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Asset Sale and Purchase Agreement

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Title:

Asset Sale and Purchase Agreement

Entities:

Genencor International Inc.; Martek Biosciences Corp.; FermPro Manufacturing, LP; Astral Technologies, Inc.

Date:

2003

Size:

181KB total

Price:

$53

ID:

#254131

► Purchase & Sale ► Sale & Purchase ► Asset Sale & Purchase Agreements
► Biotech & Drugs ► In Vitro & In Vivo Diagnostic Substances
► Biotech & Drugs ► Biological Products

Start of Preview

ASSET SALE AND PURCHASE AGREEMENT

BY AND AMONG

FERMPRO MANUFACTURING, LP,

(?SELLER?)

ASTRAL TECHNOLOGIES, INC.,

(Its General Partner)

THE LIMITED PARTNERS IDENTIFIED ON SCHEDULE 1

(Collectively, the ?PARTNERS?)

AND

MARTEK BIOSCIENCES CORPORATION

(?BUYER?)

TABLE OF CONTENTS


			Page

1.	SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES		1
	1.1.	Asset Sale	1
	1.2.	Purchase Price	1
	1.3.	Purchase Price Adjustment	3
	1.4.	Assumption of Liabilities	4
2.	REPRESENTATIONS AND WARRANTIES BY SELLER		4
	2.1.	Organization and Standing	5
	2.2.	Authorization	5
	2.3.	Litigation; Compliance with Law	5
	2.4.	Financial Statements and Condition; Liabilities	6
	2.5.	Assets; Consents	7
	2.6.	Zoning and Use	8
	2.7.	No Mechanic?s Liens	8
	2.8.	No Condemnation Proceedings; Roadways	8
	2.9.	Existing Financing	8
	2.10.	CSX Transportation, Inc. Agreements	9
	2.11.	Oral Agreements	9
	2.12.	Construction and Condition of Improvements	9
	2.13.	Mechanical Warranties	10
	2.14.	Operating and Other Agreements	10
	2.15.	Utilities	10
	2.16.	Assessed Valuation and Real Estate Taxes	10
	2.17.	Condition of Tangible Assets	10
	2.18.	Intellectual Property	11
	2.19.	Reports and Records	11
	2.20.	Contracts	11
	2.21.	Conflicts	12
	2.22.	Related Parties	12
	2.23.	Taxes	13
	2.24.	Employee Benefit Plans	13
	2.25.	Environmental Matters	15
	2.26.	Labor Relations	17
	2.27.	Insurance	17
	2.28.	Investment Intent	17
	2.29.	Experience	18
	2.30.	Disclosure	18
3.	REPRESENTATIONS AND WARRANTIES BY BUYER		18
	3.1.	Organization and Standing	18
	3.2.	Authorization	18
	3.3.	Capitalization	19
	3.4.	Martek Reports; Financial Statements	19

- i -


		3.5.	Absence of Certain Changes		20
		3.6.	Litigation; Compliance with Law		21
		3.7.	Issuance and Delivery of New Shares		21
		3.8.	Form S-3 Eligibility; Rule 144		21
		3.9.	Disclosure		21
4.	REGISTRATION EXPENSES AND PROCEDURES				22
		4.1.	Registration Expenses and Procedures		22
		4.2.	New Share Indemnification		24
		4.3.	Rule 144		27
5.	COVENANTS AND AGREEMENTS OF SELLER				27
		5.1.	Negative Covenants		27
			5.1.1.	Dispositions; Mergers	27
			5.1.2.	Accounting Principles and Practices	27
			5.1.3.	Additional Agreements and Additional Liabilities	27
			5.1.4.	Breaches; Employment Contracts	28
			5.1.5.	Actions Affecting Contracts	28
			5.1.6.	Accounts	28
			5.1.7.	Representations, Warranties and Covenants	28
			5.1.8.	Employees	28
			5.1.9.	Modification of CSX Agreements	28
			5.1.10.	New Leases	29
			5.1.11.	Exclusivity	29
		5.2.	Affirmative Covenants		29
			5.2.1.	Preserve Existence	29
			5.2.2.	Normal Operations	29
			5.2.3.	Taxes	29
			5.2.4.	Partnership and Corporate Action	30
			5.2.5.	Transfer Tax; Bulk Sales	30
			5.2.6.	Access	30
			5.2.7.	Other Information	30
			5.2.8.	Engineering Inspections	30
			5.2.9.	Insurance	31
			5.2.10.	Financial Statements; Adjustments	31
			5.2.11.	Consents and Permits	31
			5.2.12.	CSX Estoppels	31
			5.2.13.	Environmental Liens	32
			5.2.14.	401(k) Retirement Plan	32
			5.2.15.	Payment of Accrued Vacation	32
		5.3.	Confidentiality		32
		5.4.	Employment Taxes		32
		5.5.	Employees		33
		5.6.	Removal of Materials		33
6.	COVENANTS AND AGREEMENTS OF BUYER				33
		6.1.	Confidentiality		33

- ii -


	6.2.	Corporate Action	33
	6.3.	Employment of Employees	33
	6.4.	Employment of Management Employees	34
	6.5.	Access	34
	6.6.	Martek?s 401(k) Plan	34
	6.7.	Conditions to Close	34
7.	CONDITIONS PRECEDENT TO BUYER?S OBLIGATION TO CLOSE		35
	7.1.	Representations and Covenants	35
	7.2.	Consents	35
	7.3.	Delivery of Documents	35
	7.4.	Financial Statements	35
	7.5.	Title Insurance	35
	7.6.	Current Survey	35
	7.7.	Legal Proceedings	36
	7.8.	Genencor International, Inc. Note	36
	7.9.	Satisfactory Resolution of Liabilities	36
	7.10.	Employment Arrangements	36
	7.11.	Absence of Material Change	36
	7.12.	Termination of Seller?s Retiree Health Insurance Plan	36
	7.13.	Failure of Condition	36
	7.14.	Additional Agreements and Additional Liabilities	37
8.	CONDITIONS PRECEDENT TO SELLER?S OBLIGATION TO CLOSE		37
	8.1.	Representations and Covenants	37
	8.2.	Consents	38
	8.3.	Delivery by Buyer	38
	8.4.	Legal Proceedings	38
	8.5.	Grant of Stock Options	38
	8.6.	Failure of Condition	38
9.	THE CLOSING		39
	9.1.	Closing	39
	9.2.	Delivery by Seller	39
		9.2.1. Warranty Deed	39
		9.2.2. Bill of Sale (Personalty)	39
		9.2.3. Assignment of CSX Agreements	39
		9.2.4. Books and Records	39
		9.2.5. Original Documents	39
		9.2.6. Opinion of Seller?s Counsel	40
		9.2.7. Foreign Person Affidavit	41
		9.2.8. Consents	41
		9.2.9. Certificate Concerning Amendments and Additional Agreements	41
		9.2.10. UCC Report	41

- iii -


			9.2.11.	Certified Resolutions	42
			9.2.12.	Officers? Certificates	42
			9.2.13.	Seller?s IRS Form 8594	42
			9.2.14.	Expense Payment	42
			9.2.15.	Keys	42
			9.2.16.	Title Company Documents	43
			9.2.17.	Agreements and Instruments	43
			9.2.18.	Proof of Insurance	43
			9.2.19.	Easement and Shared Facilities Agreement	44
			9.2.20.	Access Easement Agreement	44
			9.2.21.	Additional Environmental Reports	44
			9.2.22.	Disposal or Treatment of Hazardous Materials	44
	9.3.	Delivery by Buyer.			44
			9.3.1.	Purchase Price Payment	44
			9.3.2.	Agreements and Instruments	44
			9.3.3.	Certified Resolutions	45
			9.3.4.	Officers? Certificate	45
			9.3.5.	Opinion of Buyer?s Counsel	45
			9.3.6.	Buyer?s IRS Form 8594	46
10.	CONDEMNATION AND CASUALTY				46
	10.1.	Procedure Upon Condemnation or Substantial Fire or Other Casualty			46
	10.2.	Risk of Loss			46
11.	SURVIVAL; INDEMNIFICATION				46
	11.1.	Survival of Seller?s Representations and Warranties			46
	11.2.	Indemnification by Seller			47
	11.3.	Survival of Buyer?s Representations			47
	11.4.	Indemnification by Martek			47
	11.5.	Conditions of Indemnification			48
	11.6.	Post-Closing Escrow			49
	11.7.	Limitations on Indemnification			49
12.	TERMINATION				50
13.	ALLOCATION OF PURCHASE PRICE				50
14.	REMEDIES				51
15.	ADDITIONAL ACTIONS AND DOCUMENTS				51
16.	BROKERS				52
17.	EXPENSES				52
18.	NOTICES				52
19.	WAIVER				54
20.	BENEFIT AND ASSIGNMENT				54
21.	REMEDIES CUMULATIVE				54
22.	ENTIRE AGREEMENT; AMENDMENT				55
23.	SEVERABILITY				55
24.	HEADINGS				55

- iv -


25.	GOVERNING LAW; ARBITRATION	55
26.	DEFINITIONS AND REFERENCES	56
27.	ANNOUNCEMENTS	65
28.	SIGNATURE IN COUNTERPARTS	65
EXHIBITS AND SCHEDULES

- v -

ASSET SALE AND PURCHASE AGREEMENT

THIS ASSET SALE AND PURCHASE AGREEMENT (the ?Agreement?) is entered into as of this 21st day of July, 2003 by and among, FermPro Manufacturing, LP, a Georgia limited partnership (?Seller?), Astral Technologies, Inc., a South Carolina corporation and the general partner of Seller (?Astral?), the limited partners of Seller identified on Schedule 1 hereto (the ?Management Employees?) and Martek Biosciences Corporation, a Delaware corporation (?Martek?), on behalf of itself or a wholly-owned corporation or entity to be formed by it (?Buyer?).

WHEREAS, Seller owns and operates a large-scale fermentation facility in Kingstree, South Carolina; and

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all the Assets (as defined in Section 26 hereof) all in accordance with and subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

1. SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES

1.1. Asset Sale

In reliance upon the representations, warranties, covenants and agreements contained herein, and subject to the terms and conditions hereof, Seller agrees to sell, assign, transfer, convey and deliver to Buyer, and Buyer agrees to purchase from Seller, the Assets, not including the Excluded Assets, and assume the Assumed Liabilities, not including the Excluded Liabilities, at the Closing.

1.2 Purchase Price

(a) For and in consideration of the conveyances and assignments described herein and in addition to the assumption of liabilities as set forth in Section 1.4, Buyer agrees to pay to Seller, and Seller agrees to accept from Buyer, for the Assets, at Closing (such consideration, together with the consideration referred to in Section 1.2(b), the ?Purchase Price?) (i) $5,000,000, of which $75,000 already has been paid to Seller, in cash, as an earnest money deposit (the ?Deposit?), and the remainder of which shall be paid in cash by wire transfer of immediately available funds to an account specified by Seller (the ?Cash Portion?); and (ii) 49,915 shares of common stock, par value $.10, of Martek (the ?Initial Shares,? and together with the Milestone Shares, the ?New Shares?). The Initial

Shares shall be issued to Seller at Closing and will be subject to the registration rights provisions of Section 4 hereof.

(b) For and in consideration of the conveyances and assignments described herein and in addition to the assumption of liabilities as set forth in Section 1.4, 74,873 shares of common stock, par value $.10 of Martek, (the ?Milestone Shares?) shall be deemed to be issued to Seller at Closing, but shall be immediately deposited in an escrow account pursuant to Section 11.6, and, subject to the terms of the Post-Closing Escrow Agreement, shall not be transferable by Seller while under such escrow arrangement but shall be distributed from escrow, in part, upon the occurrence of each of the events set forth in (i) through (iii) below (each, a ?Milestone Event?), beginning on the first anniversary of the Closing Date and ending no later than the fourth anniversary of the Closing Date:

(i) on the first anniversary of the Closing Date, if, during the immediately preceding thirty (30) day period, the new fermentation, harvesting and extraction equipment related to the production of DHA and installed after the Closing Date (the ?DHA Equipment?) has produced at least eighty percent (80%) of its Theoretical Capacity, fifty percent (50%) of the Milestone Shares remaining in the escrow account and not the subject of any escrow claims will be released from escrow and delivered to Seller in accordance with the terms and conditions of the Post-Closing Escrow Agreement; provided, however, that, if during the immediately preceding thirty (30) day period, events or circumstances have occurred that, in the reasonable view of Buyer, were outside of the direct control of the Management Employees and such events or circumstances were a direct cause of the failure to meet the required Theoretical Capacity, then, so long as, during the first consecutive thirty (30) day period ending after the first anniversary of the Closing Date during which no such events or circumstances have occurred, the DHA Equipment produced at least eighty percent (80%) of its Theoretical Capacity, fifty percent (50%) of the Milestone Shares remaining in the escrow account and not the subject of any escrow claims will be released from escrow and delivered to Seller in accordance with the terms and conditions of the Post-Closing Escrow Agreement;

(ii) on the second anniv