligating the Company to issue or sell any Company Capital Stock, or other equity
interests in, the Company. There are no outstanding obligations of the Company to redeem or
otherwise acquire any of the Company Capital Stock and there are no outstanding
contractual obligations of the Company to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any other Person.
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4.9 Financial Statements. Schedule 4.9 includes (i) a true and complete copy
of the audited balance sheet of the Company for the fiscal year ended on December 31, 2008, and the
audited consolidated profit and loss statement and statement of cash flows for the fiscal year
ended on December 31, 2008, including any related notes and the schedules thereto, certified by the
Companys independent registered public accounting firm pursuant to its audit of the financial
records of the Company, and (ii) the unaudited consolidated profit and loss statement and statement
of cash flows of the Company for the six months ending on June 30, 2009 and 2008, respectively,
including any notes and schedules thereto (collectively, the Financial Statements). The
Financial Statements: (a) have been prepared in accordance with the books of account and records of
the Company; (b) fairly present, and are true, correct and complete statements in all material
respects of the consolidated financial condition of the Company and the results of its operations
at the dates and for the periods specified in those statements; and (c) have been prepared in
accordance with Mexican GAAP consistently applied with prior periods and delivered in accordance
with U.S. GAAP. At the Closing Date, the Company shall deliver to Buyer Closing Financial
Statements of the Company. The Closing Financial Statements will (a) be prepared in accordance
with the books of account and records of the Company (b) fairly present, a true, correct and
complete statement in all material respects of the consolidated financial condition of the Company
as of February 5, 2010, and (c) be prepared in accordance with Mexican GAAP consistently applied
with prior periods and delivered on an estimated basis in accordance with U.S. GAAP. The Closing
Financial Statements delivered to Buyer shall also include a good faith estimate by Sellers of the
Companys Net Working Capital under US GAAP on the Closing Date (Estimated Net Working
Capital).
4.10 Absence of Undisclosed Liabilities. As of the Closing Date, the Company has no
debts, claims, Liabilities, commitments or obligations of any nature whatsoever, whether accrued,
absolute, contingent or otherwise, other than as provided for and disclosed in this Agreement and
disclosed, accrued for or reserved against in the Financial Statements or in the Closing Financial
Statements. There is no basis for assertion against the Company of any such debt, claim,
Liability, commitment, obligation or loss, which could have a Material Adverse Effect. For the
avoidance of doubt, Sellers acknowledge that Buyer is not assuming any such debts, claims,
Liabilities, commitments, obligations or losses not disclosed in this Agreement and disclosed and
accrued for or reserved against in the Financial Statements or the Closing Financial Statements,
and Buyer will be indemnified for such pursuant to Section 6.4.
4.11 Compliance with Laws. Except as set forth on Schedule 4.11, the Company
is in compliance with all Laws applicable to it, its business, or its properties or has made all
necessary filings to be in compliance with all such Laws, including, without limitation, those
relating to (a) the development, testing, manufacture, packaging and labeling of products at its
manufacturing site, (b) employment, occupational safety and employee health, and (c) building,
zoning and land use. The Company has not received notification from any governmental or regulatory
authority asserting that it is not in compliance with or has violated any of the Laws which such
governmental or regulatory authority enforces, or threatening to revoke any authorization, consent,
approval, franchise, license, or permit, and the Company is not subject to any agreement or consent
decree with any governmental or regulatory authority arising out of previously asserted violations.
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4.12 Legal Proceedings. Except for Schedule 4.12: (a) The Company is not a
party to any pending or threatened legal, administrative or other proceeding, arbitration,
mediation, out-of-court settlement negotiation or investigation, and (b) no Person who is or was
within the last five years an employee, director or officer of the Company is a party to any
pending, or threatened, legal, administrative or other proceeding, arbitration, mediation,
out-of-court settlement negotiation or investigation in their capacity as employees, directors or
officers of the Company, which adversely affects the Company. The Company is not subject to any
order, writ, injunction, decree or other judgment of any court or any governmental authority.
There are no suits or proceedings pending or threatened before any court or by or before any
governmental or regulatory authority, commission, or agency or public regulatory body against
Sellers which, would interfere with Sellers ability to consummate the transactions contemplated
hereby.
4.13 Title to and Condition of Personal Property.
(a) The Company and Inmobiliaria own, lease or have the legal rights to use all properties and
assets (tangible and intangible), except for those assets established in Schedule 4.13(a),
including the Real Property (as defined below) and Companys Intellectual Property, used or
intended to be used in the conduct of the Companys business (the Assets). The Company
and Inmobiliaria have good and marketable title or leasehold interest to each Asset, free and clear
of all Liens. The Assets constitute all of the assets and rights required to operate the business
of the Company as previously conducted. All of the Assets are in good operating condition and
repair, ordinary wear and tear excepted, and are not in need of substantial maintenance or repairs.
(b) Each item of equipment, personal property and asset of the Company used in operation of
the Business is included as an Asset in the Closing Financial Statements and shall remain with the
Company. The parties agree that Schedule 4.13(b) sets forth the full and complete list of
all Assets of the Company as of the Closing Date.
4.14 Real Property.
(a) Schedule 4.14(a) sets forth the street address of the real property where the
Plant is located owned by the Inmobiliaria (the Owned Real Property), and related title,
legal and other information. Sellers have previously delivered to Buyer with respect to the Owned
Real Property, a copy of the deed pursuant to which the Company acquired such Owned Real Property.
Inmobiliaria possesses and at the Closing Date will possess good, marketable and insurable fee
simple title to the Owned Real Property, free and clear of all Liens.
(b) Schedule 4.14(b) sets forth the street address of each parcel of real property
leased by the Company (the Leased Real Property and together with the Owned Real
Property, the Real Property). The Sellers have delivered to Buyer true and complete
copies of all of the lease agreements, as amended to date (the Current Leases) relating
to the Leased Real Property. The Company enjoys peaceful and undisturbed possession of the Real
Property.
(c) The Real Property (which includes the property that is the subject of the Land Purchase
Agreement and the Leases) is and as of the Closing Date will be, free of structural or
non-structural defects, and has access to adequate water, sewer, gas, telephone and electric
utilities which are in good working order; in each instance as is sufficient to conduct the
business of the
Company as currently conducted. All construction and improvements made on the Real Property
are, and as of the Closing Date, not in need of substantial repairs except for ordinary or routine
maintenance or repairs.
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4.15 Governmental Authorizations. Except as set forth on Schedule 4.15, the
Company has all authorizations, consents, approvals, franchises, licenses and permits required
under applicable Law for the ownership of the Companys properties and operation of its business as
presently operated (the Permits). No suspension, nonrenewal or cancellation of any of
the Permits is pending or, to the Sellers Knowledge, threatened, and there is no reasonable basis
therefore. The Company is not in conflict with, or in default or violation of any Permits.
4.16 Compliance with Environmental Laws. The Company and the operation of its business
is in compliance with all applicable Environmental Laws. Except as set forth in Schedule
4.16, there have been no governmental claims, citations, notices of violation, judgments,
decrees or orders issued against the Company or its Affiliates for impairment or damage, injury or
adverse effect to the environment or public health and there have been no private complaints with
respect to any such matters. There is no condition relating to any properties owned, leased or
used by the Company that would require any type of remediation, clean-up, response or other action
under applicable Environmental Laws and the Company has complied with Environmental Laws in the
generation, treatment, storage and disposal of toxic and hazardous substances, as defined under any
applicable Environmental Laws.
4.17 Employment Matters.
(a) Schedule 4.17(a) contains the names, job descriptions and annual salary rates and
other compensation including other benefits such as medical insurance and life policies of all
officers, directors, employees and consultants of the Company and its Affiliates (including
compensation paid or payable by the Company under the Plans (as hereafter defined), and a list of
all employee policies (written or otherwise), employee manuals or other written statements of rules
or policies concerning employment, including working conditions, vacation and sick leave, a
complete copy of each of which (or a description, if unwritten) has been delivered to Buyer and is
attached in Schedule 4.17(a). There are no employment, consulting, severance or
indemnification arrangements, arrangements which contain change of control provisions, agreements,
or understandings between the Company and any officer, director, consultant or employee.
For purposes of this agreement, officers, directors, employees, former employees and
consultants of the Company shall include all of such even if their compensation is paid by a third
party and all representation and warranties given hereto for the Company, shall also apply to the
Company which acts as the formal employer.
(b) The Company has complied with all applicable employment Laws, including payroll and
related obligations, benefits, and does not have any obligation in respect of any amount due to
employees of the Company or government agencies, other than normal salary, other fringe benefits
and contributions accrued but not payable on the date hereof.
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(c) Schedule 4.17(c) sets forth a complete list of all pension, retirement, stock
purchase, stock bonus, stock ownership, stock option, profit sharing, savings, medical, disability,
hospitalization, insurance, deferred compensation, bonus, incentive, welfare or any other
material employee benefit plan, policy, agreement, commitment, arrangement or practice currently or
previously maintained by the Company for any of their directors, officers, consultants, employees
or former employees (the Plans).
Each Plan has been administered in accordance with its terms and applicable Law. With respect
to the Plans, no event has occurred and there exists no condition, facts or circumstances, which
could give rise to any liability of the Company under the terms of such Plans or any applicable
Law.
Notwithstanding any provision to the contrary herein, Sellers agree to cause their affiliate
entity Pexa, S.C. (Pexa) which currently acts as employer of all employees that work for the
Company (and to cooperate with Opko Company Services, S. de R.L. de C.V., (OCS) an affiliate of
Buyer) to have OCS substitute as employer of all such employees under the current terms and
conditions of the employment agreement of each of them and to have the corresponding collective
labor agreement with the current union to be also assigned to or renewed with OCS under same terms
and conditions of the current collective labor agreement. Parties agree that the foregoing shall be
accomplished within (30) days after the Closing Date. Simultaneously to the substitution of
employer of OCS mentioned above, the corresponding services agreement dated September 1, 2001
between the Company and Pexa (the Pexa Services Agreement) shall be terminated. For purposes of
clarity the Pexa Services Agreement shall continue to be in full force and effect in accordance
with its terms until such substitution is accomplished and therefore as of the Closing date Buyer
shall cause the Company to fully comply with all obligations related to the employees and to the
Pexa Services Agreement.
4.18 Labor Relations. There is no strike or dispute pending or threatened involving
any employees of the Company. Except as described in Schedule 4.18, none of the employees
of the Company is a member of any labor union and the Company is not a party to, otherwise bound
by, or threatened with any labor or collective bargaining agreement. Without limiting the
generality of Section 4.11, (a) no unfair labor practice complaints are pending or
threatened against the Company, and (b) no Person has made any claim, and there is no basis for any
claim, against the Company under any statute, regulation or ordinance relating to employees or
employment practices, including without limitation those relating to age, sex and racial
discrimination, conditions of employment, and wages and hours.
4.19 Company Contracts.
(a) Schedule 4.19 sets forth a list (all such contracts, agreements, arrangements or
commitments as are required to be set forth on Schedule 4.19 being referred to herein
collectively as the Company Contracts) of all written agreements, arrangements or
commitments to which either the Company is a party or by which any of its assets is bound or
affected which are material to the Company, including, without limitation:
(i) each partnership, joint venture or similar agreement of the Company with another Person;
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(ii) each contract or agreement under which the Company has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness of more than US$10,000 in
principal amount or under which the Company has imposed (or may impose) a Lien on any of its
assets, whether tangible or intangible securing indebtedness;
(iii) each contract or agreement which involves an aggregate payment or commitment per
contract or agreement on the part of the Company of more than US$10,000 per year;
(iv) all leases and subleases from any third person to the Company, in each case requiring
annual lease payments in excess of US$10,000;
(v) each contract or agreement to which the Company and any of its Affiliates, employees or
former employees, officers, directors, shareholders, or family member of such persons is a party,
all of which shall be fully terminated on the Closing Date with no further consequences to the
Company or any of its Affiliates (except for the current leases which shall be substituted with the
Leases;
(vi) each contract or agreement to which the Company or any of its Affiliates is a party
limiting, in any material respect, the right of the Company (i) to engage in, or to compete with
any person in, any business, including each contract or agreement containing exclusivity provisions
restricting the geographical area in which, or the method by which, any business may be conducted
by the Company or (ii) to solicit any customer or client;
(vii) fire, casualty, liability, title, workers compensation and all other insurance policies
and binders maintained by the Company;
(viii) all collective bargaining or other labor union contracts or agreements to which the
Company is a party or applicable to persons employed by the Company;
(ix) all licenses, licensing agreements and other agreements providing in whole or part for
the use of any Intellectual Property of the Company;
(x) all other contracts or agreements which individually or in the aggregate exceed the sum of
US$10,000 other than those which are terminable upon no more than 30 days notice by the Company
without penalty or other adverse consequence.
Schedule 4.19 further identifies each of the Company Contracts which contain
anti-assignment, change of control or notice of assignment provisions. The Company Contracts are
each in full force and effect and are the valid and legally binding obligations of the Company and
are valid and binding obligations of the other parties thereto. To the Sellers or Companys
Knowledge, the Company is not a party to, nor is its business or any of its assets bound by, any
oral agreement. The Company is not in default under its Organizational Documents in any respect or
in default of any obligation under any Company Contract to which it is a party, and no event has
occurred which with the giving of notice or lapse of time or both would constitute such a default.
The Company further represents and warrants that there are not any written or verbal agreement that
submits the Company to any exclusivity of the sale or distribution of its products, and that none
of the
distribution/sale agreements agreement has any penalty on the Company for any early termination of
them.
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4.20 Tax Matters. Except as set forth on Schedule 4.20, all Tax returns
required to be filed with respect to the Company and its business have been timely filed with the
appropriate governmental authorities in all jurisdictions in which such returns are required to be
filed, all of the foregoing as filed are true, correct and complete as of the applicable filing
dates, and reflect accurately all liabilities for Taxes of the Company and its business for the
periods to which such returns relate, and all amounts shown as owing thereon have been paid. All
Taxes, if any, collectible or payable by the Company or relating to or chargeable against any of
its assets, revenues or income through the Closing Date were or will be fully collected and paid by
such date or provided for by adequate reserves in the Financial Statements. No claims or
deficiencies have been asserted against the Company with respect to any Taxes which have not been
paid or otherwise satisfied or for which accruals or reserves have not been made in the Financial
Statements, and there exists no reasonable basis for the making of any such claims. The Company
has not waived any restrictions on assessment or collection of Taxes or consented to the extension
of any statute of limitations relating to taxation.
4.21 Guaranties. Except as set forth on Schedule 4.21, the Company is not a
party to any Guaranty, and no Person is a party to any Guaranty for the benefit of the Company.
4.22 Insurance. Set forth on Schedule 4.22 is a list of all insurance
policies providing insurance coverage of any nature to the Company. Such policies are (i)
contracted under standard provisions, (ii) sufficient to cover for all Assets and Real Property;
and (iii) sufficient for the compliance by Company with all requirements of Law and all Company
Contracts. All of such policies are in full force and effect and are valid and enforceable in
accordance with their terms, and the Company has complied with all material terms and conditions of
such policies, including the payment of premium payments. None of the insurance carriers has
indicated to Company an intention to cancel any such policy. The Company has no claim pending or
anticipated against any of the insurance carriers under any of such policies and there has been no
actual or alleged occurrence of any kind which may give rise to any such claim.
4.23 Inventories. The inventories of the Company shown on the balance sheets included
in the Financial Statements and the inventories of the Company as of the Closing Date are stated
and will be stated at not more than the lower of cost (on a first-in first-out basis) or market,
and are fit for their particular use, do not and will not include any items below standard quality,
defective, damaged or spoiled, obsolete or of a quality or quantity not usable or salable in the
ordinary course of the business of the Company as currently conducted or any items whose expiration
date has passed or will pass within six months of the date hereof and of Closing (which, with
respect to items which do not have an expiration date, shall in any event not include quantities of
items not usable or salable within nine months from the date hereof), the value of which has not
been fully written down or reserved against in the Financial Statements. In addition, the
inventories shall not include (i) any raw materials or finished goods (including boxes and labels)
that relate to products which have not been sold by the Company in the preceding nine months unless
they have an expiration date of more than one year and for which the Company has received firm
purchase orders as of the Closing Date, or (ii) for which the Company has (y) not timely filed for
its sanitary registration renewal or (z) has no present intention to renew the sanitary
registration which are listed on
Schedule 4.23. The Company has all adequate quantities and types of inventory to enable it to
conduct its business consistent with past practices and anticipated operations. The Company does
not have any obligations to purchase inventory in excess of its estimated needs to conduct its
business in the ordinary course and in accordance with past practice.
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4.24 Regulatory Approvals/Product Registrations.
(a) Schedule 4.24(a) lists each product developed, manufactured, licensed, distributed
or sold by the Company presently or in the last 5 years (collectively, the Products).
Each Product manufactured by the Company has been manufactured in accordance with (i) each
corresponding Regulatory Approval and product registration applicable to such Product, (ii) the
specifications under which the Product is normally and has normally been manufactured, and (iii)
without limiting the generality of Section 4.11, the provisions of all applicable Laws.
There is no action or proceeding by any governmental or regulatory authority pending or, to the
Knowledge of the Company, the Sellers or any of their Affiliates, threatened seeking the recall of
any of the Products or the revocation or suspension of any Regulatory Approval or product
registration. Schedule 4.24(a) further lists all Products which at any time have been
recalled, withdrawn or suspended by the Company, whether voluntarily or otherwise.
(b) Schedule 4.24(b) sets forth a complete and accurate list of all Regulatory
Approvals and product registrations for each Product required under Applicable Law or Company
Contracts which are pending or maintained by the Company, as well as the deadline and filing status
for renewal of each. Except as set forth on Schedule 4.24(b), all of the Regulatory
Approvals and product registrations for the Products are in full force and effect and have been
duly and validly issued. Schedule 4.24 (b) further identifies all such registrations for which
Buyer, the Company and Sellers have agreed to obtain such renewals (the Specific Registrations).
The Company has all information and requirements on hand to file for renewal of such Specific
Registrations for its Regulatory Approvals (and for approvals required under Company Contracts) and
product registrations, and the Company has timely made all renewal filings for the Specific
Registrations required as of the Closing Date and as scheduled to be done through February 29, 2010
(as also identified in the same Schedule 4.24(b). All laws and regulations applicable to the
preparation and submission of the Regulatory Approvals and product registrations to the relevant
regulatory authorities have been complied with and the Company has filed with the relevant
regulatory authorities all required notices, applications, and annual or other reports, including
adverse experience reports, with respect to the Regulatory Approvals and product registrations.
The failure by the Company to obtain such final registration of the Specific Registrations of any
of such Products within nine months after the Closing date shall be indemnifiable by the Sellers in
the amount of US$12,500 for each registration, provided however that such indemnification shall
only apply if such renewal is not obtained as a consequence of lack of information on hand by the
Company or due to a wrongful filing for renewal made by the Company prior to the Closing Date.
(c) Except as set forth in Schedule 4.24(c), all Products which have been sold through
the Company have been merchantable and free from defects in material or workmanship for the term of
any applicable warranties and under the conditions of any express or implied specifications and
warranties arising under Law and as set forth in the specific order. Except as disclosed in
Schedule 4.24(c) hereto, during the last two years, the Company has not received any
claims based on alleged failure to meet the specifications or breach of product warranty
arising from any applicable manufacture or sale of their Products.
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4.25 Intellectual Property Rights.
(a) Schedule 4.25 sets forth a complete and correct list of all Intellectual Property
that is owned by the Company and the Intellectual Property that the Company has a license,
sublicense or other permission to use. Except as set forth in Schedule 4.25, the Company
owns all right, title and interest in and to, or has a license, sublicense or other permission to
use, all of the Intellectual Property, free and clear of all Liens or other encumbrances. All
necessary registration, maintenance and renewal fees in connection with such Intellectual Property
have been paid and all necessary documents and certificates in connection with such Intellectual
Property have been filed with the relevant copyright, trademark or other governmental or regulatory
authorities for the purposes of obtaining or maintaining such Intellectual Property duly registered
as the sole property of the Company. Schedule 4.25 lists Intellectual Property which (i)
has been recently acquired by the Company from related Sellers which final registration is pending;
and (ii) is in process of registration before regulatory authorities for purposes of obtaining
total and sole rights over such trademarks. As of the Closing Date, Buyer shall take over such
process, provided however that all reasonable costs incurred by Buyer or the Company in connection
with the foregoing until final registration shall be borne by Sellers and provided further that
(iii) any failure to obtain such final registration of any Intellectual Property listed in such
Schedule 4.25 within twenty for (24) months after the Closing date (except in the case of
the three Exakta marks, for which Sellers shall have 36 months to obtain such registrations)
shall be indemnifiable by each of the Sellers in the amount of US$5,000 per mark (other than the
Exakta marks). Failure to obtain registration of the three Exakta marks shall be indemnifiable by
the Sellers in the aggregate amount of US$100,000 as follows: (a) if the Exakta trademark is not
obtained for class 5, the penalty shall be US$75,000; (b) if the mark is not obtained for class 35,
the penalty shall be US$24,000 and (c) if the mark is not obtained for class 3, the penalty shall
be US$1,000.
(b) The Intellectual Property constitutes all patents and patent applications, and technology,
know-how and information owned or licensed to the Company relating to the manufacture, use or sale
of the Products. There have been no claims made in writing against the Company or any of its
Affiliates asserting the invalidity, abuse, misuse, or unenforceability of any of the Intellectual
Property, and, to the Knowledge of the Company and Sellers, no grounds for any such claims exist.
Neither the Company, the Sellers nor any of their Affiliates has made any claim of any violation or
infringement by others of its rights in the Intellectual Property, and, to the Knowledge of the
Company, the Sellers and their Affiliates, no grounds for any such claims exist. Neither the
Company, the Sellers nor any of their Affiliates has received any notice that it is in conflict
with or infringing upon the asserted rights of others in connection with the Intellectual Property
and, to the Knowledge of the Company, the Sellers and their Affiliates, the use of the Intellectual
Property by the Seller or any of its Affiliates is not infringing and has not infringed upon any
rights of any other Person. No interest in any of the Intellectual Property has been assigned,
transferred, licensed or sublicensed by the Company or any of its Affiliates to any Person.
4.26 Power of Attorney. All of the Companys issued, granted or executed powers of
attorney on behalf of the Company which may be in force at the Closing Date shall be revoked and
such revocation shall be notified to such attorneys in compliance with Applicable Law.
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4.27 Working Capital. As of the Closing Date, the Company will have at least Twenty
One Million Two Hundred Thousand (21,200,000)Mexican Pesos of Net Working Capital (Agreed
Working Capital).
4.28 Absence of Material Adverse Effects. Since December 31, 2008, and except as
otherwise disclosed in the Companys June 30, 2009 financial statements delivered to Buyer, the
Company has conducted its business only in the ordinary and usual course and in a manner consistent
with past practices and, since such date there has been no Material Adverse Effect and the Company
has not engaged or agreed to engage in any actions described in Section 7.1(b).
4.29 Accounts and Notes Receivable and Payable. Set forth on Schedule 4.29 is
a true and complete aged list of unpaid accounts and notes receivable owing to and owed by the
Company as of the date hereof. All of such accounts and notes receivable and payable constitute
bona fide, valid and binding claims arising in the ordinary course of the Companys business.
Except as set forth on Schedule 4.29, there is no agreement for deduction, free goods,
discounts, or other deferred price or adjustment to such receivables. Except as set forth on
Schedule 4.29, (i) all receivables owing to the Company are less than ninety (90) days old
as of February 16, 2009, are fully collectible and (ii) will be collected in the ordinary course of
business (x) within one hundred and eighty (180) days after the date of its recording in the
accounting records of the Company in the case of all receivables from private or non-governmental
customers, and (y) two hundred and seventy (270) days after the date of its recording in the
accounting records of the Company in the case of all receivables which result from direct sales
from the Company to a governmental entity or institution as further identified in Schedule
4.20. In the event any account receivable is not collected within such one hundred and eighty
(180 ) days or two hundred and seventy (270) days after the date of its recording in the accounting
records of the Company, as the case may be, the Company may assign to Sellers and Sellers shall
acquire such account receivables. As consideration for such assignment, Sellers shall pay the face
value of such account receivables in immediate available funds or at the option of the Company,
Buyer or the Company may withdraw from the Escrow Shares, the sufficient amount of shares to meet
the par value of such receivables. The corresponding calculation as to the number of Escrow Shares
to be withdraw shall be made in accordance with Section 6.4 (d). Sellers may request to the Company
to continue to be the beneficiary of record of such account receivables that may not be assigned by
law to them, it being understood however that such request shall in no event limit the right of the
Company to withdraw from the Escrow Shares the sufficient amount of shares to meet the par value of
such receivables as mentioned above. In the event the Company collects any amounts from accounts
receivables for which it remained the beneficiary of record and for which it has been wholly
indemnified by Escrow Shares, it shall transfer the amounts so collected to the Sellers as they are
collected.
4.30 Related Parties. Except as disclosed in Schedule 4.30, no officer,
director, shareholder of the Company, nor any Seller, or any of their respective spouses or family
members has, directly or indirectly, (a) any ownership interest in, or is a director, officer,
employee, consultant or agent of, any Person which is a competitor, supplier or customer of the
Company; (b) any ownership interest in any property or asset, tangible or intangible, including any
Intellectual Property, used in the conduct of the Companys business; (c) any interest in or is,
directly or indirectly, a party to, any Company Contract; (d) any contractual or other arrangement
with the Company, or any competitor, supplier or customer of the Company; (e) any cause of action
or claim whatsoever against, or owes any amount to, the Company or (f) any Liability to the
Company.
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Except as disclosed in Schedule 4.30, neither the Company nor any Subsidiary has any
Liability to any Seller.
4.31 Absence of Certain Business Practices. None of the Sellers, the Company or any
Affiliate of the Company or the Sellers, nor to the Companys or Sellers Knowledge, any of their
respective directors, officers, employees, agents, advisors, distributors, resellers or
representatives (Representatives) has: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity in respect of the Companys
business; (b) directly or indirectly paid or delivered any fee, commission, sum of money or item of
value, however characterized, to any finder, agent, or other party acting on behalf of or under the
auspices of a governmental official or Governmental Authority in order to induce the official to
make any governmental act or decision or to assist the Company in obtaining or retaining business;
or (c) made any unlawful payment to any customer or supplier of the Company or its Affiliates, or
Representative of any such customer or supplier in respect of the Companys business.
4.32 Closure of Betalactamic Business.
(a) As of the date hereof, the Company has ceased all aspects of its business related to the
manufacture, sale and distribution of betalactamic products, and the Company has provided written
notification of such event to each of its customers, suppliers and distributors of betalactamic
products, as well as the Mexican health and regulatory authorities in the format attached hereto as
Schedule 4.32. As of the date hereof, the Company has sold all raw materials and finished
product inventory relating to betalactamics, and the Company has no commitment to purchase or sell
any betalactamic product or raw materials from or to any party; nor shall it have an obligation to
purchase or sell such products at any point in the future. Sellers shall be solely responsible for
any liabilities resulting from the manufacture and sale of betalactamics by the Company up to the
Closing Date.
(b) With respect to the machinery and equipment used or to be used in connection with the
production of betalactamics under one or more lease agreements, all pending obligations under such
lease agreements and promise of sale agreements shall be assigned to and assumed by Sellers within
fifteen (15) days with no further recourse to the Company. It being understood that all payments
due as of the Closing Date under such agreements shall be paid by Sellers.
4.33 Limitation. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLERS CONTAINED
IN THIS AGREEMENT AND IN ANY AGREEMENT OR TRANSACTION DOCUMENT DELIVERED IN CONNECTION WITH THIS
AGREEMENT (THE TRANSACTION DOCUMENTS), NONE OF SELLERS, NOR COMPANY, NOR ANY OTHER PERSON ACTING
FOR ANY OF THEM MAKES ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED. EXCEPT AS PROVIDED
IN THE TRANSACTION DOCUMENTS, SELLERS HEREBY DISCLAIM ANY OTHER REPRESENTATION OR WARRANTY, WITH
RESPECT TO THE EXECUTION, DELIVERY OR PERFORMANCE BY SELLERS OF THIS AGREEMENT OR THE RELATED
DOCUMENTS.
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ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Noncompetition.
(a) Each of the Sellers acknowledges that in order to assure Buyer that Buyer will retain the
value of the Company, the Sellers shall not for a period of five years from Closing (the
Restricted Period) utilize his special knowledge of the business of the Company and their
relationships with suppliers, customers, competitors and others to compete with the Company
directly or indirectly.
(b) During the Restricted Period, each Seller shall not engage or have an interest anywhere
where the Company does business, alone or in association with others, as principal, officer, agent,
employee, director, partner or stockholder, or through the investment of capital, lending of money
or property, rendering of services or otherwise, in any business competitive with or similar to
that engaged in by the Company presently or at any time in the last 5 years. The ownership or
control of up to five percent of the outstanding voting securities or securities of any class of a
company with a class of securities which are publicly traded shall not be deemed a violation of the
provisions of this Section. Rendering services in areas that are not related (directly or
indirectly) to the manufacture, distribution marketing, or sale of pharmaceutical, nutriceutical or
healthcare products or services, even to competitors of the Company, shall not be deemed a
violation of the provisions of this Section.
(c) During the Restrictive Period, each Seller shall not, and shall not knowingly or
intentionally permit any of its employees, agents or others under its control to, directly or
indirectly, (i) call upon, accept business from, or solicit the business of any Person who is, or
who had been at any time during the preceding two years, a customer of the Company, or any
successor to the business of the Company, or otherwise divert or attempt to divert any business
from the Company, or any such successor, or (ii) recruit or otherwise solicit or induce any person
who is an employee of or otherwise engaged by the Company, or any successor to the business of the
Company to terminate his or her employment or other relationship with the Company, or such
successor, or hire any person who has left the employ of the Company or any such successor during
the preceding two years.
5.2 Confidentiality. Sellers acknowledge that all confidential or proprietary
information with respect to the business and operations of the Company are valuable, special and
unique. Sellers shall not, at any time after the Closing Date, disclose, directly or indirectly,
to any Person, or use or purport to authorize any Person to use any confidential or proprietary
information with respect to the Company or Buyer, whether or not for a Sellers own benefit,
without the prior written consent of Buyer, including without limitation, information as to the
financial condition, results of operations, customers, suppliers, products, products under
development, inventions, sources, leads or methods of obtaining new products or business, pricing
methods or formulas, cost of supplies, marketing strategies or any other information relating to
the Company or Buyer which could reasonably be regarded as confidential, but not including
information which is or shall become generally available to the public other than as a result of an
unauthorized disclosure by a Seller or a Person to whom a Seller has provided such information.
The Sellers acknowledge that Buyer would not enter into this Agreement without the assurance that
all such confidential and proprietary information will be used for the exclusive benefit of the
Company.
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5.3 Continuing Obligations. The restrictions set forth in Sections 5.1 and
5.2 are considered by the parties to be reasonable for the purposes of protecting the value
of the business and goodwill of the Company and Buyer. Buyer and the Sellers acknowledge that
Buyer and the Company would be irreparably harmed and that monetary damages would not provide an
adequate remedy in the event the covenants contained in Sections 5.1 and 5.2 were
not complied with in accordance with their terms. Accordingly, Sellers agree that any breach or
threatened breach by any of them of any provision of Sections 5.1 and 5.2 shall
entitle the Buyer and OPKO to injunctive and other equitable relief, without requirement of posting
a bond or other surety, to secure the enforcement of these provisions, in addition to any other
remedies which may be available to Buyer and OPKO, and that the Buyer and OPKO shall be entitled to
receive from the breaching parties reimbursement for all attorneys fees and expenses incurred in
enforcing these provisions. It is the desire and intent of the parties that the provisions of
Sections 5.1, 5.2 and 5.3 be enforced to the fullest extent permissible under the
laws and public policies of each jurisdiction in which enforcement is sought. If any provisions of
Sections 5.1 and 5.2 relating to the time period, scope of activities or geographic area of
restrictions is declared by a court of competent jurisdiction to exceed the maximum permissible
time period, scope of activities or geographic area, the maximum time period, scope of activities
or geographic area, as the case may be, shall be reduced to the maximum which such court deems
enforceable. If any provisions of Sections 5.1 and 5.2 other than those described in the
preceding sentence are adjudicated to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in which such
adjudication is made) in such manner as to render them enforceable and to effectuate as nearly as
possible the original intentions and agreement of the parties.
5.4 Investment Intent; Accredited Investor Status; Restrictions on Sale.
(a) Each Seller represents that it has such knowledge and experience in business or financial
matters that it is capable of evaluating the merits and risks of an investment in the Stock
Consideration. Each Seller understands and acknowledges that the Stock Consideration has not been
registered with the SEC under the Securities Act and that such Seller may not sell, transfer or
otherwise dispose of all or any portion of the Stock Consideration except (i) pursuant to an
effective registration statement under the Securities Act or (ii) upon receipt by OPKO of an
opinion of counsel acceptable to OPKO to the effect that such sale, transfer or disposition is
otherwise exempt from registration under the Securities Act.
(b) Each Seller acknowledges and agrees that, until the expiration of the Lock-up Period, he,
she or it will not, without the prior written consent of Buyer, be permitted to sell, pledge, or
otherwise dispose of, directly or indirectly, any of the Closing Shares, provided that on the first
anniversary of the Closing, the lock-up restriction shall lapse with respect to fifty percent (50%)
of the Closing Shares issued to Sellers at Closing.
5.5 Betalactamic Clean-Up. Sellers and OPKO agree that Buyer shall undertake the
cleanup of the betalactamic production area within nine (9) months following Closing (the
Betalactamic Cleanup Period) provided that Sellers shall be solely responsible for the
cost of the clean-up activities.
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ARTICLE 6
SURVIVAL; INDEMNIFICATION
6.1 Investigation. The representations, warranties and covenants set forth in this
Agreement, as excepted in the relevant Disclosure Schedules, shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on behalf of the party
for whose benefit such representation, warranties and/or covenants were made.
6.2 Survival of the Representations and Warranties. The representations and
warranties and indemnification obligations of Sellers and the Buyer shall survive the Closing Date
for a period of two (2) years from the Closing Date; provided, however, that (i) the
representations in Section 4.25 and the indemnification obligation in Section 6.4(a)(viii) relating
to registration of the Exakta marks shall survive for a period of three years; (ii) the
representations and warranties set forth in Sections 4.4, 4.11, 4.15, 4.17, 4.18, 4.24, 4.26,
4.30, and 4.31, and the indemnification obligations of Sellers set forth in Sections 6.4(a)(iv),
(v), and (vi) shall survive for a period of five years; and (iii) the representations and
warranties set forth in Sections 4.6, 4.7, 4.8, 4.16, and 4.20 and the indemnification
obligations of Seller set forth in Sections 6.4(a) (ii), (iii), and (ix) shall survive the
Closing Date until the expiration of the period specified in the applicable statute of limitations.
6.3 General Release. Except as otherwise provided for herein, as additional
consideration for the sale of the Company Capital Stock pursuant to this Agreement, each of the
Sellers hereby unconditionally and irrevocably releases and forever discharges, effective as of the
Closing Date, each of the Company and its officers, directors, employees and agents, from any and
all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or
unaccrued, asserted or unasserted, and whether known or unknown, relating to the Company which ever
existed, now exist, or may hereafter exist, by reason of any tort, breach of contract, violation of
law or other act or failure to act which shall have occurred at or prior to the Closing Date, or in
relation to any other liabilities of the Company to Sellers.
6.4 Indemnification.
(a) Indemnification by Sellers. Sellers agree, jointly and severally, to defend,
indemnify and hold harmless Buyer, OPKO, their Affiliates and their respective directors, officers,
employees and agents from, against and in respect of, the full amount of:
(i) (A) any and all actions, suits, proceedings, demands, liabilities, damages, claims,
deficiencies, fines, penalties, interest, assessments, judgments, losses, Taxes, costs and
expenses, including, without limitation, reasonable fees and disbursements of counsel
(collectively, the Indemnified Losses) arising from or in connection with any breach or
violation of any of the representations and warranties contained in this Agreement or (B) any and
all Indemnified Losses arising from or in connection with any breach or violation of the covenants
or agreements of any of the Sellers or the Company contained in this Agreement;
(ii) any and all Indemnified Losses for Taxes attributable to all Tax years or portions
thereof ending on or prior to the Closing Date imposed on the Company, as well as
deferred taxes in connection with the operation of the business prior to Closing, all of which
shall remain the sole responsibility of Sellers;
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(iii) any and all Taxes related to or arising from the sale and transfer of shares
contemplated hereby by reason of any Liability of the Company or its shareholders for such Taxes as
assessed by any taxing authority against Seller(s), and/or the Company either before or after the
Closing Date;
(iv) any and all Indemnified Losses for failure to comply prior to the Closing Date with the
terms of any Laws relating to employees or employment practices or social security;
(v) any and all Indemnified Losses related to or arising from the termination of employment
prior to or following the Closing Date of any employees of the Company listed on Schedule
6.4(a)(v);
(vi) any and all Indemnified Losses related to or arising from any products delivered by the
Company prior to the Closing Date, including without limitation, Indemnified Losses for product
recalls, product defects, warranty claims, personal injury or death;
(vii) any failure by the Company to obtain the product registrations set forth on Schedule
4.24 within nine months of Closing, which shall be indemnified in the amount as set forth on
Schedule 4.24 as provided for in Section 4.24(b) above;
(viii) the failure by the Company to obtain registration of the three Exakta marks within
thirty six months of Closing, which shall be indemnifiable in the amounts provided for in
Section 4.25(a);
(ix) any and all Indemnified Losses (A) related to or arising from a violation of any
applicable Environmental Law, with respect to any property owned, controlled or utilized by the
Company or its Affiliates, prior to the Closing Date;
(x) any and all Indemnified Losses not reserved for on the Closing Financial Statements
related to the business or operations of the Company prior to the Closing Date; and
(xi) any and all Accounts Receivable outstanding as of Closing, which are not collected by the
Company as provided for in Article 4.29 above.
(b) Indemnification by Buyer. Buyer agrees to defend, indemnify and hold harmless
Sellers and their Affiliates and their respective directors, officers, employees and agents from,
against and in respect of, the full amount of:
(i) any and all Indemnified Losses arising from or in connection with any breach or violation
of any of the representations or warranties of the Buyer contained in this Agreement; and
(ii) any and all Indemnified Losses arising from or in connection with any breach or violation
of any of the covenants or agreements of Buyer contained in this Agreement.
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(c) Indemnification Procedure as to Third Party Claims.
(i) Promptly after any party seeking indemnification under this Agreement (the
Indemnified Party) obtains knowledge of the commencement of any third party claim,
action, suit or proceeding or of the occurrence of any event or the existence of any state of facts
which may become the basis of a third party claim (any such claim, action, suit or proceeding or
event or state of facts being hereinafter referred to in this Section 6.4 as a
Claim), in respect of which an Indemnified Party is entitled to indemnification under
this Agreement, such Indemnified Party shall promptly notify the party against whom indemnity is
sought (the Indemnifying Party) of such Claim in writing; provided,
however, that any failure to give notice (A) will not waive any rights of the Indemnified
Party except to the extent that the rights of the Indemnifying Party are actually prejudiced
thereby and (B) will not relieve the Indemnifying Party of its obligations as hereinafter provided
in this Section 6.4 after such notice is given. With respect to any Claim as to which such
notice is given by the Indemnified Party to the Indemnifying Party, the Indemnifying Party will,
assume the defense or otherwise settle such Claim with counsel reasonably satisfactory to the
Indemnified Party and experienced in the conduct of Claims of that nature at the Indemnifying
Partys sole risk and expense, provided, however, that the Indemnified Party (1) shall be permitted
to join the defense and settlement of such Claim and to employ counsel reasonably satisfactory to
the Indemnifying Party, and at the Indemnified Partys own expense, (2) shall cooperate fully with
the Indemnifying Party in the defense and any settlement of such Claim in any manner reasonably
requested by the Indemnifying Party; and (3) shall not compromise or settle any such Claim without
the prior written approval of the Indemnifying Party;
(ii) If (A) the Indemnifying Party fails to assume the defense of such Claim or, having
assumed the defense and settlement of such Claim, fails reasonably to contest such Claim in good
faith, or (B) the remedy sought by the claimant with respect to such Claim is not solely for money
damages, the Indemnified Party, without waiving its right to indemnification, may, but is not
required to, assume the defense and settlement of such Claim, provided, however, that (1) the
Indemnifying Party shall be permitted to join in the defense and settlement of such Claim and to
employ counsel at its own expense, (2) the Indemnifying Party shall cooperate with the Indemnified
Party in the defense and settlement of such Claim in any manner reasonably requested by the
Indemnified Party, and (3) the Indemnified Party shall not settle such Claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
(iii) As used in this Section 6.4, the term Indemnified Party shall be deemed to
include the plural thereof where the rights or obligations of more than one Indemnified Party may
be involved.
(d) Release of Escrow. Buyer and each of the Sellers acknowledge and agree that
Escrow Fund shall be the first remedy for indemnification against Sellers but it shall not be
considered as the only remedy for Buyer, and Buyer shall have all remedies available to it at law.
The Parties agree that any amount due to the Buyer or OPKO in relation to the Sellers indemnity
obligations set out in Section 6.4 shall be paid to the Buyer or OPKO within thirty (30)
days after (a) the Buyers and Sellers relevant joint written request to the Escrow Agent or (b)
Escrow Agents receipt of an enforceable judgment issued by a court of competent jurisdiction, or
an arbitration award, directing the release of Escrow Shares, by releasing the number of the Escrow
Shares out of the Escrow Fund that are equal to the dollar amount of the indemnifiable claim
divided by the price per share of OPKO Common Stock, which shall be valued at the lower of (i)
the Average Closing Price, or (ii) the average closing price of OPKO Common Stock on the NYSE for
the five trading days preceding the date of release of the Escrow Shares by the Escrow Agent.
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6.5 Limitations on Liabilities.
(a) Notwithstanding anything to the contrary contained herein, except for subsection
(c) below, in no event shall the aggregate sums payable by the Sellers under Section
6.4(a)(i) (other than sums payable as a result of breaches of the representations and
warranties set forth in Sections 4.7, 4.8, 4.16 and 4.20) and indemnification
obligations under Section 6.4(a)(ii) through (iii), and (ix) exceed the Purchase Price.
(b) Notwithstanding anything to the contrary contained herein, except for subsection
(c) below, neither party shall be obligated to indemnify and hold harmless the other under
Section 6.4 for breaches of representations and warranties unless and until all Indemnified Losses
in respect of which such party is obligated to provide indemnification exceed Ten Thousand United
States Dollars (US$10,000) (the Basket Amount) following which (subject to the provisions
of this Section 6.5) such party shall be obligated to indemnify and hold harmless, the
other party for all such Indemnified Losses (not merely the amount by which the Indemnified Losses
exceed the Basket Amount) provided, however, for purposes of determining if the Basket Amount has
been exceeded, or whether a Liability occurred or the amount of the Liability resulting from a
breach of representation or warranty, all representations and warranties in this Agreement shall be
read without giving effect to any materiality qualifier included the.
(c) Notwithstanding anything to the contrary set forth herein, none of the limitations on
indemnification set forth in this Section 6.5 shall apply to matters relating to
intentional or fraudulent breaches, violations or misrepresentations.
(d) For purposes of this Section 6.5 only, the Purchase Price shall be equal
to Four Million United States Dollars (US$4,000,000).
ARTICLE 7
INTERIM COVENANTS
7.1 Interim Operations of the Company.
(a) The Company and each of the Sellers covenants and agrees that, from the date hereof until
the Closing Date the Company shall operate the business in accordance with its ordinary course and
past practice. In addition during the period commencing on the date hereof and until the Closing
Date, each of the Company and the Sellers shall, except to the extent the Buyer specifically gives
its prior written consent to the contrary:
(i) use its best efforts to preserve intact its business organization and the goodwill of its
customers, suppliers and others having business relations with it;
(ii) use its best efforts to keep available to Buyer the services of the Companys officers,
employees and agents, except those employees listed on Schedule 6.4(a)(v) hereto;
(iii) promptly furnish to Buyer a copy of any correspondence received from or delivered to any
governmental authority;
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(iv) maintain and keep its properties and assets in the same repair and condition as they were
on the date of this Agreement;
(v) continue and maintain the approval process in the ordinary course of business with respect
to the Company Products and product registrations and any products being developed by the Company;
and
(vi) continuously maintain insurance coverage substantially equivalent to the insurance
coverage in existence on the date of this Agreement.
(b) Additionally, during the period from the date of this Agreement to the Closing Date,
except with the prior written consent of Buyer, the Company shall not and the Sellers shall not
permit the Company to, directly or indirectly,
(i) amend or otherwise change the Companys Organizational Documents;
(ii) issue, sell or authorize for issuance or sale, shares of any class of its securities
(including, but not limited to, by way of stock split or dividend) or any subscriptions, options,
warrants, rights or convertible securities, or enter into any agreements or commitments of any
character obligating it to issue or sell any such securities;
(iii) redeem, purchase or otherwise acquire directly or indirectly any shares of its capital
stock or any option, warrant or other right to purchase or acquire any such shares;
(iv) declare or pay any dividend or other distribution;
(v) sell, transfer, surrender, abandon or dispose of any of its assets or property rights
(tangible or intangible), except for sales or dispositions of inventory in the ordinary course of
business consistent with past practice;
(vi) (A) grant, make or subject itself or any of its assets or properties to any Lien, or (B)
grant or make any Lien on any properties or assets which are being transferred out of the Company;
(vii) create, incur or assume any liability or indebtedness in excess of US$10,000;
(viii) enter into, amend or terminate any Company Contract with an annual value of at least
$10,000 or for a longer period than three months;
(ix) commit to make any capital expenditures, which would be payable by the Company after the
Closing Date;
(x) grant any guaranty other than bonds under government procurement procedures;
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(xi) waive, release, assign, settle or compromise any material claim or litigation;
(xii) except as required by Law, increase the compensation payable or to become payable to
employees or grant any rights to severance or termination pay to, or enter into any employment or
severance agreement with any employee or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any employee;
(xiii) acquire (including, without limitation, by merger, consolidation or acquisition of
stock or assets) any interest in any corporation, partnership, other business organization, Person
or any division thereof or any assets;
(xiv) alter the manner of keeping its books, accounts or records, or change in any manner the
accounting practices therein reflected;
(xv) make any Tax election or settle or compromise any material federal, state or local or
federal income Tax Liability;
(xvi) change its accounting practices, methods or assumptions or write down any of its assets;
(xvii) notify the Buyer if any party has accelerated, terminated, modified or canceled any
Company Contract;
(xviii) grant any license or sublicense of any right under or with respect to any Intellectual
Property or disclose any proprietary or confidential information to any third party;
(xix) take or omit to take any action which would render any of the Companys or any of the
Sellers representations or warranties untrue or misleading, or which would be a breach of any of
the Companys or Sellers covenants;
(xx) take any action which could have a Material Adverse Effect; or
(xxi) agree, whether in writing or otherwise, to do any of the foregoing.
7.2 Maintenance of Personnel. During the period from the date of this Agreement to
the Closing Date, the Company and Sellers agree to cooperate and provide adequate personnel to
permit the conduct of the activity contemplated in Section 7.1(a)(i).
7.3 Consent of Governmental Authorities and Others. Each of Buyer, on the one hand,
and the Company and the Sellers, on the other, agree to file, submit or request (or cause to be
filed, submitted or requested) promptly after the date of this Agreement and to prosecute
diligently any and all (a) applications or notices required to be filed or submitted to any
governmental or regulatory authorities, and (b) in the case of the Company, requests for consents
and approvals of Persons required to be obtained in connection with the transactions contemplated
by this Agreement. Each of Buyer, on the one hand, and the Company and the Sellers on the other,
shall promptly make available to the other or to a relevant governmental authority, as the case may
be,
such information as each of them may reasonably request relative to its business, assets and
property as may be required by each of them to prepare and file or submit such applications and
notices and any additional information requested by any governmental authority, and shall update by
amendment or supplement any such information given in writing. Each of Buyer on the one hand and
the Company and the Sellers on the other, represent and warrant to the other that such information,
as amended or supplemented, shall be true and not misleading.
29
7.4 Due Diligence Review. Neither the due diligence investigation made by Buyer in
connection with the transactions contemplated hereby nor information provided to or obtained by
Buyer shall affect any representation or warranty in this Agreement. Buyers failure or decision
not to conduct any such due diligence review shall not affect any representation or warranty of the
Company or the Sellers under this Agreement.
7.5 Exclusivity. Except for the transactions contemplated by the Transaction
Documents, unless and until this Agreement shall have been terminated, the Sellers will not (and
the Sellers will not cause or permit the Company to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of the Company
(including any acquisition structured as a merger, consolidation, or share exchange), (ii)
participate in, or facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing or enter into any agreement related to any of the foregoing, or (iii) except
as required by law, disclose any information not customarily disclosed to any Person concerning the
business and properties of the Company, afford to any Person (other than Buyer or its designees)
access to the properties, books or records of the Company or otherwise assist or encourage any
Person, in connection with any of the foregoing. The Sellers will notify Buyer immediately if any
Person makes any indication of interest, proposal, offer, inquiry, or contract with respect to any
of the foregoing.
7.6 Escrow Agreement. At the Closing, each of the Sellers, the Buyer and the Escrow
Agent shall execute and deliver the Escrow Agreement in form and substance reasonably acceptable to
the parties.
ARTICLE 8
CONDITIONS PRECEDENT; TERMINATION
8.1 Conditions Precedent to the Obligations of Buyer, OMF and OPKO. The obligations
of Buyer and OPKO to consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) Representations and Warranties True. The representations and warranties of the
Sellers and the Company contained in this Agreement, as excepted in the relevant Disclosure
Schedules, shall be true and correct in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be true and correct in
all respects) as of the Closing Date with the same force and effect as though made on and as of
such date and shall have been true as of the date hereof.
(b) Covenants Performed. The covenants of the Company and the Sellers contained in
this Agreement to be performed or complied with on or before the Closing Date shall have been duly
performed or complied with.
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(c) No Material Adverse Effect. There shall not have occurred any Material Adverse
Effect, the impact of which the parties have not been able to resolve to the satisfaction of both
parties, each acting in good faith and in a commercially reasonable manner.
(d) Companys Certificate. The Company shall have delivered to Buyer a certificate
executed by an authorized representative of the Company, on behalf of the Company and of the
Sellers, dated the Closing Date, certifying in such detail as Buyer may reasonably request, that
the conditions specified in Sections 8.1(a), (b), (c), (e) have been fulfilled.
(e) No Litigation. No litigation, arbitration or other proceeding shall be pending or
threatened by or before any court, arbitration panel or governmental authority; no law or
regulation shall have been enacted after the date of this Agreement; and no judicial or
administrative decision shall have been rendered; in each case, which enjoins, prohibits or
materially restricts, or seeks to enjoin, prohibit or materially restrict, the consummation of the
transactions contemplated by this Agreement.
(f) Consents. The Sellers and the Company shall have obtained all authorizations,
waivers, consents and approvals of, and made all filings, applications and notices with, Persons
which are necessary or advisable to consummate the transactions contemplated by this Agreement,
each of which shall have been obtained without the imposition of any adverse term or condition.
(g) Financial Information. Seller and the Company shall have delivered to Buyer the
Financial Statements and the Closing Financials Statements. The Closing Financial Statements shall
have been prepared in accordance with Mexican GAAP on a basis consistent with prior periods and
delivered on an estimated basis in accordance with U.S. GAAP.
(h) Escrow Agreement. The Sellers and the Escrow Agent shall have executed and
delivered to Buyer the Escrow Agreement in form and substance reasonably acceptable to the Buyer.
(i) Lease Agreements. The Leases shall have been executed and delivered to the
Company.
(j) Listing of Shares. The Stock Consideration shall have been approved for listing
by the NYSE Amex Exchange.
8.2 Conditions Precedent to the Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) Representations and Warranties True. The representations and warranties of Buyer
contained in this Agreement or in any certificate or other document delivered pursuant to this
Agreement shall be true and correct in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be true and correct to
the in
all respects) as of the Closing Date with the same force and effect as though made on and as
of such date and shall have been true as of the date hereof.
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(b) Covenants Performed. The covenants of the Buyer contained in this Agreement to be
performed or complied with on or before the Closing Date shall have been duly performed or complied
with.
(c) No Material Adverse Effect. There shall not have occurred any Material Adverse
Effect the impact of which the parties have not been able to resolve to the satisfaction of both
parties, each acting in good faith and in a commercially reasonable manner.
(d) No Litigation. No litigation, arbitration or other proceeding shall be pending or
threatened by or before any court, arbitration panel or governmental authority; no law or
regulation shall have been enacted after the date of this Agreement; and no judicial or
administrative decision shall have been rendered; in each case, which enjoins, prohibits or
materially restricts, or seeks to enjoin, prohibit or materially restrict, the consummation of the
transactions contemplated by this Agreement.
(e) Buyers Certificate. The Buyer shall have delivered to the Sellers a certificate
executed by an authorized officer of the Buyer dated the Closing Date certifying that the
conditions specified in Sections 8.2(a), (b), (c) and (d) above have been
fulfilled.
(f) Escrow Agreement. Buyer shall have executed and delivered to Sellers the Escrow
Agreement in form and substance reasonably acceptable to the Sellers.
(g) Lease Agreements. The Company shall have executed and delivered to Sellers the
Lease.
(h) Listing of Shares. The Stock Consideration shall have been approved for listing
by the NYSE Amex Exchange.
8.3 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be
terminated at any time before the Closing Date only as follows:
(i) by mutual consent of Sellers and Buyer or if Closing is prohibited by change in law;
(ii) by Buyer, if there has been a material breach by any of the Sellers at any time before
the Closing of any representation, warranty, covenant or agreement contained in this Agreement that
is not curable or, if curable, is not cured within thirty days or such other time as may be agreed
by the parties in writing after written notice of such breach is given by Buyer to the party
committing such breach;
(iii) by Sellers if there has been a material breach by Buyer at any time before the Closing
of any representation, warranty, covenant or agreement contained in this Agreement that is
not curable or, if curable, is not cured within thirty days after written notice of such
breach is given by Sellers to the party committing such breach;
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(iv) by Buyer, on the one hand, or all Sellers, on the other hand, upon notice given to the
other if the Closing shall not have taken place on or before March 16, 2010; or
(v) by Buyer, on the one hand, or all Sellers, on the other hand, upon notice given to the
other if any court (i) shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become final and nonappealable
or (ii) shall have failed to issue an order, decree or ruling or to take any other action, as
applicable, and such denial of a request to issue such order, decree, ruling or take such other
action shall have become final and nonappealable, in the case of each of (i) and (ii) which is
necessary to fulfill the conditions set forth in ARTICLE 8; provided,
however, that the right to terminate this Agreement under this Section 8.3 shall
not be available to any party whose failure to comply with Section 7.3 has been the cause
of such action or inaction.
(b) In the event of the termination of this Agreement as provided in Section 8.3(a),
this Agreement shall forthwith become wholly void and of no further force and effect (except as set
forth in this Section, Sections 5.2, 9.7, 9.10, 9.11, 9.12 and 9.13).
ARTICLE 9
MISCELLANEOUS
9.1 Notices. Any notice or other communication under this Agreement shall be in
writing and shall be delivered personally or sent by certified mail, return receipt requested,
postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses
set forth below their names on the signature pages of this Agreement (or at such other addresses as
shall be specified by the parties by like notice). Such notices and other communications shall be
deemed given when actually received or (a) in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for delivery, (b) in the case of
facsimile, the date upon which the transmitting party received confirmation of receipt by
facsimile, telephone or otherwise. A copy of any notices delivered to Buyer shall also be sent to
OPKO Health, Inc., 4400 Biscayne Boulevard, Miami, Florida 33137, Attn: General Counsel, Fax (305)
575-4140. A copy of any notices delivered to Sellers, or the Company prior to the Closing, shall
also be sent to Barrera, Gonzalez Luna y Gonzalez Schmall, S.C., Justo sierra 2847, Col., Vallarta
Norte, C.P. 44690, Guadalajara, Jalisco, Mexico. Attention. Santiago Gonzalez Luna, Fax (52) (33)
3616 2675.
9.2 Entire Agreement. This Agreement, its schedules and exhibits contain every
obligation and understanding between the parties relating to the subject matter hereof, and merges
all prior discussions, negotiations and agreements, if any, between them, and none of the parties
shall be bound by any representations, warranties, covenants, or other understandings, other than
as expressly provided or referred to herein or therein.
9.3 Assignment. This Agreement may not be assigned by any party without the written
consent of the other party; provided that Buyer may assign this Agreement to one of the Buyers
Affiliates, whether such Affiliate currently exists or is formed in the future, so long as such
Affiliate
of Buyer agrees in writing to be bound by the terms of this Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective successors,
heirs, personal representatives, legal representatives, and permitted assigns.
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9.4 No Third Party Beneficiary. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any Person other than the parties hereto
and their respective heirs, personal representatives, legal representatives, successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
9.5 Waiver and Amendment. Any representation, warranty, covenant, term or condition
of this Agreement which may legally be waived, may be waived at any time by the party entitled to
the benefit thereof, and any term, condition or covenant hereof may be amended by the parties
hereto at any time by written agreement. Any such waiver or amendment shall be evidenced by an
instrument in writing executed on behalf of the appropriate party by a person who, to the extent
applicable, has been authorized by its board of directors to execute waivers, extensions or
amendments on its behalf. No waiver by any party hereto, whether express or implied, of its rights
under any provision of this Agreement shall constitute a waiver of such partys rights under such
provisions at any other time or a waiver of such partys rights under any other provision of this
Agreement. No failure by any party hereto to take any action against any breach of this Agreement
or default by another party shall constitute a waiver of the former partys right to enforce any
provision of this Agreement or to take action against such breach or default or any subsequent
breach or default by such other party.
9.6 Severability. In the event that any one or more of the provisions contained in
this Agreement shall be declared invalid, void or unenforceable, the remainder of the provisions of
this Agreement shall remain in full force and effect, and such invalid, void or unenforceable
provision shall be interpreted as closely as possible to the manner in which it was written.
9.7 Expenses. Each party agrees to pay, without right of reimbursement from the other
party, the costs (hereafter referred to as Costs) incurred by it incident to the
performance of its obligations under this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, costs incident to the preparation of this
Agreement, and the fees and disbursements of counsel, accountants and consultants employed by such
party in connection herewith.
9.8 Headings and References. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or interpretation of any
provisions of this Agreement. References in this Agreement to clauses, subclauses, sections,
articles or schedules are references to clauses, subclauses, sections, articles or schedules of
this Agreement so numbered.
9.9 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall constitute one and the same
instrument.
9.10 Litigation; Prevailing Party. In the event of any litigation with regard to this
Agreement, the prevailing party shall be entitled to receive from the non-prevailing party and the
non-prevailing party shall pay upon demand all reasonable fees and expenses of counsel for the
prevailing party.
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9.11 Governing Law. This Agreement has been entered into and shall be construed and
enforced in accordance with the laws of the State of Florida, without reference to the choice of
law principles thereof.
9.12 Jurisdiction and Venue. All disputes arising out of or in connection with the
present Agreement shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one arbitrator appointed in accordance with said Rules. The venue of the
arbitration shall be Miami, Florida and the language of the arbitration shall be English. For any
dispute which cannot be submitted to arbitration, the Parties irrevocably agree that the state and
federal courts located in Miami-Dade County, Florida (the Court) shall have exclusive
jurisdiction to settle any dispute or claim that arises out of or in connection with this
Agreement. The parties irrevocably waive, to the fullest extent permitted by law, any objection to
jurisdiction which they may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, or
any judgment entered by any court in respect hereof brought in the State of Florida, and further
irrevocably waive any claim that any suit, action or proceeding brought in Florida has been brought
in an inconvenient forum.
9.13 Publicity. The parties shall agree to the content of any press release or other
public announcement concerning this Agreement or the transactions contemplated hereby before
issuing the same. Nothing contained herein shall prevent OPKO from at any time furnishing any
information to any governmental authority which it is by law or otherwise so obligated to disclose
or from making any disclosure which its counsel deems necessary or advisable in order to fulfill
such partys disclosure obligations under applicable law or the rules of the any stock exchange to
which the party is subject.
(Signatures on following page)
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of
the day and year first above written.
|
OPKO Health Mexicana S. de R.L. de C.V. |
||||
| By: | ||||
| Name: | Adolfo Garcin de la Cueva | |||
| Title: | Attorney-in-fact | |||
|
Calle El Carmen no. 651 Fraccionamiento Camino Real, C.P. 45040, Zapopan Jalisco, Mexico Fax: (52-33) 3122 6574 |
||||
|
OPKO Manufacturing Facilities S. de R.L. de C.V. |
||||
| By: | ||||
| Name: | Adolfo Garcin de la Cueva | |||
| Title: | Attorney-in-fact | |||
| Calle El Carmen no. 651 Fraccionamiento Camino Real, C.P. 45040, Zapopan Jalisco, Mexico Fax: (52-33) 3122-6574 |
||||
|
OPKO Health, Inc. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| 4400 Biscayne Boulevard Miami, Florida |
||||
|
Sellers: IGNACIO LEVY GARCÍA |
||||
| By: | ||||
| Name: | Ignacio Levy García | |||
| |
||||
| |
||||
|
Fax: |
||||
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|
JOSÉ DE JESUS LEVY GARCÍA |
||||
| By: | ||||
| Name: | José de Jesus Levy García | |||
| |
||||
| |
||||
| |
||||
|
Fax: |
||||
|
Company: PHARMACOS EXAKTA, S.A. DE C.V. |
||||
| By: | ||||
| Name: | Ignacio Levy Garcia | |||
| Title: | Sole Administrator and attorney-in-fact | |||
|
Av. Niño Obrero No. 651C.P. 45040 Zapopan Jalisco Mexico Fax: |
||||
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