0000950144-01-508381.txt : 20011112
0000950144-01-508381.hdr.sgml : 20011112
ACCESSION NUMBER: 0000950144-01-508381
CONFORMED SUBMISSION TYPE: SC 13D
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20011105
GROUP MEMBERS: QUINTILES, INC.
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: BIO IMAGING TECHNOLOGIES INC
CENTRAL INDEX KEY: 0000822418
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071]
IRS NUMBER: 112872047
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: SC 13D
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-52563
FILM NUMBER: 1774836
BUSINESS ADDRESS:
STREET 1: 826 NEWTOWN-YARDLEY ROAD
CITY: NEWTOWN
STATE: PA
ZIP: 18940-1721
BUSINESS PHONE: 2677571360
MAIL ADDRESS:
STREET 1: 826 NEWTOWN-YARDLEY ROAD
CITY: NEWTOWN
STATE: PA
ZIP: 18940-1721
FORMER COMPANY:
FORMER CONFORMED NAME: WISE VENTURES INC
DATE OF NAME CHANGE: 19911023
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: QUINTILES TRANSNATIONAL CORP
CENTRAL INDEX KEY: 0000919623
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731]
IRS NUMBER: 561714315
STATE OF INCORPORATION: NC
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
BUSINESS ADDRESS:
STREET 1: 4709 CREEKSTONE DR
STREET 2: RIVERBIRCH BLDG STE 200
CITY: DURHAM
STATE: NC
ZIP: 27703-8411
BUSINESS PHONE: 9199982000
MAIL ADDRESS:
STREET 1: 4709 CREEKSTONE DR
STREET 2: STE 300
CITY: DURHAM
STATE: NC
ZIP: 27703-8411
SC 13D
1
g72408sc13d.txt
QUINTILES TRANSNATIONAL / BIO-IMAGING TECHNOLOGIES
CUSIP No. 09056N103000 Page 1 of 8
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BIO-IMAGING TECHNOLOGIES, INC.
------------------------------
(Name of Issuer)
COMMON STOCK, $.00025 PAR VALUE
-------------------------------
(Title of Class of Securities)
09056N103000
------------
(CUSIP Number)
Gerald F. Roach, Esq.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
2500 First Union Capitol Center
150 Fayetteville Street Mall
Raleigh, North Carolina 27601
(919) 821-1220
(Name, Address and Telephone Number
of Person Authorized to Receive Notices and Communications)
OCTOBER 25, 2001
----------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 09056N103000 Page 2 of 8
1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only).
Quintiles Transnational Corp.
I.R.S. Employer Identification No.: 56-1714315
--------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
Joint Filing
--------------------------------------------------------------------------------
3) SEC USE ONLY
--------------------------------------------------------------------------------
4) SOURCE OF FUNDS (See Instructions) OO
--------------------------------------------------------------------------------
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
--------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
--------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF [0]
SHARES -----------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 1,103,753(1)
EACH -----------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON [0]
WITH: -----------------------------------------------------
10) SHARED DISPOSITIVE POWER
1,103,753(1)
--------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,103,753(1)
--------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
--------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.79%(2)
--------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON (See Instructions)
CO
------------
(1) Includes 1,103,753 shares of Common Stock of Bio-Imaging Technologies, Inc.
(the "Issuer"), par value $.00025 per share ("Common Stock"), held by Quintiles,
Inc., a wholly-owned subsidiary of Quintiles Transnational Corp., which are
reported by Quintiles, Inc. on the following page.
(2) Calculated based on (i) 8,259,212 shares of Common Stock of the Issuer
outstanding on June 30, 2001, as reported on the Issuer's Form 10QSB for the
period ended June 30, 2001 and filed with the SEC on August 14, 2001 and (ii)
1,103,753 shares of Common Stock issuable upon conversion of the Note (as
hereinafter defined) pursuant to the Asset Purchase Agreement (as hereinafter
defined), if such conversion took place on the Closing Date (as hereinafter
defined).
2
CUSIP No. 09056N103000 Page 3 of 8
--------------------------------------------------------------------------------
1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only).
Quintiles, Inc.
I.R.S. Employer Identification No.: 56-1323952
--------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(c) [ ]
Joint Filing
--------------------------------------------------------------------------------
3) SEC USE ONLY
--------------------------------------------------------------------------------
4) SOURCE OF FUNDS (See Instructions) OO
--------------------------------------------------------------------------------
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
--------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
--------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF [0]
SHARES --------------------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 1,103,753
EACH --------------------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON [0]
WITH: --------------------------------------------------------------
10) SHARED DISPOSITIVE POWER
1,103,753
--------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,103,753
--------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
--------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.79%(3)
--------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON (See Instructions)
CO
--------------------------------------------------------------------------------
-------------
(3) Calculated based on (i) 8,259,212 shares of Common Stock of
the Issuer outstanding on June 30, 2001, as reported on the Issuer's Form 10QSB
for the period ended June 30, 2001 and filed with the SEC on August 14, 2001 and
(ii) 1,103,753 shares of Common Stock issuable upon conversion of the Note (as
hereinafter defined) pursuant to the Asset Purchase Agreement (as hereinafter
defined), if such conversion took place on the Closing Date (as hereinafter
defined).
3
CUSIP No. 09056N103000 Page 4 of 8
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, par value $.00025 per
share, of the Issuer (the "Common Stock"). The principal executive offices of
the Issuer are located at 826 Newtown-Yardley Road, Newtown, Pennsylvania
18940-1721.
ITEM 2. IDENTITY AND BACKGROUND
The names of the entities filing this report (the "Reporting Persons")
are Quintiles Transnational Corp. a North Carolina corporation ("QTRN"), whose
principal offices are located at 4709 Creekstone Drive, Riverbirch Building,
Suite 200, Durham, North Carolina 27703 and Quintiles, Inc., a North Carolina
corporation ("Quintiles"), whose principal offices are located at 4709
Creekstone Drive, Riverbirch Building, Suite 200, Durham, North Carolina 27703.
Quintiles, which is a wholly-owned subsidiary of QTRN, provides integrated
product development, commercial development and other services to the
pharmaceutical, biotechnology, medical device and healthcare industries.
This statement is filed jointly on behalf of QTRN and Quintiles,
pursuant to Rule 13d-1(k)(1).
During the last five years, neither the Reporting Persons nor any of
their respective executive officers or directors, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has either Reporting Person been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Please see Schedule I for information pertaining to QTRN's and
Quintiles' executive officers and directors.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS
The shares of Common Stock beneficially owned by the Reporting Persons
were acquired on October 25, 2001 (the "Closing Date'") pursuant to an Asset
Purchase Agreement (the "Agreement"), dated as of the Closing Date, between the
Issuer and Quintiles. Pursuant to the Agreement, Quintiles sold certain of its
assets in consideration for the Issuer's promissory note (the "Note") in the
principal amount of $1,000,000 with interest per annum equal to the three month
LIBOR rate in effect on the last day of each quarter, plus three percent (3.0%),
as reported in the Wall Street Journal.
The Note, which is payable in quarterly installments with respect to
50% of the aggregate principal amount together with all outstanding interest,
matures thirty-six (36) months from the Closing Date and is convertible by
Quintiles any time prior to maturity into a maximum number of 1,103,753 shares
of Common Stock. The number of shares of Common Stock into which the Note may be
converted could be less than 1,103,753, depending on the market price per share
of Common Stock on the date of conversion, and the outstanding principal balance
as of any such conversion.
4
CUSIP No. 09056N103000 Page 5 of 8
ITEM 4. PURPOSE OF TRANSACTION
Pursuant to the Agreement, effective at the Closing Date, a designee of
Quintiles has been appointed to the Issuer's Board of Directors, to serve until
the Issuer's next annual meeting of shareholders or until a successor is duly
elected and qualified. In addition, at the next meeting of the Issuer's
stockholders at which directors are elected, the Issuer must cause its Board of
Directors to nominate and recommend the election by the Buyer's stockholders and
use its best efforts to effect the election as director of one individual
designated by Quintiles.
The Reporting Persons will acquire up to an additional 646,247 shares
of Common Stock after January 1, 2003, to the extent that revenues between the
Closing Date and December 31, 2002 arising from certain contracts transferred to
the Issuer exceed a threshold amount.
The Agreement is filed as an exhibit to this Schedule 13D and is
incorporated herein by reference. The foregoing summary of the transaction is
not intended to be complete and is qualified in its entirety by reference to
such exhibit.
The Reporting Persons acquired beneficial ownership of the shares for
the purpose of investment only and may elect to dispose or otherwise transfer
such shares from time to time, as permitted under contract or applicable law.
Except to the extent that it is customary for the director designated by
Quintiles to do so, the Reporting Persons have no intention to influence or
direct the Issuer's affairs, modify its corporate structure or interfere with
the business decisions of its management. Except as may be set forth above,
neither the Reporting Persons, nor to the best of their knowledge, any executive
officer or director of the Reporting Persons, has any plans or proposals which
relate to or would result in: (a) the acquisition by any person of additional
securities of the Issuer or the disposition of securities of the Issuer; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer; (c) a sale or transfer or a material amount
of assets of the Issuer; (d) any change in the present board of directors or
management of the Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board; (e) any
material change in the present capitalization or dividend policy of the Issuer;
(f) any other material change in the Issuer's business or corporate structure;
(g) changes in the Issuer's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Issuer by
any person; (h) a class of securities of the Issuer being delisted from a
national securities exchange or to ceasing to be authorized to be quoted in an
interdealer quotation system of a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934; or (j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Based on information contained in the most recent publicly available
filings of the Issuer with the Securities and Exchange Commission, QTRN is
deemed to beneficially own the number of shares and the percentage of
outstanding shares of Issuer Common Stock listed on lines 11 and 13,
respectively, of Page 2 of this Schedule 13D. In addition, the number of shares
as to which QTRN has sole or shared voting power and sole or shared dispositive
power, is listed on lines 7-10 of Page 2 of this Schedule 13D.
5
CUSIP No. 09056N103000 Page 6 of 8
Based on information contained in the most recent publicly available
filings of the Issuer with the Securities and Exchange Commission, Quintiles is
deemed to beneficially own the number of shares and the percentage of
outstanding shares of Issuer Common Stock listed on lines 11 and 13,
respectively, of Page 3 of this Schedule 13D. In addition, the number of shares
as to which Quintiles has sole or shared voting power and sole or shared
dispositive power, is listed on lines 7-10 of Page 3 of this Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except as described herein, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 and between such persons and any person with respect to any securities of
the Issuer, including but not limited to transfer or voting of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantors of profit, division of profit or loss or the giving or withholding of
proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99.01 Asset Purchase Agreement, dated October 25, 2001, between the
Issuer and Quintiles, Inc.
Exhibit 99.02 Joint Filing Agreement between Quintiles Transnational Corp.
and Quintiles, Inc.
6
CUSIP No. 09056N103000 Page 7 of 8
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 5, 2001
QUINTILES TRANSNATIONAL CORP.
By: /s/ John S. Russell
--------------------------------
Name: John S. Russell
Title: Executive Vice President,
Secretary and General
Counsel
QUINTILES, INC.
By: /s/ John S. Russell
--------------------------------
Name: John S. Russell
Title: Vice President and
Secretary
7
CUSIP No. 09056N103000 Page 8 of 8
SCHEDULE I
DIRECTORS AND OFFICERS OF QUINTILES TRANSNATIONAL CORP.
The name and principal occupation of each executive officer and
director of Quintiles Transnational Corp. ("QTRN") are set forth below. Unless
otherwise indicated, each occupation set forth opposite an executive officer's
name refers to employment with Quintiles. The business address of each person is
c/o Quintiles Transnational Corp., 4709 Creekstone Drive, Riverbirch Building,
Suite 200, Durham, North Carolina 27703.
Name Present Principal Occupation
---- ----------------------------
Dennis B. Gillings, Ph.D. Chairman
Jim D. Kever Director
Robert C. Bishop, Ph.D. Director
E.G.F. Brown Director
Vaughn D. Bryson Director
Chester W. Douglass, Ph.D. Director
Arthur M. Pappas Director
Eric J. Topol, M.D. Director
Virginia V. Weldon, M.D. Director
Pamela J. Kirby, Ph.D. Chief Executive Officer
James L. Bierman Chief Financial Officer, Executive Vice President and Treasurer
John S. Russell Executive Vice President, Secretary and General Counsel
DIRECTORS AND OFFICERS OF QUINTILES, INC.
The name and principal occupation of each executive officer and
director of Quintiles, Inc. ("Quintiles") are set forth below. Unless otherwise
indicated, each occupation set forth opposite an executive officer's name refers
to employment with Quintiles. The business address of each person is c/o
Quintiles, Inc., 4709 Creekstone Drive, Riverbirch Building, Suite 200, Durham,
North Carolina 27703.
Name Present Principal Occupation
---- ----------------------------
Dennis B. Gillings Director
Eric Vander Elst Director
Joseph J. Colatuno President
Ludo Reynders Chief Executive Officer
Thomas C. Perkins Assistant Secretary
James L. Bierman Treasurer
John S. Russell Vice President and Secretary
8
EX-99.01
3
g72408ex99-01.txt
ASSET PURCHASE AGREEMENT DATED 10/25/2001
EXHIBIT 99.01
ASSET PURCHASE AGREEMENT
DATED OCTOBER 25, 2001
BETWEEN
BIO-IMAGING TECHNOLOGIES, INC.
AND
QUINTILES, INC.
TABLE OF CONTENTS
Page
----
i
- ii -
Exhibits
Exhibit A - Note
Exhibit B - Bill 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 Arthur Andersen 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 Hale
and Dorr LLP, 650 College Road East, Princeton, New Jersey 08540 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 bill 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
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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:
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(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
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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.
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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 mark 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).
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(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
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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.
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2.11 Unbilled Services. A complete and accurate list of the
unbilled services related to the Business reflected 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,
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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.
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(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.
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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.
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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.
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(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
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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
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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;
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(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
John Ceccoli and Dawn Flitcraft; 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;
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(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 John Ceccoli and Dawn Flitcraft 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
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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
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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.
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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.
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(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.
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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
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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.
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(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
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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.
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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
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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, bill 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.
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"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).
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"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;
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(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:
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(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.
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"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;
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(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
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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,
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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.
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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:
John S. Russell, Esq.
Senior Vice President and General Counsel
Quintiles Transnational Corp.
Riverbirch Building, Suite 200
4709 Creekstone Drive
Durham, North Carolina 27703
With a Copy to:
Gerald F. Roach, Esq.
Smith Anderson Blount Dorsett Mitchell & Jernigan, L.L.P.
2500 First Union Capitol Center
Raleigh, North Carolina 27602
If to the Buyer:
Mark L. Weinstein
Chief Executive Officer
Bio-Imaging Technologies, Inc.
826 Newtown-Yardley Road
Newtown, Pennsylvania 18940-1721
With a Copy to:
William J. Thomas, Esq.
Hale and Dorr LLP
650 College Road East
Princeton, New Jersey 08540
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
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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
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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".
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BIO-IMAGING TECHNOLOGIES, INC.
By: /s/ Mark L. Weinstein
-------------------------------------
Mark L. Weinstein
President and Chief Executive Officer
QUINTILES, INC.
By: /s/ Joseph J. Colatuno
-------------------------------------
Name: Joseph J. Colatuno
Title: President
EX-99.02
4
g72408ex99-02.txt
JOINT FILING AGREEMENT
EXHIBIT 99.02
JOINT FILING AGREEMENT
Each of the undersigned hereby agrees and consents that the Schedule
13D filed herewith (the "Schedule 13D") by Quintiles Transnational Corp.
("QTRN") is filed on behalf of each of them pursuant to the authorization of the
undersigned to QTRN to make such filing and that such Schedule 13D is filed
jointly on behalf of each of them, pursuant to Sections 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder,
including Rule 13d-1(k)(l). Each of the undersigned hereby agrees that such
Schedule 13D is, and any further amendments to the Schedule 13D will be, filed
on behalf of each of the undersigned. Each of the persons is not responsible for
the completeness or accuracy of the information concerning the other persons
making this filing unless such person knows or has reason to believe that such
information is inaccurate. This agreement may be signed in counterparts. This
agreement is effective as of November 5, 2001.
QUINTILES TRANSNATIONAL CORP.
By: /s/ John S. Russell
----------------------------------------
Name: John S. Russell
Title: Executive Vice President,
Secretary and General Counsel
QUINTILES, INC.
By: /s/ John S. Russell
----------------------------------------
Name: John S. Russell
Title: Vice President and Secretary