ASSET PURCHASE AGREEMENT
AMONG
PREMIER RESEARCH WORLDWIDE, LTD.
As Purchaser
AND
DLB SYSTEMS, INC.
AND
RECALMON, INC.
As Seller
TABLE OF CONTENTS
ARTICLE I. INCORPORATION OF BACKGROUND; DEFINITIONS............................................ 1
Section 1.1. Background.............................................................................. 1
Section 1.2. Definitions............................................................................. 1
ARTICLE II. SALE AND PURCHASE OF PURCHASED ASSETS; PURCHASE PRICE............................... 9
Section 2.1. Sale and Purchase of Purchased Assets................................................... 9
Section 2.2. Payment of Purchase Price............................................................... 9
Section 2.3. Assumption of Liabilities............................................................... 10
Section 2.4. Retained Liabilities.................................................................... 11
Section 2.5. Allocation of Purchase Price............................................................ 12
ARTICLE III. CLOSING............................................................................. 13
Section 3.1. Closing................................................................................. 13
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER............................................ 15
Section 4.1. Organization and Qualification.......................................................... 15
Section 4.2. Due Authorization....................................................................... 15
Section 4.3. Conflict with Other Instruments; Absence of Restrictions................................ 15
Section 4.4. Government and Third-Party Approvals.................................................... 16
Section 4.5. Title to Purchased Assets and Related Matters........................................... 16
Section 4.6. Other Representations Regarding Purchased Assets........................................ 16
Section 4.7. Conduct of Business..................................................................... 19
Section 4.8. Additional Information.................................................................. 19
Section 4.9. Permits and Approvals................................................................... 19
Section 4.10. Compliance with Law..................................................................... 20
Section 4.11. Litigation.............................................................................. 20
Section 4.12. Absence of Material Changes............................................................. 20
Section 4.13. Contracts, Leases, Etc.................................................................. 20
Section 4.14. Product and Service Warranties.......................................................... 22
Section 4.15. Taxes................................................................................... 22
Section 4.16. Insurance............................................................................... 22
Section 4.17. Employees............................................................................... 23
Section 4.18. Strikes, Picketing, etc................................................................. 23
Section 4.19. Pension and Other Employee Benefit Plans................................................ 23
Section 4.20. Contracts with Affiliates.............................................................. 24
Section 4.21. Commission............................................................................. 24
Section 4.22. No Other Representations............................................................... 25
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................... 25
Section 5.1. Organization............................................................................ 25
Section 5.2. Due Authorization....................................................................... 25
Section 5.3. Conflict With Other Instruments......................................................... 25
Section 5.4. Government and Third-Party Approvals.................................................... 25
Section 5.5. Litigation.............................................................................. 26
Section 5.6. Commission.............................................................................. 26
Section 5.7. Acknowledgements of Purchaser........................................................... 26
(i)
ARTICLE VI. CERTAIN COVENANTS AND OTHER MATTERS................................................. 26
Section 6.1. Due Diligence Examinations and Investigations........................................... 26
Section 6.2. Confidentiality Agreement............................................................... 27
Section 6.3. Restriction on Certain Discussions and Actions.......................................... 28
Section 6.4. Conduct of Business Prior to the Closing................................................ 28
Section 6.5. Notice to Purchaser..................................................................... 29
Section 6.6. No Voluntary Bankruptcy Filing.......................................................... 29
Section 6.7. Employment Matters...................................................................... 29
Section 6.8. Consents, Further Assurances............................................................ 29
Section 6.9. Release of Seller Under Series B Preferred Stock Documents.............................. 29
Section 6.10. Non-Assigned Contracts.................................................................. 30
Section 6.11. UK Operations........................................................................... 31
Section 6.12. Closing Date Balance Sheet.............................................................. 31
ARTICLE VII. CONDITIONS TO THE OBLIGATION OF PURCHASER........................................... 31
Section 7.1. Representations and Warranties True..................................................... 31
Section 7.2. Performance of Obligations.............................................................. 32
Section 7.3. Consents................................................................................ 32
Section 7.4. Absence of Litigation................................................................... 32
Section 7.5. Certified Resolutions................................................................... 32
Section 7.6. Certificate of Good Standing: Tax Lien Certificate...................................... 32
Section 7.7. Delivery of Specified Documents......................................................... 33
Section 7.8. Opinion of Counsel for Seller........................................................... 33
Section 7.9. Joinder by Safeguard.................................................................... 33
ARTICLE VIII. CONDITIONS TO THE OBLIGATION OF SELLER.............................................. 33
Section 8.1. Representations and Warranties True..................................................... 33
Section 8.2. Performance of Obligations.............................................................. 33
Section 8.3. Absence of Litigation................................................................... 33
Section 8.4. Delivery of Specified Documents......................................................... 33
Section 8.5. Opinion of Counsel for Purchaser........................................................ 34
ARTICLE IX. POST-CLOSING COVENANTS OF SELLER.................................................... 34
Section 9.1. Books and Records of Seller............................................................. 34
Section 9.2. Discharge of Retained Liabilities....................................................... 34
Section 9.3. Covenant Not to Compete................................................................. 34
ARTICLE X. POST-CLOSING COVENANTS OF PURCHASER................................................. 35
Section 10.1. Books and Records of Purchaser......................................................... 35
ARTICLE XI. SURVIVAL; INDEMNIFICATION, EXPENSES................................................. 35
Section 11.1. General Indemnification................................................................ 35
ARTICLE XII. TERMINATION......................................................................... 39
Section 12.1. Termination............................................................................ 39
Section 12.2. Survival............................................................................... 40
Section 12.3. Expenses............................................................................... 40
ARTICLE XIII. GENERAL............................................................................. 41
Section 13.1. No Tax Representations................................................................. 41
(ii)
Section 13.2. Regarding the Representations and Warranties........................................... 41
Section 13.3. Binding Effect and Assignment.......................................................... 41
Section 13.4. Waiver................................................................................. 42
Section 13.5. Dispute Resolution..................................................................... 42
Section 13.6. Notices................................................................................ 44
Section 13.7. Use of Name............................................................................ 45
Section 13.8. Governing Law.......................................................................... 45
Section 13.9. No Third Party Beneficiaries........................................................... 45
Section 13.10. Severability........................................................................... 45
Section 13.11. Schedules.............................................................................. 45
Section 13.12. Section Headings....................................................................... 45
Section 13.13. Contents of Agreement.................................................................. 46
Section 13.14. Counterparts........................................................................... 46
Section 13.15. Public Announcements................................................................... 46
Section 13.16. Joinder by Knightview.................................................................. 46
Section 13.17. Value Added Tax........................................................................ 47
(iii)
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement") made this 28th
day of October, 1997, by and among DLB SYSTEMS, INC. ("DLB"), a Delaware
corporation, and RECALMON, INC. ("Recalmon"), a Delaware corporation (DLB and
Recalmon being collectively and individually, as appropriate, referred to herein
as the "Seller"), and PREMIER RESEARCH WORLDWIDE, LTD. (the "Purchaser"), a
Delaware corporation.
BACKGROUND
----------
A. Seller is engaged in the business of designing, developing,
licensing, marketing, supporting, maintaining, and enhancing its proprietary
software products for clinical research and development operations of
pharmaceutical and biotechnology companies on a worldwide basis (collectively,
the "Business").
B. In connection with the Purchaser's acquisition of 210,000 shares of
Series B Preferred Stock under the Series B Preferred Stock Purchase Agreement,
DLB granted to the Purchaser an option to purchase (the "Option") the assets
relating and pertaining to the Business, which Option is set forth in Section
6.05 and certain other provisions of Article VI of the Series B Preferred Stock
Purchase Agreement.
C. The Purchaser has timely and properly exercised the Option by
providing written notice thereof to DLB and, as contemplated by Section 6.07(b)
of the Series B Preferred Stock Purchase Agreement, the parties hereto are
entering into this Agreement to memorialize their understanding of the terms and
conditions upon which such purchase shall be completed.
D. DLB heretofore transferred to Recalmon certain intangible assets
relating to the Business, by reason of which Recalmon is also executing this
Agreement with DLB as a Seller for the purpose of transferring such intangible
assets to the Purchaser pursuant to and in accordance with the provisions
hereof.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises, covenants, representations and warranties made in this
Agreement, Purchaser and Seller, intending to be legally bound, hereby agree as
follows:
ARTICLE I.
INCORPORATION OF BACKGROUND; DEFINITIONS
----------------------------------------
Section 1.1. Background. The Background provisions of this Agreement
are incorporated herein by reference thereto as if fully set forth in this
Agreement.
Section 1.2. Definitions. For convenience, certain terms in this
Agreement shall have the following meanings (such terms
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as well as any other terms defined elsewhere in this Agreement shall be equally
applicable to both the singular and plural terms defined), respectively:
"Accounts Receivable" shall mean all of Seller's accounts
receivable and notes receivable created or arising in respect of the sale of
services, products or other assets of the Business.
"Affiliate" shall mean, as to any specified Person, (a) any
other Person controlling, controlled by or under common control with such
specified Person, (b) any officer, director or partner of such specified Person,
or (c) any other Person of which such specified Person is an officer, director,
shareholder or partner. As used in this definition, the term "control," with
respect to any Person, means possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or a partnership interest, by
contract or otherwise.
"Agreement" shall have the meaning ascribed to it in the
heading hereof, and shall include any amendments or modifications hereof.
"Allocation" shall have the meaning ascribed to it in
Section 2.5 hereof.
"Amgen Dispute" shall mean the dispute between DLB and Amgen,
Inc., which is more fully described in Schedule 4.11.
"Assumed Liabilities" shall have the meaning ascribed
to it in Section 2.3 hereof.
"Assumption Agreement" shall mean the written agreement
referred to in Section 3.1(b)(iii)(B) hereof evidencing and effecting the
assumption of the Assumed Liabilities by Purchaser.
"Xxxx of Sale" shall mean the written instrument referred to
in Section 3.1(b)(i)(A) hereof evidencing and effecting the assignment of the
Purchased Assets by Seller.
"Board" shall mean the Board of Directors of DLB and/or
Recalmon, as appropriate.
"Cash" shall mean all of Seller's cash and cash equivalents
applicable to, or arising out of the operations of, the Business.
"Closing" shall mean the consummation of the transactions
contemplated to occur hereunder on the Closing Date pursuant to Article III
hereof.
"Closing Date" shall have the meaning ascribed to it in
Section 3.1 hereof.
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"Closing Date Balance Sheet" shall mean the balance sheet
required to be delivered by the Seller to the Purchaser pursuant to the
provisions of Section 6.12 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor law, and any regulations issued by the Internal
Revenue Service pursuant to the Internal Revenue Code of 1986, as amended, or
any successor law.
"Common Stock" shall mean, collectively, the 1,800,000 shares
of common stock of DLB, having a par value of $.01 per share, the issuance of
which is authorized by DLB's Certificate of Incorporation (as in effect on the
date hereof).
"Condition" shall mean the assets, liabilities, business,
prospects, operations, results of operations or condition (financial or
otherwise) of the Purchased Assets.
"Contracts" shall have the meaning ascribed to it in Section
4.13 hereof.
"DLB" shall mean DLB Systems, Inc., a Delaware corporation.
"DLB Ltd." shall mean DLB Systems Limited, a company organized
under the laws of the United Kingdom, which has heretofore operated the Business
on behalf of DLB from the UK Premises.
"DLB-NJ" shall mean DLB Systems, Inc., a New Jersey
corporation, which is a shareholder of DLB.
"Employees" shall have the meaning ascribed to it in Section
4.17.
"Xxxxxxxx Agreement" shall mean the letter agreement dated May
8, 1997, between DLB and Xx. Xxxxxxxx.
"Evaluation Licensing Agreement" shall mean the Evaluation
Licensing Agreement dated June 30, 1997, between DLB and the Purchaser.
"Equipment" shall mean, collectively, all of Seller's
furniture, fixtures, machinery, equipment, motor vehicles, office equipment,
computers, tools and replacement parts, wherever located.
"Financial Statements" shall have the meanings ascribed to it
in Section 4.8(a) hereof.
"GAAP" shall mean generally accepted accounting principles, as
in effect in the United States of America and consistently applied.
3
"Hazardous Substances" means, collectively, any toxic or
hazardous gaseous, liquid or solid material or waste that may or could pose a
hazard to the environment or human health or safety and is identified as such
under any applicable environmental law, rule, or regulation.
"Indemnified Party" shall have the meaning ascribed to it in
Section 11.1(c) hereof.
"Indemnifying Party" shall having the meaning ascribed to it
in Section 11.1(c) hereof.
"Intellectual Property and Information" shall mean,
collectively, all the following assets of Seller relating to the Business (if
any): patents, applications for patents, trademarks, trademark registrations,
applications for trademark registrations, trade names, service marks, service
xxxx registrations, applications for service xxxx registrations, copyrights,
copyright registrations, applications for copyright registrations, computer
programs, trade secrets, product related artwork and know-how.
"Joinder" shall mean the Joinder to this Agreement executed
and delivered by Safeguard for the purposes set forth therein.
"Xxxxxx Agreements" shall mean, collectively, (i) the
Employment Agreement dated August 30, 1995, between DLB and Xxxxxxx Xxxxxx, and
(ii) the Employment Agreement dated August 30, 1995, between DLB and Xxxxxxxx
Xxxxxx, in each case as modified through the date hereof.
"Knightview" shall mean Knightview Computing Limited, a
company organized under the laws of the United Kingdom and a wholly-owned
subsidiary of DLB.
"Knightview Lease" shall mean the Lease dated on or about May
21, 1996, by and among IXI Ltd. (as lessor), Knightview (as lessee), and DLB
Ltd. (as guarantor), pursuant to which IXI Ltd. agreed to lease the UK Premises
to Knightview, on the terms and subject to the conditions set forth therein.
"Knowledge" shall have the meaning ascribed to it in Section
13.2(b).
"Leased Real Property" shall mean the real property leased by
DLB and used in the operation of the Business, generally described on Schedule
4.6(c) hereto.
"Leasehold Improvements and Fixtures" shall mean,
collectively, all of the leasehold improvements, fixtures and appurtenances
owned by Seller and attached to the Leased Real Property.
4
"Legal Expenses" shall having the meaning ascribed to it in
Section 11.1(a) hereof.
"Liabilities" shall mean, collectively, any and all duties,
obligations, indebtedness, or liabilities of any nature whatsoever, express or
implied, matured or unmatured, disputed, liquidated, unliquidated, absolute,
fixed or contingent, known or unknown, whether now existing or hereafter
created, whether or not required to be reflected as a liability on the
liabilities side of a balance sheet or disclosed in the footnotes thereto in
accordance with GAAP.
"License Agreements" shall mean, collectively, the Evaluation
Licensing Agreement, the Master Software License Agreement, and the Marketing
Agreement.
"Lien" shall mean, collectively, any mortgage, lien, security
interest, pledge, or encumbrance of any nature whatsoever or any property or
property interest.
"Losses" shall have the meaning ascribed to it in Section
11.1(a).
"Marketing Agreement" shall mean the Value-Added Marketing
Agreement dated June 30, 1997, between DLB and the Purchaser.
"Master Software License Agreement" shall mean the Master
Software License Agreement dated June 30, 1997, between the Purchaser and DLB.
"Material Adverse Effect" shall mean, with respect to any
fact, circumstance, condition, or event, a material adverse effect upon the
Purchased Assets taken as a whole, or the conduct of the Business by the
Purchaser following the Closing (assuming, for purposes thereof, that the
Business will be conducted after the Closing in the manner heretofore conducted
by the Seller prior to the Closing).
"Xx. Xxxxxxxx" shall mean Xxxxxx X. Xxxxxxxx, an adult
individual who is the current President of DLB.
"Non-Assigned Contracts" shall mean, collectively, those
Contracts listed on Schedule 6.10 attached hereto, which require the consent of
the other party thereto in connection with the assignment thereof by the Seller
to the Purchaser pursuant hereto and for which such consent has not been
received as of the Closing.
"Ordinary Course Customer Claims" shall have the meaning
ascribed to it in Section 4.14.
"Permitted Liens" shall mean, collectively, (i) those Liens
for taxes not yet due and payable, and (ii) those Liens
5
identified on Schedule 4.5 hereto that will remain as Liens against or affecting
the Purchased Assets following the Closing.
"Person" shall mean an individual, a corporation, a
partnership, a joint venture, a trust or unincorporated organization, a joint
stock company or other similar organization, a government or any political
subdivision thereof, or any other legal entity.
"PNC" shall mean PNC Bank, National Association, a national
banking association.
"PNC Indebtedness" shall mean, collectively, all outstanding
indebtedness of DLB to PNC in existence on the Closing Date.
"Preferred Stock" shall mean, collectively, the Series A
Preferred Stock and the Series B Preferred Stock.
"Preliminary Balance Sheet" shall mean a balance sheet of the
Business as of September 30, 1997 prepared, in all material respects, in
accordance with GAAP (and in a manner consistent with Seller's historical
preparation of financial statements for the Business).
"Premier Subsidiary" shall have the meaning ascribed to
it in Section 13.3 hereof.
"Prepaid Items" shall mean, collectively, all of Seller's
prepaid expenses expended for the benefit of the Business, including but not
limited to advances and deposits, all of the Prepaid Items on the date hereof
being listed on Schedule 4.6(g) hereto, to the extent transferable.
"Purchase Price" shall mean an amount equal to (i) Seven
Million Five Hundred Thousand Dollars ($7,500,000), minus (ii) the Series B
Preferred Stock Purchase Price, which the parties hereto acknowledge and agree
reflects the manner in which the Purchase Price is required to be calculated
pursuant to and in accordance with the provisions of Section 6.06 of the Series
B Preferred Stock Purchase Agreement.
"Purchased Assets" shall mean, collectively, (a) all of the
Seller's assets, properties and rights of every kind and description in
existence on the Closing Date, tangible and intangible, wherever situated
including, without limitation, (i) Accounts Receivable, Cash, Equipment,
Intellectual Property and Information, Leasehold Improvements and Fixtures,
Prepaid Items, and Rights and Other Property, (ii) those assets and properties
reflected on the Preliminary Balance Sheet, with only such changes therein as
shall have occurred in the regular and ordinary course of Seller's business
consistent with past practice, (iii) all rights of Seller under all agreements,
contracts, commitments, leases, plans, bids, quotations,
6
proposals, licenses, permits, authorizations, instruments and other documents to
which it is a party or by which it has rights, (iv) all rights, title, and
interest of Seller and Knightview under the Knightview Lease, (v) all rights,
title, and interest of Seller in and to the name "DLB Systems," and (vi) all
right, title, and interest of the Seller under the Reseller Agreement between
DLB and Oracle Corporation described on Schedule 4.13, (b) the UK Assets, and
(c) the business and operations of Seller as a going concern.
Notwithstanding the foregoing, the Purchased Assets do not
include (A) the corporate seal, certificate of incorporation, minute books,
stock books, tax returns or other records relating to the corporate organization
of Seller, (B) the rights which accrue or will accrue to Seller under this
Agreement, (C) any insurance policies maintained by Seller with respect to the
Business, (D) any claims and rights against third parties (including insurance
carriers) to the extent they relate to liabilities or obligations that are not
assumed by the Purchaser hereunder, (E) claims for refunds of taxes and other
governmental charges to the extent that the underlying tax liability was paid by
Seller and such refunds relate to periods ending on or prior to the Closing
Date, or (F) the Retained Assets.
"Purchaser" shall have the meaning ascribed to it in
the heading hereof.
"Purchaser Board Designee" shall mean the member of the Board
of DLB who is the designee of the Purchaser as holder of the Series B Preferred
Stock. The parties hereto acknowledge that the Purchaser Board Designee is Xx.
Xxxx Xxxxxxxxxx.
"Recalmon" shall have the meaning ascribed to it in the
heading hereof.
"Retained Assets" shall mean, collectively, those assets
described on Schedule 2.1A.
"Retained Liabilities" shall have the meaning ascribed
to it in Section 2.4.
"Rights and Other Property" shall mean, collectively, all of
Seller's assets not included in the Accounts Receivable, Cash, Equipment,
Intellectual Property and Information, Leasehold Improvements and Fixtures, and
Prepaid Items (used or useful in
carrying out the Business).
"Safeguard" shall mean Safeguard Scientifics, Inc., a
Pennsylvania corporation.
"Safeguard Warrants" shall have the meaning ascribed to it in
the Series B Preferred Stock Agreement.
7
"Safeguard-DE" shall mean Safeguard Scientifics (Delaware),
Inc., a Delaware corporation.
"Safeguard-DE Indebtedness" shall mean, collectively, all
outstanding indebtedness of DLB to Safeguard-DE in existence on the Closing
Date.
"Seller" shall have the meaning ascribed to it in the
heading hereof.
"Seller Documents" shall mean the Xxxx of Sale and Assignment,
the Assumption Agreement and other documents executed and delivered by the
Seller pursuant to the provisions of this Agreement.
"Series A Preferred Stock" shall mean the 1,000,000 shares of
capital stock of DLB designated as Series A Preferred Stock, the issuance of
which is authorized by DLB's Certificate of Incorporation (as in effect on the
date hereof).
"Series A Preferred Stock Purchase Agreements" shall mean,
collectively, (i) the Preferred Stock Purchase Agreement dated as of August 30,
1995, and (ii) the Preferred Stock Purchase Agreement dated as of August 19,
1996, both between DLB and Safeguard, pursuant to which, among other things,
Safeguard purchased an aggregate of 860,000 shares of Series A Preferred Stock,
on the terms and conditions set forth therein.
"Series B Preferred Stock" shall mean the 500,000 shares of
capital stock of DLB designated as Series B Preferred Stock, the issuance of
which is authorized by DLB's Certificate of Incorporation (as in effect on the
date hereof).
"Series B Preferred Stock Purchase Agreement" shall mean the
Preferred Stock Purchase Agreement dated June 30, 1997, between DLB and the
Purchaser, pursuant to which, among other things, the Purchaser purchased
210,000 shares of Series B Preferred Stock, on the terms and conditions set
forth therein.
"Series B Preferred Stock Purchase Documents" shall mean,
collectively, the Series B Preferred Stock Purchase Agreement, the License
Agreements, and any and all other agreements, documents, and instruments under
which the Seller has any Liabilities to the Purchaser in connection with the
transactions described in or contemplated by the Series B Preferred Stock
Purchase Agreement.
"Series B Preferred Stock Purchase Price" shall mean the sum
of One Million Dollars ($1,000,000), the purchase price paid by the Purchaser
for the Series B Preferred Stock purchased by it pursuant to the Series B
Preferred Stock Purchase Agreement.
8
"Stock Option Plan" shall mean DLB's incentive stock option
purchase plan, pursuant to which DLB is authorized to issue options to purchase
up to 350,000 shares of Common Stock.
"Threshold Amount" shall mean the sum of Thirty-Five Thousand
Dollars ($35,000).
"Transactions" shall mean, collectively, the purchase and sale
of the Purchased Assets and all transactions completed in connection therewith,
as provided herein.
"UK Assets" shall mean, collectively, those assets situate at
the UK Premises and used in connection with the operation of the Business
thereat, a description of which assets is set forth on Schedule 2.1.
"UK Assumed Liabilities" shall mean, collectively, those
liabilities assumed by the Purchaser pursuant to the provisions of Section
2.3(e).
"UK Employees" shall mean, collectively, those persons who are
employed by DLB Ltd. in connection with the operation of the Business at the UK
Premises.
"UK Premises" shall mean, collectively, those office and
related facilities comprising, in the aggregate, approximately 3,500 square feet
of a building situate in Cambridge, United Kingdom, which is leased by
Knightview pursuant to and is more particularly described in the Knightview
Lease.
"Undisclosed Liabilities" shall mean, collectively, those
Liabilities included in the Assumed Liabilities which have not been disclosed or
referred to in Section 4.8(b) hereof.
"Undisclosed Tax Liabilities" shall mean, collectively,
Undisclosed Liabilities in the nature of tax liabilities of the Seller.
"Warrant Agreements" shall have the meaning ascribed to it in
the Series B Preferred Stock Purchase Agreement.
ARTICLE II.
SALE AND PURCHASE OF PURCHASED ASSETS; PURCHASE PRICE
-----------------------------------------------------
Section 2.1. Sale and Purchase of Purchased Assets. Subject to
the terms and conditions contained in this Agreement, at the Closing on the
Closing Date, Seller shall sell, assign, transfer and deliver (or cause to be
sold, assigned, transferred, and delivered) to Purchaser and Purchaser shall
purchase and accept from Seller, free and clear of all Liens, other than
Permitted Liens, all of the Purchased Assets.
Section 2.2. Payment of Purchase Price. At the Closing,
Purchaser shall pay to Seller, by wire transfer of
9
immediately available funds to such account(s) as the Seller may designate in
writing to the Purchaser prior to the Closing an amount equal to the Purchase
Price.
Section 2.3. Assumption of Liabilities. Except for the
Retained Liabilities, at the Closing hereunder, the Purchaser shall assume and
agree to timely pay, discharge or perform, as appropriate, the following
Liabilities of Seller (collectively, the "Assumed Liabilities"):
(a) all Liabilities of Seller relating or
pertaining to the Business conducted by the Seller prior to or through the
Closing or otherwise including, without limitation, (i) Liabilities reflected on
the Preliminary Balance Sheet (including accrued unpaid dividends in respect of
the Series A Preferred Stock up to a maximum aggregate amount of Four Hundred
Thousand Dollars ($400,000), as set forth thereon), (ii) Liabilities otherwise
disclosed on Schedule 2.3(a), and (iii) Liabilities reflected on the Closing
Date Balance Sheet;
(b) PNC Indebtedness not required to be paid by
the Seller pursuant to the provisions of Section 2.4(a) and, in connection
therewith, at the Closing the Purchaser shall remit to PNC, by wire transfer of
immediately available funds, the amount of PNC Indebtedness assumed by the
Purchaser under this Section 2.3(b) in complete satisfaction of its duties and
obligations under this Section 2.3(b);
(c) without limiting the generality of the
provisions of Section 2.3(a) hereof, accrued Liabilities as of the Closing Date
under DLB's performance bonus plan authorized and adopted by the Board of DLB,
pursuant to and in accordance with the terms and conditions of such plan, as
reflected in the resolution adopted by the Board of DLB in connection therewith,
a copy of which Board resolution is attached hereto as Schedule 2.3(c);
(d) without limiting the generality of the
provisions of Section 2.3(a) hereof, all Liabilities of Seller in respect of the
agreements, contracts, commitments and leases which are described in Section
4.13 hereof or are not required to be identified in accordance with the
provisions of such Section 4.13; and
(e) all Liabilities of the Seller and Knightview
under and with respect to (i) the Knightview Lease, (ii) trade payables relating
or pertaining to the operation of the Business at the UK Premises through the
Closing Date, regardless of whether such Business was conducted by (A) the
Seller, (B) Knightview, or (C) DLB Ltd. (for the benefit, directly or
indirectly, of the Seller or Knightview), a list of which trade payables being
assumed by the Purchaser pursuant hereto shall be furnished by the Seller to the
Purchaser at the Closing, and
10
(iii) those agreements, documents, and instruments described in Schedule 2.3(e).
Section 2.4. Retained Liabilities. Notwithstanding anything
contained herein to the contrary, the Assumed Liabilities shall not include and
the Seller shall remain liable for the following Liabilities of the Seller
(collectively, the "Retained Liabilities"):
(a) PNC Indebtedness up to, but not exceeding, an
aggregate amount equal to One Million Dollars ($1,000,000) and, in connection
therewith, at the Closing the Seller shall remit to PNC, by wire transfer of
immediately available funds, the amount of PNC Indebtedness retained by the
Seller under this Section 2.4(a) in complete satisfaction of its duties and
obligations under this Section 2.4(a);
(b) Safeguard-DE Indebtedness up to, but not
exceeding an aggregate amount equal to, One Million Four Hundred Thousand
Dollars ($1,400,000) and, in connection therewith, at the Closing the Seller
shall remit to Safeguard-DE, by wire transfer of immediately available funds,
the amount of Safeguard-DE Indebtedness retained by the Seller under this
Section 2.4(b) in complete satisfaction of its duties and obligations under this
Section 2.4(b);
(c) Except for (i) the payment of the accrued
dividends specified in Section 2.3(a)(i) hereof, (ii) accrued unpaid interest in
respect of the Safeguard-DE Indebtedness as of the Closing, and (iii) payments
due and owing to Safeguard as of the Closing under the administrative services
agreement described in Schedule 2.3(a) (it being understood that the aggregate
amount due and owing from the Purchaser by reason of clauses (ii) and (iii) of
this Section 2.4(c) shall not exceed $170,000), all Liabilities of DLB to
Safeguard or Safeguard-DE in respect of the Series A Preferred Stock Purchase
Agreement, the Series A Preferred Stock, the Warrant Agreements, or otherwise;
(d) Liabilities of DLB to Xx. Xxxxxxxx under the
Xxxxxxxx Agreement;
(e) Liabilities of DLB in respect of the Stock Option
Plan (including authorized payoffs to optionees in connection therewith);
(f) Bonus payments in the maximum aggregate amount of
up to One Hundred Eighty Thousand Dollars ($180,000) awarded to certain key
employees of DLB as an inducement for such employees to maintain their
employment with DLB and become employees of Premier after the Closing pursuant
to and in accordance with the terms and conditions of the resolution adopted by
the Board of DLB in connection therewith, a copy of which Board resolution is
attached hereto as Schedule 2.4(f);
11
(g) Any federal, state or local income tax payable by
the Seller in connection with the transactions contemplated hereby;
(h) Liabilities of DLB to holders of its capital
stock, solely in their capacity as stockholders, arising under the General
Corporation Law of the State of Delaware in respect of (i) dividends, and (ii)
payments to which such holders of capital stock are entitled in connection with
any liquidation of DLB after the Closing Date;
(i) Liabilities of Recalmon and DLB to one another;
(j) Except as otherwise disclosed in Schedules 2.3(a)
or 2.3(e), Liabilities of DLB Ltd. and DLB to one another;
(k) Except as otherwise disclosed in Schedules 2.3(a)
or 2.3(e), Liabilities of Knightview and DLB to one another;
(l) Except as otherwise disclosed in Schedules 2.3(a)
or 2.3(e), Liabilities of DLB-NJ and DLB to one another;
(m) Liabilities of Xxxxxxx Xxxxxx and/or Xxxxxxxx
Xxxxxx and DLB to one another; and
(n) Liabilities arising from or relating to the Amgen
Dispute.
Section 2.5. Allocation of Purchase Price. Seller and
Purchaser agree that the Purchase Price shall be allocated (the "Allocation")
among the Purchased Assets in the manner set forth in Schedule 2.5, and further
agree that each will report the federal income tax consequences of such purchase
and sale contemplated hereby in a manner consistent with the Allocation. The
Allocation described herein shall be prepared pursuant to and in accordance with
the provisions of Section 1060 of the Code and the Seller shall prepare Form
8594 under such Section 1060 relating to the transactions contemplated hereby
based upon the Allocation.
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ARTICLE III.
CLOSING
-------
Section 3.1. Closing
------------ -------
(a) General. Unless otherwise agreed to by the
parties hereto, the closing under this Agreement (the "Closing") will be held at
a place mutually acceptable to the parties hereto, commencing at 3:00 P.M. on
October 28, 1997, or such other date and time as shall be mutually agreed to in
writing by Purchaser and Seller (the "Closing Date"). For accounting purposes
only, the parties hereto shall treat the Closing as having occurred as of
October 31, 1997 to the extent not inconsistent with the provisions of this
Agreement.
(b) Closing Deliveries. At the Closing and as a
condition thereto:
(i) Seller will deliver, or cause to be
delivered, to Purchaser:
(A) A General Assignment and Xxxx of
Sale duly executed by Seller, in the form attached hereto as Schedule
3.1(b)(i)(A), and such other instruments of transfer, sale and
assignment as shall be reasonably necessary to vest in Purchaser (or
any assignee thereof permitted hereunder) good and marketable title to,
and to assign and transfer to Purchaser all of Seller's right, title
and interest in, the Purchased Assets as provided herein, free and
clear of all Liens (other than the Permitted Liens) as provided
hereunder;
(B) Provided that the Purchaser
remits to PNC the amount required pursuant to Section 2.3(b) hereof,
UCC-3 financing statements, pursuant to which PNC shall terminate all
Liens heretofore granted to it in any of the Purchased Assets as
security for the PNC Indebtedness;
(C) Without limiting the provisions
of Section 7.6 hereof, such (1) secured transaction, judgment, and tax
lien searches relating to the Seller and the Purchased Assets, and (2)
good standing certificates concerning the Seller, as the Purchaser may
reasonably require;
(D) Subject to the provisions
Section 6.11, assignments of all of the Seller's right, title, and
interest in and to all trademarks and trademark applications described
in Schedule 4.6(d) hereto, in an appropriate form for filing with the
United States Patent and Trademark Office and the appropriate filing
office in the United Kingdom;
(E) The Joinder executed by
Safeguard; and
13
(F) All other agreements,
certificates, consents, approvals and documentary evidence required to
be delivered pursuant to Seller's obligations hereunder.
(ii) Intentionally omitted.
(iii) Purchaser will deliver, or cause to
be delivered, to or for the benefit of the Seller, as appropriate:
(A) The Purchase Price as provided
by Section 2.2;
(B) The Assumption Agreement in the
form of Schedule 3.1(b)(iii)(B) evidencing and effecting the assumption
by Purchaser of the Assumed Liabilities;
(C) A written instrument from PNC,
pursuant to which PNC shall release the Seller and Safeguard (as
guarantor) from any further Liabilities to PNC arising in connection
with any and all agreements evidencing, securing, or pertaining to the
PNC Indebtedness;
(D) A written instrument from each
landlord of the Leased Real Property, pursuant to which such landlord
shall release (1) the Seller and (2) Safeguard and Safeguard-DE (if and
to the extent Safeguard and/or Safeguard-DE are guarantors thereunder)
from any further Liabilities under the lease agreements and related
documents relating and pertaining to the Seller's occupancy of the
Leased Real Property;
(E) The sum of Four Hundred Thousand
Dollars ($400,000) in satisfaction of the Assumed Liabilities relating
to accrued unpaid dividends in respect of the Series A Preferred Stock,
as provided by Section 2.3(a)(i) hereof, by wire transfer of
immediately available funds to such account(s) as may be designated in
writing by the Seller to the Purchaser;
(F) The original share certificate
evidencing the 210,000 shares of Series B Preferred Stock owned by the
Purchaser, which shall be duly endorsed in blank by the Purchaser;
(G) The written resignation of the
Purchaser Board Designee as a member of DLB's Board; and
(H) All other agreements,
certificates, consents, approvals and documentary evidence required to
be delivered pursuant to the Purchaser's obligations hereunder.
(c) Transfer Taxes. Any sales taxes, property
transfer taxes and similar or related taxes payable in connection
14
with the transfer of the Purchased Assets shall be paid by Purchaser.
(d) Subsequent Documentation. Seller shall at
any time and from time to time upon the reasonable written request of Purchaser
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, all such further assignments and instruments of sale and transfer as
may be reasonably required for the better assigning, transferring and confirming
to Purchaser or its successors and assigns, or for aiding and assisting
Purchaser or its successors and assigns in collecting and reducing to
possession, any or all of the Purchased Assets.
(e) Delivery of Tax Returns and Insurance
Policies. At or as soon as possible after the Closing, the Seller shall provide
the Purchaser with complete copies of all tax returns filed by the Purchaser
prior to the Closing Date, together with all related exhibits and schedules
thereto, and all liability insurance maintained by the Seller as of the Closing
Date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller jointly and severally represents and warrants to
Purchaser as follows:
Section 4.1. Organization and Qualification. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is duly qualified and in good standing
as a foreign corporation authorized to transact business and to own and lease
property in each jurisdiction in which the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.
Section 4.2. Due Authorization. The execution and delivery of
this Agreement by Seller and the sale of the Purchased Assets and performance of
the obligations of Seller contemplated hereby and by the Seller Documents have
been duly and validly authorized by all necessary corporate and shareholder
action. Seller has the right, power and authority to enter into and perform this
Agreement and the Seller Documents, and this Agreement constitutes, and the
Seller Documents will, upon their execution, constitute, the valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
Section 4.3. Conflict with Other Instruments; Absence of
Restrictions. Except as set forth on Schedule 4.3, the execution, delivery and
performance of this Agreement and the Seller Documents by Seller will not
contravene any provision of Seller's articles of incorporation or by-laws and
will not result
15
in a breach of, or constitute a default under, any material agreement or other
document to which Seller is a party or by which Seller is bound, or any decree,
order or rule of any domestic or foreign court or governmental agency or any
provision of applicable law which is binding on Seller or the Purchased Assets,
or result in the creation or imposition of any Lien, on any of the Purchased
Assets or give to others any interest or rights therein or create in any third
party the right to modify, terminate or accelerate (or to make a claim for
damages in respect of) any material instrument or contract to which Seller is a
party or by which Seller is bound.
Section 4.4. Government and Third-Party Approvals. Except as
set forth on Schedule 4.4, no consent by, approval or authorization of or
filing, registration or qualification with any federal, state or local
authority, or any foreign governmental authority, or any other Person (including
any party to any contract or agreement with Seller) is required (a) for the
execution, delivery or performance of this Agreement or the Seller Documents by
Seller, (b) in connection with Seller's consummation of the Transactions, or (c)
subject to the provisions of Section 4.5, in order to vest in Purchaser good and
marketable title in and to the Purchased Assets at the Closing free and clear of
all Liens (except for the Permitted Liens).
Section 4.5. Title to Purchased Assets and Related Matters.
Seller has good, valid and marketable title to the Purchased Assets, and all
such Purchased Assets are held free and clear of Liens except for the Permitted
Liens; provided, however, notwithstanding the foregoing, the Seller makes no
representation or warranty, express or implied, with respect to (i) the Seller's
rights in the name "DLB Systems," or (ii) the Seller's ability to transfer (A)
those agreements set forth in Section 4.13 for which the required consents (as
set forth on Schedule 4.4) have not been obtained as of the Closing Date, or (B)
the Xxxxxx Agreements. Subject to the foregoing, the instruments of transfer to
be executed by Seller at the Closing will be effective to transfer to Purchaser
good and marketable title to, and assign to Purchaser all of Seller's right,
title and interest in and to, the Purchased Assets.
Section 4.6. Other Representations Regarding Purchased
Assets.
(a) Accounts Receivable. All of the Accounts
Receivable as of the Closing Date will be reflected on the Closing Date Balance
Sheet. The Accounts Receivable listed on the Closing Date Balance Sheet (i) have
arisen in the ordinary course of the Business as heretofore conducted by the
Seller, and (ii) represent valid obligations arising in the ordinary course of
the Business as heretofore conducted by the Seller (A) for sales made or
services performed, or (B) otherwise due and payable to the Seller pursuant to
the agreement to which the Seller is a party under which the Account Receivable
arose.
16
Except as reflected in the Financial Statements or on Schedule 4.6(a), to the
Seller's Knowledge, no contest, claim, or set-off right has been made, asserted
or exercised which relates to the amount or validity of any Account Receivable
and involves an amount in excess of Five Thousand Dollars ($5,000).
Notwithstanding anything contained herein, no representation or warranty is made
by Seller with respect to the collectibility of any of the Accounts Receivable
included within the Purchased Assets.
(b) Cash Accounts. Schedule 4.6(b) lists each bank
and mutual fund account and safe deposit box of Seller related to the operation
of the Business and each Person authorized to sign checks or withdraw funds from
such accounts and to have access to such safe deposit boxes.
(c) Real Property. Schedule 4.6(c) describes all real
estate, offices, and/or related facilities which are leased by the Seller and
from which it conducts Business. Seller does not own any real property. To the
Seller's Knowledge, the Seller's use and occupancy of the Leased Real Property
is in compliance, in all material respects, with all applicable laws, rules,
regulations, and ordinances (including, without limitation, subdivision, land
use, zoning, and environmental laws, rules, regulations, and ordinances).
(d) Intellectual Property and Information. Except as
set forth on Schedule 4.6(d), the Intellectual Property and Information includes
all right, title and interest in all patents, trademarks, service marks, trade
names, mask works, copyrights, trade secrets, know-how, technology and other
intellectual property and proprietary rights reasonably necessary for the
conduct of the Business. Except for the licensing of source codes by the Seller
from time to time, all licenses of which are described on Schedule 4.6(d), the
Seller has not disclosed, licensed or otherwise transferred to any third party
all or any portion of the Intellectual Property and Information, other than in
the ordinary course of the Business. The Seller has no knowledge of any
infringement of the Intellectual Property and Information by any third party.
The Seller has not received any claim or notice stating that the Business, as
presently conducted by the Seller, infringes upon or violates any of the
patents, trademarks, service marks, trade names, mask works, copyrights, trade
secrets, proprietary rights or other intellectual property of any other person.
A complete list of licenses other than standardized end-user software licenses
and registrations of and applications for registrations of such Intellectual
Property and Information is attached hereto as Schedule 4.6(d). Except as set
forth on Schedule 4.6(d), no claim is pending or, to the Seller's Knowledge,
threatened against Seller and/or its officers, employees and consultants to the
effect that any such Intellectual Property and Information owned or licensed by
Seller, or which Seller otherwise has the right to use, is invalid or
unenforceable by Seller in any
17
material respect. Except pursuant to the terms of any licenses specified on
Schedule 4.6(d), Seller has no obligation to compensate any Person for the use
of any such Intellectual Property and Information, and Seller has not granted
any Person any license or other right to use any of the Intellectual Property
and Information of Seller, whether requiring payment of royalties or not.
Schedule 4.6(d) also sets forth the actions which the Seller takes in connection
with the operation of the Business to protect the secrecy, confidentiality, and
value of the Intellectual Property and Information, although Seller makes no
representation or warranty to the Purchaser that such actions are sufficient or
adequate.
(e) Electronic Data Processing Equipment. The
Purchased Assets include all of the electronic data processing equipment and
software currently used by Seller in operating the Business subject, however, to
the leases relating thereto which are described on Schedule 4.13.
(f) Computer Software.
(i) Performance. Schedule 4.6(f) contains a
list of all computer software products sold, licensed, distributed, marketed,
used or under development by Seller (the "Software Products"). The Purchased
Assets shall include all of the Seller's right, title, and interest in and to
the Software Products. Schedule 4.6(f) describes generally the manner in which
the Seller has heretofore internally classified defects claimed by customers of
the Seller having the highest priority based upon such internal classification
system.
(ii) Title. The sale, license, distribution,
marketing or use of the Software Products by Seller does not, to the Seller's
Knowledge, violate any rights of any other Person, and Seller has not received
any communication alleging such violation. Except as otherwise disclosed in the
Contracts described on Schedules 2.3(e), and 4.17, Seller has, and the
Purchaser, following the Closing, will have (other than as a result of
agreements entered into by the Purchaser), no obligation to compensate any
Person other than Purchaser for the sale, license, distribution, marketing or
use of the Software Products. Other than as set forth on Schedule 4.6(f), Seller
has not granted to any other Person any license, option or other right in or to
any of the Software Products, except-for non-exclusive, royalty-bearing,
end-user licenses granted by Seller in the ordinary course of the Business
pursuant to license agreements, substantially in the forms attached as part of
Schedule 4.6(f) (the "End-User Licenses").
(iii) Maintenance. Seller has no obligation
to any other Person to maintain, modify, improve or upgrade any of the Software
Products, except for any such obligation set forth in an End-User License or
under a maintenance agreement substantially in the form attached as Schedule
4.6(f).
18
(g) Prepaid Items. All of Seller's prepaid expenses
are set forth in Schedule 4.6(g).
(h) Condition of Purchased Assets. Notwithstanding
anything contained herein to the contrary, the Seller makes no representation or
warranty, express or implied, as to the value or operating condition of the
equipment, machinery, furniture, fixtures, leasehold improvements, and other
tangible property included within the Purchased Assets. Such Purchased Assets
described in the immediately preceding sentence are being acquired by the
Purchaser as a result of the Purchaser's inspection and examination thereof. The
Purchased Assets are, in all material respects, sufficient to operate the
Business transferred to the Purchaser, as such Business has heretofore been
conducted by the Seller prior to the Closing.
Section 4.7. Conduct of Business. Between the date of the
Preliminary Balance Sheet and the date hereof, Seller has conducted the Business
only in the ordinary course and in a manner consistent with its past practices.
Section 4.8. Additional Information.
(a) Financial Statements. Schedule 4.8 consists of
(ii) the audited financial statements of DLB from the date of its inception
through December 31, 1996, and (ii) the internally prepared financial statements
of DLB as at and for the period ending September 30, 1997 (the "Financial
Statements") consisting of, in each case, of a balance sheet, a statement of
operations, a statement of shareholder's equity and retained earnings and a
statement of cash flows. The Financial Statements and the Closing Date Balance
Sheet were prepared, in all material respects, in accordance with GAAP
consistently applied throughout the periods reported thereon and fairly present
the financial condition and the results of the operations of DLB as at the
respective dates thereof and for the periods reported therein.
(b) Absence of Liabilities. On the Closing Date,
Seller had no Liabilities relating to or respecting the Business or the
Purchased Assets, except as and to the extent reflected in the Financial
Statements, the Preliminary Balance Sheet, the Closing Date Balance Sheet, this
Agreement, or in any Schedule hereto (including Schedule 2.3(a), Schedule
2.3(c), and Schedule 2.3(e)).
(c) PNC Loan Documents. Schedule 4.8(c) hereto
contains a list of all agreements, documents, and instruments to which DLB is a
party with PNC.
Section 4.9. Permits and Approvals. Schedule 4.9 contains a
true and correct description of all licenses, permits, approvals,
authorizations, consents and registrations, the absence of which could
reasonably be expected to have a Material Adverse Effect, all of which, to the
Seller's Knowledge, are in
19
full force and effect, and the Business is currently being operated in
compliance, in all material respects, with the terms of each of the foregoing.
Section 4.10. Compliance with Law. Seller has complied in all
material respects with each, and is not in material violation of any, law,
ordinance or governmental rule or regulation to which the Business or the
Purchased Assets are subject, including, without limitation, environmental laws,
rules, and regulations relating to the use, generation, handling, storage,
transportation, release, treatment or disposal of Hazardous Substances.
Section 4.11. Litigation. Except as set forth on Schedule
4.11, no litigation, arbitration, investigation or other proceeding of or before
any court, arbitrator or governmental or regulatory official, body or authority
is pending or, to the Seller's Knowledge, threatened against Seller with respect
to the Business or the Purchased Assets. Seller is not a party to or subject to
the provisions of any judgment, order, writ, injunction, decree or aware of any
court, arbitrator or governmental or regulatory official, body or authority
which affects the Business or the Purchased Assets.
Section 4.12. Absence of Material Changes. Between the date of
the Preliminary Balance Sheet and the Closing Date, (i) there has not been any
fact, circumstance, condition, or event which could reasonably be expected to
have a Material Adverse Effect, and (ii) the Seller has conducted the Business
in the ordinary course as heretofore conducted.
Section 4.13. Contracts, Leases, Etc. Except as listed on
Schedule 4.13 hereto, Seller is not, with respect to the Business or the
Purchased Assets, a party to any written or oral:
(a) agreement, contract or commitment with any
present or former shareholder, director, officer, employee or consultant or for
the employment of any Person, including any consultant;
(b) agreement, contract, commitment or arrangement
with any labor union or other representative of employees;
(c) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products which obligates Seller to
purchase supplies or products not limited as to quantity or at a specified price
unrelated to the market price and which is not cancelable on 30 days' notice or
less without penalty; or for the performance of services by a third party which
involves in any one case $5,000 or more and is not cancelable on 30 days' notice
or less without penalty;
20
(d) agreement, contract or commitment to sell or
supply products or to perform services which obligates Seller to sell products
or perform services on terms not limited as to quantity but limited as to price
which is not cancelable on 30 days' notice or less without penalty;
(e) representative, distribution, purchase or sales
agency agreement, contract or commitment;
(f) lease under which Seller is either lessor or
lessee;
(g) note, debenture, mortgage, pledge, charge,
security agreement, bond, conditional sale agreement, equipment trust agreement,
letter of credit agreement, loan agreement or other contract or commitment for
borrowing or lending of money (including, without limitation, loans to or from
officers, directors or any member of their immediate families), agreement or
arrangements for a line of credit or guarantee, pledge or undertaking of the
indebtedness of any other person;
(h) agreement, contract or commitment for any
charitable or political contribution;
(i) agreement, contract or commitment for any capital
expenditure in excess of $5,000;
(j) agreement, contract or commitment limiting or
restraining it from engaging or competing in any lines of business with any
Person;
(k) license, franchise, distributorship or other
similar agreement, including those which relate in whole or in part to any
patent, trademark, trade name, service xxxx or copyright or to any ideas,
technical assistance or other know-how of or used by it in the operation of the
Business;
(l) profit sharing, stock purchase, stock option,
pension, retirement, long-term disability, hospitalization, insurance or similar
material plans providing employee benefits;
(m) other agreement, contract or commitment requiring
payments or other consideration by or from Seller in excess of $5,000 during the
remainder of its term; or
(n) other material agreement, contract or commitment
not made in the ordinary course of business.
All of the foregoing agreements, contracts, commitments,
leases and other documents and undertakings are sometimes herein referred to as
the "Contracts."
To the Seller's Knowledge, (i) each of the Contracts is
valid and enforceable in accordance with its terms; (ii) the
21
parties thereto are in compliance, in all material respects, with the provisions
thereof, (iii) no party is in default in the performance, observance or
fulfillment of any material obligation, covenant or condition contained therein,
and (iv) Seller's rights under the Contracts listed on Schedule 4.13 are
transferable by Seller to Purchaser without restriction (except for the
approvals and consents listed on Schedule 4.4).
Section 4.14. Product and Service Warranties. Set forth on
Schedule 4.14 are the standard forms of product and service warranties and
guarantees utilized by Seller in connection with the operation of the Business
together with all other material product and service warranties and guarantees
used by Seller in connection with the operation of the Business, all of which
are included in the Assumed Liabilities. Schedule 4.14 sets forth a description
of all outstanding claims made under any warranty of the Seller relating to its
products and all claims made under any such warranty during the one (1) year
period prior to the Closing, other than customer claims in respect of warranty
and/or maintenance obligations of the Seller which arise in the ordinary course
of the Business and are customary for the industry in which the Business is
conducted (collectively, the "Ordinary Course Customer Claims"). None of the
Ordinary Course Customer Claims have given rise to any litigation or threatened
litigation by the Seller's customers and all information relating to Ordinary
Course Customer Claims heretofore made within the aforesaid one (1) year period
is available for inspection by the Purchaser at the Leased Real Property situate
at 0000 X.X. Xxxxxxx 00 Xxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000.
Section 4.15. Taxes. Seller has duly and timely filed with the
appropriate governmental agencies (federal, state, local and foreign) all tax
and other returns required to be filed by it and such returns, in all material
respects, accurately and completely reflect the Seller's tax obligations with
respect to the periods covered thereby. Seller has paid, or has made sufficient
provision for the payment of, all taxes required (a) to be paid by it for all
fiscal and other applicable tax periods which have ended, or (b) to be accrued
for the portion of the current fiscal or other current applicable tax period up
to the day prior to the Closing Date. No deficiencies for any taxes have been
asserted in writing or assessed against Seller which remain unpaid and which
individually or in the aggregate are material to the Condition.
Section 4.16. Insurance. Schedule 4.16 sets forth a list of
all policies or binders of fire, liability, product liability, worker's
compensation, vehicular or other insurance held by or on behalf of Seller in
respect of the Business and the Purchased Assets (specifying for each such
insurance policy, except the policies for worker's compensation and vehicular
insurance, the insurer, the policy number or covering note number with respect
to binders, and each pending claim thereunder of more than $5,000 and setting
forth the aggregate amounts paid out
22
under each such policy through the date hereof). Such policies and binders are
valid, in full force and effect and sufficient to protect the Business and the
Purchased Assets against all insured hazards.
Seller is not in material default with respect to any
provision contained in any such policy or binder. Seller has not received or
given a notice of cancellation or non-renewal with respect to any such policy or
binder. Seller has no Knowledge of any material inaccuracy in any application
for such policies or binders, any failure to pay premiums when due or any
similar state of facts which might form the basis for termination of any such
insurance.
Section 4.17. Employees. Schedule 4.17 lists each of the
employees of Seller providing services to the Business (collectively, the
"Employees") and the annualized aggregate compensation as salary, wages and
bonuses of each such Employee for the twelve (12) month period ending on the
date hereof. In addition, Schedule 4.17 lists (a) the base salary, as currently
in effect, for each of the Employees, (b) the bonus arrangements, if any,
currently in effect for each of the Employees, (c) the commission arrangements,
if any, currently in effect for each of the Employees, and (d) the date on which
the most recent salary increase went into effect for each of the Employees and
the amount of each such increase. For purposes hereof and as reflected on
Schedule 4.17, the term "Employees" shall include the UK Employees.
Section 4.18. Strikes, Picketing, etc. There has been no
strike, slowdown, picketing, work stoppage or labor dispute by any union or
other group of employees of Seller in connection with the Business for the
twelve (12) month period ending on the date hereof, and to the Seller's
Knowledge, no such action or dispute has been threatened.
Section 4.19. Pension and Other Employee Benefit Plans. There
is set forth or identified in Schedule 4.19 all of the plans, funds, policies,
programs, arrangements or understandings sponsored or maintained by Seller with
respect to the Business which provide any employee of Seller (or any dependent
or beneficiary of any such employee) with (a) retirement benefits; (b) severance
or separation from service benefits; (c) incentive, performance, stock, share
appreciation or bonus awards; (d) health care benefits; (e) disability income or
wage continuation benefits; (f) supplemental unemployment benefits; (g) life
insurance, death or survivor's benefits; (h) accrued sick pay or vacation pay;
or (i) any other type of benefit offered under any arrangement subject to
characterization as an "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and not excepted by Section 4 of ERISA (the foregoing being
collectively called "Employee Benefit Plans"). None of such Employee Benefit
Plans is an "employee benefit
23
pension plan" or a "pension plan" as defined in Section 3(2) of ERISA. As to any
Employee Benefit Plan identified in Schedule 4.19, each of the following is
true: (i) all amounts due from Seller as contributions to the date hereof have
been paid or accrued on their books; (ii) Seller and any Affiliated Company (as
hereinafter defined) have performed or satisfied all obligations required to be
performed or satisfied by them under, and are not in default under or in
violation of, any Employee Benefit Plan and, to the Seller's Knowledge, no other
party is in default thereunder or in violation thereof; (iii) Seller and any
Affiliated Company are in compliance, in all material respects, with the
requirements (including reporting and disclosure requirements applicable to
them) prescribed by all statutes, orders or governmental rules or regulations
applicable to the Employee Benefit Plans, including, but not limited to, ERISA
and the Internal Revenue Code of 1986, as amended (the "Code"); (iv) neither
Seller nor any Affiliated Company or any other "disqualified person" or "party
in interest" (as defined in Section 4975 of the Code and Section 3(14) of ERISA,
respectively) has engaged in any "prohibited transaction," as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, which could subject
any Employee Benefit Plan (or its related trust), Seller or any Affiliated
Company, Purchaser, any shareholder, officer, director, partner or employee of
Seller, any Affiliated Company or Purchaser, or any trustee, administrator or
other fiduciary of any Employee Benefit Plan to the tax or penalty imposed under
Section 4975 of the Code or Section 502(i) of ERISA; and (v) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the Seller's Knowledge, threatened, against any Employee Benefit Plan or against
the assets of any Employee Benefit Plan. For purposes of this Section 4.19,
"Affiliated Company" shall mean any member (whether or not incorporated) of a
group which is part of a controlled group of corporations or under common
control (within the meaning of the regulations promulgated under Section 414 of
the Code) and of which Seller is a member. Seller does not maintain or
participate in, and has never maintained or participated in, any "multiemployer
plans" as defined in Section 3(37) of ERISA.
Section 4.20. Contracts with Affiliates. There are no
contracts, obligations or arrangements between Seller and any director, officer,
shareholder or employee of Seller or any Affiliate of any such Person applicable
to the Business or the Purchased Assets except for (i) contracts, obligations or
arrangements with Safeguard and Safeguard DE, and (ii) those contracts,
obligations and arrangements identified on Schedule 4.20.
Section 4.21. Commission. Neither Seller nor anyone on its
behalf has made any agreement or taken any action which may cause anyone
claiming through Seller to become entitled to a commission as a result of the
sale of the Purchased Assets pursuant to this Agreement.
24
Section 4.22. No Other Representations. Notwithstanding
anything contained herein to the contrary, except as expressly set forth in this
Article IV, neither the Seller nor any agent or representative thereof
(including, without limitation, Safeguard and Safeguard-DE) has made any
representation or warranty, express or implied to the Purchaser with respect to
the Purchased Assets or the Business.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller as follows:
Section 5.1. Organization. Purchaser is a corporation
duly formed, validly existing and in good standing under the laws
of the State of Delaware.
Section 5.2. Due Authorization. The execution and delivery of
this Agreement by Purchaser and the purchase of the Purchased Assets and
performance of the obligations of Purchaser contemplated hereby and by the
Assumption Agreement have been duly and validly authorized by all necessary
corporate action. Purchaser has the right, power and authority to enter into and
perform this Agreement and the Assumption Agreement, and this Agreement
constitutes, and the Assumption Agreement will, upon its execution constitute,
the valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms.
Section 5.3. Conflict With Other Instruments. The execution,
delivery and performance of this Agreement and the Assumption Agreement by
Purchaser will not contravene any provision of Purchaser's articles or
certificate of incorporation or by-laws and will not result in a breach of, or
constitute a default under, any agreement or other document to which Purchaser
is a party or by which Purchaser is bound, or any decree, order or rule of any
court or governmental agency or any provision of applicable law which is binding
on Purchaser.
Section 5.4. Government and Third-Party Approvals. No consent
by, approval or authorization of or filing (other than a report on Form 8-K
required to be filed by the Purchaser with the Securities Exchange Commission in
connection with the consummation of the transactions contemplated hereby),
registration or qualification with any federal, state or local authority, or any
corporation, person or other entity (including any party to any contract or
agreement with Purchaser) is required for the execution, delivery or performance
of this Agreement or the Assumption Agreement by Purchaser or in connection with
Purchaser's consummation of the Transactions, which have not been received or
made, as appropriate, as of the Closing.
25
Section 5.5. Litigation. No litigation, arbitration
investigation or other proceeding of or before any court arbitrator or
governmental or regulatory official, body or authority is pending or, to the
Purchaser's Knowledge, threatened against Purchaser or the transactions
contemplated by this Agreement or the Assumption Agreement and Purchaser does
not know of any basis for such litigation, arbitration, investigation or
proceeding.
Section 5.6. Commission. Neither Purchaser nor anyone acting
on its behalf has made any agreement or taken any action which may cause anyone
claiming through Purchaser to become entitled to a commission as a result of the
purchase of the Purchased Assets pursuant to this Agreement.
Section 5.7. Acknowledgements of Purchaser. Notwithstanding
anything contained herein to the contrary, except for those representations and
warranties of the Seller set forth in Article IV, Purchaser has not relied upon
any representation or warranty, express or implied, of the Seller or any agent
or representative thereof (including Safeguard and Safeguard-DE) in connection
with making its decision to exercise the Option and acquire the Purchased Assets
pursuant hereto. Purchaser's decision to exercise the Option and acquire the
Purchased Assets was made based upon (i) Purchaser's due diligence examination
of the Purchased Assets and the Business in connection with the transactions
described in the Series B Preferred Stock Purchase Agreement, and (ii)
Purchaser's due diligence examination of the Purchased Assets and the Business
in connection with the Transactions. Purchaser acknowledges that the Seller
provided it with full, complete, and satisfactory access to the Purchased
Assets, the Business, and the Assumed Liabilities in connection with its due
diligence examination thereof. Purchaser also recognizes and acknowledges that
DLB has a negative net worth and that its financial condition has deteriorated
since its inception.
ARTICLE VI.
CERTAIN COVENANTS AND OTHER MATTERS
-----------------------------------
Section 6.1. Due Diligence Examinations and Investigations.
Between the date hereof and the Closing Date, Seller agrees to cooperate (and to
cause its officers, employees, consultants, agents, attorneys and accountants to
cooperate) fully with Purchaser and with their respective counsel, accountants
and representatives in (i) the conduct of their due diligence investigation of
the Purchased Assets, the Business, and the Assumed Liabilities and, in
connection with such due diligence investigation, to grant to Purchaser and such
representatives access to the properties, records and, with the prior consent of
Seller (which shall not be unreasonably withheld), employees, customers,
creditors, vendors and suppliers of Seller, and (ii) obtaining those instruments
referred to in paragraphs (C) and (D) of Section 3.1(b)(iii) hereof. Purchaser
26
will use its best efforts to complete its due diligence investigation as
promptly as reasonably practicable.
Section 6.2. Confidentiality Agreement.
(a) Unless otherwise agreed to in writing by Seller
or as otherwise required by law, Purchaser agrees for itself, its agents and
employees (a) to keep all Seller Proprietary Information (as hereafter defined)
confidential and not to disclose or reveal any Seller Proprietary Information to
any person other than its officers, directors, affiliates, employees, attorneys,
accountants, other agents and representatives who are participating in the
evaluation of Seller, the Business, and the Transactions or who otherwise need
to know the Seller Proprietary Information for the purpose of evaluating Seller,
the Business and/or the Transactions; and (b) not to use the Seller Proprietary
Information for any purpose other than in connection with the evaluation and/or
consummation of the Transactions. As used herein, the term "Seller Proprietary
Information" means confidential information about the Business or Safeguard
furnished to Purchaser by Seller or Safeguard; provided, however, that Seller
Proprietary Information shall not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by
Purchaser in violation of this Agreement, (ii) was available to Purchaser on a
non-confidential basis prior to its disclosure by Seller, or (iii) becomes
available to Purchaser on a non-confidential basis from a Person other than
Seller who is not otherwise bound by a confidentiality agreement with Seller.
The obligations of Purchaser under this Section 6.2(a) shall terminate upon the
earlier of the Closing Date or one year from the date of this Agreement, except
to the extent that the Seller Proprietary Information relates to confidential
information about Safeguard, in which event the obligations of Purchaser under
this Section 6.2(a) shall survive the Closing. If the Closing is not
consummated, Purchaser will, upon the request of Seller, destroy or return to
Seller all Seller Proprietary Information which is in writing or can otherwise
be destroyed or returned.
(b) Unless otherwise agreed to in writing by
Purchaser or as otherwise required by law, Seller agrees for itself, its agents
and employees (a) to keep all Purchaser Proprietary Information (as hereafter
defined) confidential and not to disclose or reveal any Purchaser Proprietary
Information to any person other than its officers, directors, affiliates,
employees, attorneys, accountants, other agents and representatives who are
participating in the Transactions or who otherwise need to know the Purchaser
Proprietary Information for the purpose of completing the Transactions; and (b)
not to use the Purchaser Proprietary Information for any purpose other than in
connection with the evaluation and/or consummation of the Transactions. As used
herein, the term "Purchaser Proprietary Information" means (a) confidential
information about the Business and/or the Purchased Assets and (b) confidential
27
information about the Purchaser furnished by Purchaser to Seller; provided,
however, that Purchaser Proprietary Information shall not include information
which (i) is or becomes generally available to the public other than as a result
of a disclosure by Seller in violation of this Agreement, (ii) was available to
Seller on a non-confidential basis prior to its disclosure by Purchaser, or
(iii) becomes available to Seller on a non-confidential basis from a Person
other than Purchaser who is not otherwise bound by a confidentiality agreement
with Purchaser. The obligations of Seller under this Section 6.2(b) shall
survive the Closing. If the Closing is not consummated, Seller will, upon the
request of Purchaser, destroy or return to Purchaser all Purchaser Proprietary
Information which is in writing or can otherwise be destroyed or returned.
Section 6.3. Restriction on Certain Discussions and Actions.
Seller agrees that until the Closing Date or until termination of this Agreement
pursuant to Article XII it will refrain, and will direct and cause its officers,
directors, affiliates, employees, attorneys, accountants and other agents and
representatives to refrain, from taking any action, directly or indirectly, to
solicit, encourage, initiate or participate in any way in discussions or
negotiations with, or furnish any information with respect to the Business or
the Purchased Assets to, any Person (other than Purchaser and its
representatives) in connection with any possible or proposed sale of a
substantial portion of the assets involving the Business or the Purchased Assets
or any similar transaction involving the Business or the Purchased Assets.
Seller agrees, except as may be required under applicable law, that it will not
(without Purchaser's prior written consent) disclose this Agreement or the
matters referred to herein to any other prospective acquirer of the Business
until the Closing Date or until termination of this Agreement pursuant to
Article XII.
Section 6.4. Conduct of Business Prior to the Closing.
Between the date of this Agreement and the Closing:
(a) Seller shall conduct its business, operations,
activities and practices (including, without limitation, its maintenance and
management of Cash) in the usual and ordinary course, consistent with its past
practices;
(b) Seller shall not take or suffer or permit any
action which would render untrue any of the representations or warranties of
Seller herein contained in any material respect, and Seller shall not omit to
take any action the omission of which would render untrue any such
representation and warranty in any material respect;
(c) Seller shall not grant or otherwise make, or
agree to grant or otherwise make, any increase in the compensation payable or to
become payable by it to any of the Employees;
28
(d) Seller shall not sell or dispose of any of the
Purchased Assets other than in the ordinary course of Business consistent with
past practice;
(e) Seller shall not enter into any agreement not in
the ordinary course of Business; and
(f) Seller shall not knowingly cancel, waive or
modify any material claims or rights owned by, or running in favor of, it, which
material claims or rights will be transferred to Purchaser.
Section 6.5. Notice to Purchaser. Seller covenants and agrees
to provide Purchaser with immediate notice of any occurrence which could
reasonably be expected to have a Material Adverse Effect.
Section 6.6. No Voluntary Bankruptcy Filing. Seller covenants
and agrees that it will not institute any bankruptcy, reorganization,
arrangement or insolvency proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors on or prior to the Closing Date.
Section 6.7. Employment Matters. On the Closing Date, the
Purchaser covenants and agrees to make offers of employment to all Employees,
the terms of which shall be (i) with respect to salary, the same or more
favorable than the terms of their employment with the Seller, and (ii) with
respect to health, retirement, severance, vacation, and similar benefits, be
consistent with those benefits provided by the Purchaser to its Employees. In
connection therewith, the Purchaser shall provide such Employees who accept
employment with the Purchase with prior service credit for purposes of vesting
and benefit entitlement under such terms of employment.
Section 6.8. Consents, Further Assurances. Consistent with the
terms and conditions hereof, each party hereto will use its best efforts to
execute and deliver such other documents and take such other actions as
reasonably requested by the other party to fulfill the conditions precedent to
the obligation of the other party to consummate the purchase and sale of the
Purchased Assets and assumption of the Assumed Liabilities, or as the other
party hereto may reasonably request in order to carry out this Agreement and the
Transactions. Purchaser and Seller shall use their best efforts and will
cooperate with each other to the extent reasonably necessary to obtain all
consents, approvals and waivers, if any, from third parties required to
consummate the Transactions contemplated hereby or which, if not obtained, would
have a Material Adverse Effect.
Section 6.9. Release of Seller Under Series B Preferred Stock
Documents. Upon completion of the Transactions, the Seller shall be fully
released and discharged from any and all Liabilities arising under or in
connection with the Series B
29
Preferred Stock Documents and all rights and interests of the Purchaser as a
stockholder of the Seller shall automatically and immediately cease, terminate
and expire.
Section 6.10. Non-Assigned Contracts. The parties hereto have
mutually decided to complete the Closing notwithstanding the existence of the
Non-Assigned Contracts. The parties hereto covenant and agree that, after the
Closing, the Non-Assigned Contracts shall be subject to the following provisions
in order for the Purchaser to obtain the rights and benefits therefrom:
(a) The Seller shall fully cooperate with Purchaser
in the Purchaser's efforts to obtain the required consent to the assignment to
the Purchaser of the Seller's entire right, title, and interest in each
Non-Assigned Contract. If and when the consent to assignment of each
Non-Assigned Contract is obtained, such Non-Assigned Contract shall no longer be
deemed to be a Non-Assigned Contract subject to the provisions of this Section
6.10.
(b) Seller shall make available to Purchaser all
rights and other benefits of each Non-Assigned Contract, on a subcontract or
sublease basis or in some other appropriate manner to the fullest extent
possible, and Purchaser shall be considered an independent subcontractor or
sublessee of Seller, or an agent of Seller, with respect to all matters
concerning such Non-Assigned Contract. As a subcontractor, Purchaser shall pay,
perform and fully satisfy when due all of the Seller's Liabilities under each
Non-Assigned Contract as part of the Assumed Liabilities. Without limiting the
generality of the foregoing, Purchaser shall be considered Seller's agent for
purposes of (i) collecting all amounts that may be due from the other party or
parties to each Non-Assigned Contract; and (ii) negotiating or otherwise
handling all disputes and issues that may arise in connection with each
Non-Assigned Contract. Purchaser shall be entitled to retain all payments due or
to become due from the other party or parties under the Non-Assigned Contracts.
Without Purchaser's prior written consent, Seller shall not agree to any
amendment, modification, extension, renewal, termination or other change in the
terms of any Non-Assigned Contract, nor shall Seller exercise any right under
such Non-Assigned Contract.
(c) At Purchaser's reasonable direction, Seller shall
(i) notify the other party or parties to such Non-Assigned Contract that
Purchaser is Seller's subcontractor, sublessee or agent with respect thereto and
that all further payments, notices and other communications with respect thereto
shall be directed to Purchaser; (ii) agree to such amendments, modifications,
extensions, renewals, terminations or other changes in the terms of such
Non-Assigned Contract as Purchaser determines, in its reasonable discretion, are
advisable; and (iii) exercise any right under such Non-Assigned Contract at such
time and in such
30
manner as Purchaser determines, in its reasonable discretion, to be advisable.
Section 6.11. UK Operations. Purchaser recognizes and
acknowledges that some or all of the UK Assets and UK Assumed Liabilities may be
titled in the name of DLB Ltd. as a result of a services arrangement between DLB
Ltd. and DLB, pursuant to which DLB Ltd. operated the Business at the UK
Premises for the benefit of DLB. While the Seller is in the process of causing
all such UK Assets and UK Assumed Liabilities to be transferred to the Purchaser
pursuant to this Agreement, the Seller shall not be deemed to be in breach of
this Agreement if such transfer has not been fully completed as of the Closing,
provided that: (i) the Seller shall diligently and in good faith take any and
all actions which are required under applicable law to complete such transfer as
soon as possible after the Closing; (ii) such transfer shall be completed
pursuant to and in accordance with such agreements, documents, and instruments
which are reasonably acceptable to the Purchaser and its counsel; (iii) none of
the Seller's representations or warranties (including, without limitation, the
representation and warranty as to title in Section 4.5 hereof) shall be affected
by the provisions of this Section 6.11; and (iv) none of the Purchaser's rights,
duties, obligations, or liabilities with respect to the UK Assets and UK Assumed
Liabilities hereunder shall be affected thereby.
Section 6.12. Closing Date Balance Sheet. As soon as possible
after the Closing Date, but in any event not later than ten (10) days
thereafter, the Seller shall cause to be prepared and delivered to the Purchaser
an internally prepared balance sheet of the Seller as of the Closing Date, which
balance sheet shall be prepared pursuant to and in accordance with GAAP in a
manner consistent with the manner in which the Preliminary Balance Sheet was
prepared. It is understood that the Purchaser shall permit the Seller to utilize
the services of Xxxxxx Xxxxx and such other former DLB employees who become
Premier employees as and to the extent necessary to prepare the Closing Date
Balance Sheet required hereby.
ARTICLE VII.
CONDITIONS TO THE OBLIGATION OF PURCHASER
-----------------------------------------
The obligation of Purchaser to proceed with the Closing under
this Agreement is subject to the satisfaction, on or prior to the Closing, of
each of the following conditions, each of which may be waived by Purchaser:
Section 7.1. Representations and Warranties True. The
representations and warranties of Seller contained in this Agreement and the
information contained in the Schedules to this Agreement and any closing
documents delivered by Seller in connection with this Agreement shall have been
true and correct, in all material respects, when made and shall be true and
correct, in all material respects, at the Closing Date as though
31
made at such time, and Seller shall have delivered to Purchaser a certificate to
that effect signed by its President.
Section 7.2. Performance of Obligations. The obligations of
Seller to be performed by it on or before the Closing pursuant to the terms of
this Agreement shall have been duly performed and complied with, in all material
respects, and, at the Closing, Seller shall have delivered to Purchaser a
certificate to that effect signed by its President.
Section 7.3. Consents. Subject to the provisions of Section
6.10 with respect to Non-Assigned Contracts, all consents, approvals and waivers
from third parties (including, without limitation, lenders) and government
agencies required to consummate the Transactions, as specified on Schedule 4.4,
or reasonably requested by Purchaser in connection with the consummation of the
Transactions shall have been obtained (unless and to the extent waived by
Purchaser, it being understood and agreed that Purchaser's completion of the
Transactions without have received any such consents, approvals, or waivers
shall constitute a waiver of Purchaser's rights with respect to the consent,
approval, or waiver not so delivered).
Section 7.4. Absence of Litigation. There shall not be any
litigation or proceeding, pending or threatened (including, without limitation,
any litigation or proceeding arising under antitrust or securities laws), to
restrain or invalidate the sale and purchase of the Purchased Assets or the
other Transactions, and no action or proceeding shall be pending or threatened
against Seller or the Purchased Assets, at law or in equity, before any federal
or state court or governmental commission or in arbitration or by or before any
administrative agency, which action or proceeding would have a Material Adverse
Effect, nor shall any judgments, consents, injunctions or any other judicial or
administrative mandates be outstanding against Seller which would have a
Material Adverse Effect.
Section 7.5. Certified Resolutions. Purchaser shall have
received a certified copy of the resolutions of the Board and Shareholders (if
necessary) of Seller and Knightview authorizing and approving the execution and
delivery of this Agreement and the Seller Documents and the consummation of the
Transactions.
Section 7.6. Certificate of Good Standing: Tax Lien
Certificate. Purchaser shall have received a good standing certificate of Seller
dated not more than thirty (30) days prior to the Closing Date from its
jurisdiction of incorporation and shall have received a tax lien certificate
dated not more than thirty (30) days prior to the Closing Date from the
applicable officials of the State of Delaware evidencing that no Liens have been
placed on any of the Purchased Assets as of the Closing Date as a result of
delinquent taxes.
32
Section 7.7. Delivery of Specified Documents. Seller shall
have delivered to Purchaser all of the documents and instruments specified in
Section 3.1(b)(i) hereof on or prior to the Closing Date.
Section 7.8. Opinion of Counsel for Seller. Seller shall have
delivered to Purchaser an opinion of its counsel, dated the date of the Closing
and reasonably satisfactory to Purchaser.
Section 7.9. Joinder by Safeguard. Safeguard shall have
executed and delivered the Joinder.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATION OF SELLER
--------------------------------------
The obligation of Seller to proceed with the Closing under
this Agreement is subject to the satisfaction, on or prior to the Closing, of
each of the following conditions, each of which may be waived by Seller:
Section 8.1. Representations and Warranties True. The
representations and warranties of Purchaser contained in this Agreement and the
information in the Schedules to this Agreement and any closing documents
delivered by Purchaser in connection with this Agreement shall have been true
and correct, in all material respects, when made and shall be true and correct,
in all material respects, at the Closing Date as though made at such time and,
at the Closing, Purchaser shall have delivered to Seller a certificate to that
effect signed by its President.
Section 8.2. Performance of Obligations. Each of the
obligations of Purchaser to be performed by it on or before the Closing pursuant
to the terms of this Agreement shall have been duly performed and complied with,
in all material respects, and, at the Closing, Purchaser shall have delivered to
Seller a certificate to that effect signed by its President.
Section 8.3. Absence of Litigation. There shall not be any
litigation or proceeding, pending or threatened (including, without limitation,
any litigation of proceeding arising under antitrust or securities laws), to
restrain or invalidate the sale and purchase of the Purchased Assets or the
other Transactions which would, in the judgment of Seller, made in good faith,
involve expense or lapse of time that would be materially adverse to the
interests of Seller.
Section 8.4. Delivery of Specified Documents. Purchaser shall
deliver to Seller or Safeguard, as appropriate, all of the documents,
instruments, and other items specified in Sections 3.1(b)(ii) and (iii) hereof
on or prior to the Closing Date.
33
Section 8.5. Opinion of Counsel for Purchaser. Purchaser shall
have delivered to Seller an opinion of its counsel, Xxxxxx & Xxxxxxx, dated the
date of the Closing and reasonably satisfactory to Seller and its counsel.
ARTICLE IX.
POST-CLOSING COVENANTS OF SELLER
--------------------------------
Section 9.1. Books and Records of Seller. Following the
Closing, Seller agrees to permit Purchaser and its representatives to inspect
the books and records of Seller not included in the Purchased Assets insofar as
they relate to the Purchased Assets during regular hours and at no expense to
Seller in order for Purchaser and such representatives to obtain information
relevant to Purchaser's tax returns, third party claims or litigation involving
Purchaser, or as otherwise reasonably required for the conduct of the Business
by Purchaser. Seller agrees to maintain such books and records insofar as they
relate to the Purchased Assets for a period of five (5) years after the Closing
Date.
Section 9.2. Discharge of Retained Liabilities. Following the
Closing, Seller shall timely pay, perform and discharge, as they become due, the
Retained Liabilities.
Section 9.3. Covenant Not to Compete.
(a) Seller will not, for a period of two (2) years
following the Closing Date (the "Restricted Period"), be engaged, either
directly or indirectly, as owner, shareholder, employee, consultant, director,
officer or partner, or otherwise in any other capacity, in the Business,
regardless of the geographical territory in which such Business is conducted as
of the Closing.
(b) During the Restricted Period, Seller shall not:
(1) solicit, divert, take away or induce customers (wherever located) of
Purchaser or of the Business prior to the Closing to avail themselves of the
services or products of others which are competitive with any of Purchaser's
services or products, or (2) solicit, employ or in any other fashion hire any
employee of Purchaser or any former employee of the Business (unless the
Purchaser shall have elected not to hire such individual) unless such Person
shall have been discharged by Purchaser, or otherwise induce any employee of
Purchaser to leave the employ of Purchaser.
(c) Seller expressly acknowledges that damages alone
will be an inadequate remedy for any breach or violation of any of the
provisions of this Section 9.3, and that Purchaser, in addition to all other
remedies available at law or hereunder, shall be entitled, as a matter of right,
to injunctive relief, including specific performance, with respect to any such
breach or violation, in any court of competent jurisdiction. If any of
34
the provisions of this Section 9.3 are held to be in any respect an unreasonable
restriction upon Seller, then they shall be deemed to extend only over the
maximum period of time, geographic area or range of activities as to which they
may be enforceable. In the event that Seller shall be in violation of the
restrictive covenants in this Section 9.3, then the Restricted Period shall be
extended for a period of time equal to the period of time during which such
breach shall occur; and, in the event that Purchaser should be required to seek
relief from such breach in any court, board of arbitration or other tribunal,
then the Restricted Period shall be extended for the period of time required for
the pendency of such proceedings, including all appeals.
ARTICLE X.
POST-CLOSING COVENANTS OF PURCHASER
-----------------------------------
Section 10.1. Books and Records of Purchaser. Following the
Closing, Purchaser agrees to permit Seller and its representatives to inspect
the books and records of Purchaser included in the Purchased Assets during
regular business hours and at no expense to Purchaser in order for Seller and
such representatives to obtain information relevant to Seller's tax returns,
third party claims or litigation involving Seller, or as otherwise reasonably
required for the conduct of Seller's business. Purchaser agrees to maintain such
books and records insofar as they relate to the Purchased Assets for a period of
five (5) years after the Closing Date.
ARTICLE XI.
SURVIVAL; INDEMNIFICATION, EXPENSES
-----------------------------------
Section 11.1. General Indemnification.
(a) On the terms and subject to the conditions
and limitations of this Article XI, Seller hereby agrees to (i) indemnify,
defend and hold harmless Purchaser and each of its directors, officers, and
employees from and against any and all losses, damages, liabilities, costs and
claims (collectively, the "Losses") arising out of, based upon or resulting from
(A) any inaccuracy of any representation or warranty of Seller which is
contained in or made pursuant to this Agreement, (B) any breach by Seller of any
of its agreements or obligations contained in or made pursuant to this
Agreement, (C) any of the Retained Liabilities, and (D) the Undisclosed
Liabilities, and (ii) reimburse Purchaser and each of its directors, officers,
and employees for any and all reasonable fees, costs and expenses of any kind
related thereto (including, without limitation, any and all Legal Expenses). As
used in this Article XI, "Legal Expenses" of a Person shall mean any and all
reasonable out-of-pocket fees, costs and expenses of any kind incurred by such
Person and its counsel in investigating, preparing for, defending against or
providing evidence, producing documents or taking other action with respect to
any threatened or asserted claim.
35
(b) Purchaser hereby agrees to (i) indemnify, defend
and hold harmless Seller, Safeguard, Safeguard-DE, Knightview, and each of their
respective directors, officers, and employees from and against any and all
Losses arising out of, based upon or resulting from (A) any inaccuracy of any
representation or warranty of Purchaser which is contained in or made pursuant
to this Agreement, (B) any breach by Purchaser of any of its agreements or
obligations contained in or made pursuant to this Agreement, (C) any Assumed
Liabilities, and (D) the Business conducted by the Purchaser after the Closing
Date, and (ii) reimburse Seller, Safeguard, Safeguard-DE, Knightview, and each
of their respective directors, officers, and employees for any and all
reasonable fees, costs and expenses of any kind related thereto (including,
without limitation, any and all Legal Expenses).
(c) Promptly after receipt by any Person entitled to
indemnification under this Section 11.1 (an "Indemnified Party") of notice of
the commencement of any action in respect of which the Indemnified Party will
seek indemnification hereunder, the Indemnified Party shall so notify in writing
the Person(s) from whom indemnification hereunder is sought (collectively, the
"Indemnifying Party"), but any failure to so notify the Indemnifying Party shall
not relieve any such Indemnifying Party from any liability that it may have to
the Indemnified Party under this Section 11.1 except to the extent that the
Indemnifying Party's ability to defend such claim is materially prejudiced by
the failure to give such notice. The Indemnifying Party shall be entitled to
participate in the defense of such action and to assume control of such defense;
provided, however, that:
(i) the Indemnified Party shall be entitled
to participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim;
(ii) the Indemnifying Party shall obtain the
prior written approval of the Indemnified Party before entering into any
settlement of such claim or ceasing to defend against such claim, which approval
shall not be unreasonably withheld, conditioned, or delayed, except that it
shall not be unreasonable to withhold approval if, pursuant to or as a result of
such settlement or cessation, injunctive or other equitable relief would be
imposed against the Indemnified Party;
(iii) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to each Indemnified Party of a release from liability in respect of such claim;
and
(iv) the Indemnifying Party shall not be
entitled to control, but shall be entitled to participate at its own expense in
the defense of, and the Indemnified Party shall be
36
entitled to have sole control at its own expense over, the defense or settlement
of any claim to the extent the claim seeks an order, injunction or other
equitable relief against the Indemnified Party which, if successful, could, in
the sole judgment of the Indemnified Party, materially interfere with the
business, operations, assets, condition or prospects of the Indemnified Party,
provided, the Indemnified Party shall give notice to the Indemnifying Party of
such judgment and assumption of control as provided in Section 11.1(d) hereof.
(d) At any time, the Indemnified Party may assume
control of the defense of any such action by written notice to the Indemnifying
Party. After such written notice by the Indemnified Party to the Indemnifying
Party of its election to assume control, the Indemnifying Party shall not be
liable to such Indemnified Party hereunder for any Legal Expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof, but
shall be otherwise liable to the Indemnified Party as herein provided.
(e) If the Indemnifying Party does not assume control
of the defense of such claims as provided in this Section 11.1, the Indemnified
Party shall have the right to defend such claim in any manner as it may deem
appropriate at the cost and expense of the Indemnifying Party, and the
Indemnifying Party will promptly reimburse the Indemnified Party thereof in
accordance with this Section 11.1. The reimbursement of fees, costs and expenses
required by this Section 11.1 shall be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
(f) Notwithstanding anything contained herein to the
contrary, but subject to the provisions of Section 11.1(h):
(i) Seller shall have no liability for
indemnification under Section 11.1(a) hereof unless and to the extent that the
aggregate of all Losses incurred by the Purchaser for which indemnification from
the Seller is available hereunder exceed the Threshold Amount.
(ii) Except for Losses described in
clause (iii) of this Section 11.1(f), the aggregate amount of Losses for which
the Seller shall be liable under Section 11.1(a) hereof shall not exceed One
Million Dollars ($1,000,000) subject, however, to reduction pursuant to the
provisions of clause (iv) below.
(iii) The aggregate amount of Losses for
which the Seller shall be liable as a result of any breach of the representation
and warranty contained in Section 4.5 hereof (only insofar as such
representation and warranty pertains to the Software Products owned by the
Seller) shall not exceed (A) Four Million Dollars ($4,000,000) minus (B) other
amounts paid by the Seller in respect of claims for indemnification under
37
Section 11.1(a) hereof subject, however, to reduction pursuant to the provisions
of clause (iv) below.
(iv) The maximum amount of Seller's
liability under Section 11.1(a), as referenced in clauses (ii) and (iii) above,
shall be reduced, dollar for dollar, by the aggregate amount of costs, expenses,
and damages incurred by Seller with respect to the Amgen Dispute.
(v) Seller shall have no duty, obligation,
or liability with respect to any claim for indemnification under Section 11.1(a)
hereof of which the Purchaser does not provide written notice to the Seller
within (A) six (6) months after the Closing Date with respect to any claims for
indemnification under Section 11.1(a) hereof for Losses relating to Undisclosed
Liabilities (other than Undisclosed Tax Liabilities), and (B) one (1) year after
the Closing Date with respect to (1) Undisclosed Tax Liabilities, and (2) any
other claim for indemnification under Section 11.1(a) hereof.
(g) Notwithstanding anything contained herein to the
contrary, but subject to the provisions of Section 11.1(h) hereof:
(i) Purchaser shall have no liability for
indemnification under Section 11.1(b) hereof unless and to the extent that the
aggregate of all Losses incurred by the Seller for which indemnification from
the Purchaser is available hereunder exceed the Threshold Amount.
(ii) The aggregate amount of Losses for
which the Purchaser shall be liable under Section 11.1(b) hereof shall not
exceed One Million Dollars ($1,000,000).
(iii) Purchaser shall have no duty,
obligation, or liability with respect to any claim for indemnification under
Section 11.1(b) hereof of which the Seller does not provide written notice to
the Purchaser within one (1) year after the Closing Date.
(h) Notwithstanding anything contained herein to the
contrary, the limitations on each party's right to and liability for
indemnification under Sections 11.1(f) and 11.1(g) hereof shall not, under any
circumstances, apply to (i) any claim for indemnification made by the Purchaser
under Section 11.1(a) hereof in respect of any of the Retained Liabilities, and
(ii) any claim for indemnification made by the Seller or other Indemnified Party
under Section 11.1(b) in respect of any of the Assumed Liabilities.
38
(i) Notwithstanding anything contained herein to the
contrary and in addition to the limitations set forth in Sections 11.1(f) and
11.1(g):
(i) neither party shall be liable to the
other party for any misrepresentation, breach of any warranty or failure to
fulfill any covenant or agreement herein if such other party shall have had
Knowledge of the facts upon which such misrepresentation, breach or failure to
fulfill is based at or prior to the Closing Date.
(ii) the liability of either party computed
otherwise in accordance with this Article XI shall be limited to the after-tax
consequence to the Indemnified Party of any Loss suffered or incurred by such
Indemnified Party.
(iii) neither party shall have any liability
to the other party for misrepresentation, breach of warranty or failure to
fulfill any covenant or agreement to be performed at or prior to the Closing
Date except pursuant to this Article XI and this Article XI shall be each
party's sole and exclusive remedy against the other for any breach of this
Agreement (regardless of the nature of the breach or the remedy being sought for
such breach), except for the equitable remedies available to the Purchaser under
Section 9.3 hereof.
(iv) neither party shall have any liability
to the extent such liability is covered by insurance of the other
party.
(j) Safeguard, Safeguard-DE, Knightview, and their
directors, officers, and employees are intended third-party beneficiaries of the
provisions of this Article XI and may exercise any and all rights available to
them hereunder as an Indemnified Party pursuant to and in accordance herewith.
ARTICLE XII.
TERMINATION
-----------
Section 12.1. Termination. This Agreement may be
terminated prior to the Closing as follows:
(a) at the election of Purchaser, if any one or more
of the conditions set forth in Article VII to its obligation to proceed with the
Closing has not been fulfilled on the Closing Date;
(b) at the election of Seller, if any one or more of
the conditions set forth in Article VIII to its obligation to proceed with the
Closing has not been fulfilled on the Closing Date;
(c) at the election of Purchaser, if Seller has
breached, or Purchaser reasonably believes that Seller has
39
breached, in any material respect, any representation, warranty, covenant or
agreement contained in this Agreement, which breach cannot be or is not cured by
the Closing Date;
(d) at the election of Seller, if Purchaser has
breached, or Seller reasonably believes that Purchaser has breached, in any
material respect, any representation, warranty, covenant or agreement contained
in this Agreement, which breach cannot be or is not cured by the Closing Date;
(e) at the election of Purchaser or Seller, if any
legal proceeding is commenced or threatened by any governmental or regulatory
body or other Person (other than Purchaser or Seller) directed against the
consummation of the Closing and either Purchaser or Seller, as the case may be,
reasonably and in good xxxxx xxxxx it impractical or inadvisable to proceed in
view of such legal proceeding or threat thereof, taking into account the
potential expense and delay likely to be involved;
(f) at any time on or prior to the Closing Date, by
mutual written consent of Purchaser and Seller; or
(g) at the election of Purchaser or Seller, if the
Closing has not occurred on or prior to October 31, 1997.
If this Agreement so terminates, it shall become null and void
and have no further force and effect, except as provided in Section 12.2.
Section 12.2. Survival. If this Agreement is validly
terminated pursuant to Section 12.1 and the Transactions are not consummated as
described above, this Agreement shall become void and of no further force and
effect; provided, however, that if Purchaser terminates this Agreement because
any of the conditions contained in Sections 7.1 or 7.2 have not been satisfied
or if Seller terminates this Agreement because any of the conditions contained
in Sections 8.1 or 8.2 have not been satisfied then the terminating party shall
have the right to pursue all of its legal remedies for breach of contract and
damages; provided, further, that if this Agreement is validly terminated
pursuant to Section 12.1 and the Transactions are not consummated as described
above, the provisions of Section 6.2 relating to the obligation of Purchaser to
keep confidential and not to use certain information obtained by it from Seller
and to return documents and copies thereof to Seller and the provisions of
Section 12.3 relating to responsibility for expenses shall survive. No party
hereto shall have any liability to any other party in respect of a valid
termination of this Agreement pursuant to Section 12.1, except to the extent set
forth above.
Section 12.3. Expenses. Whether or not the Closing
occurs and the Transactions are consummated, but subject to the right of a
non-defaulting party to recover damages, costs and
40
expenses from a defaulting party pursuant to Section 12.2, all costs and
expenses incurred in connection with this Agreement shall be paid by the person
incurring such expenses; i.e., by Purchaser if incurred by Purchaser, by Seller
if incurred by Seller and by Safeguard if incurred by Safeguard.
ARTICLE XIII.
GENERAL
-------
Section 13.1. No Tax Representations. Seller and Purchaser
agree that no representation or warranty has been made by them as to the tax
consequences of the Transactions or the results of the Allocation of the amount
of, or the consideration comprising, the Purchase Price, that each is engaging
separate counsel with respect to such tax consequences, and that each is
assuming its own respective tax liability, if any, arising out of this Agreement
or the consummation of the Transactions.
Section 13.2. Regarding the Representations and
Warranties.
(a) Independence. Each of the representations and
warranties made by Seller in Article IV is independent of the other
representations and warranties made therein, and each of the representations and
warranties made by Purchaser in Article V is independent of the other
representations and warranties made therein.
(b) Knowledge Qualification. Whenever a
representation or warranty is made herein based on the knowledge of Seller or
Purchaser (as the case may be), such representation or warranty is made based on
the actual knowledge of any executive officer of Seller or Purchaser (as the
case may be) who has been actively involved in the negotiation of this Agreement
and the Transactions.
Section 13.3. Binding Effect and Assignment. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by each of
the parties and their respective successors and assigns. This Agreement may not
be assigned by either party without the prior written consent of the other
party; provided, however, the Purchaser shall have the right, consistent with
the provisions of Section 13.17 hereof, to direct the Seller to transfer the UK
Assets and delegate the UK Assumed Liabilities pursuant hereto to Premier
Research Worldwide Limited, a company organized and existing under the laws of
the United Kingdom and wholly-owned subsidiary of the Purchaser (the "Premier
Subsidiary") so long as (i) the Premier Subsidiary executes an assumption
agreement, in form and substance reasonably satisfactory to the Seller, agreeing
to assume and discharge the UK Assumed Liabilities, and (ii) the Purchaser shall
not be released of its obligations in respect of the UK Assumed Liabilities by
reason thereof.
41
Section 13.4. Waiver. Any term or provision of this Agreement
may be waived at any time by the party entitled to the benefit thereof by a
written instrument duly executed by such party.
Section 13.5. Dispute Resolution.
(a) Good-Faith Negotiations. If any dispute arises
under this Agreement that is not settled promptly in the ordinary course of
business, the parties shall seek to resolve any such dispute between them,
first, by negotiating promptly with each other in good faith in face-to-face
negotiations. These face-to-face negotiations shall be conducted by the
respective designated senior management representative of each party. If the
parties are unable to resolve the dispute between them through these
face-to-face negotiations, within twenty (20) business days (or such period as
the parties shall otherwise agree) following the date of notification (the
"Notice Date") by one party to the other(s) of the existence of such dispute,
then any such disputes shall be resolved in the following manner.
(b) Mediation. The parties shall endeavor to resolve
any dispute arising out of or relating to this Agreement by mediation under the
CPR Mediation Procedures for Business Disputes. Unless otherwise agreed, the
parties will select a mediator from the CPR Panels of Neutrals and shall notify
CPR to initiate the selection process.
(c) Resolution of Disputes.
(i) Any action, suit or proceeding where the
amount in controversy as to at least one party, exclusive of interest and costs,
exceeds $ 1,000,000 ("Summary Proceeding"), arising out of or relating to this
Agreement, the Seller Documents or any other agreement executed in connection
herewith or the breach, termination or validity thereof which has not been
resolved by mediation as provided herein within 90 days of the Notice Date,
shall be litigated exclusively in the Superior Court of the State of Delaware
(the "Delaware Superior Court") as a summary proceeding pursuant to Rules
124-131 of the Delaware Superior Court, or any successor rules (the "Summary
Proceeding Rules"). Each of the parties hereto hereby irrevocably and
unconditionally (A) submits to the jurisdiction of the Delaware Superior Court
for any Summary Proceeding, (B) agrees not to commence any Summary Proceeding
except in the Delaware Superior Court, (C) waives, and agrees not to plead or to
make, any objection to the venue of any Summary Proceeding in the Delaware
Superior Court, (D) waives, and agrees not to plead or to make any claim that
any Summary Proceeding brought in the Delaware Superior Court has been brought
in an improper or otherwise inconvenient forum, (E) waives, and agrees not to
plead or to make, any claim that the Delaware Superior Court lacks personal
jurisdiction over it, (F) waives its right to remove any Summary Proceeding to
the federal courts except where such courts are
42
vested with sole and exclusive jurisdiction by statute, and (G) understands and
agrees that it shall not seek a jury trial or punitive damages in any Summary
Proceeding based upon or arising out of or otherwise related to this Agreement,
the Seller Documents or any other agreement executed in connection herewith or
the breach, termination or validity thereof, and waives any and all rights to
any such jury trial or to seek punitive damages.
(ii) In the event any action, suit or
proceeding where the amount in controversy as to at least one party, exclusive
of interest and costs, does not exceed $1,000,000 (a "Proceeding"), arising out
of or relating to this Agreement, the Seller Documents or any other agreement
executed in connection herewith or the breach, termination or validity thereof,
is brought, the parties to such Proceeding agree to make application to the
Delaware Superior Court to proceed under the Summary Proceeding Rules. Until
such time as such application is rejected, such Proceeding shall be treated as a
Summary Proceeding and all of the foregoing provisions of this Section relating
to Summary Proceedings shall apply to such Proceeding.
(iii) If a Summary Proceeding is not
available to resolve any dispute hereunder, the controversy or claim shall be
settled by arbitration conducted on a confidential basis, under the U.S.
Arbitration Act, if applicable, and the then current Commercial Arbitration
Rules of the American Arbitration Association (the "Association") strictly in
accordance with the terms of this Agreement and the substantive law of the State
of Delaware including law in respect of any statute of limitations. The
arbitration shall be conducted at the Association's regional office located in
Philadelphia, Pennsylvania by three arbitrators, at least one of whom shall be
knowledgeable in software design, programming and implementation, one of whom
shall be an attorney and one of whom shall be a member of a "Big Six" accounting
firm familiar with businesses engaged in software design, programming and
implementation. The arbitrators are not empowered to award damages in excess of
compensating damages and each party hereby irrevocably waives any right to
recover such damages with respect to any such dispute. Judgment upon the
arbitrators' aware may be entered and enforced in any court of competent
jurisdiction.
(d) Neither party shall be precluded hereby from
securing equitable remedies in courts-of any jurisdiction, including, but not
limited to, temporary restraining orders and preliminary injunctions to protect
its rights and interests but shall not be sought as a means to avoid or stay
arbitration or Summary Proceeding.
(e) Each party is required to continue to perform its
obligations under this Agreement pending final resolution of any dispute arising
out of or relating to this contract, unless
43
to do so would be impossible or impracticable under the circumstances.
Section 13.6. Notices. All notices, requests, demands,
waivers, consents, approvals, or other communications which are required or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally, sent by reputable overnight courier service (such as Federal
Express), sent by telecopier, or sent by registered or certified mail, return
receipt requested, postage prepaid, to the addresses set forth below:
If to Purchaser:
Premier Research Worldwide, Ltd.
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, M.D.,
President and Chief Executive
Officer
With a copy to:
Xxxxxx & Xxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esquire
If to Seller:
DLB Systems, Inc.
Recalmon, Inc.
c/o Safeguard Scientifics, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxx
44
With a copy to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
or to such other address or telecopier number as the party entitled to receive
such notice may, from time to time, specify in writing to the other party.
Section 13.7. Use of Name. Subject in all respects to the
provisions of Section 4.5 hereof, the Purchaser will acquire all rights to the
name "DLB Systems" in connection with the transactions contemplated hereby. On
or as soon as practicable after the Closing Date, DLB will change its corporate
and trade name to a name which is distinctly different from "DLB Systems";
provided, however, to the extent reasonably necessary to identify it to other
Persons, DLB shall be permitted to use the phrase "formerly known as DLB
Systems, Inc." or words of similar import in connection with the use of its new
corporation and trade names.
Section 13.8. Governing Law. This Agreement shall be governed
as to its validity, interpretation and effect by the laws of the State of
Delaware.
Section 13.9. No Third Party Beneficiaries. Notwithstanding
anything to the contrary contained herein, no provision of this Agreement is
intended to benefit any person other than the signatories hereto nor shall any
such provision be enforceable by any other Person.
Section 13.10. Severability. Any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall be ineffective to
the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 13.11. Schedules. All Schedules referred to in this
Agreement are intended to be and are specifically incorporated by reference
herein.
Section 13.12. Section Headings. All section headings herein
have been inserted for convenience of reference only and shall in no way modify
or restrict any of the terms or provisions hereof.
45
Section 13.13. Contents of Agreement. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
Transactions and shall not be amended or terminated except by a written
instrument duly executed by each of the parties hereto. Any and all prior or
contemporaneous agreements or understandings between the parties regarding the
subject matter hereof are superseded in their entirety by this Agreement.
Section 13.14. Counterparts. This Agreement may be executed in
two or more fully executed counterparts, each of which shall be deemed an
original, but all of such counterparts together shall constitute but one and the
same instrument.
Section 13.15. Public Announcements. Any public announcement
or similar publicity with respect to this Agreement or the transactions
contemplated hereby shall be subject to the review and approval of the
Purchaser, the Seller, and Safeguard, and such approval shall be received before
dissemination of any such announcement or publicity (which approval shall not be
unreasonably withheld, conditioned, or delayed).
Section 13.16. Joinder by Knightview. At the request of DLB,
Knightview has agreed to join in and become a party to this Agreement for the
purpose of selling, assigning, transferring, and delivering to the Purchaser all
of Knightview's
46
right, title and interest in and to the Purchased Assets (including, without
limitation, the Knightview Lease and the UK Assets).
Section 13.17. Value Added Tax. The parties hereto shall
cooperate with one another and take any and all action reasonably requested by
the other parties hereto to cause the sale and transfer of the UK Assets and UK
Assumed Liabilities to be a transfer of a business as a going concern for the
purposes of the Value Added Tax (Special Provisions) Order 1995 Article 5 and
the Value Added Tax Xxx 0000 S49.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
PREMIER RESEARCH WORLDWIDE, LTD.
By_________________________________
Name:
Title:
("Purchaser")
---------
DLB SYSTEMS, INC.
By_________________________________
Name:
Title:
RECALMON, INC.
By_________________________________
Name:
Title:
("Seller")
------
KNIGHTVIEW COMPUTING LIMITED (for
the purposes set forth in
Section 13.16)
By________________________________
Name:
Title:
47
JOINDER
-------
Safeguard Scientifics, Inc. ("Safeguard"), intending to be legally
bound hereby and in connection with the transactions described in and
contemplated by the foregoing Asset Purchase Agreement (the "Purchase
Agreement"), represents, covenants, and agrees, as appropriate, to Premier
Worldwide Research, Ltd. (the "Purchaser") that:
(a) Safeguard has reviewed the Purchase Agreement;
(b) Safeguard agrees to be bound by the Confidentiality
provisions of Section 6.2(b) of the Purchase Agreement;
(c) Safeguard hereby guarantees the duties and obligations of
the Seller under Article XI of the Purchase Agreement, subject, in all respects,
to the terms, conditions, and limitations set forth therein (including, without
limitation, the limitations set forth in Sections 11.1(f), 11.1(h) and 11.1(i)
of the Purchase Agreement); and
(d) Purchaser may pursue claims which it may
hereafter have under Article XI of the Purchase Agreement directly against
Safeguard subject, however, to the provisions set forth above.
Any capitalized terms used herein which are not so defined, but which
are defined in the Purchase Agreement, shall have the meanings ascribed to those
terms in the Purchase Agreement.
IN WITNESS WHEREOF, Safeguard has executed and delivered this Joinder
by its duly authorized officers this 28th day of October, 1997.
SAFEGUARD SCIENTIFICS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
48
Table of Schedules
------------------
2.1A Retained Assets
2.1 UK Assets
2.3(a) Certain Assumed Liabilities
2.3(c) DLB Performance Bonus Plan
2.3(e) UK Assumed Liabilities
2.4(f) DLB Bonus Awards
2.5 Allocation Statement
3.1(b)(i)(A) Xxxx of Sale and Assignment
3.1(b)(iii)(B) Assumption Agreement
4.3 Conflicts with Other Instruments
4.4 Required Consents and Approvals
4.5 Permitted Liens
4.6 Intellectual Property Matters
4.6(b) Bank Accounts
4.6(c) Leased Real Property
4.6(d) Intellectual Property
4.6(f) Software Products
4.6(g) Prepaid Items
4.8 Financial Statements
4.9 Permits and Approvals
4.11 Litigation
4.13 Contracts, Leases, Etc...
4.14 Product and Service Warranties
4.16 Insurance
4.17 Employees
4.19 Pension/Benefit Matters
49
4.20 Transactions with Affiliates
6.10 Non-Assigned Contracts
50
