ASSET PURCHASE AGREEMENT
DATED OCTOBER 25, 2001
BETWEEN
BIO-IMAGING TECHNOLOGIES, INC.
AND
QUINTILES, INC.
TABLE OF CONTENTS
-----------------
Page
ARTICLE I THE ASSET PURCHASE.............................................1
1.1 Purchase and Sale of Assets......................................1
1.2 Assumption of Liabilities........................................1
1.3 Purchase Price...................................................1
1.4 The Closing......................................................3
1.5 Allocation.......................................................4
1.6 Further Assurances...............................................4
1.7 Registration Rights..............................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER...................4
2.1 Organization, Qualification and Corporate Power..................4
2.2 Authorization of Transaction.....................................4
2.3 Noncontravention.................................................5
2.4 Financial Statements.............................................5
2.5 Absence of Certain Changes.......................................5
2.6 Ownership and Condition of Assets................................6
2.7 Real Property Leases.............................................7
2.8 Intellectual Property............................................8
2.9 Contracts........................................................9
2.10 Insurance.......................................................10
2.11 Unbilled Services...............................................11
2.12 Litigation......................................................11
2.13 Warranties......................................................11
2.14 Employees.......................................................11
2.15 Employee Benefits...............................................11
2.16 Environmental Matters...........................................13
2.17 Legal Compliance................................................13
2.18 Customers and Suppliers.........................................13
2.19 Permits.........................................................13
2.20 Brokers' Fees.................................................. 13
2.21 Disclosure......................................................14
2.22 Certain Securities Laws Representations.........................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER...................14
3.1 Organization and Corporate Power................................14
3.2 Authorization of the Transaction................................15
3.3 Noncontravention................................................15
3.4 Broker's Fees...................................................15
3.5 Certificate of Incorporation and By-Laws........................15
3.6 Capitalization..................................................15
3.7 Reports and Financial Statements............................... 16
3.8 Absence of Material Adverse Change..............................16
3.9 Litigation......................................................17
3.10 Legal Compliance................................................17
3.11 Disclosure......................................................17
i
ARTICLE IV CONDITIONS TO CLOSING.........................................17
4.1 Conditions to Obligations of the Buyer..........................17
4.2 Conditions to Obligations of the Seller.........................19
ARTICLE V POST-CLOSING COVENANTS........................................20
5.1 Assigned Contracts..............................................20
5.2 Proprietary Information.........................................20
5.3 Solicitation and Hiring.........................................21
5.4 Non-Competition.................................................21
5.5 Tax Matters.....................................................22
5.6 Sharing of Data.................................................22
5.7 Use of Name.....................................................22
5.8 Collection and Billing of Accounts Receivable...................23
5.9 Employees.......................................................23
5.10 Delivery of Audited Financial Statements........................24
5.11 Election of Seller's Designee to Buyer's Board of Directors.....24
5.12 Listing of Shares...............................................24
5.13 Bulk Transfer Laws..............................................24
ARTICLE VI INDEMNIFICATION...............................................25
6.1 Indemnification by the Seller...................................25
6.2 Indemnification by the Buyer....................................25
6.3 Indemnification Claims..........................................25
6.4 Survival of Representations and Warranties......................28
6.5 Limitations.....................................................28
6.6 Treatment of Indemnity Payments.................................29
ARTICLE VII DEFINITIONS...................................................29
ARTICLE VIII MISCELLANEOUS.................................................38
8.1 Press Releases and Announcements................................38
8.2 No Third Party Beneficiaries....................................38
8.3 Entire Agreement................................................38
8.4 Succession and Assignment.......................................38
8.5 Counterparts and Facsimile Signature............................38
8.6 Headings........................................................38
8.7 Notices.........................................................39
8.8 Governing Law...................................................40
8.9 Amendments and Waivers..........................................40
8.10 Severability....................................................40
8.11 Expenses........................................................40
8.12 Submission to Jurisdiction......................................40
8.13 Specific Performance............................................40
8.14 Construction....................................................41
- ii -
Exhibits
Exhibit A - Note
Exhibit B - ▇▇▇▇ of Sale
Exhibit C - Trademark Assignment
Exhibit D - Instrument of Assumption
Exhibit E - Registration Rights Agreement
Exhibit F - Master Services Agreement
Exhibit G - Opinion of Seller's counsel
Exhibit H - Employment Agreement
Exhibit I - Transition Services Agreement
Exhibit J - Opinion of Buyer's counsel
Exhibit K - Invention Assignment Agreement
Exhibit L - Final Closing Balance Sheet
Schedules
---------
Disclosure Schedule
Schedule 1.1(a)- Acquired Assets
Schedule 1.1(b) - Excluded Assets
Schedule 1.3(b) - Contracts
Schedule 1.5 - Allocation of Purchase Price
Schedule 5.10 - Transferred Employees
- iii -
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of October 25, 2001 by and
between Bio-Imaging Technologies, Inc., a Delaware corporation (the "Buyer"),
and Quintiles, Inc. a North Carolina corporation and wholly-owned subsidiary of
Quintiles Transnational Corp. (the "Seller").
This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller certain assets of the Seller's Intelligent Imaging business as
defined under Article VII hereof.
Capitalized terms used in this Agreement shall have the meanings ascribed
to them in Article VII.
In consideration of the representations, warranties and covenants herein
contained, the Parties agree as follows.
ARTICLE I
THE ASSET PURCHASE
1.1 Purchase and Sale of Assets.
---------------------------
(a) Upon and subject to the terms and conditions of this Agreement,
the Buyer shall purchase from the Seller, and the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, at the Closing, for the consideration
specified below in this Article I, all right, title and interest in, to and
under the Acquired Assets as set forth on Schedule 1.1(a).
---------------
(b) Notwithstanding the provisions of Section 1.1(a), the Acquired
Assets shall not include the Excluded Assets as set forth on Schedule 1.1(b).
----------------
1.2 Assumption of Liabilities.
-------------------------
(a) Upon and subject to the terms and conditions of this Agreement,
the Buyer shall assume and become responsible for, from and after the
Closing, the Assumed Liabilities.
(b) Notwithstanding the terms of Section 1.2(a) or any other provision
of this Agreement to the contrary, the Buyer shall not assume or become
responsible for, and the Seller shall remain liable for, the Retained
Liabilities.
1.3 Purchase Price. The Purchase Price to be paid by the Buyer for the
---------------
Acquired Assets at the Closing shall be $1,000,000, plus the Additional
Consideration (as defined in Section 1.3(b) below), payable as follows:
(a) Note. $1,000,000 to be paid by Buyer to the Seller in the form
----
of an unsecured, subordinated convertible promissory note, in the form attached
hereto as Exhibit A (the "Note"), in the principal amount equal to $1,000,000,
---------
with interest per annum equal to the
rate as set forth in the Note. The Note will, among other things: (i) mature
thirty-six (36) months from the Closing Date; (ii) require quarterly payments of
principal and interest with respect to $500,000 of the principal amount; (iii)
require the remaining $500,000 of the principal amount, plus accrued but unpaid
interest, to be paid at maturity; (iv) be senior to all other indebtedness of
the Buyer and require the Seller's consent to any new indebtedness incurred by
the Buyer, except as set forth in the Note; and (v) be convertible any time
prior to maturity (the "Conversion Date"), at the Seller's option, into such
shares of restricted common stock of the Buyer, $0.00025 par value (the "Common
Stock"). Such number of shares shall be calculated by dividing the principal and
accrued but unpaid interest outstanding under the Note on the Conversion Date by
the conversion price as set forth in the Note.
(b) Additional Consideration. The additional consideration (the
-------------------------
"Additional Consideration") shall be paid in shares of the Buyer's Common Stock
based on a formula of $1.00 of Additional Consideration for each $1.00 of
revenue earned for all cumulative revenues greater than $1,800,000 for the
period beginning on the Closing Date and ending on December 31, 2002, which are
derived from the Contracts included within the Acquired Assets and other
agreements, understandings and arrangements as set forth on Schedule 1.3(b)
----------------
attached hereto. To the extent such Additional Consideration is due under the
terms of this Section 1.3(b), it shall be paid on or before February 15, 2003
(the "Payment Date"). The exact number of shares shall be calculated by dividing
the Additional Consideration (less any indemnification obligations of the Seller
as set forth in this Agreement) by the Exchange Price that would result on the
Payment Date. The "Exchange Price" is defined as the average closing price of
the Buyer's Common Stock as reported on the NASD OTC Bulletin Board (or such
successor securities exchange on which the Common Stock is then traded) over the
ten (10) consecutive trading days immediately preceding the Payment Date.
(c) Calculation. For purposes of calculating the Additional
-----------
Consideration,cumulative revenues and related returns shall be determined in
accordance with GAAP. In determining the amounts calculated under this Section
1.3, the Seller shall be entitled to receive from the Buyer, not less than
thirty (30) days prior to the applicable Payment Date, a copy of the financial
statements and calculations (the "Calculations") used in determining whether or
not the Buyer was required to pay the Additional Consideration. Unless the
Seller notifies the Buyer in writing within ten (10) business days of the
Seller's receipt of the Calculations of any disagreement with the Calculations,
the Calculations shall be final and binding. If the Seller notifies the Buyer of
any disagreement with the Calculations within such ten (10) business day period
and such disagreement cannot be satisfactorily resolved within an additional
period of thirty (30) days, the disagreement as to the Calculations shall be
submitted for final determination to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or such other
nationally recognized accounting firm as the parties may agree upon ("Appeal
Accountant"). Both parties shall be bound by the determination of the Appeal
Accountant. If the calculation by the Appeal Accountant differs by less than 5%
from the Buyer's Calculations, then the Seller shall bear the cost of any
expenses associated with the Appeal Accountant. However, if the calculation by
the Appeal Accountant differs by more than 5% from the Buyer's Calculations,
then the Buyer shall bear the cost of such expenses. The Appeal Accountant shall
render their final determination with respect to the
-2-
resolution of such disputes which shall be binding on the Buyer and the Seller
and deliver copies thereof to each such party.
(d) Maximum. In no event shall the number of shares to be issued to
-------
the Seller under Section 1.3(b) of this Agreement exceed 646,247 shares (such
number of shares equal to the difference between 1,750,000 shares and the number
of shares that would have been issued at Closing, calculated by dividing
$1,000,000 by the Exchange Price that would result on the Closing Date).
1.4 The Closing.
-----------
(a) The Closing shall take place at the offices of ▇▇▇▇ and ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ commencing at 9:00 a.m. local
time on the Closing Date. All transactions at the Closing shall be deemed to
take place simultaneously, and no transaction shall be deemed to have been
completed and no documents or certificates shall be deemed to have been
delivered until all other transactions are completed and all other documents and
certificates are delivered.
(b) At the Closing:
(i) the Seller shall deliver to the Buyer the various
certificates, instruments and documents referred to in Section 4.1;
(ii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section 4.2;
(iii) the Seller shall execute and deliver to the Buyer a ▇▇▇▇ of
sale in substantially the form attached hereto as Exhibit B, one or more
----------
trademark assignments in substantially the form attached hereto as Exhibit C,
---------
and such other instruments of conveyance (such as real estate deeds, assigned
certificates or documents of title, assigned negotiable instruments and stock
transfer powers) as the Buyer may reasonably request in order to effect the
sale, transfer, conveyance and assignment to the Buyer of valid ownership of the
Acquired Assets;
(iv) the Buyer shall execute and deliver to the Seller an
instrument of assumption in substantially the form attached hereto as Exhibit D
---------
and such other instruments as the Seller may reasonably request in order to
effect the assumption by the Buyer of the Assumed Liabilities;
(v) the Buyer shall pay to the Seller, the Purchase Price set
forth in Section 1.3, by delivering the Note;
(vi) the Seller shall deliver to the Buyer, or otherwise put the
Buyer in possession and control of, all of the Acquired Assets of a tangible
nature;
-3-
1.5 Allocation. The Buyer and the Seller agree to allocate the Purchase
----------
Price (and all other capitalizable costs) among the Acquired Assets and the
non-solicitation and non-competition covenants set forth in Sections 5.3 and 5.4
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule attached hereto as Schedule 1.5 which the parties
------------
have mutually agreed upon.
1.6 Further Assurances. At any time and from time to time after the
------------------
Closing subject to any other provisions of this Agreement to the contrary, at
the request of the Buyer and without further consideration, the Seller shall
execute and deliver such other instruments of sale, transfer, conveyance and
assignment and take such actions as the Buyer may reasonably request to more
effectively transfer, convey and assign to the Buyer, and to confirm the Buyer's
rights to, title in and ownership of, the Acquired Assets and to place the Buyer
in actual possession and operating control thereof.
1.7 Registration Rights. The Buyer shall provide the Seller with certain
--------------------
registration rights, in each case on the terms and conditions set forth in the
Registration Rights Agreement attached hereto as Exhibit E.
---------
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that the statements
contained in this Article II are true and correct, except as set forth in the
Disclosure Schedule. The Disclosure Schedule shall be arranged in sections and
subsections corresponding to the numbered and lettered sections and subsections
contained in Article II of this Agreement. The disclosures in any section or
subsection of the Disclosure Schedule shall qualify only the corresponding
section or subsection in this Article II, or any other section hereof where it
is reasonably clear, upon a reading of such disclosure without any independent
knowledge on the part of the reader regarding the matter disclosed, that the
disclosure is intended to apply to such other section. For purposes of this
Article II, the phrase "to the knowledge of the Seller" or any phrase of similar
import shall be deemed to refer to the actual knowledge of the Seller.
2.1 Organization, Qualification and Corporate Power. The Seller is a
---------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina. The Seller is duly qualified to conduct business
and is in corporate and tax good standing under the laws of each jurisdiction
listed in Section 2.1 of the Disclosure Schedule. The Seller has all requisite
corporate power and authority to carry on the Business and to own and use the
properties owned and used by it in the Business. The Seller has furnished to the
Buyer complete and accurate copies of its Articles of Incorporation and by-laws.
The Seller is not in violation of any provision of its Articles of Incorporation
or by-laws.
2.2 Authorization of Transaction. The Seller has all requisite corporate
----------------------------
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to perform its obligations hereunder and thereunder. The
execution and delivery by the Seller of this
-4-
Agreement, the performance by the Seller of this Agreement and the Ancillary
Agreements and the consummation by the Seller of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Seller. This Agreement has been duly and
validly executed and delivered by the Seller and constitutes, and each of the
Ancillary Agreements, upon its execution and delivery by the Seller, will
constitute, a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms subject to applicable bankruptcy and
equitable principles.
2.3 Noncontravention. Neither the execution and delivery by the Seller of
----------------
this Agreement or the Ancillary Agreements, nor the consummation by the Seller
of the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Articles of Incorporation or by-laws of the Seller,
(b) require on the part of the Seller any notice to or filing with, or any
permit, authorization, consent or approval of, any Governmental Entity, (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which the Seller is a party or by which the Seller is bound or to which any of
the Acquired Assets is subject which, in all such cases, relate primarily to the
Business, except for (i) any conflict, breach, default, acceleration,
termination, modification or cancellation which would not adversely affect the
consummation of the transactions contemplated hereby or (ii) any notice, consent
or waiver, the absence of which would not adversely affect the consummation of
the transactions contemplated hereby, (d) result in the imposition of any
Security Interest upon any assets of the Business or (e) to its knowledge,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Business.
2.4 Financial Statements. The Seller has provided to the Buyer the
---------------------
Financial Statements of the Business. The Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, fairly present the consolidated financial condition,
results of operations and cash flows of the Seller as of the respective dates
thereof and for the periods referred to therein and are consistent with the
books and records of the Seller; provided, however, that the Financial
-------- -------
Statements are subject to normal recurring year-end adjustments (which will not
be material) and do not include footnotes.
2.5 Absence of Certain Changes. Since the Most Recent Balance Sheet Date,
---------------------------
(a) there has occurred no event or development which, individually or in the
aggregate, has had, or could reasonably be expected to have in the future, a
Material Adverse Effect on the Business, and (b) the Seller has conducted the
Business in the Ordinary Course of Business and in compliance with all
applicable laws and regulations and, to the extent consistent therewith, used
its Reasonable Best Efforts to keep the physical assets of the Business in good
working condition, keep available the services of the current officers and
employees of the Business and preserved its relationships with the Business's
customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, since the Most Recent Balance Sheet
Date, the Seller has not, solely with respect to the Business:
-5-
(a) entered into, adopted or amended any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.15 or (except for normal increases in the Ordinary Course of Business
for employees who are not Affiliates), increased in any manner the compensation
or fringe benefits of, or materially modified the employment terms of, its
directors, officers or employees, generally or individually, or paid any bonus
or other benefit to its directors, officers or employees (except for existing
payment obligations listed in Section 2.15 of the Disclosure Schedule) or hired
any new officers or (except in the Ordinary Course of Business) any new
employees;
(b) acquired, sold, leased, licensed or disposed of any assets or
property, other than purchases and sales of assets in the Ordinary Course of
Business;
(c) mortgaged or pledged any of its property or assets or subject any
such property or assets to any Security Interest;
(d) discharged or satisfied any Security Interest or paid any
obligation or liability other than in the Ordinary Course of Business;
(e) amended its charter, by-laws or other organizational documents in
a manner that could have an adverse effect on the transactions contemplated by
this Agreement;
(f) changed its accounting methods, principles or practices, except
insofar as may be required by a generally applicable change in GAAP, or made any
new elections, or changes to any current elections, with respect to Taxes that
affect the Acquired Assets;
(g) entered into, amended, terminated, took or omitted to take any
action that would constitute a violation of or default under, or waived any
rights under, any contract or agreement of a nature required to be listed in
Section 2.8 or Section 2.9 of the Disclosure Schedule;
(h) made or committed to make any capital expenditure in excess of
$1,000 per item or $10,000 in the aggregate;
(i) instituted or settled any Legal Proceeding;
(j) took any action or failed to take any action permitted by this
Agreement with the knowledge that such action or failure to take action would
result in (i) any of the representations and warranties of the Seller set forth
in this Agreement becoming untrue or (ii) any of the conditions to the Closing
set forth in Article IV not being satisfied; or
(k) agreed in writing or otherwise to take any of the foregoing
actions.
2.6 Ownership and Condition of Assets.
---------------------------------
(a) The Seller is the true and lawful owner, and has good title to,
all of the Acquired Assets, free and clear of all Security Interests, except as
set forth in Section 2.6(a) of
-6-
the Disclosure Schedule. Upon execution and delivery by the Seller to the Buyer
of the instruments of conveyance referred to in Section 1.4(b)(iii), the Buyer
will become the true and lawful owner of, and will receive good title to, the
Acquired Assets, free and clear of all Security Interests other than those set
forth in Section 2.6(a) of the Disclosure Schedule.
(b) The Acquired Assets are sufficient for the conduct of the Seller's
Business as presently conducted and as presently proposed to be conducted and,
subject to the terms of the Transition Services Agreement, constitute all assets
necessary to conduct the Business as presently conducted and as presently
proposed to be conducted. Each tangible Acquired Asset is free from material
defects, has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes for which it presently is used.
(c) Section 2.6(c) of the Disclosure Schedule lists individually (i)
all Acquired Assets which are fixed assets (within the meaning of GAAP) having a
book value greater than $500, indicating the cost, accumulated book depreciation
(if any) and the net book value of each such fixed asset as of the Most Recent
Fiscal Quarter End, and (ii) all other Acquired Assets of a tangible nature
(other than inventories) whose book value exceeds $1,000.
(d) Each item of equipment, motor vehicle and other asset that is
being transferred to the Buyer as part of the Acquired Assets and that the
Seller has possession of pursuant to a lease agreement or other contractual
arrangement is in such condition that, upon its return to its lessor or owner
under the applicable lease or contract, the obligations of the Seller to such
lessor or owner will have been discharged in full.
2.7 Real Property Leases. Section 2.7 of the Disclosure Schedule lists all
--------------------
Leases and lists the term of such Lease, any extension and expansion options,
and the rent payable thereunder. The Seller has made available to the Buyer
complete and accurate copies of the Leases. With respect to each Lease:
(a) such Lease is legal, valid, binding, enforceable and in full force
and effect;
(b) such Lease is assignable by the Seller to the Buyer without the
consent or approval of any party (except as set forth in Section 2.7 of the
Disclosure Schedule) and such Lease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and
(c) the Seller, nor to the knowledge of the Seller, any other party,
is in breach or violation of, or default under, any such Lease, and no event has
occurred, is pending or, to the knowledge of the Seller, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Seller or, to the knowledge of the Seller, any other
party under such Lease.
-7-
2.8 Intellectual Property. With respect to the Intellectual Property used]
---------------------
exclusively in the conduct of the Business:
(a) Section 2.8(a) of the Disclosure Schedule lists (i) each patent,
patent application, copyright registration or application therefor, mask work
registration or application therefor, and trademark, service ▇▇▇▇ and domain
name registration or application therefor of the Business and (ii) each Customer
Deliverable of the Business.
(b) The Seller owns or has the right to use all Intellectual Property
necessary (i) to use, manufacture, have manufactured, market and distribute the
Customer Deliverables and (ii) to operate the Internal Systems. Upon execution
and delivery by the Seller to the Buyer of the instruments of conveyance
referred to in Section 1.4(b)(iii), each item of Seller Intellectual Property
will be owned or available for use by the Buyer immediately following the
Closing on substantially identical terms and conditions as it was immediately
prior to the Closing. The Seller has taken all reasonable measures to protect
the proprietary nature of each item of Seller Intellectual Property, and to
maintain in confidence all trade secrets and confidential information, that it
owns or uses with respect to the Business. No other person or entity has any
rights to any of the Seller Intellectual Property owned by the Seller (except
pursuant to agreements or licenses specified in Section 2.8(d) of the Disclosure
Schedule), and, to the knowledge of the Seller, no other person or entity is
infringing, violating or misappropriating any of the Seller Intellectual
Property.
(c) None of the Customer Deliverables, or the marketing, distribution,
provision or use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
None of the Internal Systems, or the use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity. Section 2.8(c) of the Disclosure Schedule lists any complaint,
claim or notice, or written threat thereof, received by the Seller alleging any
such infringement, violation or misappropriation; and the Seller has provided to
the Buyer complete and accurate copies of all written documentation in the
possession of the Seller relating to any such complaint, claim, notice or
threat. The Seller has provided to the Buyer complete and accurate copies of all
written documentation in the Seller's possession relating to claims or disputes
known to the Seller concerning any Seller's Intellectual Property.
(d) Section 2.8(d) of the Disclosure Schedule identifies each license
or other agreement pursuant to which the Seller has licensed, distributed or
otherwise granted any rights to any third party with respect to, any Seller
Intellectual Property. Except as described in Section 2.8(d) of the Disclosure
Schedule, the Seller has not agreed to indemnify any person or entity against
any infringement, violation or misappropriation of any Intellectual Property
rights with respect to any Customer Deliverables.
(e) Section 2.8(e) of the Disclosure Schedule identifies each item of
Seller Intellectual Property that is owned by a party other than the Seller, and
the license or agreement pursuant to which the Seller uses it (excluding
off-the-shelf software programs licensed by the Seller pursuant to "shrink wrap"
licenses).
-8-
(f) The Seller has not disclosed the source code for the Software or
other confidential information constituting, embodied in or pertaining to the
Software to any person or entity, except pursuant to the agreements listed in
Section 2.8(f) of the Disclosure Schedule, and the Seller has taken reasonable
measure to prevent disclosure of such source code.
(g) All of the copyrightable materials (including Software)
incorporated in or bundled with the Customer Deliverables that have been created
in the past three years have been created by employees of the Seller within the
scope of their employment by the Seller or by independent contractors of the
Seller who have executed agreements expressly assigning all right, title and
interest in such copyrightable materials to the Seller. No portion of such
copyrightable materials was jointly developed with any third party.
(h) The Customer Deliverables and the Internal Systems necessary to
conduct the Business are free from significant defects or programming errors and
conform in all material respects to the written documentation and specification
therefor.
2.9 Contracts.
---------
(a) Section 2.9 of the Disclosure Schedule lists the following
agreements (written or oral) to which the Seller is a party as of the date of
this Agreement and which is primarily related to the Business:
(i) any agreement (or group of related agreements)for the lease
of personal property from or to third parties providing for lease payments in
excess of $10,000 per annum or having a remaining term longer than twelve (12)
months;
(ii) any agreement (or group of related agreements) for the
purchase or sale of products or for the furnishing or receipt of services (A)
which calls for performance over a period of more than one year, (B) which
involves more than the sum of $10,000, or (C) in which the Seller has granted
manufacturing rights, "most favored nation" pricing provisions or marketing or
distribution rights relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed to purchase goods
or services exclusively from a certain party;
(iii) any agreement concerning the establishment or operation of
a partnership, joint venture or limited liability company;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving more
than $1,000 or under which it has imposed (or may impose) a Security Interest on
any of its assets, tangible or intangible;
(v) any agreement for the disposition of any material portion of
the assets primarily related to the Business (other than sales of products in
the Ordinary Course of
-9-
Business) or any agreement for the acquisition of such assets (other than
purchases of inventory or components in the Ordinary Course of Business);
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any employment or consulting agreement;
(viii) any agreement involving any current or former officer,
director or stockholder of the Seller or an Affiliate thereof who has or had a
direct relationship with the Business;
(ix) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Material Adverse Effect on
the Business;
(x) any agreement which contains any provisions requiring the
Seller to indemnify any other party (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in the
Ordinary Course of Business); and
(xi) any other agreement (or group of related agreements) either
involving more than $10,000 or not entered into in the Ordinary Course of
Business.
(b) The Seller has made available to the Buyer a complete and accurate
copy of each agreement listed in Section 2.8 or Section 2.9 of the Disclosure
Schedule. With respect to each agreement so listed: (i) the agreement is legal,
valid, binding and enforceable and in full force and effect as to the Seller;
(ii) for those agreements to which the Seller is a party, the agreement is
assignable by the Seller to the Buyer without the consent or approval of any
party (except as set forth in Section 2.3 of the Disclosure Schedule) and will
continue to be legal, valid, binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect immediately prior to the Closing; and (iii) neither the Seller nor, to
the knowledge of the Seller, any other party, is in breach or violation of, or
default under, any such agreement, and no event has occurred, is pending or, to
the knowledge of the Seller, is threatened, which, after the giving of notice,
with lapse of time, or otherwise, would constitute a breach or default by the
Seller or, to the knowledge of the Seller, any other party under such agreement.
2.10 Insurance. Section 2.10 of the Disclosure Schedule lists each
---------
insurance policy (including fire, theft, casualty, comprehensive general
liability, workers compensation, business interruption, environmental, product
liability and automobile insurance policies and bond and surety arrangements) to
which the Seller is a party and which is primarily related to the Business, all
of which are in full force and effect. Such insurance policies are of the type
and in amounts customarily carried by organizations conducting businesses or
owning assets similar to those of the Business. There is no material claim
pending under any such policy as to which coverage has been questioned, denied
or disputed by the underwriter of such policy. All premiums due and payable
under all such policies have been paid, and it is otherwise in compliance in all
material respects with the terms of such policies.
-10-
2.11 Unbilled Services. A complete and accurate list of the unbilled
------------------
services related to the Businessreflected on the Most Recent Balance Sheet is
included in Section 2.11 of the Disclosure Schedule.
2.12 Litigation. There is no Legal Proceeding which is pending or has been
----------
threatened in writing against the Seller related to the Business which (a) seeks
either damages in excess of $5,000 or equitable relief or (b) in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement. There are no judgments, orders or decrees
outstanding against the Seller with respect to the Business.
2.13 Warranties. No product or service manufactured, sold, leased,
----------
licensed or delivered by the Seller primarily related to the Business is subject
to any guaranty, warranty, right of return, right of credit or other indemnity
other than (i) the applicable standard terms and conditions of sale or lease of
the Seller, which are set forth in Section 2.13 of the Disclosure Schedule, and
(ii) manufacturers' warranties for which the Seller has no actual liability, or
to its knowledge, any potential liability.
2.14 Employees.
---------
(a) Section 2.14 of the Disclosure Schedule contains a list of all
employees of the Business, along with the position and the annual rate of
compensation of each such person. Each current or past employee of the Business
has entered into a customary invention assignment, confidentiality,
non-competition and non-solicitation agreement with the Seller. Section 2.14 of
the Disclosure Schedule contains a list of all employees of the Business who are
a party to a non-competition agreement with the Seller; copies of such
agreements have been made available to the Buyer. To the knowledge of the
Seller, no key employee or group of employees of the Business has any plans to
terminate employment with the Seller (other than for the purpose of accepting
employment with the Buyer following the Closing).
(b) The Seller is not a party to or bound by any collective bargaining
agreement, nor experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes, in each case with respect to
employees of the Business. The Seller has no knowledge of any organizational
effort made or threatened, either currently or within the past two years, by or
on behalf of any labor union with respect to employees of the Business.
2.15 Employee Benefits.
-----------------
(a) Section 2.15(a) of the Disclosure Schedule contains a complete and
accurate list of all Seller Plans, including any Employee Benefit Plan subject
to Section 412 of the Code or Title IV of ERISA and any multiemployer plan as
defined in section 4001(a)(3) of ERISA. Complete and accurate copies of (i) all
Seller Plans which have been reduced to writing, (ii) written summaries of all
unwritten Seller Plans, (iii) all related trust agreements, insurance contracts
and summary plan descriptions, and (iv) all annual reports filed on IRS Form
5500,
-11-
5500C or 5500R and (for all funded plans) all plan financial statements for the
last five plan years for each Seller Plan, have been made available to the
Buyer.
(b) Each Seller Plan has been administered in all material respects in
accordance with its terms and each of the Seller and the ERISA Affiliates has in
all material respects met its obligations with respect to each Seller Plan and
has made all required contributions thereto. The Seller, each ERISA Affiliate
and each Seller Plan are in compliance in all material respects with the
currently applicable provisions of ERISA and the Code and the regulations
thereunder (including Section 4980 B of the Code, Subtitle K, Chapter 100 of the
Code and Sections 601 through 608 and Section 701 et seq. of ERISA). All filings
and reports as to each Seller Plan required to have been submitted to the
Internal Revenue Service or to the United States Department of Labor have been
duly submitted. No Seller Plan has assets that include securities issued by the
Seller or any ERISA Affiliate.
(c) There are no Legal Proceedings (except claims for benefits payable
in the normal operation of the Seller Plans and proceedings with respect to
qualified domestic relations orders) against or involving any Seller Plan or
asserting any rights or claims to benefits under any Seller Plan that could give
rise to any material liability.
(d) There are no unfunded obligations under any Seller Plan providing
benefits after termination of employment to any employee of the Seller (or to
any beneficiary of any such employee), including but not limited to retiree
health coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code or other
applicable law and insurance conversion privileges under state law. The assets
of each Seller Plan which is funded are reported at their fair market value on
the books and records of such Seller Plan.
(e) Section 2.15(e) of the Disclosure Schedule discloses each: (i)
agreement with any stockholder, director, executive officer or other key
employee of the Business (A) the benefits of which are contingent, or the terms
of which are altered, upon the occurrence of a transaction involving the Seller
or any Subsidiary of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee, or
(C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person related to the Business may receive
payments from the Seller that may be subject to the tax imposed by Section 4999
of the Code or included in the determination of such person's "parachute
payment" under Section 280G of the Code; and (iii) agreement or plan binding the
Seller relating to individuals associated with the Business, including any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan or Seller Plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
-12-
(f) Section 2.15(f) of the Disclosure Schedule sets forth the policy
of the Seller with respect to accrued vacation, accrued sick time and earned
time off and the amount of such liabilities applicable to employees of the
Business as of the Most Recent Balance Sheet Date.
2.16 Environmental Matters. The Seller has complied with all applicable
----------------------
Environmental Laws applicable to the Business, except for violations of
Environmental Laws that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Seller Material Adverse Effect. There
is no pending or, to the knowledge of the Seller, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Seller or any Subsidiary.
2.17 Legal Compliance. The Seller is currently conducting, and has at all
----------------
times conducted, the Business in compliance with each applicable law (including
rules and regulations thereunder) of any federal, state, local or foreign
government, or any Governmental Entity, except for any violations or defaults
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Seller Material Adverse Effect. The Seller has not received
any notice or communication from any Governmental Entity alleging noncompliance
with any applicable law, rule or regulation.
2.18 Customers and Suppliers. Schedule 1.3(b) sets forth a complete list of
----------------------- ---------------
all projects of the Business as of the Most Recent Balance Sheet Date and the
amount of revenues accounted for by such customer during each such period and
(b) each supplier that is the sole supplier of any significant product or
service to the Business. No such customer or supplier has indicated in writing
within the past year that it will terminate its existing relationship with the
Business. No unfilled customer order or commitment obligating the Seller to
process, manufacture or deliver products or perform services with respect to the
Business will result in a loss to the Seller upon completion of performance.
2.19 Permits. Section 2.19 of the Disclosure Schedule sets forth a list of
-------
all Permits (including those issued or required under Environmental Laws and
those relating to the occupancy or use of leased real property) issued to or
held by the Seller. Such listed Permits are the only Permits that are required
for the Seller to conduct the Business as presently conducted, except for those
the absence of which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Seller Material Adverse Effect. Each such
Permit is in full force and effect; the Seller is in compliance with the terms
of each such Permit; and, to the knowledge of the Seller, no suspension or
cancellation of such Permit is threatened. Each such Permit is assignable by the
Seller to the Buyer without the consent or approval of any party.
2.20 Brokers' Fees. Neither the Seller nor any Subsidiary has any
-------------
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
-13-
2.21 Disclosure. No representation or warranty by the Seller contained in
----------
this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered by or on behalf of the
Seller pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
2.22 Certain Securities Laws Representations. With respect to the Note to
---------------------------------------
be acquired in connection with the purchase of the Acquired Assets hereunder:
(a) (i) The Seller is an "accredited investor" as such term is
defined in Rule 501(a) promulgated under the Securities Act; or
(ii) The Seller has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the investment in the Note.
(b) The Seller is receiving the Note for investment for its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof, other than as contemplated hereby.
(c) The Seller has been advised that a restrictive legend in
substantially the following form shall be placed on the certificates
representing such shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
ACT OF ANY STATE AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE 1933 ACT OR APPLICABLE STATE SECURITIES ACTS OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 Organization and Corporate Power. The Buyer is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it.
-14-
3.2 Authorization of the Transaction. The Buyer has all requisite power
--------------------------------
and authority to execute and deliver this Agreement and the Ancillary Agreements
and to perform its obligations hereunder and thereunder. The execution and
delivery by the Buyer of this Agreement and the Ancillary Agreements and the
consummation by the Buyer of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Buyer. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes a valid and binding obligation of the
Buyer, enforceable against it in accordance with its terms.
3.3 Noncontravention. Neither the execution and delivery by the Buyer of
----------------
this Agreement or the Ancillary Agreements, nor the consummation by the Buyer of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Certificate of Incorporation or by-laws of the
Buyer, (b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party any right to terminate, modify or cancel, or require any
notice, consent or waiver under, any contract or instrument to which the Buyer
is a party or by which it is bound or to which any of its assets is subject,
except for (i) any conflict, breach, default, acceleration, termination,
modification or cancellation which would not adversely affect the consummation
of the transactions contemplated hereby or (ii) any notice, consent or waiver
the absence of which would not adversely affect the consummation of the
transactions contemplated hereby, or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Buyer or any of its
properties or assets.
3.4 Broker's Fees. The Buyer has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
3.5 Certificate of Incorporation and By-Laws. True, correct and complete
-----------------------------------------
copies of the Certificate of Incorporation and By-Laws or equivalent
organizational documents, each as amended to date, of the Buyer have been made
available to the Seller. The Certificate of Incorporation and By-Laws, or
equivalent organizational documents, of Buyer are in full force and effect.
Buyer is not in violation of any provision of its Certificate of Incorporation,
By-Laws or equivalent organizational documents.
3.6 Capitalization.
--------------
(a) The authorized capital stock of the Buyer consists of 18,000,000
shares of Common Stock, par value $0.00025 per share. As of the date hereof,
8,259,212 shares of the Buyer's Common Stock were issued and outstanding. All of
the issued and outstanding shares of the Buyer's Common Stock have been validly
issued, and are fully paid and nonassessable, and are not subject to preemptive
rights. Each share of the Buyer's Common Stock to be issued in connection with
this Agreement has been duly authorized and, when so issued, will be fully paid
and nonassessable, free and clear of any liens, will not be subject to
preemptive rights, and will be freely transferable.
-15-
(b) As of June 30, 2001, except as set forth in the Buyer Reports (as
defined below): (i) there are no options, warrants or other agreements,
arrangements or commitments of any character to which the Buyer is a party,
requiring the Buyer to grant, issue or sell any shares of the capital stock or
other equity interests of the Buyer; (ii) the Buyer has no obligation,
contingent or otherwise, to repurchase, redeem or otherwise acquire any shares
of the capital stock or other equity interests of the Buyer; and (iii) there are
no voting trusts, proxies or other agreements or understandings to or by which
the Buyer is a party or is bound with respect to the voting of any shares of
capital stock or other equity interests of the Buyer.
3.7 Reports and Financial Statements. The Buyer has previously furnished
--------------------------------
or made available to the Seller complete and accurate copies, as amended or
supplemented, of (a) its Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2000, as filed with the Securities and Exchange Commission (the
"SEC"), (b) its Proxy Statement and related materials filed with the SEC in
connection with its 2001 Annual Meeting of Stockholders, and (c) all other
reports filed by the Buyer under Section 13 or subsections (a) or (c) of Section
14 of the Exchange Act with the SEC since September 30, 2000 (such reports are
collectively referred to herein as the "Buyer Reports"). The Buyer Reports
constitute all of the documents required to be filed by the Buyer under the
Securities Act or the Exchange Act with the SEC from September 30, 2000 through
the date of this Agreement. The Buyer Reports complied in all material respects
with, the requirements of the Securities Act, Exchange Act and the rules and
regulations thereunder when filed. As of their respective dates, or if amended
as of the date of the last such amendment, the Buyer Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents required
to be filed by the Buyer with the SEC after the date hereof and prior to the
Closing will comply in all material respects with the requirements of the
Securities Act, Exchange Act and the rules and regulations thereunder and none
of such documents will contain any untrue statement of a material fact or will
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of the Buyer included in the Buyer Reports to be included in any
reports required to be filed after the date hereof and prior to Closing, (i)
complied, or will comply, as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto when filed, (ii) were prepared, or will be prepared, in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-QSB under
the Exchange Act), (iii) fairly present, or will fairly present, the
consolidated financial condition, results of operations and cash flows of the
Buyer as of the respective dates thereof and for the periods referred to
therein, and (iv) are consistent, or will be consistent, with the books and
records of the Buyer. Since September 30, 2000, the Buyer has not incurred any
liabilities or obligations of any nature, individually or in the aggregate, that
would have a Buyer Material Adverse Effect.
3.8 Absence of Material Adverse Change. Since September 30, 2000, the
----------------------------------
Buyer has conducted its business and operations in the ordinary and usual course
consistent with past
-16-
practice, except where such failure would not have a Buyer Material Adverse
Effect, and there has not occurred: (i) as of the date hereof, any event,
condition or occurrence having or that would have, individually or in the
aggregate, a Buyer Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) having or which would have, individually
or in the aggregate, a Buyer Material Adverse Effect; or (iii) a distribution of
any kind by the Buyer on any class of its capital stock.
3.9 Litigation. Except as disclosed in the Buyer Reports, as of the date
----------
of this Agreement, there is no Legal Proceeding which is pending or, to the
Buyer's knowledge, threatened against the Buyer or any subsidiary of the Buyer
which, if determined adversely to the Buyer or such subsidiary, could have,
individually or in the aggregate, a Buyer Material Adverse Effect or which in
any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement. There are no judgments, orders or
decrees outstanding against the Buyer.
3.10 Legal Compliance. The Buyer is currently conducting, and has at all
----------------
times conducted, its business in compliance with applicable law (including rules
and regulations thereunder) of any federal, state, local or foreign government,
or any Governmental Entity, except for any violation or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Buyer Material Adverse Effect. The Buyer has not received any
notice or communication from any Governmental Entity alleging noncompliance with
any applicable law, rule or regulation.
3.11 Disclosure. No representation or warranty by the Buyer contained in
----------
this Agreement, and no statement contained in any document, certificate or other
instrument delivered or to be delivered by or on behalf of the Buyer at Closing
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading. The Buyer has disclosed to the
Seller or in the Buyer's periodic and other filings with the SEC all material
information relating to the business of the Buyer or the transactions
contemplated by this Agreement.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
----------------------------------------
to consummate the transactions contemplated by this Agreement to be consummated
at the Closing is subject to the satisfaction of the following conditions:
(a) the Seller shall have obtained at its own expense (and shall have
provided copies thereof to the Buyer) all of the assignments, waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, including from all applicable Governmental
Entities and necessary third parties, which are required on the part of the
Seller, except for any failure of which to obtain or effect would not,
individually or in the
-17-
aggregate, have a material adverse effect on the right of the Buyer to own,
operate or control the Acquired Assets following the Closing or on the ability
of the Parties to consummate the transactions contemplated by this Agreement;
(b) the Buyer shall have received an executed Master Services
Agreement, substantially in the form attached hereto as Exhibit F, entered into
---------
by and between the Buyer and the Seller for all contracts of the Seller relating
to the Business which are performed under agreements between the Seller and
certain sponsors which cannot be assigned to the Buyer;
(c) the representations and warranties of the Seller set forth in the
first sentence of Section 2.1 and in Section 2.2 and any representations and
warranties of the Seller set forth in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and all other
representations and warranties of the Seller set forth in this Agreement shall
be true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing as though made as of the Closing, except to
the extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);
(d) the Seller shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Closing;
(e) no Legal Proceeding shall be pending or threatened relating
primarily to the Business wherein an unfavorable judgment, order, decree,
stipulation or injunction would in any reasonably foreseeable way (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Buyer to own, operate or
control any of the Acquired Assets, or to conduct the Business as currently
conducted, following the Closing, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(f) the Seller shall have delivered to the Buyer the Seller
Certificate;
(g) the Seller shall have delivered to the Buyer an update, as of the
Closing Date, of each list contained in the Disclosure Schedule that lists or
describes Acquired Assets (including the lists set forth in Sections 2.6(c),
2.7, 2.8, 2.9, 2.10, 2.15(a) and 2.19 of the Disclosure Schedule);
(h) the Seller shall have delivered to the Buyer documents evidencing
the release or termination of all Security Interests on the Acquired Assets, and
copies of filed UCC termination statements with respect to all UCC financing
statements evidencing Security Interests;
(i) the Seller shall have provided to the Buyer all necessary
documentation of (i) compliance with any applicable environmental transfer
statute and (ii) transfer of all material Permits required under Environmental
Laws;
-18-
(j) the Buyer shall have received from counsel to the Seller an
opinion in substantially the form attached hereto as Exhibit G, addressed to the
---------
Buyer and dated as of the Closing Date;
(k) the Buyer shall have received such other certificates and
instruments (including certificates of good standing of the Seller in its
jurisdiction of organization and the various foreign jurisdictions in which it
is qualified, certified charter documents, certificates as to the incumbency of
officers and the adoption of authorizing resolutions) as it shall reasonably
request in connection with the Closing;
(l) the Buyer shall have received an executed Employment Agreement,
substantially in the form attached hereto as Exhibit H, with each of ▇▇▇▇
----------
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; and
(m) the Buyer shall have received from the Seller an executed
Transition Services Agreement, substantially in the form attached hereto as
Exhibit I.
---------
4.2 Conditions to Obligations of the Seller. The obligation of the Seller
---------------------------------------
to consummate the transactions contemplated by this Agreement to be consummated
at the Closing is subject to the satisfaction of the following conditions:
(a) the representations and warranties of the Buyer set forth in the
first sentence of Section 3.1 and in Section 3.2 and any representations and
warranties of the Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and all other
representations and warranties of the Buyer set forth in this Agreement shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing as though made as of the Closing, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);
(b) the Buyer shall have performed or complied in all material
respects with its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Closing;
(c) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation;
(d) the Buyer shall have delivered to the Seller the Buyer
Certificate;
(e) the Seller shall have received from counsel to the Buyer an
opinion in substantially the form attached hereto as Exhibit J, addressed to the
---------
Seller and dated as of the Closing Date;
-19-
(f) the Seller shall have received such other certificates and
instruments (including certificates of good standing of the Buyer in its
jurisdiction of organization, certificates as to the incumbency of officers and
the adoption of authorizing resolutions) as it shall reasonably request in
connection with the Closing;
(g) the Seller shall have received from the Buyer the executed
Registration Rights Agreement, Transition Services Agreement and Master Services
Agreement;
(h) the Buyer shall have appointed to its Board of Directors an
individual designated by the Seller who will serve until the Buyer's next annual
stockholders' meeting at which directors are elected, and subject to Section
5.12, such person will serve until his successor is duly elected and qualified;
and
(i) The Seller shall have received letters of resignation from ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ under which such individuals voluntarily terminate
their employment with Seller effective immediately prior to Closing.
ARTICLE V
POST-CLOSING COVENANTS
5.1 Assigned Contracts. If (i) any of the Assigned Contracts or other
------------------
assets or rights constituting Acquired Assets may not be assigned and
transferred by the Seller to the Buyer (as a result of either the provisions
thereof or applicable law) without the consent or approval of a third party,
(ii) the Seller, after using its Reasonable Best Efforts, is unable to obtain
such consent or approval prior to the Closing and (iii) the Closing occurs
nevertheless, then (A) such Assigned Contracts and/or other assets or rights
shall not be assigned and transferred by the Seller to the Buyer at the Closing
and the Buyer shall not assume the Seller's liabilities or obligations with
respect thereto at the Closing, (B) the Seller shall continue to use its
Reasonable Best Efforts to obtain the necessary consent or approval as soon as
practicable after the Closing, (but Seller shall not be required to make any
payment to any Person or forego any benefits to obtain such consent or approval)
and (C) upon the obtaining of such consent or approval, the Buyer and the Seller
shall execute such further instruments of conveyance (in substantially the form
executed at the Closing) as may be necessary to assign and transfer such
Assigned Contracts and/or other assets or rights (and the associated liabilities
and obligations of the Seller) to the Buyer within thirty (30) days of the
Closing Date. After such thirty (30)-day period, if any Assigned Contracts have
not been assigned to the Buyer after the Reasonable Best Efforts of the Seller
as provided above, then such Assigned Contracts may be agreed upon to become a
part of, and may be agreed upon to be performed pursuant to, the Master Services
Agreement, upon the mutual written consent of the Buyer and the Seller.
5.2 Proprietary Information. From and after the Closing, each of the
------------------------
Buyer and the Seller shall use its best efforts to cause all of its Affiliates
to comply with the terms of the Confidentiality Agreement, dated June 12, 2001,
between the Buyer and the Seller, and in furtherance of such Confidentiality
Agreement, from and after the Closing, each of the Buyer
-20-
and the Seller shall not disclose or make use of, and shall use its best efforts
to cause all of its Affiliates not to disclose or make use of, any knowledge,
information or documents of a confidential nature or not generally known to the
public with respect to the Business of the Seller or the Buyer or the Buyer's
business (including the financial information, technical information or data
relating to the Business's products and names of customers of the Business),
except to the extent that such knowledge, information or documents shall have
become public knowledge other than through improper disclosure by either the
Buyer or the Seller or an Affiliate thereof, as the case may be. Each of the
Buyer and the Seller shall enforce, for the benefit of the other, all
confidentiality, invention assignments and similar agreements between either the
Buyer or the Seller and any other party relating to the Acquired Assets or the
Business which are not Assigned Contracts.
5.3 Solicitation and Hiring. For a period of two (2) years after the
-------------------------
Closing Date, neither the Seller nor the Buyer shall (i) request, induce or
attempt to influence any distributor or supplier of goods or services to any
other party to curtail or cancel any business they may transact with the other
party, (ii) request, induce or attempt to influence any customers of any other
party that have done business with or potential customers which have been in
contact with the other party to curtail or cancel any business they may transact
with the other party, (iii) request, induce or attempt to influence any employee
of any other party to terminate his or her employment or consulting agreement
with such other party or (iv) request, induce or attempt to influence any
Governmental Entity or regulatory authority to terminate, revoke or materially
and adversely alter or impair any license held, owned, used or reserved for the
other party.
5.4 Non-Competition.
---------------
(a) For a period of two (2) years after the Closing Date, the Seller shall
not, either directly or indirectly as a stockholder, investor, partner,
consultant or otherwise, (i) design, develop, manufacture, market, sell or
license any product or provide any service anywhere in the world which is
competitive with any product designed, developed (or under development),
manufactured, sold or licensed or any service provided by the Business within
the one-year period prior to the Closing Date or (ii) engage anywhere in the
world in any business competitive with the Business as conducted as of the
Closing Date or during the one-year period prior to the Closing Date; provided,
--------
however, the Seller may make an investment in any public traded competing
-------
business for up to two percent (2%) of the outstanding capital stock of such
company; and, provided, further, that if the Seller subcontracts for services,
-------- -------
at the request of a client, substantially similar to the Business, such action
shall not be deemed to be competitive to the Business as provided above.
(b) The Seller agrees that the duration and geographic scope of the
non-competition provision set forth in this Section 5.4 are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the Parties agree that the provision shall remain in full force and effect for
the greatest time period and in the greatest area that would not render it
unenforceable. The Parties intend that this non-competition provision shall be
deemed to be a series of separate covenants, one for each and every county of
each and every state of the United
-21-
States of America and each and every political subdivision of each and every
country outside the United States of America where this provision is intended to
be effective.
(c) The Seller shall, and shall use its Reasonable Efforts to cause
its Affiliates to, refer all inquiries regarding the Business to the Buyer.
5.5 Tax Matters.
-----------
(a) Any agreement between the Seller and any of the Subsidiaries
regarding allocation or payment of Taxes or amounts in lieu of Taxes shall be
deemed terminated at and as of the Closing.
(b) All transfer taxes, deed excise stamps and similar charges related
to the sale of the Acquired Assets contemplated by this Agreement shall be paid
by the Seller.
5.6 Sharing of Data.
---------------
(a) The Seller shall have the right for a period of seven years
following the Closing Date to have reasonable access to such books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other records that are transferred to the Buyer
pursuant to the terms of this Agreement for the limited purposes of concluding
its involvement in the Business conducted prior to the Closing Date and for
complying with its obligations under applicable securities, tax, environmental,
employment or other laws and regulations. The Buyer shall have the right for a
period of seven years following the Closing Date to have reasonable access on
advance notice and during regular business hours to those books, records and
accounts, including financial and accounting records (including the work papers
of the Seller's independent accountants), tax records, correspondence,
production records, employment records and other records relating primarily to
the Business that are retained by the Seller pursuant to the terms of this
Agreement to the extent that any of the foregoing is needed by the Buyer for the
purpose of conducting the Business after the Closing and complying with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations. Neither the Buyer nor the Seller shall destroy any such
books, records or accounts retained by it outside of the Ordinary Course of
Business without first providing the other Party with the opportunity to obtain
or copy such books, records, or accounts at such other Party's expense.
(b) Promptly upon request by the Buyer made at any time following the
Closing Date, the Seller shall authorize the release to the Buyer of all files
pertaining to the Acquired Assets held by any federal, state, county or local
authorities, agencies or instrumentalities.
5.7 Use of Name. The Seller shall not use, and shall not permit any
-----------
Affiliate to use, the name Intelligent Imaging or any name reasonably similar
thereto after the Closing Date in connection with any business related to,
competitive with, or an outgrowth of, the business conducted by the Seller on
the date of this Agreement.
-22-
5.8 Collection and Billing of Accounts Receivable.
---------------------------------------------
(a) The Seller agrees that it shall forward promptly to the Buyer any
monies, checks or instruments received by the Seller after the Closing Date with
respect to the accounts receivable earned by the Buyer for services rendered by
the Buyer after the Closing. The Buyer agrees that it shall forward promptly to
the Seller any monies, checks or instruments received by the Buyer after the
Closing Date with respect to the accounts receivable earned by the Seller for
services rendered by the Seller prior to the Closing Date.
(b) The Buyer will collect all monies associated with the unbilled
services set forth in the Final Closing Balance Sheet to the extent such
services were rendered pursuant to executed agreements or purchase orders.
(c) The Seller and the Buyer shall continue to perform their
respective obligations as set forth in more detail in the Transition Services
Agreement for the term of that agreement.
5.9 Employees.
---------
(a) Effective as of the Closing, Buyer shall offer to employ all
persons listed in Schedule 5.10. Each such offer of employment shall be on terms
-------------
and conditions, including employee benefit plans, that, taken as a whole, are at
least as favorable as the terms and conditions of employment, including employee
benefit plans, provided to such persons as of the date hereof. Each such person
who accepts an offer of employment from Buyer effective as of the Closing shall
be referred to herein as a "Transferred Employee." The Buyer shall have each
such key employee of the Seller that the Buyer wishes to retain execute an
Invention Assignment Agreement, substantially in the form attached hereto as
Exhibit K.
---------
(b) From and after the Closing Date, Buyer shall recognize any prior
accrued service credit, credit towards satisfying deductible expense
requirements, out-of-pocket expense limits of all Transferred Employees and/or
such Transferred Employees' dependants as of the Closing Date for all purposes
under Buyer benefit plans and Buyer's benefits and compensation arrangements
(including, but not limited to, eligibility to participate and vesting). Buyer
and Seller agree that where applicable with respect to any medical or dental
benefit plan of Buyer, Buyer shall waive, with respect to any Transferred
Employees, any pre-existing condition exclusion (to the extent such exclusion
would not have applied under the applicable plan of Seller).
(c) Buyer shall provide continuation health care coverage to all
Transferred Employees and their qualified beneficiaries who incur a "qualifying
event" after the Closing Date in accordance with and to the extent required,
under the continuation health care coverage requirements of Section 4980D of the
Code and Sections 601 through 608 of ERISA ("COBRA"). Seller shall be
responsible for providing continuation coverage and all related notices to the
extent required by law to any Transferred Employees (or qualified beneficiary)
who incurs a "qualifying event" under COBRA on or before the Closing Date.
-23-
(d) The Buyer agrees to provide any required notice under the Worker
Adjustment and Retraining Notification Act, as amended (the "WARN Act"), and to
otherwise comply with the WARN Act with respect to any "plant closing" or "mass
layoff" (as defined in the WARN Act), affecting the Transferred Employees and
occurring on or after the Closing Date. The Buyer shall indemnify and hold
harmless the Seller and its Affiliates with respect to any liability under the
WARN Act arising from the actions of the Buyer or its Affiliates on or after the
Closing Date.
(e) The Seller agrees to provide any required notice under the Worker
Adjustment and Retraining Notification Act, as amended (the "WARN Act"), and to
otherwise comply with the WARN Act with respect to any "plant closing" or "mass
layoff" (as defined in the WARN Act), affecting all terminated employees of the
Business, other than the Transferred Employees, and occurring on or after the
Closing Date. The Seller shall indemnify and hold harmless the Buyer and its
Affiliates with respect to any liability under the WARN Act arising from the
actions of the Seller or its Affiliates on or after the Closing Date.
5.10 Delivery of Audited Financial Statements. Within sixty (60) days of
------------------------------------------
the Closing Date, the Seller will deliver to the Buyer the audited financial
statements of the Business (balance sheet, statement of operations,
shareholders' equity and cash flows) for the twelve months ended September 30,
2000 and September 30, 2001 (the "Business's Audited Financial Statements"). The
Business's Audited Financial Statements will be complete and correct in all
material respects and will have been prepared in accordance with Regulation S-X
promulgated under the federal securities laws and generally accepted accounting
principles applied on a consistent basis throughout the periods indicated.
5.11 Election of Seller's Designee to Buyer's Board of Directors. At
----------------------------------------------------------------
the next meeting of the Buyer's stockholders at which directors are elected, the
Buyer will cause the Board of Directors of the Buyer to nominate and recommend
the election by the Buyer's stockholders and use its Reasonable Efforts to
effect the election as director of one individual designated by the Seller. Any
vacancy created by the death, disability, retirement or removal of such
individual prior to the 2003 Annual Meeting shall be filled by an individual
similarly designated by Seller.
5.12 Listing of Shares. The Buyer shall cause such shares of the
-------------------
Buyer's Common Stock issued upon conversion of the Note or as Additional
Consideration to be listed for trading on the NASD OTC Bulletin Board or on such
securities exchange on which such shares are then listed.
5.13 Bulk Transfer Laws. The Buyer hereby waives compliance by the Seller
------------------
with the provisions of any so-called "bulk transfer law" (including without
limitation bulk transfer laws relating to Taxes) of any jurisdiction in
connection with the sale of the Acquired Assets to the Buyer.
-24-
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Seller. The Seller shall indemnify the Buyer in
-----------------------------
respect of, and hold the Buyer harmless against, Damages incurred or suffered by
the Buyer or any Affiliate thereof resulting from, relating to or constituting:
(a) any breach of any representation or warranty of the Seller
contained in this Agreement, any Ancillary Agreements or any other agreement or
instrument (including the Seller Certificate) furnished by the Seller to the
Buyer pursuant to this Agreement;
(b) any failure to perform any covenant or agreement of the Seller
contained in this Agreement, any Ancillary Agreement or any agreement or
instrument furnished by the Seller to the Buyer pursuant to this Agreement;
(c) any Retained Liabilities;
(d) the failure of the Buyer and the Seller, in connection with the
sale of the Acquired Assets by the Seller to the Buyer pursuant to this
Agreement, to comply with, and obtain for the Buyer the benefits afforded by
compliance with, any applicable bulk transfers laws; or
(e) the failure by the Seller to deliver the Acquired Assets free of
the Security Interests relating to those financing statements set forth on
Section 2.6(c) of the Disclosure Schedule.
6.2 Indemnification by the Buyer. The Buyer shall indemnify the Seller in
-----------------------------
respect of, and hold it harmless against, any and all Damages incurred or
suffered by the Seller resulting from, relating to or constituting:
(a) any breach of any representation or warranty of the Buyer
contained in this Agreement, any Ancillary Agreement or any other agreement or
instrument (including the Buyer Certificate) furnished by the Buyer to the
Seller pursuant to this Agreement;
(b) any failure to perform any covenant or agreement of the Buyer
contained in this Agreement, any Ancillary Agreement or any other agreement or
instrument furnished by the Buyer to the Seller pursuant to this Agreement; or
(c) any Assumed Liabilities.
6.3 Indemnification Claims.
----------------------
(a) An Indemnified Party shall give written notification to the
Indemnifying Party of the commencement of any Third Party Action. Such
notification shall be given within twenty (20) days after receipt by the
Indemnified Party of notice of such Third Party Action, and
-25-
shall describe in reasonable detail (to the extent known by the Indemnified
Party) the facts constituting the basis for such Third Party Action and the
amount of the claimed damages; provided, however, that no delay or failure on
the part of the Indemnified Party in so notifying the Indemnifying Party shall
relieve the Indemnifying Party of any liability or obligation hereunder except
to the extent of any damage or liability caused by or arising out of such
failure. Within twenty (20) days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party,
assume control of the defense of such Third Party Action with counsel reasonably
satisfactory to the Indemnified Party; provided that the Indemnifying Party may
not assume control of the defense of Third Party Action involving criminal
liability or in which equitable relief is sought against the Indemnified Party.
If the Indemnifying Party does not, or is not permitted under the terms hereof
to, so assume control of the defense of a Third Party Action, the Indemnified
Party shall control such defense. The Non-controlling Party may participate in
such defense at its own expense. The Controlling Party shall keep the
Non-controlling Party advised of the status of such Third Party Action and the
defense thereof and shall consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such Third Party Action (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of such
Third Party Action. The fees and expenses of counsel to the Indemnified Party
with respect to a Third Party Action shall be considered Damages for purposes of
this Agreement if (i) the Indemnified Party controls the defense of such Third
Party Action pursuant to the terms of this Section 6.3(a) or (ii) the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such Third
Party Action. The Indemnifying Party shall not agree to any settlement of, or
the entry of any judgment arising from, any such Third Party Action without the
prior written consent of the Indemnified Party, which shall not be unreasonably
withheld, conditioned or delayed; provided that the consent of the Indemnified
Party shall not be required if the Indemnifying Party agrees in writing to pay
any amounts payable pursuant to such settlement or judgment and such settlement
or judgment includes a complete release of the Indemnified Party from further
liability and has no other adverse effect on the Indemnified Party. The
Indemnified Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such Third Party Action without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
conditioned or delayed.
(b) In order to seek indemnification under this Article VI, an
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.
-26-
(c) Within twenty (20) days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party the Response, in which
the Indemnifying Party shall do one of the following: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case the written response shall be accompanied by a payment by the Indemnifying
Party to the Indemnified Party of the Claimed Amount, by check or by wire
transfer; (ii) agree that the Indemnified Party is entitled to receive the
Agreed Amount (in which case the written response shall be accompanied by a
payment by the Indemnifying Party to the Indemnified Party of the Agreed Amount,
by check or by wire transfer; or (iii) dispute that the Indemnified Party is
entitled to receive any of the Claimed Amount. If the Response creates a
Dispute, the Indemnifying Party and the Indemnified Party shall follow the
procedures set forth in Section 6.3(d) for the resolution of such Dispute.
(d) During the ninety (90)-day period following the delivery of a
Response that reflects a Dispute, the Indemnifying Party and the Indemnified
Party shall use good faith efforts to resolve the Dispute. If the Dispute is not
resolved within such ninety (90)-day period, the Indemnifying Party and the
Indemnified Party shall discuss in good faith the submission of the Dispute to
an ADR Procedure. In the event the Indemnifying Party and the Indemnified Party
agree upon an ADR Procedure, such parties shall, in consultation with the ADR
Service, promptly agree upon a format and timetable for the ADR Procedure, agree
upon the rules applicable to the ADR Procedure, and promptly undertake the ADR
Procedure. The provisions of this Section 6.3(d) shall not obligate the
Indemnifying Party and the Indemnified Party to pursue an ADR Procedure or
prevent either such party from pursuing the Dispute in a court of competent
jurisdiction; provided that, if the Indemnifying Party and the Indemnified Party
agree to pursue an ADR Procedure, neither the Indemnifying Party nor the
Indemnified Party may commence litigation or seek other remedies with respect to
the Dispute prior to the completion of such ADR Procedure. Any ADR Procedure
undertaken by the Indemnifying Party and the Indemnified Party shall be
considered a compromise negotiation for purposes of federal and state rules of
evidence, and all statements, offers, opinions and disclosures (whether written
or oral) made in the course of the ADR Procedure by or on behalf of the
Indemnifying Party, the Indemnified Party or the ADR Service shall be treated as
confidential and, where appropriate, as privileged work product. Such
statements, offers, opinions and disclosures shall not be discoverable or
admissible for any purposes in any litigation or other proceeding relating to
the Dispute (provided that this sentence shall not be construed to exclude from
discovery or admission any matter that is otherwise discoverable or admissible).
The fees and expenses of any ADR Service used by the Indemnifying Party and the
Indemnified Party shall be shared equally by the Indemnifying Party and the
Indemnified Party.
(e) Notwithstanding the other provisions of this Section 6.3, if a
third party asserts (other than by means of a lawsuit) that an Indemnified Party
is liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VI, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation because not to do so would cause the Indemnified Party substantial
harm, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for
-27-
indemnification in accordance with the provisions of this Article VI, and (iii)
such Indemnified Party shall be reimbursed, in accordance with the provisions of
this Article VI, for any such Damages for which it is entitled to
indemnification pursuant to this Article VI (subject to the right of the
Indemnifying Party to dispute the Indemnified Party's entitlement to
indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article VI).
6.4 Survival of Representations and Warranties. All representations and
-------------------------------------------
warranties contained in this Agreement, the Seller Certificate or the Buyer
Certificate shall (a) survive the Closing and (b) shall expire on the date
eighteen (18) months following the Closing Date, except that (i) the
representations and warranties set forth in Sections 2.1 2.2, 3.1 and 3.2 (and
the portion of the Seller Certificate or the Buyer Certificate relating thereto)
shall survive the Closing without limitation and (ii) the representations and
warranties set forth in Sections 2.15 and 2.16 (and the portion of the Seller
Certificate relating thereto) shall survive until thirty (30) days following
expiration of all statutes of limitation applicable to the matters referred to
therein. If an Indemnified Party delivers to an Indemnifying Party, before
expiration of a representation or warranty, either a Claim Notice based upon a
breach of such representation or warranty, or an Expected Claim Notice, then the
applicable representation or warranty shall survive until, but only for purposes
of, the resolution of the matter covered by such notice. If the legal proceeding
or written claim with respect to which an Expected Claim Notice has been given
is definitively withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Indemnifying Party.
6.5 Limitations.
-----------
(a) Notwithstanding anything to the contrary herein, (i) the aggregate
liability of the Seller for Damages under Sections 6.1(a) and/or 6.1(b) shall
not exceed and shall be limited to the Additional Consideration, and (ii) the
Seller shall not be liable under Sections 6.1(a) and/or 6.1(b) unless and until
the aggregate Damages for which it would otherwise be liable exceed $25,000 (at
which point the Seller shall become liable for the aggregate Damages in excess
of $25,000; provided, that, the limitations set forth in this sentence shall not
-------- ----
apply to a claim pursuant to Sections 6.1(a) and/or 6.1(b) relating to a breach
of the representations and warranties set forth in Sections 2.1 or 2.3 (or the
portion of the Seller Certificate relating thereto) or to a breach of the
covenants set forth in Article V. For purposes solely of this Article VI, all
representations and warranties of the Seller in Article II (other than Section
2.21) shall be construed as if the term "material" and any reference to "Seller
Material Adverse Effect" (and variations thereof) were omitted from such
representations and warranties.
(b) The rights of the Buyer under this Article VI shall be limited to
the Additional Consideration, if any, plus up to $100,000 in cash from the
----
Seller; provided, however, this limitation shall not apply to the rights of the
-------- -------
Buyer under Section 6.1(e).
(c) Except with respect to claims based on fraud, after the Closing,
the rights of the Indemnified Parties under this Article VI shall be the
exclusive remedy of the Indemnified Parties with respect to claims resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement contained in this Agreement.
-28-
6.6 Treatment of Indemnity Payments. Any payments made to an Indemnified
--------------------------------
Party pursuant to this Article VI shall be treated as an adjustment to the
Purchase Price for tax purposes.
ARTICLE VII
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.
"ADR Procedure" shall mean a mutually acceptable alternative dispute
--------------
resolution procedure, which may be non-binding or binding upon the parties, as
they agree in advance.
"ADR Service" shall mean the chosen dispute resolution service for an ADR
-----------
Procedure.
"Acquired Assets" shall mean all of the assets, properties and rights of
----------------
Seller primarily used in the Business existing as of the Closing, including:
(a) all unbilled services that are payable to the Seller for products
delivered by the Seller or for services provided by the Seller, together with
any security held by the Seller for the payment thereof;
(b) cash, equal to the accounts receivable, as set forth on the Final
Closing Balance Sheet;
(c) the computers, machinery, equipment, tools and tooling, furniture,
fixtures, supplies, leasehold improvements, motor vehicles and other tangible
personal property listed on Schedule 1.1(a);
---------------
(d) the leaseholds and subleaseholds in real property, and easements,
rights-of-way and other appurtenants thereto listed on Schedule 1.1(a);
---------------
(e) the Intellectual Property listed on Schedule 1.1(a);
---------------
(f) all rights under Assigned Contracts;
(g) all claims, prepayments, deposits, refunds, causes of action,
choses in action, rights of recovery, rights of setoff and rights of recoupment
applicable solely to the Business;
(h) the Permits listed on Schedule 1.1(a); and
---------------
(i) the books, records, accounts, ledgers, files, documents,
correspondence, lists (including customer and prospect lists), employment
records, manufacturing and procedural
-29-
manuals, Intellectual Property records, sales and promotional materials,
studies, reports and other printed or written materials relating to the Acquired
Assets.
"Affiliate" shall mean any affiliate, as defined in Rule 12b-2 under the
---------
Securities Exchange Act of 1934.
"Agreed Amount" shall mean part, but not all, of the Claimed Amount.
--------------
"Ancillary Agreements" shall mean the Transition Services Agreement, the
---------------------
Master Services Agreement, ▇▇▇▇ of sale, trademark assignments and other
instruments of conveyance referred to in Section 1.4(b)(iii) of this Agreement,
the instrument of assumption and other instruments referred to in Section
1.4(b)(iv) of this Agreement, and the Registration Rights Agreement referred to
in Section 1.7.
"Assigned Contracts" shall mean any contracts, agreements or instruments,
-------------------
whether written or oral, to which the Seller is a party which relate primarily
to the Business, including any agreements or instruments securing any amounts
owed to the Seller, any leases or subleases of real property, any employment
contracts, the Blind Reader contracts associated with the foregoing customer
contracts, and any licenses or sublicenses relating to Intellectual Property.
"Assumed Liabilities" shall mean all of the following liabilities of the
--------------------
Seller (whether known or unknown, absolute or contingent, liquidated or
unliquidated, due or to become due and accrued or unaccrued, and whether claims
with respect thereto are asserted before or after the Closing):
(a) all obligations of the Seller arising after the Closing under the
Assigned Contracts; and
(b) all liabilities and obligations of the Seller, including unearned
income reflected on the Final Closing Balance Sheet, except for the Retained
Liabilities.
"Business" shall mean any and all business associated with the Intelligent
--------
Imaging business unit of the Seller primarily providing medical imaging services
for pharmaceutical, biotech and medical device companies involved in clinical
trials.
"Buyer" shall have the meaning set forth in the first paragraph of this
-----
Agreement.
"Buyer Certificate" shall mean a certificate to the effect that each of the
-----------------
conditions specified in clauses (a) through (c) (insofar as clause (c) relates
to Legal Proceedings involving the Buyer) of Section 4.2 of this Agreement is
satisfied in all respects.
"Buyer Material Adverse Effect" shall mean a material adverse effect on the
-----------------------------
assets, business, condition (financial or otherwise) or results of operations of
the Buyer, taken as a whole.
-30-
"CERCLA" shall mean the federal Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended.
"Claimed Amount" shall mean the amount of any Damages incurred or
---------------
reasonably expected to be incurred in good faith by the Indemnified Party.
"Claim Notice" shall mean written notification which contains (i) a
-------------
description of the Damages incurred or reasonably expected in good faith to be
incurred by the Indemnified Party and the Claimed Amount of such Damages, to the
extent then known, (ii) a statement that the Indemnified Party is entitled to
indemnification under Article VI of this Agreement for such Damages and a
reasonable explanation of the basis therefor, and (iii) a demand for payment (in
the manner provided in Section 6.3 of this Agreement) in the amount of such
Damages.
"Closing" shall mean the closing of the transactions contemplated by this
-------
Agreement.
"Closing Date" shall mean October 25, 2001, or, if all of the conditions to
------------
the obligations of the Parties to consummate the transactions contemplated
hereby (excluding the delivery at the Closing of any of the documents set forth
in Article IV hereof) have not been satisfied or waived by such date, such
mutually agreeable later date as soon as practicable (and in any event not later
than three business days) after the satisfaction or waiver of all such
conditions.
"COBRA" shall have the meaning set forth in Section 5.10(c).
-----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Contracts" shall mean, for purposes of Section 1.3(b), any fully executed
---------
contracts, agreements or instruments, to which the Seller is a party related
primarily to the Business, including any agreements or instruments securing any
amounts owed to the Seller, any leases or subleases of real property, any
employment contracts and any licenses or sublicenses relating to Intellectual
Property.
"Controlling Party" shall mean the party controlling the defense of any
------------------
suit or proceeding relating to a third party claim for which indemnification is
sought pursuant to Article VI of this Agreement.
"Customer Deliverables" shall mean (a) the products related to the Business
---------------------
that the Seller (i) currently manufactures, markets, sells or licenses, or (ii)
has manufactured, marketed, sold or licensed within the previous three years, or
(iii) currently plans to manufacture, market, sell or license in the future and
(b) the services related to the Business that the Seller (i) currently provides,
or (ii) has provided within the previous three years, or (iii) currently plans
to provide in the future.
"Damages" shall mean any and all debts, monetary damages, fines, fees,
-------
penalties, interest obligations, deficiencies, losses and expenses (including
amounts paid in settlement, interest, court costs, costs of investigators,
reasonable fees and expenses of attorneys, accountants, financial advisors and
other experts, and other reasonable expenses of litigation).
-31-
"Disclosure Schedule" shall mean the disclosure schedule provided by the
--------------------
Seller to the Buyer on the date hereof and accepted in writing by the Buyer.
"Dispute" shall mean the dispute resulting if the Indemnifying Party in the
-------
Response disputes its liability for all or part of the Claimed Amount.
"Employee Benefit Plan" shall mean any "employee pension benefit plan" (as
----------------------
defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation.
"Environmental Law" shall mean any federal, state or local law, statute,
------------------
rule or regulation or the common law relating to the environment or occupational
health and safety, including any statute, regulation, administrative decision or
order pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine life and wetlands, including all endangered and threatened species;
(vi) storage tanks, vessels, containers, abandoned or discarded barrels and
other closed receptacles; (vii) health and safety of employees and other
persons; and (viii) manufacturing, processing, using, distributing, treating,
storing, disposing, transporting or handling of materials regulated under any
law as pollutants, contaminants, toxic or hazardous materials or substances or
oil or petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in CERCLA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"ERISA Affiliate" shall mean any entity which is, or at any applicable time
---------------
was, a member of (1) a controlled group of corporations (as defined in Section
414(b) of the Code), (2) a group of trades or businesses under common control
(as defined in Section 414(c) of the Code), or (3) an affiliated service group
(as defined under Section 414(m) of the Code or the regulations under Section
414(o) of the Code), any of which includes or included the Seller or a
Subsidiary.
"Excluded Assets" shall mean the following assets of the Seller:
---------------
(a) all trade and other accounts receivable and notes and loans
receivable that are payable to the Seller, for products delivered or services
provided, together with any security held by the Seller for the payment thereof;
-32-
(b) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books and other documents relating to the organization and
existence of the Seller as a corporation;
(c) all rights relating to refunds, recovery or recoupment of Taxes;
(d) any of the rights of the Seller under this Agreement or under the
Ancillary Agreements;
(e) all assets of Seller that are not assets primarily of the
Business; and
(f) those assets listed on Schedule 1.1(b) attached hereto.
---------------
"Expected Claim Notice" shall mean a notice that, as a result a legal
-----------------------
proceeding instituted by or claim made by a third party, the Indemnified Party
reasonably expects to incur Damages.
"Financial Statements" shall mean:
--------------------
(a) the unaudited balance sheets and unaudited statements of income,
changes in stockholders' equity and cash flows of the Seller related to the
Business as of and for the eight (8) month period ended on the Most Recent
Balance Sheet Date, and
(b) the Final Closing Balance Sheet and the unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the
nine (9) months ended as of the Closing Date.
"Final Closing Balance Sheet" shall mean the final balance sheet prepared
-----------------------------
in accordance with GAAP for the period ended on the Closing Date, and attached
hereto as Exhibit L.
"GAAP" shall mean United States generally accepted accounting principles.
----
"Governmental Entity" shall mean any court, arbitrational tribunal,
--------------------
administrative agency or commission or other governmental or regulatory
authority or agency.
"Indemnified Party" shall mean a party entitled, or seeking to assert
------------------
rights, to indemnification under Article VI of this Agreement.
"Indemnifying Party" shall mean the party from whom indemnification is
-------------------
sought by the Indemnified Party.
"Intellectual Property" shall mean all intellectual property of Seller that
---------------------
is used primarily for the Business, including, but limited to the following:
-33-
(a) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, reexamination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations;
(b) trademarks or service marks, whether registered or under common
law, trade dress, Internet domain names, logos, trade names and corporate names
and registrations and applications for registration thereof;
(c) copyrights and registrations and applications for registration
thereof;
(d) mask works and registrations and applications for registration
thereof;
(e) computer software, data and documentation;
(f) inventions, trade secrets and confidential business information,
whether patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, research and
development information, copyrightable works, financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information;
(g) other proprietary rights relating to any of the foregoing
(including remedies against infringements thereof and rights of protection of
interest therein under the laws of all jurisdictions); and
(h) copies and tangible embodiments thereof.
"Internal Systems" shall mean the internal systems of the Seller that are
-----------------
primarily used for the Business, including computer hardware systems, software
applications and embedded systems used in the operation of the Business.
"Lease" means any lease or sublease applicable to the Business pursuant to
-----
which the Seller leases or subleases from another party any real property.
"Legal Proceeding" shall mean any action, suit, proceeding, claim,
-----------------
arbitration or investigation before any Governmental Entity or before any
arbitrator.
"Materials of Environmental Concern" shall mean any chemicals, pollutants
-----------------------------------
or contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum
products or any other material subject to regulation under any Environmental
Law.
"Most Recent Balance Sheet" shall mean the unaudited consolidated balance
-------------------------
sheet of the Seller related to the Business as of the Most Recent Balance Sheet
Date.
"Most Recent Balance Sheet Date" shall mean August 31, 2001.
------------------------------
-34-
"Non-controlling Party" shall mean the party not controlling the defense of
---------------------
any suit or proceeding relating to a third party claim for which indemnification
is sought pursuant to Article VI of this Agreement.
"Ordinary Course of Business" shall mean the ordinary course of business
----------------------------
consistent with past custom and practice.
"Parties" shall mean the Buyer and the Seller.
-------
"Permits" shall mean all permits, licenses, registrations, certificates,
-------
orders, approvals, franchises, variances and similar rights issued by or
obtained from any Governmental Entity and which (i) relate primarily to the
Business and (ii) are material to the Business.
"Purchase Price" shall mean the purchase price to be paid by the Buyer for
---------------
the Acquired Assets at the Closing plus the Additional Consideration, as set
forth in Section 1.3 of this Agreement.
"Reasonable Best Efforts" shall mean best efforts, to the extent
--------------------------
commercially reasonable.
"Response" shall mean a written response containing the information
--------
provided for in Section 6.3(c).
"Restricted Employee" shall mean any person who either (i) was an employee
--------------------
of the Buyer on either the date of this Agreement or the Closing Date or (ii)
was an employee of the Seller on either the date of this Agreement or the
Closing Date and received an employment offer from the Buyer within five
business days following the Closing Date.
"Retained Liabilities" shall mean any and all liabilities or obligations
---------------------
(whether known or unknown, absolute or contingent, liquidated or unliquidated,
due or to become due and accrued or unaccrued, and whether claims with respect
thereto are asserted before or after the Closing) of the Seller which are not
Assumed Liabilities. The Retained Liabilities shall include, without limitation,
all liabilities and obligations of the Seller:
(a) any liability associated with the Long-Term Liability Due to
Parent as set forth on the Final Closing Balance Sheet;
(b) for income, transfer, sales, use or other Taxes arising in
connection with the consummation of the transactions contemplated by this
Agreement (including any income Taxes arising as a result of (i) the transfer by
the Seller to the Buyer of the Acquired Assets, (ii) the Seller having an
"excess loss account" (within the meaning of Treasury Regulation ss.1.1502-19)
in the stock of any Subsidiary of the Seller, or (iii) the acceleration of any
intracompany items pursuant to Treasury Regulation ss.1.1502-13));
(c) for costs and expenses incurred in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement;
-35-
(d) under this Agreement or the Ancillary Agreements;
(e) for any Taxes, including deferred taxes or taxes measured by
income of the Seller earned prior to the Closing, any liabilities for federal or
state income tax and FICA taxes of employees of the Seller which the Seller is
legally obligated to withhold, any liabilities of the Seller for employer FICA
and unemployment taxes incurred, and any liabilities of the Seller for sales,
use or excise taxes or customs and duties;
(f) under any agreements, contracts, leases or licenses which are
listed on Schedule 1.1(b);
---------------
(g) arising prior to the Closing under the Assigned Contracts, and all
liabilities for any breach, act or omission by the Seller prior to the Closing
under any Assigned Contract;
(h) for repair, replacement or return of products manufactured or sold
prior to the Closing, except to the extent set forth in the definition of
Assumed Liabilities;
(i) arising out of events, conduct or conditions existing or occurring
prior to the Closing that constitute a violation of or non-compliance with any
law, rule or regulation (including Environmental Laws), any judgment, decree or
order of any Governmental Entity, or any Permit or that give rise to liabilities
or obligations with respect to Materials of Environmental Concern;
(j) to pay severance benefits to any employee of the Seller whose
employment is terminated (or treated as terminated) in connection with the
consummation of the transactions contemplated by this Agreement, and all
liabilities resulting from the termination of employment of employees of the
Seller prior to the Closing that arose under any federal or state law or under
any Employee Benefit Plan established or maintained by the Seller; provided,
that the Buyer is to assume, however, accrued vacation and sick time liabilities
of the Seller arising from the Transferred Employees.
(k) to indemnify any person or entity by reason of the fact that such
person or entity was a director, officer, employee, or agent of the Seller or a
Subsidiary or was serving at the request of the Seller or a Subsidiary as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such indemnification is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such indemnification is pursuant to any statute, charter document, bylaw,
agreement, or otherwise);
(l) injury to or death of persons or damage to or destruction of
property occurring prior to the Closing (including any workers compensation
claim); and
(m) for medical, dental and disability (both long-term and short-term
benefits), whether insured or self-insured, owed to employees or former
employees of the Seller based upon (A) exposure to conditions in existence prior
to the Closing or (B) disabilities existing prior
-36-
to the Closing (including any such disabilities which may have been aggravated
following the Closing).
"Security Interest" shall mean any mortgage, pledge, security interest,
------------------
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic's, materialmen's, and similar liens, (ii) liens
arising under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation and (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the Ordinary
Course of Business of the Seller and not material to the Seller.
"Seller" shall have the meaning set forth in the first paragraph of this
------
Agreement.
"Seller Certificate" shall mean a certificate to the effect that each of
-------------------
the conditions specified in clauses (a) through (e) (insofar as clause (e)
relates to Legal Proceedings involving the Seller or a Subsidiary) of Section
4.1 of this Agreement is satisfied in all respects.
"Seller Intellectual Property" shall mean the Intellectual Property owned
-----------------------------
by or licensed to the Seller and covering, incorporated in, underlying or used
in connection with the Customer Deliverables or the Internal Systems.
"Seller Material Adverse Effect" shall mean a material adverse effect on
--------------------------------
the assets, business, condition (financial or otherwise) or results of
operations of the Business, taken as a whole.
"Seller Plan" shall mean any Employee Benefit Plan maintained, or
------------
contributed to, by the Seller, any Subsidiary or any ERISA Affiliate primarily
for the benefit of the employees of the Business.
"Software" shall mean any of the software owned by the Seller and used
--------
primarily in the Business.
"Subsidiary", individually, and "Subsidiaries", collectively, shall mean
----------
each corporation, partnership, limited liability company, joint venture or other
business association or entity in which the Seller has, directly or indirectly,
an equity interest representing 50% or more of the capital stock thereof or
other equity interests therein or voting power thereof.
"Taxes" shall mean all taxes, charges, fees, levies or other similar
-----
assessments or liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment, insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties,
-37-
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof.
"Third Party Action" shall mean any suit or proceeding by a person or
--------------------
entity other than a Party for which indemnification may be sought by a Party
under Article VI.
"Transferred Employees" shall have the meaning set forth in Section
----------------------
5.10(a).
ARTICLE VIII
MISCELLANEOUS
8.1 Press Releases and Announcements. Neither Party shall issue any press
---------------------------------
release or public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided, however, that
-------- -------
either Party may make any public disclosure it believes in good faith and upon
advice of securities counsel is required by applicable law, regulation or stock
market rule (in which case the disclosing Party shall use reasonable effort to
advise the other Party and provide it with a copy of the proposed disclosure
prior to making the disclosure).
8.2 No Third Party Beneficiaries. This Agreement shall not confer any
------------------------------
rights or remedies upon any person other than the
Parties and their respective successors and permitted assigns.
8.3 Entire Agreement. This Agreement (including the documents referred to
----------------
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, with respect to the subject matter hereof.
8.4 Succession and Assignment. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided that the Buyer may assign some or all of
its rights, interests and/or obligations hereunder to one or more Affiliates of
the Buyer with the prior consent of Seller, which consent shall not be
unreasonably withheld.
8.5 Counterparts and Facsimile Signature. This Agreement may be executed in
------------------------------------
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.
8.6 Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
-38-
8.7 Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered four
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, in
each case to the intended recipient as set forth below:
If to the Seller:
----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
Quintiles Transnational Corp.
Riverbirch Building, Suite 200
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a Copy to:
--------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Buyer:
---------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Bio-Imaging Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With a Copy to:
--------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Either Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Either Party may
change the address to
-39-
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
8.8 Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of laws of any jurisdictions other than those of the State
of Delaware.
8.9 Amendments and Waivers. The Parties may mutually amend any provision of
----------------------
this Agreement at any time prior to the Closing. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by each of the Parties. No waiver by either Party of any right or remedy
hereunder shall be valid unless the same shall be in writing and signed by the
Party giving such waiver. No waiver by either Party with respect to any default,
misrepresentation, or breach of warranty or covenant hereunder shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
8.10 Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
8.11 Expenses. Except as set forth in Article VI, each Party shall bear its
--------
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
8.12 Submission to Jurisdiction. Each Party (a) submits to the
------------------------------
non-exclusive jurisdiction of any state or federal court sitting in Pennsylvania
in any action or proceeding arising out of or relating to this Agreement or the
Ancillary Agreements, and (b) agrees that all claims in respect of such action
or proceeding may be heard and determined in any such court. Either Party may
make service on the other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 8.7. Nothing in this Section 8.12, however, shall
affect the right of either Party to serve legal process in any other manner
permitted by law.
8.13 Specific Performance. Each Party acknowledges and agrees that the
---------------------
other Party would be damaged irreparably in the event any of the provisions of
this Agreement (including
-40-
Sections 5.1, 5.2, 5.3 and 5.4 hereof) are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each Party agrees
that the other Party shall be entitled to an injunction and other equitable
relief to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
8.14 Construction.
------------
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against either Party.
(b) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) Any reference herein to "including" shall be interpreted as
"including without limitation".
-41-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BIO-IMAGING TECHNOLOGIES, INC.
By:/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
QUINTILES, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
[signature page to Quintiles/Bio-Imaging Asset Purchase Agreement]